[Senate Hearing 113-666]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 113-666
 
                    EXAMINING TAKATA AIRBAG DEFECTS 
                     AND THE VEHICLE RECALL PROCESS

=======================================================================

                                HEARING

                               BEFORE THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           NOVEMBER 20, 2014

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation
                             
                             
                             
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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

            JOHN D. ROCKEFELLER IV, West Virginia, Chairman
BARBARA BOXER, California            JOHN THUNE, South Dakota, Ranking
BILL NELSON, Florida                 ROGER F. WICKER, Mississippi
MARIA CANTWELL, Washington           ROY BLUNT, Missouri
MARK PRYOR, Arkansas                 MARCO RUBIO, Florida
CLAIRE McCASKILL, Missouri           KELLY AYOTTE, New Hampshire
AMY KLOBUCHAR, Minnesota             DEAN HELLER, Nevada
MARK BEGICH, Alaska                  DAN COATS, Indiana
RICHARD BLUMENTHAL, Connecticut      TIM SCOTT, South Carolina
BRIAN SCHATZ, Hawaii                 TED CRUZ, Texas
EDWARD MARKEY, Massachusetts         DEB FISCHER, Nebraska
CORY BOOKER, New Jersey              RON JOHNSON, Wisconsin
JOHN E. WALSH, Montana
                    Ellen L. Doneski, Staff Director
                     John Williams, General Counsel
              David Schwietert, Republican Staff Director
              Nick Rossi, Republican Deputy Staff Director
   Rebecca Seidel, Republican General Counsel and Chief Investigator
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on November 20, 2014................................     1
Statement of Senator Nelson......................................     1
Statement of Senator Thune.......................................     2
Statement of Senator McCaskill...................................     4
    Letter submitted by Hon. Claire McCaskill dated June 20, 2014 
      from Reginald Modlin, Regulatory Affairs--Director, 
      Chrysler Group LLC to Frank Borris, Director, Office of 
      Defect Investigation, National Highway Traffic Safety 
      Administration.............................................    33
    Letter dated December 1, 2014 to Hon. Claire McCaskill from 
      Rick Schostek, Executive Vice President, Honda North 
      America....................................................    41
Statement of Senator Heller......................................     5
    Letter dated November 21, 2014 to Hon. Dean Heller from Rick 
      Schostek, Executive Vice President, Honda North America, 
      Inc........................................................    28
Statement of Senator Klobuchar...................................    23
Statement of Senator Ayotte......................................    25
Statement of Senator Markey......................................    29
Statement of Senator Blumenthal..................................    31
Statement of Senator Cantwell....................................    47
Statement of Senator Rubio.......................................    49

                               Witnesses

Lieutenant Stephanie Erdman, Destin, Florida.....................     6
    Prepared statement...........................................     8
Hiroshi Shimizu, Senior Vice President, Global Quality Assurance, 
  Takata Corporation.............................................    11
    Prepared statement...........................................    12
Rick Schostek, Executive Vice President, Honda North America, 
  Inc............................................................    14
    Prepared statement...........................................    15
Scott G. Kunselman, Senior Vice President and Head of Vehicle 
  Safety and Regulatory Compliance, Chrysler Group LLC...........    17
    Prepared statement...........................................    18
David J. Friedman, Deputy Administrator, National Highway Traffic 
  Safety Administration, U.S. Department of Transportation.......    54
    Prepared statement...........................................    59

                                Appendix

Response to written questions submitted by Hon. Richard 
  Blumenthal to Hiroshi Shimizu..................................    69
Response to written questions submitted to Rick Schostek by:
    Hon. Bill Nelson.............................................    70
    Hon. Maria Cantwell..........................................    71
    Hon. Claire McCaskill........................................    73
    Hon. Richard Blumenthal......................................    73
    Hon. Deb Fischer.............................................    74
Response to written questions submitted Scott G. Kunselman by:
    Hon. Bill Nelson to..........................................    74
    Hon. Maria Cantwell..........................................    75
    Hon. Claire McCaskill........................................    76
    Hon. Richard Blumenthal......................................    76
Response to written questions submitted by Hon. Richard 
  Blumenthal to David J. Friedman................................    77


                    EXAMINING TAKATA AIRBAG DEFECTS 
                     AND THE VEHICLE RECALL PROCESS

                              ----------                              


                      THURSDAY, NOVEMBER 20, 2014

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10 a.m., in room 
SR-253, Russell Senate Office Building, Hon. Bill Nelson, 
presiding.

            OPENING STATEMENT OF HON. BILL NELSON, 
                   U.S. SENATOR FROM FLORIDA

    Senator Nelson. Good morning, everyone. Senator Thune and I 
have been looking forward to this. We want to thank the 
witnesses for coming.
    We are here to investigate the link between defective 
airbags and the numerous injuries and deaths across the 
country--indeed, across the globe.
    More than 7.8 million vehicles in the U.S. have been 
recalled because of defective airbags, and, just this week, the 
National Highway Traffic Safety Administration announced that 
it was calling on all automakers to expand that recall from a 
few states, what they called a regional recall, to the entire 
country.
    Well, the first thing that needs to be done is to take care 
of consumers. Automakers need to get a replacement part so that 
the airbags can be replaced. That needs to be sent to the 
dealers. And they need, because of people potentially driving 
around with a defective airbag in their steering wheel and 
dashboard, the dealers, the automobile makers need to provide a 
loaner vehicle or a rental car for those whose cars cannot be 
immediately fixed.
    General Motors recently took that kind of step for certain 
models with faulty ignition switches, and there is no reason 
why the automakers covered by this notice should not be 
required to take the same kind.
    I think it is absolutely imperative, in view of the fear 
that has gripped the public by virtue of what has already been 
said and what will be stated in this hearing today, that a 
loaner or a rental car would be provided for someone if they 
cannot get their replacement of their defective airbag on the 
recall list done immediately.
    The owners should have a right to expect that the cars that 
they drive are as safe as possible. And so that is going to be 
what we are going to be facing in the next immediate future as 
we dig into the question of what, in fact, is the problem.
    Now, I have written to Secretary Foxx urging him to impose 
civil penalties up to the full extent of his law on any company 
that refuses to provide drivers with an alternative form of 
transportation if they are going to have to wait to have their 
car repaired.
    The American people have a right to know about the story 
behind this airbag recall, and so that is why we are here 
today.
    Now, let me just show you some of the items.
    This is part of the steering mechanism. It would be facing 
the driver like this, and it would look like this in the wheel 
of the steering column. And, of course, the chemicals inside 
this mechanism--upon impact, the chemical reaction causes an 
inflation of the airbag.
    And, upon close examination, you will see the little holes 
around the mechanism that the gas that is created by the 
chemical reaction comes out, inflates the airbag. And it is a 
device that has saved many, many people's lives.
    This compound, ammonium nitrate, seems to have a problem. 
Long about the turn of the year 2000, when it was changed as 
the compound, perhaps some of the metal as well and when the 
explosions occur, instead of the gasses forming to fill the 
airbag, additionally it explodes with such force that this 
metal shreds it.
    And, as a result, what you see, in this particular case of 
an airbag, metal has shredded it. Here is a big hole. Here is 
another hole. And the very device that is supposed to save 
lives becomes a device that is taking lives. So that is 
absolutely unacceptable.
    Now, after the opening statements of the prospective 
Chairman and Ranking Members, I have asked an Air Force active-
duty first lieutenant, who happens to be stationed at the large 
Eglin Air Force Base in Fort Walton Beach, Florida, to be our 
first witness and she will give you a firsthand account as to 
what her encounter has been with a defective airbag.
    Let me turn to our Ranking Member, Senator Thune, our 
future Chairman of this committee.
    Senator Thune, thank you for participating.

                 STATEMENT OF HON. JOHN THUNE, 
                 U.S. SENATOR FROM SOUTH DAKOTA

    Senator Thune. Well, thank you, Senator Nelson, for serving 
as Chairman of this morning's hearing to examine the alarming 
Takata airbag recalls and the actions of the National Highway 
Traffic Safety Administration. These are currently issues that 
belong on the Commerce Committee's agenda, and I appreciate 
very much your calling this hearing to examine these issues in 
greater detail.
    I first want to thank Lieutenant Stephanie Erdman for being 
here today. Thank you also for your service to our country. We 
appreciate you coming here to tell your story and help inform 
this committee.
    This hearing is an important one, and our discussion today 
will explore matters of public safety and accountability. 
Ensuring the safety of America's motorists is a priority, but 
the public's trust has been shaken due to the record number of 
recalls this year and the beliefs many have about problems in 
the industry and at NHTSA.
    This year, record fines have been levied against Toyota, 
GM, and Honda. Now, with the latest news of problems with 
Takata airbags, we are again faced with examining an apparent 
failure with serious safety consequences.
    Today, we will be asking Takata, NHTSA, and other 
stakeholders increasingly familiar questions about how these 
faulty products made it into consumers' vehicles, when the 
problem was first discovered, and what steps, if any, could 
have been taken sooner that may have saved lives or prevented 
injuries.
    In this case, many would especially like to know whether 
the allegations reported in The New York Times that Takata knew 
of and hid risks related to airbags years ago are true. 
Questions also exist about NHTSA's approach to these recalls 
and the wisdom of the agency's initial decision to request 
regional, rather than national, recalls--a decision which NHTSA 
has since reversed for some of the affected vehicles.
    The troubling string of recalls this year should be a wake-
up call. I believe we can do a better job of addressing safety 
issues as they arise and holding automakers, their suppliers, 
and NHTSA accountable to their shared mission of ensuring 
safety on America's roadways.
    In recent years, Congress has enacted, and NHTSA has sought 
to implement, a robust early reporting regime. The major 
automakers and other manufacturers have also instituted or 
sought to improve internal safety reporting systems that 
encourage employees to report safety problems. But reports of 
employees whose concerns may have been ignored, silenced, or 
possibly even covered up, persist.
    I believe we can do more to ensure that NHTSA is informed 
of potential defects as early as possible. That is why later 
today I, along with Senator Nelson, will be introducing the 
Motor Vehicle Safety Whistleblower Act. I am pleased that 
Senators Heller and McCaskill, who have been at the forefront 
of the Committee's efforts on the GM recalls, are also sponsors 
of this legislation.
    This bill will incentivize employees who uncover serious 
allegations of vehicle defects or violations of motor vehicle 
safety laws that could lead to death or serious bodily injury 
to provide voluntarily that information to the Department of 
Transportation. If such information leads to DOT or Department 
of Justice enforcement actions that total more than a million 
dollars in penalties, the whistleblower would be eligible to 
share in a portion of total penalties collected.
    This bill will also protect whistleblowers' identities and 
allow NHTSA to share information with the Department of Justice 
and other Federal agencies where appropriate. Other agencies 
have similar programs, including programs that incentivize 
individuals to report information to the Securities and 
Exchange Commission and to the IRS.
    If there are potential whistleblowers with important 
information to help NHTSA identify more defects, we want them 
to come forward so that these problems can be identified 
earlier in the process. I think we would all agree that it is 
better to address a problem before injuries or deaths occur, if 
at all possible, rather than relying primarily on fines imposed 
after the fact.
    I look forward to working with stakeholders and my 
colleagues as we continue oversight on these safety matters.
    We will undoubtedly revisit many of these issues when we 
consider the President's nominee to lead NHTSA. Having written 
President Obama twice in the last 8 months urging him to fill 
swiftly the NHTSA administrator position at NHTSA that has now 
been vacant for 343 days, I am pleased the President finally 
announced his intention to nominate Dr. Mark Rosekind on the 
eve of this hearing. This nomination is long overdue, and I 
look forward to reviewing the nominee's qualifications and his 
plan for NHTSA in a timely manner.
    Finally, I urge all of my constituents watching this 
hearing to pay attention to any recalls or field actions and, 
if you determine your vehicle is subject to a recall, to get it 
repaired quickly by an authorized repair facility.
    I want to thank the witnesses for being here today, and I 
look forward to your testimony.
    Thank you, Mr. Chairman.
    Senator Nelson. Thank you, Senator Thune.
    We want our two leaders in the Subcommittee to make a short 
opening statement.
    The Chair of the Subcommittee, Senator McCaskill.

              STATEMENT OF HON. CLAIRE McCASKILL, 
                   U.S. SENATOR FROM MISSOURI

    Senator McCaskill. Thank you, Senator Nelson.
    I find it troubling, but, more importantly, I am sad that I 
am not surprised, that we find ourselves examining another 
example of manufacturers' failure to fulfill safety obligations 
that could have saved lives.
    Honda is under investigation for failure to provide early-
warning reports to NHTSA related to the deaths the company has 
linked to Takata airbags. Takata itself is also under 
investigation by NHTSA and Federal prosecutors over troubling 
claims that it might have known a long time before it notified 
its auto manufacturer customers of the public safety defects 
associated with millions of its airbags.
    Ten automakers have now recalled at least 7.8 million 
vehicles in the United States under either safety recalls or 
service campaigns related to defective Takata airbags. What I 
want to try to get to the bottom of at this hearing is what is 
the difference and isn't that difference important--a safety 
recall versus a service campaign.
    There seems to be some confusion among the driving public 
about the scope and severity of these recalls, and part of that 
is because not all the manufacturers are treating this the 
same, using the same language, and we have failed to have 
clarity from NHTSA in this regard.
    In this committee's Consumer Protection Subcommittee, we 
have held three auto safety hearings since General Motors 
recalled 2.6 million vehicles earlier this year for a defective 
ignition switch that was largely ignored by the company and 
Federal auto safety regulators for more than 10 years.
    Sadly, I think today we will hear many of the same themes 
we heard in the GM investigation: an industry that fears no 
consequences for not complying with the law, companies more 
focused on defending against private litigation than promoting 
safety, and a regulator that lacks both the resources and 
technical expertise to effectively do its job.
    I am pleased that the President has finally nominated a 
candidate to serve as NHTSA's Administrator, a position that 
has been vacant for nearly a year--a critical year. I look 
forward to hearing from him, particularly in regards to his 
plans to strengthen the agency's oversight of the auto 
industry.
    Dr. Mark Rosekind has been nominated, and he certainly has 
a resume that reflects years of work in the area of automobile 
and transportation safety. This committee should move quickly 
on a hearing to consider his nomination. I certainly have a lot 
of questions.
    As we head into a new session of Congress, this committee 
should also make legislation reauthorizing NHTSA a priority. We 
aren't going to agree on everything, but I think there is 
enough common ground on the reforms that are needed to act 
without delay. I look forward to working with the new Chairman 
in that regard and all of the members of this committee in the 
next Congress.
    Thank you, Senator Nelson.
    Senator Nelson. Thank you, Senator.
    Senator Heller, the Ranking Member of the Subcommittee.

                STATEMENT OF HON. DEAN HELLER, 
                    U.S. SENATOR FROM NEVADA

    Senator Heller. Chairman, thank you. And I will keep my 
statement brief.
    But before I begin, I want to acknowledge the lives that 
were lost due to the Takata airbags and would like to thank 
Lieutenant Erdman for being here today. Thank you for your 
service to this country and for sharing your story with this 
committee today.
    Mr. Chairman, I think this is the year of the airbags. GM 
had defects with airbags that would not deploy, and now we have 
Takata airbags that send shrapnel into the face of those that 
are driving.
    As this committee knows, I know a little bit about cars. I 
race them, I build them, I break them, and I fix them. Probably 
break them more than I race them, but that just seems to be the 
way it works out. But I will tell you the most terrifying thing 
a driver experiences is a crash, and, at that moment, the only 
thing that matters in their lives is that airbag.
    We have common themes emerging from all of our hearings 
this year from this committee and our subcommittee: It has 
taken far too long from the information found within the 
company that there is a defect and then getting these cars off 
the road.
    Today, I am proud to stand with Senator Thune, Senator 
Nelson, and Senator McCaskill on introducing legislation that 
would bring this information forward faster by rewarding 
whistleblowers. It is my hope and it is our hope that the Motor 
Vehicle Safety Whistleblowers Act will solve the problems that 
we are seeing time and again with these recalls, that employees 
in these companies have raised concerns about defects and those 
warnings have not been properly vetted. It is my hope that a 
significant monetary payout will get this information to the 
public faster and faster means saving lives.
    Today, this committee has Takata here. We need to know what 
they knew and when they knew it. I am very troubled by the New 
York Times article that alleges that there may have been a 
cover-up.
    And I am glad to have NHTSA here. Just yesterday, the 
President submitted his nomination for NHTSA Administrator to 
the Senate, and I have called on the President to do this for 
months now. We will review this nominee. I am hopeful we will 
be able to process him accordingly. NHTSA needs a Senate-
confirmed administrator. It has been almost a year, and I fear 
that the trust the public has in this agency has been eroded 
greatly.
    One of the major concerns that I have is that NHTSA is not 
able to recognize these defects fast enough. NHTSA is far too 
important for that to happen, and I want to work with NHTSA and 
my colleagues on solutions to that.
    As you know, Nevada will be producing cars very soon, with 
the new Tesla Giga center. We need to make sure that NHTSA can 
handle these cars of the future as well as the cars that we 
have here today.
    So thank you, Mr. Chairman. I look forward to the 
testimonies, look forward to this hearing.
    Senator Nelson. With the indulgence of the Committee, we 
want to get on into the testimony. After the lieutenant, we 
will have the next panel. The Chairman will defer his questions 
so we can get the members plenty of time to have their 
questions. And then we have a third panel, which is the 
administration, NHTSA.
    So let's get right to it.
    Lieutenant, we are certainly appreciative that you would be 
willing to step forward.
    First Lieutenant, United States Air Force, Stephanie 
Erdman, a graduate of the University of Texas system, ROTC 
graduate, one of her first duty stations, of which she is a 
compliance and testing officer in the Air Force Testing and 
Evaluations Command at Eglin Air Force Base.
    And if you all can turn the posters, you can start to see 
something of the impact. She was driving a 2002 Honda, and this 
is what happened to her. The shredded airbag, just like the one 
that I showed you here on the left poster. This is what the car 
looked like. She had a passenger. You can see the airbag still 
inflated in the car.
    And, unfortunately--and she has given us permission--when 
the lieutenant was being carried to the hospital, that is what 
she looked like.
    So, Lieutenant Erdman, if you would share with us your 
story of what happened.

           STATEMENT OF LIEUTENANT STEPHANIE ERDMAN, 
                        DESTIN, FLORIDA

    Lieutenant Erdman: Yes, sir.
    Good morning, everyone, ladies and gentlemen. My name is 
Stephanie Erdman. I am honored to be here today to serve as the 
voice for the people who have been forever silenced because of 
exploding Takata airbags.
    On behalf of everyone who has suffered because of these 
defective Takata airbags, I would like to thank the Committee 
for holding this hearing. I hope that no other families will 
have to go through the terrible ordeal that my family and I 
have had to endure because this happened to me.
    On September 1, 2013, my life was changed forever. I was 
driving my 2002 Honda Civic on Highway 98 near Eglin Air Force 
Base, Florida, where I was stationed. I was on my way to get 
some groceries with a friend. As I was driving, a car took a 
left in front of me, and our cars collided.
    When the impact occurred, shrapnel from my car's airbag 
shot through the airbag cloth and embedded into my right eye 
and cheek. I was instantly blinded on my right side. I felt 
gushing blood running down my neck. I was terrified.
    When I got to the hospital, they did a CT scan of my face. 
The image showed that there was a metallic foreign object which 
had punctured and fractured my right nasal bone, and the tip of 
the shrapnel had embedded in my right sinus.
    Since that day, I have endured multiple surgeries and 
therapies. I have more to go still. My vision will never be the 
same. I will never be the same.
    My accident involved a moderate frontal impact. The 
headlights on the front of the vehicle weren't even broken. My 
passenger only had mild scrapes and bruises. I should have not 
been injured in the shocking and terrifying way that I was.
    What happened to me was gruesome. The photo that the EMT 
took of me with the shrapnel embedded in my eye is scary to 
look at, but I believe it is necessary to grab the attention of 
those who have the ability to do something and keep this from 
happening to anyone else.
    It is easy to think that I am the only one who has suffered 
because of this accident, but it has also been exceptionally 
tough on my family. They try to be strong for me, and I see it, 
but I can tell that whenever I talk about it they are also 
hurting. I know I have physical scars about this tragedy, but 
people who care about me have scars, as well. They are just the 
kind you cannot see.
    These companies should have done everything they could. 
They claim that they notified customers as soon as they found 
out about the problem, that they expanded the recalls as they 
learned about each set of additional potentially affected 
vehicles as soon as they could. I believe that the facts show 
differently.
    It has been 6 years since the first recall covering these 
deadly Takata airbags. What just started at 3,940 vehicles has 
now ballooned into over 7 million vehicles. But the exact same 
vehicle in one state is not even recalled in the next state 
over. I do not understand how crossing a border simply means 
that that vehicle is now safe.
    I do not also understand why the dealerships that sell 
these vehicles and service them are not notifying customers. 
American Honda Motor Company claims that they notified the 
Honda-certified dealership where I bought my Civic about the 
recall for the driver-side airbag in February 2010. I took my 
car into the dealership for service three times after they 
supposedly received the information. The Honda dealership never 
told me about the recall, they never performed the recall 
repairs on my vehicle, and they never warned me about what 
might happen if my airbags deployed. They did nothing.
    I have also learned that Honda claims they have sent a 
recall notice to my house in 2010. They have records showing 
that the envelope containing critical information was returned 
to them as undeliverable. Instead of trying to notify me in 
another way, they did nothing to warn me.
    It is in honor of my family and friends who support me so 
very much that I ask the Committee to demand real answers. It 
is in honor of the families and friends of all who have been 
injured by these defective Takata airbags that I ask the 
Committee to insist that these companies explain why they 
waited so long to identify all of these potentially deadly 
vehicles. And it is in honor of those who cannot be here today 
because they have been hurt or killed by these dangerous 
products that I ask the Committee to get to the bottom of why 
these companies did not try harder to warn us.
    I am so honored to be here today to have the opportunity to 
tell my story, but please understand that I am just one of many 
people who have been affected by these deadly airbags. I am 
hopeful that Congress will look at a way to improve the recall 
notification process. I hope there will be no more mothers 
taken from their children or no more fathers blinded by the 
exploding airbags. I ask the Committee to do everything in its 
power to make sure every vehicle with a defective airbag is 
made safe.
    Thank you.
    [The prepared statement of Lieutenant Erdman follows:]

                 Prepared Statement of Stephanie Erdman
    Ashley Parham. Gurjit Rathore. Hai Ming Xu. And my name is Lt. 
Stephanie Erdman.
    Thanks to the gracious invitation of the U.S. Senate Committee on 
Commerce, Science, and Transportation, I am honored to be here today to 
serve as the voice for the people who have been forever silenced 
because of the failure of companies to address the dangers of exploding 
airbags.
    On behalf of everyone who has suffered because of these defective 
airbags, I would like to thank the Committee for holding this hearing. 
It is my sincere hope that no other families will have to go through 
the terrible ordeal that my family has had to endure because of what 
happened to me or experience the same kind of terror that myself and 
others who have been injured and killed because of these defective 
airbags have felt.
    On September 1, 2013, my life changed forever. I was driving my 
2002 Honda Civic on Highway 98 West near Destin, Florida on my way to 
get some groceries with a friend. As I was driving, a car turned left 
in front of my Honda and we crashed.
    When the impact occurred, shrapnel from my car's airbag inflator 
shot through the airbag cloth and embedded in my right eye and neck. I 
was instantly blind on my right side. And then I felt gushing blood. It 
was terrifying. I thought I was going to bleed out.
    When I got to the hospital, they did a CT of my face. The imaging 
showed that a metallic foreign body had punctured and fractured my 
right nasal bone, and the tip of that shrapnel had embedded itself in 
my right sinus. Since that day, I have endured multiple surgeries and 
therapy. I have more of them to go. My vision will never be the same. I 
will never be the same.
    An accident only has to involve a mild impact to trigger the 
airbags to deploy. My accident involved a moderate frontal impact. I 
should have gotten a few bumps and bruises like the passenger in my 
car. I should not have been injured in the shocking and terrifying way 
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    What happened to me was gruesome. The photo that the EMT took of me 
with the shrapnel in my eye is scary to look at. But I believe it is 
necessary to get the attention of those who have the ability to do 
something to stop this from happening to someone else.
    It is important to me to talk about this problem. It is helpful to 
me to talk about it so that I can learn to deal with the trauma that I 
had to endure and that still haunts me to this day. Just like I am 
haunted by what could have happened if a family member or a friend was 
driving my car. I could never forgive myself if this had happened to 
one of them in my car.
    It is easy to think that I am the only one who has suffered because 
of my accident. But it has also been exceptionally tough for my family. 
They try to be strong for me, and I see it. But I can tell that, 
whenever I talk about it, they are also hurting. I know that I have 
physical scars from my tragedy. But the people who care about me have 
scars, too. They are just the kind you cannot see.
    These companies say they have done everything they could. They 
claim that they notified consumers as soon as they found out about the 
problem. That they expanded the recalls as they learned about each set 
of additional potentially affected vehicles just as soon as they could. 
I believe the facts show differently.
    It has been six years since the first recall covering these deadly 
airbags. What started with just 3,940 vehicles has now ballooned into 
more than seven million vehicles on the roads in the United States. But 
the exact same vehicle in one state is not even recalled in the state 
next door. I do not understand how that is acceptable. I do not 
understand how a company can take the position that just crossing a 
border means that the vehicle somehow becomes safe.
    I also do not understand why the dealerships that sell and service 
these vehicles are not notifying consumers. American Honda Motor 
Company claims that they notified the Honda-certified dealership where 
I bought my Civic about the recall for the driver's side airbag in 
February of 2010. I took my car into that dealership for service three 
times after they received the recall notice for my car. They never told 
me about the recall. They never performed the recall repair on my 
vehicle. And they never warned me about what might happen if my airbag 
deployed.
    I have also learned that Honda claims they sent a recall notice to 
my house in 2010. They claim that they have records showing that the 
envelope with that critical notice was returned to them as 
undeliverable. Instead of trying to notify me another way, they did 
nothing to warn me. They did nothing to try and make sure that me and 
my family were safe before the accident happened. It was not until 
September 4, 2013--three days after my accident--that Honda called and 
left a message on my phone about the recall.
    It is in honor of my family and friends, whose support means so 
very much to me, that I ask the Committee to demand real answers to 
questions like these from Takata and from the auto manufacturers that 
knew about this problem long before it began ruining lives and taking 
lives.
    It is in honor of the families and friends of all those who have 
been injured by these defective airbags that I ask the Committee to 
insist that these companies explain why they waited so long to identify 
all of the potentially deadly vehicles.
    And it is in honor of those who cannot be here today because they 
have been hurt or killed by these dangerous products that I ask the 
Committee to get to the bottom of why these companies did not try 
harder to warn us about this issue as soon as possible so that no one 
else suffers the consequences of their inaction.
    I believe in personal responsibility. I believe in admitting that 
you are wrong when you are wrong. I believe in holding companies 
accountable for their actions. The safety of the American public was 
not held paramount by these companies. These companies did not play by 
the rules when they failed to timely and fully notify NHTSA and 
customers like me about this defect. Something must be done to stop 
this deadly trend that we see time and time again in the auto industry. 
I am hopeful that NHTSA's recall management division also takes more 
responsibility for overseeing recall campaigns so that they improve 
completion rates and make sure that all affected vehicles are included.
    I am so honored to be here today and to have the opportunity to 
tell my story. But please understand that I am just one of many people, 
along with their families and friends, who have suffered because of 
these defective airbags.
    I am hopeful that Congress will look at ways to improve the recall 
notification process. I hope there will be no more mothers taken from 
their children or fathers blinded so they can never again truly enjoy 
playtime with their sons. But I worry that, once all of the attention 
that is now focused on these deadly products subsides, these companies 
will not follow through with making sure that the defective airbags in 
every last one of these affected vehicles are removed. I ask that the 
Committee do everything in its power to make sure that each and every 
vehicle affected by this defect is made safe.
    Thank you.

    Senator Nelson. We will do that, Lieutenant.
    Lieutenant Erdman: Thank you, sir.
    Senator Nelson. You have our promise. And that is why we 
had this hearing today. And we want to thank you for the 
courage of you stepping forward to come and tell your story.
    Between what the lieutenant has said and the pictures, I 
think you get the picture. So, with the Committee's permission, 
I would like to get right on into the next panel.
    Thank you, Lieutenant. You are very kind. Appreciate it.
    All right, if we could ask the next panel, please, to come 
up.
    Mr. Hiroshi Shimizu, he is the Senior Vice President, 
Global Quality Assurance, for the Takata Corporation, the 
manufacturer of the airbags; Mr. Rick Schostek, Executive Vice 
President of Honda North America; Mr. Scott Kunselman, Senior 
Vice President, Vehicle Safety and Regulatory Compliance, the 
Chrysler Corporation Group.
    Gentlemen, thank you for coming. Please be seated.
    Mr. Shimizu, we will start with you. You are very 
accommodating to speak in English, and this committee 
appreciates that. You have with you a translator if there is 
any difficulty. And for you making the effort to speak in 
English today, we want you to know that we appreciate it.
    Mr. Shimizu, please proceed.

  STATEMENT OF HIROSHI SHIMIZU, SENIOR VICE PRESIDENT, GLOBAL 
             QUALITY ASSURANCE, TAKATA CORPORATION

    Mr. Shimizu. Thank you.
    Chairman Nelson and Ranking Member Thune and distinguished 
members of the Committee, my name is Hiroshi Shimizu, and I am 
Senior Vice President for Global Quality Assurance for Takata 
Corporation. I am honored to appear before this committee to 
offer the perspective of Takata Corporation on the important 
issues under examination at today's hearing.
    Takata's mission is to make products that save lives and 
prevent serious injuries. Whenever one of our products does not 
perform as expected, it is our first priority to understand the 
root causes of the issue. If we identify a problem in our 
product design, production, or installation, we do not hesitate 
to take the necessary steps to ensure that the problem is 
addressed properly and promptly.
    All of us at Takata know that the airbag inflator ruptures 
that have been the subject of recent recalls involve very 
important issues of public safety. Even though millions of 
Takata airbags have inflated properly, saving lives and 
avoiding serious injuries in hundreds of thousands of 
accidents, any failure of an airbag to perform as designed in 
an automobile accident is incompatible with Takata's standards 
for highest quality assurance.
    We are deeply sorry about each of the reported instances in 
which a Takata airbag has not performed as designed and a 
driver or passenger has suffered personal injuries or deaths. 
Our sincerest condolences go out to all those who have suffered 
in these accidents and to their families.
    Takata is working closely with automakers and the NHTSA to 
support the ongoing recalls and the regional field actions. And 
we are devoting extraordinary resources to producing quality 
replacement kits on the schedule necessary to fulfill all of 
the automakers' orders.
    We are also devoting extensive efforts and attention to 
answering requests for information about these matters from 
NHTSA and other investigators. We are committed to being fully 
transparent with the government.
    Takata strongly agrees with the position stated by NHTSA on 
November 9, 2014, that the current focus of the ongoing field 
actions and the recalls should remain the specific regions of 
high absolute humidity. Our best current information supports 
the view that these regions must be the priority for the 
replacement of suspect inflators. It is imperative that all 
owners of the affected vehicles in these regions respond to the 
recall notices at the earliest opportunity.
    We are confident that the airbags Takata is producing 
today, including the replacements for recalled units, are safe. 
We have confidence in the integrity of our engineering and our 
current manufacturing processes. We believe that, properly 
manufactured and installed, the airbags we are producing today 
will work as designed to save lives for the expected life of 
the automobiles.
    While each instance of an airbag failure is terrible and 
unacceptable to Takata, it is also important to remember that 
Takata airbags continue to deploy properly as they were 
designed to do in real world accidents, and our airbags are 
helping to save lives and prevent injuries on the road every 
day.
    As we move forward, Takata will continue to cooperate 
closely with automakers and with governmental regulators, and 
we will take whatever actions are determined to be necessary in 
the public interest and that will best advance the goal of 
safety for the driving public.
    Finally, as the Committee is aware, English is not my 
native language. I will do my best to answer questions in 
English, but I may ask for a clarification and I may need 
assistance from my interpreter here from time to time for help 
in understanding the Committee's questions.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Shimizu follows:]

Prepared Statement of Hiroshi Shimizu, Senior Vice President for Global 
                 Quality Assurance, Takata Corporation
    Chairman Nelson, Ranking Member Thune, and distinguished Members of 
the Committee, my name is Hiroshi Shimizu, and I am Senior Vice 
President for Global Quality Assurance for Takata Corporation. I am 
honored to appear before this Committee to offer the perspective of 
Takata Corporation on the important issues under examination at today's 
hearing.
    Takata's mission is to make products that save lives and prevent 
serious injuries. Whenever one of our products does not perform as 
expected, it is our first priority to understand the root causes of the 
issue. If we identify a problem in our product design, production, or 
installation, we do not hesitate to take the necessary steps to ensure 
that the problem is addressed properly and promptly.
    All of us at Takata know that the airbag inflator ruptures that 
have been the subject of recent recalls involve very important issues 
of public safety. Even though millions of Takata airbags have inflated 
properly, saving lives and avoiding serious injuries in hundreds of 
thousands of accidents, any failure of an airbag to perform as designed 
in an automobile accident is incompatible with Takata's standards for 
highest quality assurance. We are deeply sorry and anguished about each 
of the reported instances in which a Takata airbag has not performed as 
designed and a driver or passenger has suffered personal injuries or 
death. Our sincerest condolences go out to all those who have suffered 
in these accidents and to their families.
    Takata is working closely with the automakers and the National 
Highway Traffic Safety Administration (``NHTSA'') to support the 
ongoing recalls and regional field actions, and we have devoted extra 
resources to producing quality replacement kits on the schedule 
necessary to fulfill all of the automakers' orders. We are also 
devoting extensive efforts and attention to answering requests for 
information about these matters from NHTSA and other investigators. We 
are committed to being fully transparent with regulators and 
investigators.
    In response to reports of accidents involving ruptured airbag 
inflators, the automakers have announced various recalls involving 
different models of Takata airbags.
    Those recalls began in 2008 when Honda, in consultation with 
Takata, initiated a series of recalls for driver-side airbags following 
reports of three incidents of inflator ruptures in 2007. These recalls 
involved inflators manufactured exclusively for Honda in 2000 and 2001. 
From 2007 to 2010, Takata collaborated with Honda to conduct numerous 
tests of inflators returned from the field and to review our entire 
inflator manufacturing process, and these efforts led to the expansion 
of the initial Honda recalls. These recalls of Honda driver-side 
inflators focused primarily on specific manufacturing and product-
handling issues we had identified, including issues with the pressing 
of propellant wafers at our production facility at Moses Lake, 
Washington. We have taken steps to address the specific production 
issues identified in connection with these Honda recalls.
    From 2009 to 2012, there were a limited number of reports of 
inflator ruptures involving passenger-side airbags manufactured from 
2000 to 2002. Those reports resulted in a 2010 recall of passenger-side 
airbags installed in vehicles that were exclusively sold in Asia. 
Separately, several automakers announced global recalls of passenger-
side airbags beginning in 2013. Since then, there have been several 
additional incidents of inflator ruptures involving both driver-side 
and passenger-side airbags that were not covered by the earlier 
recalls. Almost all of these incidents involved vehicles that spent 
their lives mostly in areas of high absolute humidity, such as Puerto 
Rico and South Florida, and were at least six years old at the time of 
the accident.
    Our best current judgment is that the root causes of these inflator 
ruptures likely involve a combination of three factors: (1) the age of 
the unit; (2) persistent exposure over time to conditions of high 
absolute humidity; and (3) potential production issues, which we have 
worked to identify and address.
    Based on this engineering analysis, and at NHTSA's suggestion, 
multiple automakers began regional field actions focused on areas of 
the United States that experience higher levels of heat and absolute 
humidity. Several automakers have recently converted these field 
actions into regional recalls. These ongoing regional actions and 
recalls are targeted at vehicles sold or registered in Puerto Rico, 
Hawaii, Florida, and the U.S. Virgin Islands. Several automakers have 
expanded these actions to additional areas along the Gulf Coast and 
other coastal areas, including Southern California.
    One important function of these regional actions is to retrieve 
inflators from the field for purposes of data gathering, testing, and 
further analysis. In the past several months, we have tested and 
analyzed thousands of returned airbag inflators, both from within the 
areas of high absolute humidity and from outside those areas, and we 
are working to increase our capacity for testing. We are regularly 
sharing the results of this ongoing testing and analysis with the 
automakers and NHTSA. So far, these ongoing tests have not shown any 
ruptures in inflators retrieved from vehicles outside the areas of high 
absolute humidity. The tests have resulted in some failures of 
inflators retrieved from within those areas, with some notable 
variations in the test results for different models of inflators and 
for different makes of automobiles. We are continuing to analyze these 
results and to learn from them.
    In the meantime, Takata strongly agrees with the position stated by 
NHTSA on November 9, 2014 that the current focus of the ongoing field 
actions and recalls should remain the specific regions of high absolute 
humidity. Our best information supports the view that these regions 
must be the priority for the replacement of airbags. It is imperative 
that all owners of the affected vehicles in these regions respond to 
the recall notices at the earliest opportunity.
    Takata has added new production capacity to meet the demand from 
automakers for airbag replacement kits needed in response to the 
regional actions and recalls. We are currently producing more than 
300,000 replacement kits per month and will be increasing those 
production levels beginning in January. We believe we will be able to 
meet the demand currently expected from automakers for these 
replacement units.
    We are confident that the airbags Takata is producing today, 
including the replacements for recalled units, are safe. We have 
confidence in the integrity of our engineering and our current 
manufacturing processes. We believe that, properly manufactured and 
installed, the airbags we are producing today will work as designed to 
save lives for the expected life of the automobile.
    While each instance of an airbag failure is terrible and 
unacceptable to Takata, it is also important to remember that Takata 
airbags continue to deploy properly as they were designed to do in 
real-world accidents, and our airbags are helping to save lives and 
prevent injuries on the road every day. More than 200 million cars and 
light trucks are registered in the United States, and NHTSA has 
estimated that around half of one percent of these vehicles experience 
an airbag deployment each year. Many of those airbags are Takata 
products. That means that Takata airbags help to save hundreds of lives 
and prevent thousands of serious injuries every year in the United 
States.
    As we move forward, Takata will continue to cooperate closely with 
the automakers, with NHTSA, and with government regulators in Japan and 
around the world to address the potential for inflator rupturing. We 
will take whatever actions are determined to be necessary in the public 
interest and that will best advance the goal of safety for the driving 
public.
    Thank you, Mr. Chairman. I will be pleased to answer questions from 
the Committee.

    Senator Nelson. Of course, you will have that assistance. 
And one of the things that we will want you to answer is about 
the change to ammonium nitrate and the problems that occurred 
thereafter.
    Mr. Schostek, now, you are a representative of Honda, being 
the Executive Vice President at Honda North America. Also talk 
to us about the recalls and the provisions of loaners and/or 
rental cars.
    Mr. Schostek?

  STATEMENT OF RICK SCHOSTEK, EXECUTIVE VICE PRESIDENT, HONDA 
                      NORTH AMERICA, INC.

    Mr. Schostek. Thank you, Chairman Nelson, Senator Thune, 
and members of the Committee. My name is Rick Schostek. I am 
Executive Vice President with Honda North America. On behalf of 
more than 28,000 Honda employees in the U.S., 1,300 automobile 
dealers, and more than 600 North American suppliers, thank you 
for the opportunity to be here today.
    I want to begin by expressing our deepest sympathies to 
those individuals and families who have been affected by these 
tragic incidents. We offer our sincere apologies to the 
families of those who have died, to those who have been 
injured, including Lieutenant Erdman, and to those who have 
been in any way inconvenienced due to the defects in Takata 
airbags in our vehicles.
    Airbags save thousands of lives each year, but we recognize 
that even one customer who is injured or loses their life when 
an airbag does not perform as intended is one too many and is 
completely unacceptable.
    We understand the urgency of the current situation and are 
taking proactive steps to encourage Honda and Acura owners to 
get their vehicles repaired. Specifically, to meet the needs of 
our customers related to these airbag recalls, we have posted 
written messages prominently on our websites to reassure our 
customers that we have procedures in place to address their 
individual needs.
    Customers with affected vehicles who desire alternative 
transportation until their car is fixed have access to loaner 
cars and rental vehicles at no cost to the customer. And we are 
working in our service and parts divisions with our dealer 
network to ensure that replacement inflators are available 
where and when they are needed.
    Like many automakers, Honda looked to Takata for the supply 
of airbag components because Takata was an internationally 
recognized safety systems supplier. As the manufacturer of the 
complete vehicle, we relied on Takata for its expertise in this 
specific area of technology. We provided our performance 
requirements, and Takata designed the airbag components to 
those criteria.
    Beginning with the 2001 model year, Takata began to supply 
Honda with a new generation of airbag components. By 2004, we 
had sold several million vehicles equipped with these Takata 
airbags. It was then, in 2004, when we learned of an airbag 
inflator rupture in one of our vehicles and reported that to 
NHTSA. This remained the only airbag inflator rupture we were 
aware of until 3 years later.
    Since 2007, we have been involved in a safety investigation 
of Takata airbag inflators. Takata identified specific 
manufacturing issues as the primary factors of the rupture 
events.
    Starting with a recall in November 2008 and with every 
subsequent recall, we gathered component parts from the time 
period that corresponded to Takata's manufacturing issues and 
provided those to Takata for further investigation. 
Additionally, we recalled vehicles that were outside of the 
range Takata had identified for the purpose of additional 
analysis.
    As new evidence identified new risk, Honda acted to expand 
our recall population. The investigation process has, since 
2007, been designed to replace defective Takata inflators and 
also to seek out data using the public recall process. The 
investigation continues to this day.
    With regard to the 2004 inflator rupture, Takata advised us 
that their analysis demonstrated that it had distinctly 
different characteristics compared to the ruptures that led to 
the first recall.
    At Honda, the founding principle of our company places the 
highest priority on the quality of our products and the 
satisfaction of our customers. Now, today, we are operating 
with even greater energy and greater focus to quickly address 
our customers' needs and, with every action of our company, 
dedicating ourselves to honor the relationship we have with our 
customers.
    Thank you.
    [The prepared statement of Mr. Schostek follows:]

    Prepared Statement of Rick Schostek, Executive Vice President, 
                       Honda North America, Inc.
    Thank you, Mr. Chairman, Senator Thune and members of the 
Committee. My name is Rick Schostek. I'm an Executive Vice President 
with Honda North America--a company that works in support of all Honda 
companies in North America--and I'm based in Ohio. On behalf of the 
more than 28,500 associates working for Honda in the United States, as 
well as our nearly 1,300 automobile dealers in the U.S. and more than 
600 suppliers in North America, thank you for this opportunity to share 
our perspectives on this very serious automotive safety issue.
    I want to begin by expressing our deepest and heartfelt sympathies 
to those individuals and families who have been affected by these 
tragic incidents. It is truly heartbreaking to all of us at Honda. We 
offer our sincere apologies to the families of those who have died, to 
those who have been injured--including Ms. Erdman--and to those who 
have been in any way inconvenienced due to the defects in Takata 
airbags in our vehicles.
    Airbags save thousands of lives each year. But we recognize that 
even one customer who is injured or loses their life when an airbag 
does not perform as intended, is one too many, and is completely 
unacceptable.
    Regarding the multiple recalls we have conducted let me first say 
that Honda is a company built upon a commitment to providing 
satisfaction to our customers. We take great pride in the quality of 
our products, the vast majority of which are built here in North 
America. And we stand behind the safety of these products.
    We understand the urgency of the current situation, and are taking 
proactive steps to encourage Honda and Acura owners to get their 
vehicles repaired at an authorized dealership.
    We have a well-respected service division dedicated to supporting 
our dealers in meeting the needs of each customer throughout the 
lifetime of vehicle ownership. Specifically, regarding the effort to 
reach out and meet the needs of our customers related to the airbag 
recalls:

   We have posted written messages prominently on our websites 
        to reassure our customers that we have procedures in place to 
        address their individual needs.

   Customers with affected vehicles who desire alternative 
        transportation until their car is fixed have access to loaner 
        cars and rental vehicles--at no cost to the customer--if we 
        experience a situation where a dealers' service capacity or the 
        availability of replacement air bag inflators is insufficient 
        to meet the customer's needs.

   We continue to work with Takata in an effort to increase 
        parts availability to meet the needs of customers in the 
        expanded population of recalls.

   And we are working within our own service parts division and 
        with our dealer network to ensure that our existing inventory 
        of replacement airbag inflators is available when and where 
        they are needed.

   We have dedicated resources to promptly investigate all 
        reports of potential rupture, contacting owners or their 
        representatives when we learn of potential ruptures through 
        media, law enforcement or other sources.

    So, we have taken, and continue to take action to address the needs 
and concerns of our customers related to the series of recalls in our 
vehicles with Takata airbag inflators.
    Like many automakers, Honda looked to Takata for the supply of 
airbag components because Takata was an internationally-recognized 
safety systems supplier. As the manufacturer of the complete vehicle, 
we relied on Takata for its expertise in this specific area of 
technology. We provided our performance requirements and Takata 
designed the airbag components to those criteria.
    Beginning with the 2001 model year, Takata began to supply Honda 
with a new generation of airbag components. By 2004, we had sold 
several million vehicles equipped with these Takata airbags, when we 
learned of an airbag inflator rupture in one of our vehicles, and 
reported it to NHTSA. This remained the only airbag inflator rupture we 
were aware of until three years later.
    Since 2007, we have been involved in a safety investigation of 
Takata airbag inflators. Throughout this investigation, Takata 
identified specific manufacturing issues as the primary factors of the 
rupture events. Starting with a recall in November 2008, and with every 
subsequent recall, we gathered component parts from the time period 
corresponding to Takata's manufacturing issues and provided those to 
Takata for further investigation. Additionally, we recalled units that 
were outside the range Takata had identified, for the purpose of 
analysis.
    As new evidence identified new risk, Honda acted to expand our 
recall populations. The investigation process has, since 2007, been 
designed to replace defective Takata inflators and to seek out data 
using the public recall process. The investigation continues to this 
day.
    With regard to the 2004 inflator rupture, Takata advised us that 
their analysis demonstrated that it had distinctly different 
characteristics compared to the ruptures that led to the first recall.
    Honda has conducted seven recalls and two safety improvement 
campaigns in the U.S. related to Takata driver and front passenger 
airbag inflators. These actions represent our continued due diligence 
and focus on the safety of our customers.
    It is our practice to actively communicate with our customers who 
own an affected vehicle in order to get them to take immediate action 
to have their vehicle repaired. Over and above the required first class 
mail notification, we provide multiple notices in English and Spanish, 
as well as other means of reaching customers, both directly and 
indirectly. We plan to continue these activities for all recalls.
    We also have employed other communications techniques in an effort 
to increase the completion rate for our recalls. We consulted with the 
U.S. Postal Service to try new methods to get people to open their 
recall mailings. We also have used overnight delivery. We have called 
more than 700,000 hard-to-reach customers by phone, using our customer 
relations staff, our dealers, and automated calls.
    Based on our efforts, we have experienced completion rates that are 
considered high for the recall of older model vehicles. Still, we are 
concerned when multiple recall notices go unheeded by some registered 
owners. We want our customers to complete each and every recall.
    Toward this goal, we would like to offer a suggestion for 
consideration that we believe would greatly improve the response rate 
to recall notices.
    Many states require owners to obtain a tailpipe emissions test 
before a vehicle can be registered, and certain states decline vehicle 
registration renewals until outstanding emissions recall repairs have 
been completed. In a similar way, as the Inspector General commented in 
October 2011, if each state required that open recalls related to 
safety issues be addressed, if parts are available, before allowing the 
vehicle to be registered, this simple step would greatly reduce the 
risk of injuries related to unrepaired older model vehicles. Further, 
all dealerships and independent repair facilities could be required to 
check for, and notify the customer of, any open recalls before 
returning a vehicle to the customer. This is something we already ask 
all of our dealers to do.
    However, at this time, such requirements do not exist in the United 
States.
    So, Honda will continue to work to alert owners about recalls and 
to encourage owners with an affected vehicle to take immediate action 
to have their vehicle serviced at their authorized dealership.
    At Honda, the founding principle of our company places the highest 
priority on the quality of our products and the satisfaction of our 
customers. Now, we are operating with even greater energy and focus to 
quickly address our customers' needs and concerns and, with every 
action of our company, dedicating ourselves to honor the relationship 
we have with our customers.
    Again, I very much appreciate the opportunity to appear before the 
Committee today, and now I will be happy to address your questions. 
Thank you.

    Senator Nelson. Mr. Schostek, you didn't say anything about 
loaners or rental cars.
    Mr. Schostek. Mr. Chairman, I believe I did. Customers with 
affected vehicles who desire alternative transportation in the 
form of loaners or rental cars have them available to them at 
no cost.
    Senator Nelson. Immediately?
    Mr. Schostek. We have them in place now, sir.
    Senator Nelson. For all of your dealers across the country?
    Mr. Schostek. In the form of loaners, we have expanded our 
loaner program, and we also have the option of rental cars. We 
will take care of our customers, sir.
    Senator Nelson. OK. Let the record show that that has been 
said. We have certainly had contrary information to this point. 
If that is the case, then I certainly want to congratulate you, 
for the obvious reasons.
    All right. Mr. Kunselman.
    Mr. Kunselman. Yes.
    Senator Nelson. Mr. Kunselman, Senior Vice President, 
Vehicle Safety and Regulatory Compliance, of Chrysler.

          STATEMENT OF SCOTT G. KUNSELMAN, SENIOR VICE

PRESIDENT AND HEAD OF VEHICLE SAFETY AND REGULATORY COMPLIANCE, 
                       CHRYSLER GROUP LLC

    Mr. Kunselman. Yes. Thank you.
    Chairman Nelson, Ranking Member Thune, members of the 
Committee, as stated, my name is Scott Kunselman. I am the 
Senior Vice President and Head of Vehicle Safety and Regulatory 
Compliance at Chrysler Group. I lead an organization with a 
mission of safeguarding our customers--a mission we embrace 
wholeheartedly. I would like to thank the Committee for the 
opportunity to appear today to discuss this important matter.
    Today's automobiles are among the most sophisticated and 
complex consumer goods on the market. Auto manufacturers are 
more committed than ever to developing advanced safety 
technologies to reduce fatalities and injuries resulting from 
motor vehicle crashes. On a daily basis, we work to design, 
engineer, and manufacture vehicles to withstand a myriad of 
operating conditions.
    Promoting and ensuring vehicle safety is a responsibility 
shared by automakers, suppliers, government, and consumers. 
Chrysler Group looks forward to continuing this collective 
engagement with Takata and NHTSA to help address the current 
situation.
    Chrysler Group has been actively engaged with Takata and 
NHTSA since Takata first informed us in April 2013 that certain 
airbag inflators used by other auto manufacturers may 
malfunction on deployment. These inflators, described by Takata 
as the alpha population, have since been linked to at least 
four fatalities.
    This group of inflators has never been used in our 
vehicles. Our vehicles were equipped with Takata's beta-
population inflators. And in April 2013, Takata assured us that 
the manufacturing nonconformance that led to the alpha-
population recall had been corrected. Chrysler Group engineers 
subsequently conducted a follow up investigation and confirmed 
the beta inflators benefited from an upgraded manufacturing 
process.
    In October 2013, we learned that one of our vehicles in 
southern Florida was subject to a high-pressure deployment 
involving a driver's airbag and causing a personal injury. This 
remains the one incident of its kind involving one of our 
vehicles. In response to this incident and working with Takata, 
in consultation with NHTSA, we launched an investigation and 
conducted component testing.
    In May 2014, Takata again advised Chrysler Group of four 
incidents involving vehicles produced by other auto 
manufacturers. Those vehicles were equipped with Takata 
inflators similar to the inflators used in our vehicles.
    And then in June 2014, this year, Chrysler Group announced 
plans to replace beta-population inflators in certain vehicles 
registered or purchased in four areas known for high humidity, 
a factor believed to have played a role in high-pressure 
deployments.
    We will begin notifying affected customers on or before 
December 19th, when they may schedule service for a 
replacement. Our action covers 371,000 vehicles in Florida, 
Hawaii, Puerto Rico, and the U.S. Virgin Islands.
    It is important to understand the distinction between the 
alpha and beta populations. The alpha inflators are associated 
with the most severe events, a substantially higher incident 
rate, and were found to contain a defined manufacturing defect. 
None of our vehicles were built with an alpha-inflator 
population.
    Again, our vehicles were equipped with beta inflators. In 
our vehicles, these are known to have deployed as intended more 
than 10,000 times across the U.S. and 830 times in the areas 
that I just mentioned that are covered by our field action. As 
I previously stated, there is one incident involving a high-
pressure deployment in one of our vehicles. This took place in 
Florida, a state covered by the announced regional action.
    Chrysler Group continues to work with NHTSA as the 
situation evolves and will respond to the agency's most recent 
request for additional information, which the company received 
on November 18.
    In closing, I would like to reiterate our belief that 
promoting and ensuring vehicle safety is a responsibility 
shared by automakers, suppliers, government, and consumers. 
Chrysler Group will continue to work collaboratively with 
Takata, NHTSA, and others to address this matter.
    I once again extend my thanks to the Committee for 
discussing this very important issue.
    [The prepared statement of Mr. Kunselman follows:]

  Prepared Statement of Scott G. Kunselman, Senior Vice President and 
  Head of Vehicle Safety and Regulatory Compliance, Chrysler Group LLC
    Chairman Nelson, Ranking Member Thune, Members of the Committee . . 
. my name is Scott Kunselman and I am Senior Vice President and Head of 
Vehicle Safety and Regulatory Compliance at Chrysler Group LLC.
    I lead an organization with a mission of safeguarding our 
customers, a mission we embrace wholeheartedly.
    I'd like to thank the Committee for the opportunity to appear today 
to discuss this important matter. As you know, Chrysler's review of our 
involvement with Takata airbags is ongoing. Hence, my testimony is 
based on my recollection today, and not based on a comprehensive review 
of all relevant information under Chrysler's possession or control.
    Today's automobiles are among the most sophisticated and complex 
consumer goods on the market. Auto manufacturers are more committed 
than ever to developing advanced safety technologies to reduce 
fatalities and injuries resulting from motor vehicle crashes. On a 
daily basis, we work to design, engineer, and manufacture vehicles to 
withstand a myriad of operating conditions.
    Promoting and ensuring vehicle safety is a responsibility shared by 
auto makers, suppliers, government and consumers. Chrysler Group looks 
forward to continuing this collective engagement with Takata and NHTSA 
to help address the current situation.
    Chrysler Group has been actively engaged with Takata and NHTSA 
since Takata first informed us in April 2013 that certain air-bag 
inflators used by other auto makers may malfunction on deployment. 
These inflators, described by Takata as the Alpha population, have 
since been linked to at least four fatalities.
    They have never been used in our vehicles.
    Our vehicles were equipped with Takata's Beta-population inflators. 
In April 2013, Takata assured us that the manufacturing nonconformance 
that led to the Alpha-population recall had been corrected.
    Chrysler Group engineers subsequently conducted a follow-up 
investigation and confirmed the Beta inflators benefited from an 
upgraded manufacturing process.
    In October 2013, we learned that one of our vehicles in southern 
Florida was subject to a high-pressure deployment involving a driver's-
side air bag and caused a personal injury. This remains the one 
incident of its kind involving one of our vehicles.
    In response to this incident, and working with Takata and in 
consultation with NHTSA, we launched an investigation and conducted 
component-testing.
    In May 2014, Takata advised Chrysler Group of four incidents 
involving vehicles produced by other auto manufacturers. Those vehicles 
were equipped with Takata inflators similar to the inflators used in 
our vehicles.
    In June 2014, Chrysler Group announced plans to replace Beta-
population inflators in certain vehicles registered or purchased in 
four areas known for high humidity--a factor believed to have played a 
role in high-pressure deployments. We will begin notifying affected 
customers on or before December 19th when they may schedule service. 
Our action covers approximately 371,000 vehicles in Florida, Hawaii, 
Puerto Rico and the U.S. Virgin Islands.
    It is important to understand the distinction between the Alpha and 
Beta populations. The Alpha inflators are associated with the most 
severe events, a substantially higher incident rate, and were found to 
contain a defined manufacturing defect. None of our vehicles were built 
with an Alpha-population inflator.
    Our vehicles were equipped with Beta inflators. These are known to 
have deployed as intended more than 10,000 times in our vehicles across 
the U.S., with 830 of those deployments occurring in the regions 
affected by our field action. As I previously stated, there is one 
incident involving a high-pressure deployment in one of our vehicles. 
This took place in Florida, a state covered by our announced regional 
field action.
    Chrysler Group continues to work with NHTSA as this situation 
evolves and we will respond to the agency's most recent request for 
additional information, which the company received on November 18.
    In closing, I would like to reiterate our belief that promoting and 
ensuring vehicle safety is a responsibility shared by auto makers, 
suppliers, government, and consumers. Chrysler Group will continue to 
work collaboratively with Takata, NHTSA and others to address this 
matter. I once again extend my thanks to the Committee for discussing 
this important issue.

    Senator Nelson. Was that airbag deployment in south 
Florida, was it alpha or beta?
    Mr. Kunselman. It was from the beta population.
    Senator Nelson. And, therefore, of those that are in your 
vehicles, are you providing loaners and rental cars until they 
can get it fixed?
    Mr. Kunselman. As we deploy our field action, we will have 
rental cars available to those who need them.
    What I would reiterate, our number one goal, as you 
suggested at the opening, is to have the parts available and 
quickly service the product. That is our number-one goal. When 
that can't be accomplished, we will make loaner cars available.
    Senator Nelson. You said that is not until the middle of 
December.
    Mr. Kunselman. We will launch that in the middle of 
December when the parts are available to initiate this action.
    Senator Nelson. So do they get loaners and rental cars in 
the next 3 weeks?
    Mr. Kunselman. In these 3 weeks' time, concerned customers 
can contact us through our hotline, and we will on a case-by-
case basis address those needs.
    Senator Nelson. Thank you for making that clear.
    Mr. Kunselman. Yes, sir.
    Senator Nelson. Senator Thune?
    Senator Thune. Thank you, Mr. Chairman.
    Mr. Shimizu, you mentioned in your written testimony that 
you have confidence in your current engineering and 
manufacturing processes. My question is, what changes have you 
made to your manufacturing processes that give you the 
confidence to testify that the replacement Takata airbags are, 
in fact, safe?
    Mr. Shimizu. Senator, let me explain about the history of 
the recall--series of recalls.
    Since the 2007 or 2008 time period we have identified some 
issues identified, we identified the root cause of the issues, 
and we addressed these issues to fix the problems at the same 
time as we did the recall. Every time it happens, we identify 
the problems, we address all issues, and they are taken care 
of.
    And currently we believe the products we are producing 
right now are coming from the weather-controlled manufacturing 
processes. And we believe these products will work as designed 
and are safe.
    Senator Thune. What change have you made in that process 
that leads you to believe that?
    Mr. Shimizu. Yes. There are two major causes of the 
problems, according to what we studied in the past instances.
    One is density issues. The propellant was pressed from the 
powder, and we controlled the compression force to get the 
certain density. However, at that time, in the beginning of 
production, the compression force control did not work well and 
as we expected, according to investigation. So we changed the 
press machine, and now the new press machines can control the 
compression force for each cylinder.
    And then, at the same time, also, we have the device called 
auto-reject device, which, if the compression force is not as 
designed, then it would detect that failure and the auto-
rejection device would reject this propellant. So this device 
will take care of the issues of compression force, or you can 
say density issues.
    And the other one is humidity control. Ammonium nitrate is 
a material that has many advantages to its use; however, as is 
well known, it is sensitive to the humidity. So we put some 
special control of the humidity during the processes of 
propellant manufacturing and also inflator assemblies.
    However, because the handling issue existed in the past and 
also the humidity controls is well enough, so since then, we 
have controlled the humidity during the process in the plant 
much tighter, so maybe, since then, we can control the humidity 
much better while we are manufacturing the propellant and the 
inflators.
    Senator Thune. There are media reports, as I referenced 
earlier, that Takata may have been aware of the dangerous 
airbag defects as early as 2004. I know Takata has denied those 
allegations in the media, but we need answers from an 
independent source about when Takata became aware of the airbag 
defect and whether the defect was concealed from NHTSA.
    As you know, General Motors commissioned an internal 
investigation and released a public report on the ignition 
switch issue. Will Takata initiate an investigation and release 
a public report about whether there was any wrongdoing?
    Mr. Shimizu. According to the record of communication I 
confirmed, the date was May 2005 when we learned of the 2004 
incident. And it was a communication including pictures also. 
That was the first time, according to my understanding, we 
started investigation of that incident. This was 2005.
    And if there was any communication with the automakers 
before that point, I am not aware of that because I was not 
directly involved. But, again, the record I confirmed shows the 
date as May 2005.
    But, at that time, only pictures were available, no actual 
airbag model--the inflator was not available at this point. So 
we checked the pictures and we checked the production record, 
and, at that time, definitely the picture shows an anomaly. 
However, the record we checked doesn't show any system error. 
And then we reported back to the automakers.
    Senator Thune. Will you initiate an independent 
investigation? I know you are talking about some of the things 
that you looked into, but there is a real concern that Takata's 
action here is not as independent as it should be.
    Have you given thought, or would you initiate some sort of 
an independent investigation, where someone outside the company 
takes a look at these things and reports back regarding whether 
or not there was wrongdoing? If not, why wouldn't you do that?
    Mr. Shimizu. Senator, since I was not directly involved at 
that time, I can't answer your question.
    Senator Thune. I understand at that time you were not 
involved. My question is, prospectively, does it make sense to 
have an independent investigation similar to what General 
Motors did with the ignition switch issue?
    Mr. Shimizu. Yes, Senator, I agree with that. And that is 
actually the reason we asked an independent research center to 
check our materials and processes too. So, actually, we are 
doing recently, but maybe not at that time.
    Senator Thune. All right. We can revisit that issue.
    Very quickly, if I might, Mr. Chairman, Mr. Schostek, as we 
heard from Lieutenant Erdman, she referenced that her vehicle 
was serviced multiple times at dealerships after the recall but 
prior to the tragic accident. Is there some policy under which 
your dealers must notify a customer of safety matters when 
someone brings a car in like that? She didn't receive 
notification until 3 days after her accident.
    Mr. Schostek. Indeed, Senator Thune, there is such a 
policy. And we failed Lieutenant Erdman, and our dealer failed 
Lieutenant Erdman. You heard her speak about notifications from 
Honda that she did not receive, so we did not effectively get 
word to her of her recalled vehicle.
    In addition, as she told you, she brought the car to a 
Honda dealer for other service. Her VIN number was not checked, 
and, as a result, we lost opportunities to repair her vehicle. 
We failed Lieutenant Erdman, and the dealer failed Lieutenant 
Erdman.
    We have a policy--our dealers are independent franchisees, 
as you know. We communicate to them regularly about the 
importance of checking each car when it comes in for service to 
see if there are any outstanding recalls. We communicated that 
in March of this year. We have communicated that a week or so 
ago. Very often we are doing that.
    If you would also look at the complete testimony I made, we 
are endeavoring to continuously improve the way we reach out to 
customers. I have to say, the populations involved in these 
recalls are older vehicles. It is harder to track down the 
current owner.
    That is not an excuse. We have to do better. We failed 
Lieutenant Erdman; our dealer failed Lieutenant Erdman.
    Senator Thune. Because there are older vehicles, it would 
seem that the ideal time to provide notice is when somebody 
brings a vehicle in for service.
    Mr. Schostek. I agree, Senator Thune, that, to our 
everlasting regret, we missed those opportunities.
    Senator Thune. The mail is not the most effective way to 
get that message out there and these dealerships may be 
dropping the ball. So I am interested in knowing what you and 
Mr. Kunselman, with Chrysler--what the current policy is, and 
what you intend to do to improve notice in the future.
    My time is up, Mr. Chairman, but if I could get Mr. 
Kunselman to respond quickly to my question on what Chrysler's 
current policy is and what it plans to do differently?
    Mr. Kunselman. Certainly.
    Similar to what Mr. Schostek said, our policy clearly is 
to, through the dealership, communicate to consumers when they 
come to the dealership what open recalls are on their vehicle. 
In fact, the electronic systems that are available that 
identify the vehicle as it enters the dealership automatically 
has this information. It is readily available; they don't have 
to work very hard to find it.
    It is our policy that they not only communicate but make 
every effort not to have that consumer leave the dealership 
without scheduling or performing that service on site.
    Senator Thune. Thank you.
    Thank you, Mr. Chairman.
    Senator Nelson. Mr. Kunselman, I would suggest that the 
next 3 weeks might be critical and that you all need to be 
forward-leaning on that.
    And, Mr. Schostek, thank you for stepping forth and taking 
some responsibility, specifically with regard to the 
lieutenant.
    And, Mr. Shimizu, I would urge you, as Senator Thune has 
requested--and this committee will follow up--that this 
independent inquiry be quick and swift and public.
    Senator Klobuchar?

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. Thank you very much, Mr. Chairman. 
Thanks for holding this hearing.
    And thank you to our witnesses.
    I wish to say that I really believe there has to be a full 
investigation of what happened here. And I say this on behalf 
of a victim in my state, Shashi Chopra, who was driving in her 
car in North Oaks, Minnesota. It was a 2002 BMW, but this 
actually happened in 2013. And there had not been a recall. And 
that airbag exploded in her face, and she is permanently blind.
    And so that is why this looking back and trying to figure 
out what happened is very important to me. Why did it take 
Takata years to disclose the danger of the defective airbags 
despite numerous red flags? When did Takata know that the 
defective part was not limited to certain Honda vehicles? And 
did Takata conduct secret tests on those airbags and not report 
the findings?
    So, to me, those are really key questions on behalf of this 
constituent, in addition to the fact of how NHTSA handled this, 
which I am sure we will be dealing with with the next panel.
    So my first question, Mr. Schostek, is: Honda has been 
aware of these airbags for years, and you issued the first 
recall back in 2008, and since then it has been expanded 
multiple times. Why do it that way? Why doesn't Honda just 
order one expansive recall from the outset and avoid these 
additional recalls?
    Mr. Schostek. Yes, Senator. In 2007, we saw a series of 
inflator ruptures, defects, and began our investigation. In 
working with Takata, they identified specific manufacturing 
problems in their manufacturing plants that were related to the 
time that those inflators were produced which we put into our 
cars.
    We recalled based on that information. We expanded the 
recall when another different manufacturing issue was brought 
to our attention by Takata. And, in all, we did four recalls 
from 2008 through 2011.
    I think it is important for the Committee to understand 
that those four recalls which we did had no geographic 
boundary. They had no geographic boundary. And the injuries 
that have occurred from ruptured--there have been 45 injuries 
because of ruptures in Honda vehicles. Forty-three of those 
correlate to the time of those Takata manufacturing concerns. 
And, to our regret, all four fatalities correspond to that same 
time.
    So we are talking about recalls that were done 2008 to 2011 
because of different manufacturing issues that Takata made us 
aware of and where there was pretty strong data that shows this 
is where the majority of the problems have been occurring. And 
those recalls were not geographic----
    Senator Klobuchar. I understand. Yes, I wasn't saying they 
were regionally limited. It is just that you have these recalls 
after recalls after recalls when clearly there are these red 
flags. And the reason it matters so much to this constituent 
who is permanently blind is that, when this was in 2013, it 
just seems--and it is a different manufacturer.
    Mr. Schostek. I understand.
    Senator Klobuchar. But if Takata had done a more global 
look at what was happening--by ``global'' I mean in all their 
airbags--I don't think this would have happened.
    So I get to you, Mr. Shimizu. And that is, a November 6th 
New York Times article reported that Takata secretly conducted 
tests in 2004 at your Auburn Hills, Michigan, location in 
response to the release-of-metal-fragments issue with the Honda 
Accord. And, according to the article, two of the steel 
inflators allegedly cracked during the test, and Takata 
executives ordered the testing data deleted and the airbag 
inflators destroyed.
    Takata has disputed the report, saying the story was based 
on some misunderstandings. What specifically about the report 
was inaccurate?
    Mr. Shimizu. Yes, Senator. Again, regarding the incident of 
a Honda vehicle in 2004, according to my knowledge, Takata was 
informed in May 2005. And so there was no way we could do any 
tests related to that 2004 incident beforehand.
    And, also, the series of incidents is happened in 2007, and 
at that time actually we started an investigation to identify 
the problems. At that time, we had a series of tests of 
inflators, and all test results since 2007, the starting point 
of the investigation by us, are shared with automakers and also 
NHTSA.
    Senator Klobuchar. OK. So just to get to the--we can go 
back to 2004 another time or in writing, but my issue is my 
constituent got blind in 2013.
    So, in 2010, BMW sent a letter to NHTSA that it was aware 
of the Takata airbags under Honda recalls--and, of course, she 
was driving a BMW--but that it had received documentation from 
Takata indicating that BMW vehicles were not affected.
    So what documentation did Takata provide to BMW? Because, 
remember, this is post-2007 now. We are not back in 2004; we 
are in 2013.
    So I am asking specifically about BMW. And if you don't 
know, you can send it to me later, but I would like to know 
what documentation was provided to BMW about their situation. 
Because they told NHTSA that they knew about these problems 
with Honda's recalls, but they had received documentation from 
Takata indicating that BMW vehicles were not affected.
    Mr. Shimizu. Senator, can I confirm one thing? Is it a 
driver-side airbag module you are talking about?
    Senator Klobuchar. I believe that this was the driver's 
side, yes.
    Mr. Shimizu. Yes. Let me answer based on what I know.
    We did the recall of the Honda vehicles at that time, and, 
as you mentioned, Senator, multiple times, is inflator code 
PSDI. And it is a dual-stage driver-side inflator. At that 
time, the inflator we supplied to BMW is a PSDI-4. And the 
PSDI-4 is a different construction of the inflator. It 
completely looks same from outside but is different from PSDI 
and produced in a different line.
    So that is the major reason, is that the PSDI was recalled 
but we answered to BMW that the PSDI-4 is a different structure 
so it won't be----
    Senator Klobuchar. OK. And so when did you--this is my last 
question. When did you become aware that there were problems 
with the BMW airbags?
    Mr. Shimizu. I am sorry, I am not familiar with--I don't 
know the actual date.
    Senator Klobuchar. All right. Thank you.
    Senator Nelson. Just so it is clear to everybody what we 
are talking about, this is the middle of the steering wheel. 
This is the inflator and it fits in there. And then when the 
impact occurs, the explosion is supposed to come this way. But, 
as we said earlier, if the explosive force is too great, it 
breaks off this metal, and the metal starts coming through the 
middle.
    Every one of us at this hearing table have had constituents 
affected by this. In Florida, right in central Florida, we have 
had one death. And in the case of Corey Burdick, a fireman, a 
firefighter, he has no eye now for the rest of his life. Very 
similar to the situation of the lieutenant, but, in this case, 
the metal had penetrated his actual eye. So this is why we are 
so concerned about this and to get to the bottom of this.
    Senator Ayotte?

                STATEMENT OF HON. KELLY AYOTTE, 
                U.S. SENATOR FROM NEW HAMPSHIRE

    Senator Ayotte. I want to thank the Chairman and Ranking 
Member for holding this very important hearing.
    I wanted to follow up, Mr. Shimizu, on a question that 
Senator Klobuchar had asked you about with regard to the report 
in The New York Times about the 2004 secret tests by Takata.
    As I heard your testimony in response to her question, you 
said that Takata wasn't informed until 2005 about a particular 
incident. And what incident was that?
    Mr. Shimizu. It was an incident that happened in 2004 in a 
Honda vehicle. And according to my information, the driver was 
injured.
    Senator Ayotte. OK. And then you said that there were a 
series of incidents in 2007 that prompted an investigation 
within Takata?
    Mr. Shimizu. Yes.
    Senator Ayotte. When was NHTSA first notified of any of 
this?
    Mr. Shimizu. According to my knowledge, there were three 
incidents that happened during the year of 2007. That is the 
actual three to deeply investigate the root cause of the 
problems.
    Senator Ayotte. With the 2005 incident, was there any 
investigation conducted within Takata?
    Mr. Shimizu. We did. We received the picture, not the 
actual module, but we received the picture, and our engineers 
checked the picture and also production record based on the 
serial number provided. And then, as I said, our engineer 
recognized an anomaly from the picture. However, the production 
record didn't show any system error or any abnormality from the 
production record.
    And, at that time, there was not enough technical evidence 
at the time that we believed it required the further 
investigation or action at that time.j
    Senator Ayotte. So you didn't take any further steps to 
investigate the anomaly that your engineers saw. Did you report 
it to anyone, or did you talk to NHTSA about it or Honda or 
anyone else?
    Mr. Shimizu. According to my understanding, we didn't 
inform NHTSA at that time, but we reported back to Honda.
    Senator Ayotte. Throughout this, I would like to understand 
whether Takata believes that, as it receives reports--and I 
would like to also inquire of Mr. Schostek of Honda.
    When it received reports of both incidents of injury and 
unfortunately these horrible incidents of death, when do you 
believe that you reported them to NHTSA? And do you believe you 
have complied with the TREAD Act?
    Mr. Schostek. Do you want me to answer that, Senator?
    Senator Ayotte. Yes.
    Mr. Schostek. And, if I might, to supplement the discussion 
you have been having with Mr. Shimizu, the first event of a 
rupture in a Honda vehicle occurred in 2004. We received notice 
of that event through our legal department in May 2004. We are 
still checking our records, but, as Mr. Shimizu said, what we 
can find now is that we provided that information to Takata in 
2005. We did report that 2004 event on our TREAD report, which 
is provided to NHTSA.
    As we were discussing, in 2007 there were several events, 
and it was at this time that we and Takata engaged in the 
beginnings of an investigation. Ultimately, in that 
investigation, Takata made us a presentation that showed the 
2007 events and the manufacturing deficiencies that caused the 
defect and also compared it to that 2004 event.
    The 2007 event, those manufacturing times clearly show 
improper density in the inflator propellant. The 2004 event, 
ultimately it was fully investigated, and it shows a proper 
density for the inflator propellant.
    So it is not an excuse, Senator, but that information we 
could have gleaned maybe sooner in 2004 would not have helped 
us predict the events in 2007. As I look back on our activity, 
I think we acted with urgency, but do I think we could have 
moved faster in some respects? I absolutely do.
    Have we met our obligations to report under TREAD? We have 
not. And I think as the Committee may know, we have an ongoing 
internal review about that process and that information is due 
to be provided by Honda to NHTSA this coming Monday. We will 
provide it on time, and we will share with them any gaps or 
deficiencies in our TREAD reporting at that time.
    Senator Ayotte. So I know that my time has expired here, 
but let me just say that I echo the comments of my colleagues. 
This really does warrant a thorough investigation, because 
these timeframes, the reporting requirements, the questions 
that have been raised.
    And, as you know, GM undertook this activity with regard to 
the ignition switch, and, given the seriousness of this matter, 
I would think that Takata and Honda would want to undertake the 
same. So let me urge you to do that, as well.
    And my time is up, but, Mr. Kunselman, let me just say I am 
troubled about the December 19 piece because I think you 
should, instead of waiting for people to call you with 
concerns, should affirmatively reach out to your customers 
while they are waiting till December 19, regardless of how you 
view the beta airbag differently than the alpha. So I think 
that--I am very concerned about that December 19 date.
    Thank you.
    Senator Nelson. Thank you, Senator Ayotte, for underscoring 
that point.
    Senator Heller?
    Senator Heller. Mr. Chairman, thank you, and to the Ranking 
Member, thank you also for having this and holding this 
hearing.
    Mr. Shimizu, I did read your testimony, and it does discuss 
your anguish, and I can understand that, your commitment to 
address this issue properly and promptly. However, I think 
there was something that was amiss in your testimony, and that 
was that nowhere does it say that Takata takes full 
responsibility.
    So I want to ask you right now, does Takata take full 
responsibility for this tragic defect?
    Mr. Shimizu. Excuse me, can I ask my interpreter to confirm 
your question?
    Senator Heller. Sure.
    [Confers with interpreter.]
    Mr. Shimizu. Senator, can I confirm the tragedy this time--
which tragedy are you talking about?
    Senator Heller. I am talking about the five deaths.
    Mr. Shimizu. Oh, five deaths.
    Senator Heller. Do you take full responsibility for those 
tragic deaths? Does Takata take responsibility?
    Mr. Shimizu. Excuse me.
    [Confers with interpreter.]
    Mr. Shimizu. I understand. We recognize the three victims' 
case as relating to our products during accident. But to my 
understanding, two others are still under investigation. So----
    Senator Heller. So, OK, let's take the three. Does Takata 
take full responsibility for those three deaths?
    Mr. Shimizu. My understanding is that our products in this 
accident were anomalies. So that caused an accident. From that 
sense, yes.
    Senator Heller. OK.
    Mr. Schostek, I got a phone call from my wife. Recently, a 
``Good Morning, America'' piece was done on this issue. And she 
is probably doing what every parent is doing in America today. 
We happen to own a 2007 Honda Civic. And we didn't buy it 
brand-new, so we probably didn't get recall notices on that. 
And my wife would remember if she did.
    And I am going to give to you the same question that she 
asked me. If our 18-year-old daughter were to drive that car 
today, a 2007 Honda Civic, would she be safe?
    Mr. Schostek. Senator, we have several different analyses 
of what the problems are with these airbags in our vehicles.
    As I mentioned before, the recalls that we did in 2008 
through 2011, we have connected those to Takata manufacturing 
issues, and we urge customers--and those have no geographic 
limits--we urge customers to get those vehicles repaired 
because there is a risk. There is a risk.
    With regard to the more recent regional recalls, where 
there is not as much information available as to what is the 
cause of the ruptures in the airbag--that is where there is a 
concern about humidity, and we have the same concern about 
humidity. We looked at the 45 injuries that have occurred; 17 
of them have occurred in Florida, also Puerto Rico and Texas. 
The large majority of these issues are occurring in southern 
areas.
    So we are trying to understand if there is any additional 
risk out there. And when we find risk, we act to recall. It is 
our responsibility to recall those vehicles when we find risks.
    Senator Heller. As a parent, we did run the VIN number 
through NHTSA's site, and they said that a 2006 or earlier 
vehicle would have been subject to the recall but not 2007.
    How can you assure me today that a 2007 vehicle is safe for 
any young adult on the road to drive today?
    Mr. Schostek. Senator, with your indulgence and 
understanding that I am not sure of all the exact models as I 
sit here in terms of the breakpoints in the recalls, if that 
vehicle was subject to a recall, we want it fixed. If that 
vehicle was not subject to a recall, we have not determined 
risk, so we would deem it safe for the driver.
    [Mr. Schostek sent the following letter to Senator Heller 
the next day:]

                                  Honda North America, Inc.
                                  Washington, DC, November 21, 2014
Hon. Dean Heller,
United States Senate,
Washington, DC.

Dear Senator Heller:

    I want to follow up our discussion yesterday morning about the 
safety of your daughter's 2007 Civic. I hesitated to respond to your 
question only because I did not have readily available the details of 
the specific recalls, if any, applicable to your daughter's vehicle. I 
have now had a chance to look into that question.
    The driver's airbag inflator in your daughter's vehicle was not 
made by Takata. It was made by Autoliv. The passenger airbag inflator 
was manufactured by Takata, specifically a PSPl-X model. We are unaware 
of any field ruptures of the PSPl-X inflator. It has not been subject 
to any recall or service campaigns in any part of the country. 
Incidentally, you should know that my own daughter, who lives in 
Tennessee, drives a 2008 Civic. It is equipped with precisely the same 
airbags. My wife and I are comfortable with her driving the car.
    I want you to know that Honda is committed to addressing the needs 
and concerns of our customers and making clear that we stand behind the 
safety and quality of our products. It is our priority to always act 
within the best interests of our customers.
            Sincerely,
                                             Rick Schostek,
                                          Executive Vice President.

    Senator Heller. We had a conversation earlier in my office, 
and you said it was difficult to determine the safety of the 
device because of propriety reasons.
    Would I be accurate in assuming that you can't be assured, 
100 percent assured, not knowing that the necessary changes 
were made in these airbags?
    Mr. Schostek. Senator Heller, we are not chemical 
propellant experts at Honda. There is proprietary technology 
involved.
    There have been improvements made by Takata as time has 
gone on. For example, there are differences in the shape of the 
propellant wafer. I am not an engineer. To me, as a layperson, 
it makes sense that that different shape may result in a better 
manufacturing process.
    But, respectfully, Senator, I would defer questions about 
the intellectual property and the proprietary aspects of the 
chemistry to Takata.
    Senator Heller. Thank you.
    Mr. Chairman, my time has run out, but I think I represent 
every parent across America, concerned with their young adults 
and the cars that they are driving today, as to whether or not 
they have an airbag sitting in front of them today that may 
cause severe injuries, as we have heard in testimony today, and 
even death.
    So, anyway, thank you.
    Senator Nelson. Senator Heller, let the record show that 
the pauses that occurred to your two direct questions to the 
two gentlemen, that those pauses, I can say for this Senator, 
were painful. And perhaps on the basis of Mr. Schostek's 
response, you better tell your daughter not to drive south in 
her Honda.
    Senator Markey?

               STATEMENT OF HON. EDWARD MARKEY, 
                U.S. SENATOR FROM MASSACHUSETTS

    Senator Markey. Thank you, Mr. Chairman, very much.
    In the audience today is Kim Kopf. Kim is sitting right 
over here. Her sister was killed in Arizona in November 2003 
sitting in the passenger side of a Subaru model that contained 
defective Takata airbags. But that Subaru model has only been 
recalled in humid states, which Arizona certainly is not.
    So my first question to you is, Mr. Shimizu, would you, 
first of all, right now, given your testimony, agree with the 
position that NHTSA has taken, recalling--you have said so far 
that Takata strongly agrees with the position stated by NHTSA 
that the recalls be limited to the so-called humid states.
    But on Tuesday, NHTSA finally changed its position and 
called for a nationwide recall of all impacted driver-side 
Takata airbags. Does Takata support NHTSA's new nationwide 
recall?
    Mr. Shimizu. I understand NHTSA's change from regional 
recall to national recall. The reason behind is, I understand, 
one incident that happened in North Carolina. And----
    Senator Markey. Do you agree or disagree with NHTSA's call 
for a nationwide recall, Mr. Shimizu?
    Mr. Shimizu. Senator, it is hard for me to answer ``yes'' 
or ``no.'' So if you allow me----
    Senator Markey. It is not hard for you to answer ``yes'' or 
``no.'' Do you support the nationwide recall of airbags that 
the Department of Transportation has issued, yes or no?
    Mr. Shimizu. Again, Senator, if we identify the Takata data 
from any incident to support NHTSA's new directions, then we 
will definitely work together with NHTSA and automakers to take 
care of the issues.
    Senator Markey. I am going to take that as a no, you do not 
agree with the decision by NHTSA. And I just think you are 
plain wrong here. And I think that it is very disturbing, I 
think, to any American family who has a vehicle with a Takata 
airbag to think that that is your position today after all that 
we have learned. I think that your company is making a big 
mistake in not supporting this recall wholeheartedly.
    Now, let me move on, if I can, to you, Mr. Schostek, and 
you, Mr. Kunselman. Kim Kopf's sister was killed with a 
passenger-side bag. And I think that there is kind of a 
roulette-like quality to this, hoping that the airbag that was 
installed in people's cars was on the driver's side--that is 
now being recalled--but not the passenger's side.
    I don't think that is right. And I don't think anyone 
should have to worry that any of their family members are in 
danger. Kim Kopf has lost her sister forever.
    Does Honda support a recall of passenger-side bags, as 
well, given what we now know about the ticking time bombs that 
each one of these airbags potentially is as a risk to American 
families?
    Mr. Schostek. Senator Markey, there are two confirmed 
airbag ruptures in testing--passenger airbag inflator 
ruptures--in Honda vehicles. We have not experienced any 
injuries.
    They are part of the SIC, or the safety improvement 
campaign. We have actually recalled passenger airbags in 10 
states. We are actively working on that right now. Again, those 
are concentrated in the humid areas----
    Senator Markey. Do you support passenger-side recalls that 
would be the equivalent of the driver-side recalls for these 
airbags, Mr. Schostek?
    Mr. Schostek. We support passenger-side--we have ongoing a 
passenger-side airbag recall. And, for us, the key is to 
understand what the technical information is that----
    Senator Markey. Do you support not a voluntary or 
geographic recall but a nationwide recall of passenger-side 
bags, yes or no, Mr. Schostek?
    Mr. Schostek. As to a national recall, we have not refused. 
We are actively considering that, Senator Markey. Right now, 
our priority is in the southern states.
    Senator Markey. You should be saying ``yes'' right now to 
that, Mr. Schostek.
    Mr. Schostek. Sir, we----
    Senator Markey. Mr. Kunselman, for Chrysler, yes or no, do 
you support a nationwide recall? Not voluntary, not geographic, 
nationwide. Do you support it, yes or no?
    Mr. Kunselman. Respectfully, Senator, I want to point out 
that the answer to this question obviously is one that we 
interact with NHTSA on and make decisions quickly based on the 
data. I haven't received that specific request, but I would 
respond quickly using our rigorous internal process to make 
that decision in a 5-day period.
    Senator Markey. Look it, these airbags are the same, 
whether they hurt the lieutenant or they killed Kim Kopf's 
sister. They are the same. And they should be recalled. And 
each of you should be today saying that you support that 
wholeheartedly.
    Thank you, Mr. Chairman.
    Senator Nelson. Thank you, Senator. Thank you for making it 
so direct, yes or no, just like Senator Heller did, as well.
    Senator Blumenthal?

             STATEMENT OF HON. RICHARD BLUMENTHAL, 
                 U.S. SENATOR FROM CONNECTICUT

    Senator Blumenthal. Thanks, Mr. Chairman.
    You know, I know that you are here in good faith, so I hope 
you won't take anything I am going to say personally. But, you 
know, it strikes me that these airbags failed, but the system 
failed equally, if not more.
    And, first of all, I want to join Senator Markey in his 
calling for a national recall of all cars with these airbags on 
the passenger as well as the driver's side. We have made that 
point previously, he and I.
    I am also calling on the Secretary of Transportation to 
immediately accelerate the replacement process, looking 
forward. At the current rate of production by Takata of 300,000 
airbags a month, there is no way that there are going to be 
sufficient products available.
    So I ask you, will you cooperate in an accelerated 
replacement process so that competitors of Takata will be 
called upon to supply those products instead of Takata?
    To each of the--Mr. Schostek and Mr. Kunselman.
    Ms. Kunselman. I can start.
    Obviously, I mention again that we have an obligation to 
our customers. Accelerating the production of parts and getting 
this process done quicker is directly----
    Senator Blumenthal. And so that is a ``yes.''
    Mr. Kunselman. I agree.
    Senator Blumenthal. And, Mr. Schostek, will you take non-
Takata parts to replace those airbags?
    Mr. Schostek. Senator, we want to get these cars fixed. The 
safety of our customers is the highest priority. All options 
are on the table. We will look at every option.
    Senator Blumenthal. Well, I am going to ask the Secretary 
of Transportation to order that you do so, but I hope you will 
cooperate.
    You know, when I say the system failed, we are here because 
of delay, nondisclosure, as well as potential deception, and 
concealment. In fact, both of your companies entered into 
settlements that were deliberately and purposefully concealed 
in court orders.
    Damian Fernandez in Florida, Ashley Parham--the first in 
2006; Ashley Parham in Oklahoma City in 2009; Jennifer Griffin, 
Orange County, Florida, 2009; Gurjit Rathore, Virginia, 2009; 
Kristy Williams in Georgia, 2010. The first was driving a 
Chrysler. The others were driving a Honda. Your companies 
settled with them.
    If that information had been made public, more people would 
know about this deadly defective airbag and fewer people would 
have been killed. Do you agree?
    Mr. Kunselman. Respectfully----
    Senator Blumenthal. Mr. Kunselman and Mr. Schostek.
    Mr. Kunselman. Respectfully, I would highlight that that 
incident did occur in the fall of 2013. I highlighted it in my 
opening statement. And while it is our policy when we enter 
into confidential settlement terms, the existence of that 
incident was not concealed in any way. It was----
    Senator Blumenthal. But the details were. And the devil and 
the death was in the details here. Don't you agree?
    Mr. Kunselman. I would ask for a definition of ``details,'' 
respectfully.
    Senator Blumenthal. Well, the details of how and why and 
what the role of the airbag was in that crash.
    Mr. Schostek, do you agree?
    And let me ask both of you, will your companies commit to 
declining from now on to enter into these kinds of secret 
settlements and concealing the facts surrounding crashes that 
result from defective products?
    Mr. Schostek. Yes, Senator. Two of the cases that you cite, 
with Ms. Parham and Ms. Rathore, we provided information about 
those inflator ruptures to NHTSA. We have talked about them to 
Takata----
    Senator Blumenthal. But not to the public. Your company 
deliberately concealed the facts that otherwise would have been 
known to the public as a result of this court action.
    Mr. Schostek. I respectfully disagree. Ms. Rathore's case 
was reported in the TREAD material. I understand your point 
that Ms. Parham's was not. But we were in talking to NHTSA 16 
days after that TREAD report was due, giving them all the 
information we had about inflators.
    With respect to confidential settlements, our legal system 
recognizes confidential settlements, but we do not intend to 
hide behind settlements. The safety information that comes out 
during lawsuits should be available to NHTSA, and, as 
appropriate, we could support the principle of other government 
entities as well.
    Senator Blumenthal. Mr. Shimizu, I want to show you some 
standards that are used in testing American cars. These are 
standards used to test; they are specifically required by our 
American law to test.
    Were those standards used prior to the sending of those 
airbags to these American companies?
    Mr. Shimizu. I am not familiar with this, but I am sure the 
responsible person in the company knows about this.
    Senator Blumenthal. Well, someone in your company knows 
about it, but you don't know whether those standards were used?
    Mr. Shimizu. Not in detail.
    Senator Blumenthal. Well, I would like to get an answer 
from you in writing after this hearing that these standards--
they are U.S. car--24 standards. They apply to the substances 
used in the airbag, the hermetic sealing of those airbags to 
protect them from moisture.
    You are unable to provide this committee an assurance that 
those standards were used and applied. I want to know from 
someone in your company, under oath, whether those standards 
were applied to every airbag design, in other words if the 
designs were changed over the years, and whether they were 
tested with those standards when there were reports of defects.
    Mr. Shimizu. Senator, yes, if you allow me, I will talk to 
our responsible engineers, and then I will get back to the 
Committee as soon as possible. Is this acceptable?
    Senator Blumenthal. Thank you.
    And let me just conclude. I hope that your companies will 
join in supporting the legislation that I have introduced, 
sunshine-in-litigation legislation, that would prevent these 
kinds of settlements that contributed to the problem. The 
courts ought not to be complicit. And I hope that your 
companies will cooperate and join in supporting this kind of 
legislation.
    Thank you.
    Thank you, Mr. Chairman.
    Senator Nelson. Thank you.
    Senator McCaskill?
    Senator McCaskill. Thank you.
    Mr. Shimizu, is your company the only company that uses 
ammonium nitrate that manufactures airbags?
    Mr. Shimizu. Senator, I don't know in detail what kind of 
materials exactly our competitors are using, but I heard that 
some of our competitors are also using a similar kind of 
material.
    Senator McCaskill. Well, the information we have is there 
are four or five companies that make airbags and that your 
company is the only one that is using ammonium nitrate.
    Let me ask you this question. Are you still using ammonium 
nitrate in the manufacture of your airbags?
    Mr. Shimizu. Yes, Senator.
    Senator McCaskill. OK. Well, that is worrisome to me.
    And let me now move to Chrysler and Honda. I am confused, 
and I guarantee if I am confused your customers are confused.
    The letter that Chrysler sent to NHTSA on June 20, 2014--I 
would like these three letters to be made part of the record, 
Mr. Chairman, if we could.
    Senator Nelson. Without objection.
    [The information referred to follows:]

                              Chrysler--Chrylsler Group LLC
                                    Auburn Hills, MI, June 20, 2014

Mr. Frank Borris,
Director, Office of Defect Investigation,
National Highway Traffic Safety Administration,
Washington, DC.

Dear Mr. Borris:

    This letter is Chrysler's response to your request that Chrysler 
consider a regional field action to address a risk of airbag inflator 
failures that was described in a letter from Takata Holdings Inc. to 
the Office of Defect Investigations (ODI), dated June 11, 2104, and 
that was discussed in a conference call with several manufacturers, 
including Chrysler, on June 13, 2014.
    Although Chrysler has not at this time, made a determination of a 
defect in the subject airbag inflators, it is Chrysler's intention to 
conduct a field action to replace the driver airbag inflators built 
between January 1, 2004 and June 30, 2007, as well as the passenger 
airbag inflators built between June 1, 2000 and July 31, 2004 in the 
Chrysler vehicles located in the regions identified by Takata (Florida, 
Hawaii, Puerto Rico and U.S. Virgin Islands).
    Chrysler is currently working with Takata to identify the serial 
numbers for the suspect inflators. This information will be used to 
establish the potentially affected vehicles in the regions identified 
by Takata. Once this affected vehicle population is identified, 
Chrysler will provide the information to the National Highway Traffic 
Safety Administration (NHTSA).
    As of this date, Chrysler is aware of only a single incident in a 
Chrysler vehicle involving the suspect inflators.
            Sincerely,
                                           Reginald Modlin,
                                      Regulatory Affairs--Director.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Senator McCaskill. Listen to this paragraph.
    ``Although Chrysler has not at this time made a 
determination of a defect in the subject airbag inflators, it 
is Chrysler's intention to conduct a field action to replace 
the driver airbag inflators between June'' . . . ``as well as 
the passenger airbag inflators between'' . . .
    So I am guessing a lawyer wrote that paragraph, because 
then I have a letter from Honda that says, ``We have determined 
a potential defect relating to motor vehicle safety exists.'' 
That was written in 2008.
    And then we have another letter from Honda in 2014 saying, 
``We have decided to conduct a safety improvement campaign. We 
have not made a determination that a safety defect exists.''
    Then you go down the list of the notifications, and I am 
going to start in June 2014. We have a service campaign, then a 
service campaign, then a Honda safety recall, and then a Mazda 
service campaign, and then a Mitsubishi service campaign, then 
a Nissan safety recall, then a Nissan service campaign, then a 
Nissan safety recall. Then we have a Subaru safety recall. Then 
we have a Subaru service campaign.
    Do you understand the issue here? What is going on here is 
a refusal to characterize a problem in a way that is clearly 
understandable to the consumer.
    We have had more recalls in the last year and a half in 
American car manufacturing than in the history of American car 
manufacturing, probably more in the last year than we have had 
in many, many years combined. The problem is I don't think that 
people that are driving these cars understand the risk. Because 
you guys aren't even comfortable with being consistent as to 
whether or not you are telling NHTSA it is a service campaign 
or a safety recall.
    In your mind, Mr. Kunselman, other than avoiding litigation 
and liability, why would you differentiate between a service 
call and a safety recall?
    Mr. Kunselman. Yes, Senator. I would like to start by 
saying it is Chrysler's policy that, regardless of which way 
these actions are initiated or how they are characterized, 
recall or field service campaign, the customer-facing 
information is identical. We file the same information with 
NHTSA, and the mailings that go to our customers are the same.
    Senator McCaskill. So do the mailings say that this is a 
safety recall and you are in danger and you need to get this 
car in? Or does it say, this is a notice that this part has 
been recalled, without any emphasis on safety?
    Mr. Kunselman. It is my understanding that it does 
characterize it as a safety concern, yes.
    Senator McCaskill. Well, I would like to see, for all of 
those ones that involve your companies, all the service 
campaign versus safety recall, I would like to see the notices 
that went to your drivers. I would like to see the language of 
those.
    And if, in fact, the language is the same that goes to the 
drivers, why is the language different to NHTSA?
    Mr. Kunselman. I guess the characterization, in terms of 
how we characterize these events--again, Chrysler is agreeing 
to do this with one incident and a lack of understanding of 
root cause.
    I know this will sound like engineering terminology, but 
the thing that is still open in this instance with these beta 
inflators is an absence of a defined root cause. In absence of 
a defined root cause, it makes the next steps difficult in 
terms of what to do.
    I think this is a nuance of definition as to why you see 
these characterized this way.
    Senator McCaskill. And, Mr. Schostek, do you say the same? 
Is the reason that there is a difference in characterization to 
NHTSA--is your notification to your drivers identical as to 
whether or not it is a service campaign or a safety recall?
    Mr. Schostek. Yes, Senator, I think there is confusion here 
and the regulatory framework that we are operating under has 
certain terms that are part of that regulatory framework that 
we are using.
    I am not an engineer. I have asked the very same question 
you have asked: What is the practical difference for the 
customer? And I have been told: None. They need to bring their 
car in.
    Now, in terms of how we are looking for evidence of risk 
and so forth, that should be the manufacturers' responsibility, 
working with suppliers and working with NHTSA.
    But, Senator, I would support, if we could make this 
clearer for consumers, Honda is happy to work with----
    Senator McCaskill. Are you sending the same notification to 
your drivers whether or not it is a safety recall or whether or 
not it is a service campaign?
    Mr. Schostek. Senator, I would like to double check, but I 
believe they are very similar notifications whether it is a 
service campaign or a safety recall.
    [Mr. Schostek submitted the following letter on December 
1:]

                           Honda--Honda North America, Inc.
                                   Washington, DC, December 1, 2014
Hon. Claire McCaskill,
United States Senate,
Washington, DC.

Dear Senator McCaskill:

    I want to follow up on our discussion about the letters consumers 
receive when Honda conducts a safety recall versus those related to a 
safety improvement campaign. You asked me whether the letters customers 
receive from Honda are identical. To answer that question, please see 
the attached letters to the National Highway Traffic Safety 
Administration (NHTSA), both dated June 19, 2014.
    At that time, Honda had identified a potential safety defect in 
passenger airbag inflators of certain 2002 and 2003 Honda and Acura 
vehicles. We initiated a safety recall based on that determination. 
Included in our communication to NHTSA was a draft letter to consumers 
that stated the nature of the problem as follows: ``If an affected 
airbag deploys, the increased internal pressure may cause the inflator 
to rupture. Metal fragments could be propelled upward toward the 
windshield, or downward toward the front passenger's foot well, 
potentially causing injury to a vehicle occupant.'' The letter then 
directed vehicle owners to schedule an appointment with a dealership to 
have their vehicle repaired, at no cost to them.
    On that same day, at the request of NHTSA, Honda also initiated a 
safety improvement campaign (SIC) for the passenger's airbag inflator 
in certain 2003, 2004, and 2005 Honda and Acura vehicles. Although the 
transmittal letter to NHTSA distinguished the SIC from a recall, our 
proposed letter to customers identified the action as a safety recall. 
Honda described the problem as follows: ``If an affected airbag 
deploys, the increased internal pressure may cause the inflator to 
rupture. Metal fragments could be propelled upward through the 
windshield, or downward toward the front passenger's foot well, 
potentially causing injury to a vehicle occupant.'' Consumers also 
received the same instructions to take their vehicle to a dealership 
for repair at no cost to them.
    I want you to know that Honda is committed to addressing the needs 
and concerns of our customers, especially when it involves a safety 
defect recall. Please feel free to call Ed Cohen or me at 202-661-4400 
with any further questions you may have.
            Sincerely,
                                             Rick Schostek,
                                          Executive Vice President,
                                                   Honda North America.
                                 ______
                                 
                                 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                               
                                                                  
    Mr. Schostek. Our interest is to tell that customer to 
please call, please come to a dealership, please get the part 
replaced, whether that replacement is for the purpose of an 
identified defect, which is the recall, or the purpose of 
getting more information, which is the safety improvement 
campaign. I think we should help the consumer by not having it 
be so unclear to them.
    Senator McCaskill. Well, I will tell you what. If I get a 
letter saying, ``We are investigating something; would you 
bring your car in so you can help us?'', I am busy. If I get a 
letter that says, ``Hey, you know, if you drive this, you could 
have a piece of shrapnel embedded in your eye, if your daughter 
is sitting in the seat next to you she could be blinded or you 
could die,'' that is a lot different than, ``Hey, we are 
checking out an investigation; could you bring it in so we 
could check it out?''
    I mean, I think that too many lawyers are--I mean, we found 
this in GM, as you all know. You had to have followed it 
closely. There were lawyers that were trying to avoid 
litigation. There were not lawyers that were trying to make 
sure every consumer knew the danger.
    And we have to get out of this defensive crouch about 
liability litigation and get into an offensive position about 
making sure drivers are safe. And until your companies decide 
to do that, until NHTSA is a more able and aggressive partner 
in that, consumers are going to be in the dark.
    I mean, the exchange between Senator Heller about whether 
or not his daughter was safe was incredible. He is a United 
States Senator, and he is asking somebody in charge of the 
company that made his daughter's car whether it is safe for her 
to drive it, and it was clear you weren't sure how to answer 
it. That is a problem. We have a problem.
    So we are going to keep having these hearings, and we are 
going to keep working on legislation, and we are going to keep 
yelling at NHTSA until we get this right for the driving 
public. This is unacceptable.
    Thank you.
    Thank you, Mr. Chairman.
    Senator Nelson. Thank you, Senator.
    Senator Cantwell?

               STATEMENT OF HON. MARIA CANTWELL, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Cantwell. Thank you, Mr. Chairman.
    And I would like to follow up on a couple of points that my 
colleagues have made. And I share their frustration and angst 
over this situation when there is such a pause or it is, ``We 
are just doing what NHTSA says.'' I think today's hearing is a 
very good opportunity for us to discuss what are the changes to 
be made. Not what NHTSA requires today, but now that we are 
here, what do we need to improve the situation.
    But first I want to follow up on this airbag recall 
situation as it relates to the passenger side. So I wanted to 
ask you, Mr. Shimizu, would you be able to meet demand if it 
was for all the passenger-side airbags? Would you be able to 
meet that demand? Or do we need the Secretary to help in 
expediting this with other manufacturers?
    So I heard Mr. Schostek say, well, if that is--you know, to 
Mr. Blumenthal's question, there was a little bit of--I read 
hesitancy into that, ``Well, we will see what NHTSA says.'' So 
I am asking you now, can you meet that demand on the passenger-
side bags? If not, let's get to the bottom line here.
    Mr. Shimizu. We committed to provide for replacement kits, 
which is in the beginning of this recall of the passenger-side 
airbag. Currently, we are producing 300,000 kits per month in 
total.
    And we understand we have to speed up preparing for 
replacement kits, so we will add two more lines in January. And 
that we also committed in the beginning, and we are going to do 
as committed, and the supply ability of replacement parts to 
increase to 450,000 kits.
    And, also, we do some effort--so we have four inflator 
plants globally and then the plant in Mexico, which is mainly 
producing the inflator for replacement, but they are running at 
full capacity right now. We found out the German plant has some 
extra capacity, so we decided to move some of the products from 
Mexico to Germany to open up the capacity in Mexico so Mexico 
can open up some capacity to generate more inflators for 
replacement kits.
    Senator Cantwell. So you are saying you have capacity. Is 
that what you are saying? You have capacity and the secretary 
doesn't need to take action?
    It shouldn't be a mystery here. We should be clear whether 
we need more capacity by other suppliers or not.
    Mr. Shimizu. We understand we have to speed up the 
replacement kits. Even if we increase to 450,000, that is maybe 
still not speedy enough. So we are discussing with automakers 
for any other option we can take to speed up the replacement.
    And answering to your questions, I am not sure what kind of 
things----
    Senator Cantwell. Well, maybe I will ask the other two.
    Mr. Schostek, do you think that we need to have the 
Secretary take action, yes or no?
    Mr. Schostek. At the present time, we have enough supply 
for the demand, but the demand could change based on future 
actions. So I am not in a position to judge Takata's ultimate 
capacity here. For us, all options should be on the table to 
get parts replaced in customer vehicles.
    Senator Cantwell. OK. I have about a minute left, and I 
want to get to another point, but I am going to follow up on 
this with each of you and with the Secretary.
    But why are we not here today discussing why not make 
manufacturers responsible for 100 percent recall success?
    The gaps that I see--I mean, first of all, I don't see an 
e-mail system here, I don't see an AMBER Alert, and yet we have 
people who are dying. And we are hiding behind, ``Well, we had 
an agreement, and we did a settlement,'' and then in the 
settlement nobody really knew what was going on.
    My understanding is Germany has more like 100 percent 
recall success. We have a gap here with people who are second 
purchasers not knowing, because you are communicating with 
first, is my understanding, first buyers.
    So why not just say that you are responsible for getting 
100 percent recalled? The cars are yours. They are out there in 
the public. There are lots of tools we can use. But why not set 
a better goal than what we have?
    Mr. Schostek. One hundred percent would be what we would 
want to achieve, too. And that is what we are trying to achieve 
right now. We are trying different methods. We haven't got 100 
percent. And especially in older vehicle populations, we have 
been unable to achieve 100 percent.
    I don't know the average recall completion rate. I believe, 
but I would want to check further, I believe it is about 60, 
70, 80 percent. To me, that is not good enough.
    Senator Cantwell. And my understanding is that Germany is 
getting, like, 100 percent.
    Mr. Schostek. Right. And I would just submit, Senator, in 
my full written opening statement, we talk about that. Germany, 
to my understanding, has a process whereby, before a car can 
get registered, it needs to be checked if there are any 
outstanding recalls, similar to in some states in the United 
States where an emissions certificate precedes registration.
    Please don't misunderstand. Honda is going to use any new 
tools or any innovative tools to find customers and get these 
recalls done. That is what we want to have happen. But there 
could be some support on the state level, where these programs 
are implemented for recommendations such as that.
    Senator Cantwell. I think the more the manufacturers can 
talk about not what NHTSA does and requires today but what you 
would like to see, the better that will be.
    Thank you, Mr. Chairman.
    Senator Nelson. Senator Rubio?

                STATEMENT OF HON. MARCO RUBIO, 
                   U.S. SENATOR FROM FLORIDA

    Senator Rubio. Thank you, Mr. Chairman.
    This question is to all three of the companies involved. 
Can you guarantee us here today that no one driving one of 
these vehicles outside of the territories currently covered--
Florida, Hawaii, Puerto Rico, the U.S. Virgin Islands, the 
places with high humidity--if you were driving one of these 
vehicles with one of these devices in it outside of those 
territories, can you guarantee us that no one will be injured 
by this device in the way we have seen in other places?
    Mr. Shimizu. Maybe I will start.
    As I mentioned in the opening statement, all issues from 
the past incidents or problems are already addressed and taken 
care of. And according to my understanding, I believe that the 
products we are producing right now, including replacement 
kits, are produced under well-controlled production processes 
and should work as designed and are safe.
    And regarding a regional recall, you mentioned over the 
four states for the high absolute humidity area, according to 
our record, these areas are the focus due to the high absolute 
humidity environment----
    Senator Rubio. No, I understand. I am sorry, I don't mean 
to cut you off. I have limited time.
    My question is pretty straightforward, though. If you 
bought a car and you have one of these cars with this device in 
it and you have spent the entire time in North Dakota or South 
Dakota or Wisconsin, not one of these places, can you tell us 
here today that you are confident that no one will be injured 
in the way we saw, for example, in Florida?
    Mr. Shimizu. If it is not currently under recall, covered 
by recall, I believe our products in the car works as designed 
and are safe, as I said before.
    Senator Rubio. OK. So we are never going to read about a 
story of someone outside of these areas covered by the recall 
that has been injured in the same way that we saw, for example, 
in Florida. Is that your testimony?
    Mr. Shimizu. According to my knowledge, again, I believe 
these vehicles are considered to be safe.
    Senator Rubio. OK.
    What about, then, did the other companies have a----
    Mr. Schostek. Senator Rubio, we have recalls outstanding 
that are connected to Takata manufacturing issues. We did these 
recalls 2008 through 2011. They had no geographic limit. Those 
are uncompleted recalls, and I was just discussing with Senator 
Cantwell our struggles to get those completed.
    Those customers, we want them to come in. There is risk 
there. We want those customers to come in. We want to get to 
100 percent----
    Senator Rubio. My question is people that are not covered 
by the recall for various reasons--where they purchased the 
car, et cetera. You are talking about the recalls that had 
nothing to do with geographic limits.
    Mr. Schostek. Yes, sir.
    Senator Rubio. I am talking about the ones that do, the 
ones that--maybe that is not specific to your company.
    If your car is not currently covered under the existing 
recall, you have nothing to worry about?
    Mr. Schostek. We have identified higher risk, sir, in the 
humid areas. And that is what we are still working on right 
now, to gather more information about those vehicles, both 
there and in non-humid states.
    Senator Rubio. Yes?
    Mr. Kunselman. Senator, in my opening statement, I 
characterized this situation as an ongoing investigation. And 
at least once during the testimony I reiterated that, in the 
absence of a defined root cause for the beta population of 
vehicles, I think we would find it difficult to guarantee 100 
percent as to the risk outside of the geographic regions 
identified.
    I believe the test data and the incidents confirm those 
areas are of high risk and of utmost important to deal with 
those first. But with the open status of the root cause, I 
could not affirm your question.
    Senator Rubio. To the best of your knowledge, with the 
minute that I have left, to the best of your knowledge, did any 
of your companies at any time calculate that the costs of 
conducting a recall outweighed the benefits of alerting 
consumers and therefore decided not to move forward with some 
of this earlier in the process?
    In essence, was there ever a time here where a calculation 
was made that it would cost so much financially to deal with 
this that we are better off not doing anything about it because 
the safety risks don't justify it? Did that calculation ever 
happen at any of the three companies?
    Mr. Kunselman. I can confidently say that that is not the 
case at Chrysler.
    Mr. Schostek. To the best of my knowledge, no, sir.
    Mr. Shimizu. Is not the case.
    Senator Rubio. OK.
    My last question: If I am driving one of these cars now and 
I don't live in one of the states covered or areas or products 
covered by the recall because of where they are geographically 
located, what should I do? Just go on about my life and not 
worry about it?
    Mr. Schostek. Sir, we have communicated to our dealers that 
if our customer has a concern, has a worry about driving a 
vehicle in one of----
    Senator Rubio. My question is, should they have a worry?
    Mr. Schostek. We----
    Senator Rubio. If you are not covered currently by the 
recall but you are driving one of these cars, should you have a 
worry?
    Mr. Schostek. Again, we see the risk much higher in the 
humid states. And it is open as to what is the cause. That is 
what all of us are trying to get to right now, with regard to 
this regional SIC.
    Mr. Kunselman. Senator Rubio, I would say that for the 
Chrysler vehicles not covered by the recall, I would drive them 
myself.
    Senator Nelson. Senator Rubio, they see the risk much 
higher in the humid states, but Associated Press reported on 
November 17 that Honda had quietly decided to replace impacted 
Takata airbags nationwide rather than just in hot and humid 
states. And they also indicated in those reports that Honda had 
no intention of actually notifying customers in other states 
about the remedy. Instead, as stated, they would have to go to 
their dealer.
    So, Mr. Schostek, why did Honda believe it was appropriate 
to provide a remedy but not tell anybody?
    Mr. Schostek. And, Chairman Nelson, this is not a secret or 
a quiet policy. It is on the NHTSA website, and it is there 
because we put it there.
    This was a communication to our dealers. Our dealers are 
asking the same kind of questions that Senator Rubio had. And 
we want to deal with our customers' needs in the non-humid 
areas on an individual basis. If we find a customer that has a 
concern, we are asking our dealers to take care of that 
customer and replace that airbag, understanding that we believe 
the repairs are more priority in the humid areas, but we have 
an approach to our customers that we want to provide customer 
service.
    It is not secret. We didn't mean it to be quiet. We wanted 
to tell our dealers, if a customer comes in with a concern, 
please respond to that concern.
    Senator Nelson. So a dealer in Senator Thune's state of 
South Dakota or Senator Markey's state or Senator Klobuchar's 
state--but we are a mobile society, and there are people in 
Massachusetts and Minnesota and South Dakota that drive south 
and come to Florida during all times of the year.
    Senator Thune. Especially in January.
    Senator Nelson. Especially January, but when the kids are 
out of school, they come also in the heat of the summer to 
Disney World.
    Now, isn't something missing here?
    Mr. Schostek. We are trying to understand the reasons for 
the inflator ruptures, and we are collecting inflators from 
vehicles that have been in those humid states or ever been 
registered in those humid states or spent time in those states. 
We are doing our best to collect that information, sir.
    Senator Nelson. Mr. Shimizu, this morning's New York Times 
says, quote, ``Two former Takata engineers said they and other 
employees had concerns over switching to a risky compound.'' 
They are talking about the ammonium nitrate from the previous 
compound.
    Quote, ``It is a basic design flaw that predisposes this 
propellant to break apart and therefore risk catastrophic 
failure in an inflator,'' said Mark Lillie, a former senior 
engineer with Takata at its propellant plant in Moses Lake, 
Washington. Mr. Lillie recently shared his concerns with our 
Senate staff members.
    Quote, ``It was a question that came up: Ammonium nitrate 
propellant, won't that blow up?'', said Michael Britton, a 
chemical engineer who worked with Mr. Lilly at the Moses Lake 
plant. The answer was, ``Not if it stays in the right phase.''
    All right. Now, in addition, the media reported various 
problems at the Takata plant in 2001 and secret airbag tests in 
2004.
    So why didn't Takata take action on any of these kinds of 
concerns regarding the use of ammonium nitrate?
    Mr. Shimizu. Senator, let me briefly explain about the 
material called ammonium nitrate.
    Senator Nelson. Please.
    Mr. Shimizu. Ammonium nitrate, as I said at the beginning, 
there are several advantage to using it, and then it has 
benefit to the users also, because of its chemical properties. 
But it is sensitive to moisture, as is well known, and if the 
moisture is not well controlled during manufacturing the 
propellant or assembling the inflator, maybe the performance--
they don't perform as designed, because that may influence the 
combustion characteristics. And that is well known in the 
industry.
    But talking about phase stability, according to my 
knowledge, the ammonium nitrate stays stable during the process 
or manufacturing processes. So, in my understanding, in other 
words, if we produce the propellant and inflator under the 
controlled, especially moisture-controlled, environment, it 
will be stable and safe.
    And, of course, there are some errors that have happened 
during processing. On some occasions, we have had some failure 
modes appear, and so we did recalls in the past.
    Senator Nelson. Mr. Shimizu, I did not interrupt you. I 
wanted to give you every opportunity to answer the question. 
That doesn't answer the question.
    If, in fact, you knew about it as far back as 2001 and 
Takata was doing secret airbag tests with ammonium nitrate in 
2004 and you have your own engineers, as quoted in today's New 
York Times, saying what they said, that ammonium nitrate was 
the problem, then--Senators, any further questions in a second 
round?
    Senator Markey. May I ask one question?
    Senator Nelson. Please.
    Senator Markey. Thank you, Mr. Chairman.
    Mr. Schostek, until 2 days ago, most of the recent actions 
taken related to defective driver-side airbags were limited to 
so-called humid states. But three of the four deaths that were 
caused by exploding Takata airbags in Honda's cars occurred in 
Oklahoma, Virginia, and California, not the humid states that 
this recall applied to. As the Chairman was just referring to, 
South Dakota or Minnesota or Massachusetts could have been in 
that category.
    When my staff asked NHTSA about these deaths, they were 
told that the vehicles involved had been recalled for a 
different Takata airbag manufacturing problem years ago but 
that they had not been repaired.
    There is just one problem with the explanation. When my 
staff put the vehicle ID number of two cars involved in 2013 
and 2014 fatalities through Honda's recall data base, the 
database says that these cars' airbags were repaired sometime 
after 2011.
    Either, one, your recall database is wrong, or, two, the 
defective airbag was replaced with another defective airbag, 
or, three, the driver received a brand-new airbag sometime 
after 2011 and the airbag still killed someone just a few years 
later.
    So, Mr. Schostek, which of those three options is it?
    Mr. Schostek. Senator Markey, I believe it is option one, 
that our website has deficiencies. When we have multiple 
recalls that involve the same vehicle, our system was bringing 
up a message of ``recall completed'' for the ones that were 
superceded, if you will.
    It is our problem, sir; it is being fixed. We are due to 
report to NHTSA tomorrow about that. It is an embarrassing 
problem, in this day and age, that we have that technology 
problem on our website.
    Senator Markey. All right. So this goes back to Senator 
Heller's question, and others, about the safety of families 
driving these vehicles. So what you are telling me is that 
someone buying a used Honda today could look up the car they 
want to buy on your recall data base, be told that a repair 
needed to fix a fatal safety defect was completed, even though 
it was not.
    And I think, again, that just goes to the whole question of 
whether or not the public should feel confident that they have 
a family member driving these vehicles.
    Mr. Schostek. Sir, I agree with you. That could happen 
today. I am bound and determined to check and make sure it 
can't happen tomorrow and it won't happen again.
    Senator Markey. And I will just say again, Mr. Chairman, I 
don't think it makes any sense for a passenger-side airbag 
recall not to occur. Otherwise, the passengers in these 
vehicles should just be in the backseat, because they are just 
really running a huge risk, given the fact they are the very 
same airbags that deployed and are ready to hit dangerously a 
passenger in our country.
    Thank you, Mr. Chairman.
    Senator Nelson. And, gentlemen, you need to know that I am 
going to be meeting with Secretary Foxx. I am going to request 
of him that he impose the maximum penalty allowed by law, even 
if that is a million dollars a day, on the automobile companies 
if you all are not providing a loaner or a rental car to the 
folks who potentially would be driving a deathtrap. It is as 
simple as that.
    Senators, we need to move on to the NHTSA person.
    Senator Blumenthal?
    Senator Blumenthal. Just one quick question to Mr. Shimizu.
    What is the maximum number of replacement parts that you 
will be able to provide per month?
    Mr. Shimizu. Currently, it is all provided from Mexico for 
the American market, 300,000 per month at this moment. But if 
we increase, it would be increased to 450,000 per month from 
January.
    Senator Blumenthal. 450,000 per month, that is the maximum?
    Mr. Shimizu. That is our plan right now.
    Senator Blumenthal. And one more question. What steps have 
you taken to improve the assembly of the inflator, the 
container that Senator Nelson showed you? What steps have you 
taken to make the inflator more leak-proof and water-proof, in 
other words, more resistant to water coming into it or 
humidity?
    Mr. Shimizu. A couple steps already we have taken to 
improve the problems, improve the robustness. And we are 
discussing with our carmakers--the current product, as I said, 
is safe if they came out from well-managed processes. But if 
there is a way to improve the robustness against the humidity, 
we will continue to discuss about how we can improve the 
robustness of the inflator from now.
    Senator Blumenthal. Thank you, Mr. Chairman.
    Senator Nelson. Thank you, Senator.
    OK, gentlemen. Thank you for your participation today.
    We will call up Mr. David Friedman, the Deputy 
Administrator of the National Highway Traffic Safety 
Administration, NHTSA.
    Where is Mr. Friedman?
    Welcome, Mr. Friedman. Have you heard the testimony in the 
anteroom?

             STATEMENT OF DAVID J. FRIEDMAN, DEPUTY

         ADMINISTRATOR, NATIONAL HIGHWAY TRAFFIC SAFETY

       ADMINISTRATION, U.S. DEPARTMENT OF TRANSPORTATION

    Mr. Friedman. Yes, Mr. Chairman, I have.
    Senator Nelson. OK.
    What we are going to do is forgo the statement because of 
the lateness of the hour. We are going to have our Senators, 
and you can make your points in response to the questions. I 
will defer my questions and do clean-up at the end.
    Senator Thune?
    Senator Thune. Thank you, Mr. Chairman.
    Mr. Friedman, we are here today to discuss yet another 
apparent failure within the automobile industry. These issues 
with the faulty Takata airbags are just the latest in a long 
line of high-profile recalls that have been the focus of 
multiple hearings held by this committee and the House of 
Representatives this year.
    This is a general question, but I hope you can shed some 
light on why we are seeing such a flood of automotive safety 
issues recently. Do you believe that this recent experience 
indicates a broad and systemic problem within the automobile 
industry?
    Mr. Friedman. Ranking Member, one of the reasons why I 
think we are seeing this increase in recalls is because the 
auto industry is running scared. Because the auto industry 
realizes, one, that NHTSA has been pushing them hard to 
establish a new normal when it comes to recalls, where we 
expect them to recall vehicles quickly, to notify us quickly, 
and to find the problems quickly.
    I think they are also very concerned, as they should be, 
about the actions Congress has taken to shed a light on serious 
problems in the auto industry. And I think they are also 
reacting to the media attention that has been observed. They 
are cleaning out their closets. And it is truly a shame, the 
fact that it took all of this attention for them to do so.
    I asked 12 major automakers, I called them to Washington to 
talk to them about the need for a new normal when it comes to 
recalls. No more hiding information, no more hiding behind 
attorney-client privilege, no more waiting until proof beyond a 
shadow of a doubt that there is a problem, no more fighting us 
when we have clear evidence of defects. They need to act much 
more quickly.
    And NHTSA needs to continue to act more aggressively and 
more quickly to keep them in line, as we have done over the 
last 6 years, with more than $160 million in fines.
    Senator Thune. In 2010, NHTSA closed its examination into 
the scope and timeliness of Honda recalls involving Takata 
driver-side airbags, citing, ``insufficient information to 
suggest that Honda failed to make timely defect decisions on 
information it was provided.''
    What was the insufficient information at issue? Knowing 
what you now know, should the agency have kept that inquiry 
open?
    Mr. Friedman. Senator, we are just beginning to look into 
the details of what happened at that time. I expect to be able 
to provide you more details on that going forward.
    My current understanding is that we understood that Takata 
had identified the batches that were involved with the 
manufacturing problems. But it has been made clear to us that 
Takata does not have good quality control and clearly does not 
have good recordkeeping, because further down the road they had 
to update their submissions in some of their recalls, 
indicating that they had not provided us with that information.
    That is one of the key reasons why we are demanding, under 
oath, that they answer and provide us all details going back to 
2000 about all of these recalls, all of the tests they have 
done on airbags. We need every bit of that information. We will 
pore through that. And if they failed to live up to the law, if 
the auto industry failed to live up to the law, we will hold 
them accountable to the full extent of the law.
    I would say, though, one of the things we would like to 
see, as is included in the GROW AMERICA Act, is a significant 
increase in our ability to hold them accountable. Right now, we 
are limited to just $35 million for any single infraction. 
Frankly, for too many of these companies, that is pocket 
change. The Secretary and the President have asked for that to 
be increased to $300 million, and if you give us that 
authority, we will use it aggressively.
    Senator Thune. So what you are saying, essentially, is not 
the insufficient information determination was made as a result 
of Takata's failure to disclose to you the information that 
could have shed additional light on this problem and that NHTSA 
closed the inquiry because it thought Takata had satisfied all 
the questions that you had.
    Mr. Friedman. Based on our understanding----
    Senator Thune. That it was a failure on their part to 
provide information.
    Mr. Friedman. We are looking into it to find that out. And 
that is why we are demanding they provide us that information 
under oath.
    Senator Thune. You haven't had a chance to look at it yet, 
but Senator Nelson and I and a few others on the Committee are 
introducing legislation today that would incentivize 
individuals who uncover serious allegations of vehicle defects 
or noncompliance with motor safety laws to blow the whistle and 
provide original information to government regulators and that, 
if that information leads to enforcement actions where more 
than a million dollars in monetary sanctions is involved, that 
that whistleblower could receive up to 30 percent of that.
    Is that a concept that you can support?
    Mr. Friedman. Senator, we welcome every bit of evidence, 
every bit of information that can help lead us to rout out any 
of these problems. I look forward to reading your legislation. 
I look forward to evaluating it.
    One of the things that I think would be crucial, in general 
but also with such a proposal, is to ensure that we have the 
resources, the people and the dollars, to follow up on those 
leads.
    We are getting this year alone over 70,000 consumer 
complaints. These are critical to us finding these problems. We 
get 6,000 reports a year from the auto industry. We need more 
people to be able to follow up on all that information.
    Senator Thune. OK. Thank you.
    Mr. Chairman, my time has expired. Thanks.
    Senator Nelson. I agree with you, Mr. Friedman. You do need 
more resources.
    And thanks to Senator Thune for being willing to push 
forward on this question on the whistleblowers.
    Senator Klobuchar?
    Senator Klobuchar. Thank you very much, Senator Nelson.
    First of all, I think you maybe heard me talk about the 
victim in our state who is permanently blinded, Shashi Chopra 
from North Oaks, Minnesota. She was driving her BMW in 2013. It 
was a 2002 model. And this is sad because this had been going 
on for so long. There is a New York Times report about secret 
tests by Takata in 2004, and now here you are in 2013.
    Mr. Friedman, according to the family, they never received 
confirmation from NHTSA that their case was being reviewed. And 
I don't know what actions, follow-up actions--because the 
family themselves filed something with NHTSA in 2013. And do 
you know if anyone ever reviewed the complaint that was filed 
by the family and what happened?
    Mr. Friedman. Senator, we are looking into this as we 
speak. I know your staff has alerted it to us just this week. 
But we put eyes on every single complaint that comes through 
NHTSA, that comes through our website, that comes through our 
hotline, that people mail in. We put eyes on all of them, and 
we follow up, and we try to piece together the information that 
that provides.
    I will look further into this to make sure that I can tell 
you exactly what happened with this.
    Senator Klobuchar. OK. And, obviously, this complaint was 
filed after it happened, but just given how these recalls have 
trickled out, it might have helped someone else. And that is 
why we are concerned.
    Then going back in time, NHTSA's call this week--now we are 
into this week--for a recall that expanded beyond the regional 
recall finally got at people in Minnesota who might be, 
actually, snowbirds. Believe it or not, some of them abandon 
our state during the winter, and so they actually spend their 
winter months in southern states.
    And their vehicles then--they drive down there, and then 
they drive back. So their vehicles are exposed for an extended 
amount of time to high humidity. And they were not included in 
the previous regional recalls, and you didn't think there was a 
need to include those types of vehicles.
    What changed?
    Mr. Friedman. Senator, if we could put up a couple of 
charts so that I can help make that clearer.
    This is a chart of the United States indicating the median 
dew point temperature, which is basically an indication of the 
total amount of water in the air. All of the initial incidents 
that occurred occurred in these regions that you see in brown 
or in Puerto Rico, which is also even more humid.
    So all the initial incidents that caused us to open this 
investigation--we started with three complaints. We acted 
rapidly based on those three complaints. We connected the dots 
that all three--there were three different car companies. All 
three had airbags from Takata. We connected those dots. We 
connected the dots, as well, that these were all in humid 
regions.
    We opened an investigation and got the auto industry to 
begin recalling vehicles in days. So we acted aggressively in 
this case, based on the information we had at the time.
    Now, because we didn't want to see anyone else hurt from 
these problems, part of what we did is we pushed the auto 
industry. We said, ``We can't wait for another one of these 
incidents. You need to get out there and work with Takata, test 
airbags that are returned, so that we can figure out, is this a 
broader problem? We can't sit here.''
    Now, as we did that, as we tried to gather that test data, 
we were also monitoring field incidents.
    If you could put up the driver-side chart.
    Initially what we were working with on the driver-side 
airbags was three incidents--sorry, five incidents, pardon me--
that were all in Florida, again, initially reinforcing the 
concept that this was a problem related to exposure to high 
temperatures and high humidity, in other words high median dew 
point temperature.
    Senator Klobuchar. I am not sure, were they all in Florida, 
or were they in the southern part of the United States?
    Mr. Friedman. So, initially, it was only these that were--
--
    Senator Klobuchar. And then it got to some southern--OK.
    Mr. Friedman. Then there was an incident in California.
    Senator Klobuchar. Right.
    Mr. Friedman. When that incident happened, we made clear to 
Honda, and Honda acted, to extend their regional recall to that 
area. At that point, that could--could--have been an outlier.
    Then, at the end of last month, we received a complaint 
from an incident in North Carolina, here. We acted quickly. We 
reached out to the consumer. We verified that it was, in fact, 
an airbag rupture. Based on that data, the pattern is now 
clearly broken for the driver-side airbags.
    Senator Klobuchar. OK.
    Mr. Friedman. So, while all the incidents initially were 
around here, now we have an incident here and here----
    Senator Klobuchar. Right.
    Mr. Friedman.--areas of much lower temperature and 
humidity.
    Senator Klobuchar. OK.
    Mr. Friedman. Based on that information, we called on 
Takata and all the automakers involved with driver-side airbags 
to recall those vehicles.
    Senator Klobuchar. OK.
    My last question is about not the humidity issue and 
expanding to the rest of the United States but the types of 
cars. And this is an issue for this family. This was a BMW car. 
And it is my understanding in 2010 they sent a letter; BMW told 
NHTSA that it was aware of the Takata airbags under Honda's 
recalls but that Takata had told them that BMW vehicles were 
not affected.
    And so, did NHTSA receive that? And did this happen with 
other manufacturers, as well, that they just based this on 
Takata's information?
    Mr. Friedman. I believe that is accurate.
    One of the things, frankly, that needs to change and that 
needs to be more effective is suppliers and automakers need to 
do a better job of sharing incidents, especially when you have 
a common supplier.
    Senator Klobuchar. Right.
    Mr. Friedman. Right now, all too often, automakers keep 
their incident data to themselves.
    Senator Klobuchar. Can they legally share that information?
    Mr. Friedman. Well, this is one of the things, when I 
called all 12 automakers to Washington, that I began discussing 
with them, is we have to figure out a way, without violating 
antitrust laws, that they can share critical safety 
information. There should be no barriers----
    Senator Klobuchar. I agree.
    Mr. Friedman.--to sharing that critical safety information.
    Senator Klobuchar. About suppliers. Yes.
    Mr. Friedman. And we also talked about suppliers. I was 
talking to them about Takata at the time because, both in the 
GM case and in the Takata case, part of the concerns here are 
communications between the auto industry and their suppliers. 
That has to get better.
    Senator Klobuchar. Got it. All right. Maybe that is 
something we can work on.
    Mr. Friedman. Absolutely.
    Senator Klobuchar. Thank you, Mr. Friedman.
    Senator Nelson. Senator Markey?
    And, by the way, of course your written testimony will be a 
permanent part of the record.
    Mr. Friedman. Thank you, Mr. Chairman.
    [The prepared statement of Mr. Friedman follows:]

Prepared Statement of David J. Friedman, Deputy Administrator, National 
       Highway Traffic Safety Administration, U.S. Department of 
                             Transportation
    Mr. Chairman and members of the Committee, thank you for the 
opportunity to testify today about Takata air bag recalls. The Takata 
air bag defects involve a series of recalls spanning back to 2008 with 
multiple causes of the serious safety issue of fragmenting air bag 
modules. Understandably, people are concerned. I share that concern, 
which is why we acted quickly this year when we received evidence of a 
new defect. I welcome the opportunity to clarify the facts surrounding 
the different recalls of these air bags and to reassure you and the 
motoring public that NHTSA is pursuing its recalls and investigation of 
defective Takata air bags aggressively.
    NHTSA's mission is safety, and we have helped reduce roadway 
fatalities to record lows by fighting dangerous behaviors such as 
impaired and distracted driving, pushing industry to make safer cars, 
and forcing recalls of approximately 100 million defective vehicles and 
items of motor vehicle equipment in the past 10 years. This year alone, 
we forced the largest child seat recall ever and fined automakers more 
than $55 million for mishandling recall requirements--bringing the 
total to over $160 million in the past six years.
    The Takata air bag recall story is more complicated than most 
recalls because, to date, there have been multiple issues leading to 
recalls involving 10 auto manufacturers and over 10 million vehicles 
since 2008. These recalls can be broken down into two categories: 
national recalls, along with their expansions, associated with 
identified manufacturing defects and the recent regional recalls--
initiated by NHTSA as soon as the problem appeared--that preliminary 
data indicate were associated with prolonged exposure of some Takata 
air bags to regions of high absolute humidity (the combination of high 
temperatures and high relative humidity), which may be related to a 
manufacturing, design, or other defect not yet identified.
    Between 2008 and 2013, Honda, along with Toyota, BMW, Nissan and 
Mazda, took action to recall defective Takata air bags with 
manufacturing problems relating to fragmenting driver's or passenger's 
side inflators rather than face NHTSA enforcement.\1\ In 2014, 
Chevrolet recalled vehicles to address a newly discovered manufacturing 
problem. These recalls were national in scope because based on our 
present knowledge, the defects occurred in the manufacturing process of 
air bags that had been installed in an identifiable pool of vehicles 
sold nationwide. The four deaths in the United States that have been 
widely reported as attributable to rupturing Takata air bags all 
involved air bags associated with the national recalls that occurred 
prior to 2014.
---------------------------------------------------------------------------
    \1\ In calendar years 2008 through 2011, Honda conducted a series 
of recalls to address a manufacturing defect concerning driver's bag 
inflator ruptures on various MY 2001 through 2004 vehicles. In calendar 
year 2013, Honda, along with Toyota, BMW, Nissan and Mazda, initiated 
recalls to address a manufacturing defect concerning passenger bag 
ruptures in certain MY 2001 through 2004 models.
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    Tragically, in at least some of those cases, the air bag in the 
vehicle was not repaired even though the recall had begun. This loss of 
life is unacceptable and that is why we continue to expand our outreach 
to vehicle consumers through information tools like the VIN look up, 
recall alert smartphone applications and red letter envelope direct 
mailings. In addition to NHTSA's work, industry must step up to more 
aggressively reach out to consumers to help them get their vehicles 
repaired to keep them safe. For example, NHTSA has been pushing both 
the automobile and child seat manufacturers to take greater steps to 
alert and even incentivize owners to bring in their defective products. 
And, as the Administration proposes in the GROW AMERICA Act, rental car 
companies and used cars dealers should not be allowed to rent or sell 
vehicles without first fixing defects.
    Given our present knowledge, the recalls cited above are different 
from the air bag defect NHTSA identified, forced regional recalls on, 
and has been investigating this year. In 2014, soon after opening our 
investigation, NHTSA demanded, and obtained, the recall of more than 
four million vehicles because of evidence that air bag inflators were 
rupturing during crashes in geographic regions that have high levels of 
absolute humidity. To our knowledge, there are zero deaths in the 
United States associated with the 2014 recalls. But our concern for the 
threat of serious injury or worse compelled us to act very quickly.
    NHTSA began looking into this issue after connecting three separate 
consumer complaints of air bag ruptures from three different 
automakers. NHTSA staff identified that these three had a common 
supplier and common climatic conditions, and reached out to the 
supplier and automakers. This helped us identify three additional 
incidents and two other affected automakers. All six crashes that led 
to the initial regional recalls occurred in Florida or Puerto Rico 
between August of 2013 and May 2014.
    NHTSA's calls for recalls in 2014 by Honda, Toyota, Nissan, Mazda, 
Mitsubishi, Subaru, Chrysler, Ford, BMW, and General Motors are based 
on real data and a clear objective to protect those at demonstrated 
risk. Because of that risk and because of their use of the same or 
similar air bag inflators, we persuaded those 10 auto manufacturers--
including some that had no field incidents--to conduct recalls on 
early, limited information to save lives and prevent injuries. Our 
additional purpose in pushing for these actions was to obtain more data 
by testing the replaced air bags to see whether they would rupture.
    At our insistence, Takata is quadrupling testing of returned air 
bags, including those outside of hot and humid regions, to assist our 
effort to determine the full scope of the problem. We have also pressed 
the auto manufacturers to conduct their own testing of returned air 
bags. In addition, we are looking very carefully at any unusual air bag 
deployment incident we find that occurs in or outside of the present 
regions to determine whether it may involve the same, a similar, or a 
different defect. Finally, we are working to bring in outside expertise 
and secure appropriate testing facilities so we can expand the volume 
of and validate testing being done by the supplier and manufacturers.
    The initial data related to the current regional recalls indicate 
that vehicles with certain Takata air bags in regions prone to long-
term, high humidity and temperatures pose a risk. At this time, we are 
evaluating evidence to determine whether or not the same can be said 
for other regions or in cases where people travel to these regions 
during periods of lower humidity. We are also evaluating the 
differences in the data between driver's and passenger's front air 
bags. Our investigation is far from over and we continue to seek and 
push for more information and we will take additional action as 
warranted.
    Based on the results of testing and on field data we continue to 
gather, NHTSA has expanded, and will continue to expand, the geographic 
scope and vehicles involved in these recalls as appropriate. In fact, 
on Monday, November 17, 2014, my staff contacted Takata, and then 
followed up with Honda, Ford, BMW, Chrysler, and Mazda, to call on them 
to initiate a national recall for specific driver's side frontal air 
bags made by Takata. This decision was based on our evaluation of a 
recent driver's side air bag failure in a Ford vehicle outside the area 
of high absolute humidity and its relationship to five previous air bag 
ruptures of the same or similar design.
    Some have called to expand the geographic area of all the vehicles 
currently subject to the regional recalls. We share a deep concern for 
those with vehicles outside the regions of high absolute humidity, 
which is why we have expanded the recalls based on the data and 
directed Takata to work with the manufacturers to get and test air bags 
from other parts of the country. To date, there have been no ruptures 
in those tests for passenger's side front air bags, but we are pushing 
Takata and the manufacturers to accelerate efforts to get even more 
tests done around the nation, and we are evaluating field incidents as 
we are made aware of them. And, given the current limitations on the 
supply of replacement parts, NHTSA called on Takata to speed up the 
production of replacement parts. In response, Takata agreed to add two 
production lines early next year. NHTSA has also been in communication 
with other air bag inflator manufacturers to assess what, if any, 
capability those companies have to fill the demand for replacement 
parts.
    The regional recalls of vehicles with defective Takata passenger 
side air bags ensure that the limited supply of replacement parts goes 
to vehicles in areas of demonstrated risk--Florida, the Gulf Coast and 
other areas of high absolute humidity. At this point, a national recall 
of all Takata air bags would divert replacement air bags from areas 
where they are clearly needed, putting lives at risk. While a national 
recall of all Takata air bags is not supported by the data as we now 
understand it, we will continue to follow the field and testing data 
wherever they may lead. Let me be clear to you, Mr. Chairman, and to 
the Committee and the American people. As we find evidence supporting 
the need to expand the regional recalls or to move to a national recall 
of all Takata air bags, we will use all of our authority as necessary 
to ensure that such a recall takes place.
    Finally, in addition to requiring these recalls, NHTSA has taken 
quick and aggressive action as needed to compel the information we need 
from industry to protect motorists. We have issued Special Orders, 
which are equivalent to subpoenas under our statute, to Takata and 
Honda to produce documents and provide answers to our questions. As our 
investigation advances, we will continue to use every tool available to 
the agency to identify the cause and scope of the malfunctioning air 
bags and protect the motoring public. And, if we find evidence of 
wrongdoing, those responsible will be held accountable to the full 
extent of the authority Congress has provided to us, including but not 
limited to maximum civil penalties and agency orders.
    Thank you again for this opportunity to testify, and I am happy to 
answer your questions.

    Senator Nelson. Senator Markey?
    Senator Markey. Thank you very much.
    Mr. Friedman, how can you justify calling for a mandatory 
nationwide recall of Takata driver-side airbags while 
continuing to allow a patchwork of voluntary and regional 
recalls for Takata's passenger-side airbags?
    Mr. Friedman. Senator, two things. First of all, these 
regional recalls are not voluntary, period. I have in my hand 
letters, the same letters that each of the car companies are 
sending to all of the affected consumers that state, 
``Important Safety Recall Notice.'' This is from Honda, who, 
frankly, I was frustrated to hear them even at times calling 
this a service campaign. This is a recall.
    They also very clearly state, ``Honda has decided''----
    Senator Markey. Can I--why are you not making the same 
recall for passenger-side airbags?
    Mr. Friedman. Senator, that is based on the data.
    If we could switch to the chart based on--yes, that test 
chart.
    Because we didn't want to be in a position of waiting for 
another rupture, we pushed the auto industry and Takata to test 
airbags, not just in the affected regions but all over the 
country.
    Senator Markey. Can I just ask you to do this? Kim Kopf is 
sitting over here. Her sister died in a passenger-side airbag 
accident. So what do you tell Kim and her family about her 
sister and everyone else's sister who is now sitting in that 
same passenger seat now in vehicles all across the country, 
given the fact that Kim has lost her sister?
    Why are the passenger-side airbags not being recalled? Her 
sister was driving a Subaru with a Takata airbag in a non-humid 
state. Why not issue that same recall order as a result for 
every passenger-side airbag as well?
    Mr. Friedman. Senator--and what I say to you: This is the 
first I have heard of your accident. Please, get us the details 
of what happened. I want to know what happened to your sister. 
It is an utter tragedy, clearly, what happened to your sister. 
If we can get information from you on exactly what happened so 
that we can determine if this was an airbag rupture outside of 
those regions, you could help other Americans potentially 
protect themselves if there is data out there.
    We will always follow the data. We will always follow the 
information. That is why we have pushed the automakers to test 
this.
    The challenge that we face, Senator, is, without 
information--the Safety Act requires us, requires us, to act 
based on information about unreasonable risk. If I have no 
information about an unreasonable risk outside those areas, 
then I am not able to force the automakers to recall outside 
those areas.
    In a situation, especially with a----
    Senator Markey. Look, you know, honestly----
    Mr. Friedman.--limited airbag supply----
    Senator Markey. Can I just say this? Her----
    Mr. Friedman.--what you are potentially doing, Senator, if 
I did a national recall without the data----
    Senator Markey. Her sister----
    Mr. Friedman.--is putting someone's life at risk in 
Florida.
    Senator Markey. Her sister was in Arizona, okay? It goes up 
to 110, 120 degrees in Arizona in the summer. That car can be 
driven over to southern California or driven over to Texas. It 
could be driven to Florida. You don't know what any of these 
family members are going to be doing. It could be a used car 
that is sold and just taken to another state.
    I mean, it just seems to me that you, as the agency chief, 
should err on the side of safety, knowing that these vehicles 
move from state to state. As the chairman said, people are 
going to Florida from pretty much every state in order to 
escape the cold in the winter or to visit Disney World. And we 
know that. And once they hit those conditions, an accident 
could happen.
    And so why don't we just recognize the mobile nature of our 
society, the danger that each person runs?
    And, by the way, I don't accept the fact that there is no 
risk in really warm weather in Arizona or other states, because 
we have other states here that are outside the humid area that 
have had these incidents.
    So I just don't know why you don't say to all these 
families who have already lost people that the least that is 
going to happen is that no other family members of any other 
family in America is going to suffer the same fate.
    Mr. Friedman. Senator, that is my solemn goal in doing all 
of our efforts, is to put safety first. If we have evidence 
that indicates this should be a national recall, we will do 
that. Right now----
    Senator Markey. OK, but----
    Mr. Friedman.--the challenge, Senator, is, what you are 
asking me to do, without information, is to put someone's life 
at risk in Florida based on a lack of information elsewhere in 
a situation where airbag supplies are limited. We are pushing 
Takata incredibly hard to----
    Senator Markey. I just, honestly----
    Mr. Friedman.--get more airbags produced.
    Senator Markey. You heard Takata today. Takata is not even 
saying they support your recall right now.
    Mr. Friedman. It is ridiculous. It is frustrating. It is 
unacceptable.
    Senator Markey. How can you trust a company, Mr. Friedman, 
who, in answer to my question today about whether or not they 
support your nationwide recall for driver's side, says they 
cannot give an affirmative answer to that? That is a 
frightening answer from a company who is responsible for 
ensuring that all information about the danger of these airbags 
is made public.
    You should just err on the side of safety, Mr. Friedman.
    Mr. Friedman. Senator, we----
    Senator Markey. And, finally, if I can, Toyota believes 
that its passenger-side airbags being driven in some humid 
states are so dangerous that it told dealers to disable them 
and warned passengers not to sit in the passenger seats.
    Do you think Toyota was right to warn its dealers and 
vehicle owners in that manner?
    Mr. Friedman. Senator, first, to address one of the 
previous issues of people in and out of states, first of all, 
let me be clear. The data indicates that the median time to 
failure for these airbags is 10 years. If you are coming in and 
out of these states or you are in them for only a short period 
of time, the data does not indicate that you are facing the 
same risk as someone who lives there.
    Further, if you look at the information----
    Senator Markey. Answer the Toyota question before my time 
runs out.
    Mr. Friedman. Senator, you can drive a vehicle without 
someone in the passenger seat, but even if you drive a vehicle 
without someone in the passenger seat, if that airbag ruptures, 
that driver is in danger. Therefore, disabling an airbag and 
putting a label on that vehicle saying ``Do not put anyone in 
this passenger seat'' is a way to protect the driver from a 
dangerous airbag.
    Senator Markey. So you approved Toyota's plan to do that?
    Mr. Friedman. Senator, it is not a question of approval. 
These are defective parts, and, therefore, they are broken 
parts.
    Senator Markey. OK. Well, if you did approve that plan, 
then why didn't you tell other manufacturers with passenger-
side Takata airbags to issue the same warning?
    Mr. Friedman. Senator, as I said, we did not approve this 
one way or another. These are broken parts, and manufacturers 
are allowed to disconnect broken parts.
    Senator Markey. Here is the letter that came from NHTSA to 
Toyota. This letter serves to acknowledge Toyota Motor 
Engineering and Manufacturing--it is a notification from the 
National Highway Traffic Safety Administration of a safety 
recall which will be conducted pursuant to Federal law for the 
products listed below. And the product that we are referring to 
is the airbag that is in discussion.
    And it says in your letter that, as an interim measure, the 
dealer will disable the front passenger airbag and advise the 
customer not to use the front passenger seat until a 
replacement inflator is installed.
    So that is your letter to Toyota.
    Mr. Friedman. That is accurate, Senator. That is our letter 
acknowledging----
    Senator Markey. So, again, if that is the case, then why 
not have a similar letter go from every other manufacturer to 
warn people of a potential passenger-side airbag catastrophe?
    Mr. Friedman. Senator, I believe there may be some 
confusion in the process here. We do not approve remedies. What 
that letter is is called a ``recall acknowledgment letter.'' 
That is us acknowledging to them what they told us. That is our 
way of holding them to the decisions that they have made. It is 
not our letter telling them what to do. It is simply us 
acknowledging their steps.
    Senator Markey. You know, it just kind of says to me that 
you are seeing yourself as some detached processor of a 
decision made by a manufacturer of vehicles, Toyota, that has 
tremendous implications for every other vehicle that has the 
same kind of Takata airbag, that a catastrophic consequence is 
possible.
    And I don't understand how you can process something like 
this, agree with it essentially, hold the manufacturer to the 
implementation of it, and not simultaneously be saying, this is 
the warning bell going off, that if Toyota believes that this 
is so dangerous, that the other manufacturers, as well, should 
have the same responsibility to make sure that those airbags 
are recalled.
    So I just say to you, Mr. Friedman, that, from my 
perspective, there is a higher responsibility that, as an 
agency, we have to call you to.
    And I thank you, Mr. Chairman.
    Senator Nelson. And you will acknowledge, because you heard 
the testimony today, that each of these automobile 
manufacturers are handling the recalls in a different way, 
which is all the more adding confusion. You heard Chrysler say 
they are not going to start until the middle of December. And 
you have to have concerns about whether these automakers are 
responding appropriately.
    Mr. Friedman. I have serious concerns. We have actually had 
to push Chrysler before in previous cases to accelerate the 
production of parts, to get notices out to consumers.
    After hearing what they said, I don't accept that there is 
any reason why they should wait to notify consumers about these 
recalls until they have the parts. Consumers need to know there 
is a risk in Chrysler vehicles because of these airbags. 
Consumers need to be aware of that risk.
    Senator Nelson. Do you have under law the ability to fine 
them if they don't respond quickly to replace these defective 
airbags?
    Mr. Friedman. We have authority under law to require an 
accelerated remedy. And if we determine that they have tools 
that they could be putting into place to provide a remedy more 
quickly than they currently are, yes, we can require them to 
act.
    We are currently in the process of trying to ask and 
determine that exact question. We have already pushed Takata to 
increase their production from about 300,000 units a month to 
about 500,000 units a month.
    Senator Nelson. Do you have the legal authority to fine 
them on a daily basis if, in fact, they are not replacing the 
airbags?
    Mr. Friedman. If we find that they could be doing more and 
they are failing to do so, absolutely. We can order them to 
accelerate the remedy, and if they don't do it, we can fine 
them.
    Senator Nelson. OK. Well, if somebody is driving around in 
a lethal deathtrap, isn't that enough evidence, without getting 
their airbag replaced, that you ought to start sticking it to 
the manufacturers with a severe financial penalty?
    Mr. Friedman. Senator, my understanding of the Safety Act 
is that it requires us to--before we can do that, that it 
requires us to be able to demonstrate that they could be doing 
more than they are.
    So we started from the beginning, digging in, trying to 
understand. We are contacting other suppliers and trying to get 
them to be able to step up to supply more airbags to these car 
companies.
    Senator Nelson. I don't want to beat up on you, but if you 
could meet Corey Burdick from central Florida, the father of 
two little boys, a firefighter, who now has no ability because 
he does not have an eye as a result of a piece of this shrapnel 
coming in his eye, then it would seem to me that that would 
give you the legal authority to whack it to these people to 
replace those defective airbags.
    Senator Blumenthal?
    Mr. Friedman. Senator----
    Senator Blumenthal. Thank you.
    Mr. Friedman, thanks for being here today. I take your 
comments about going after the automobile manufacturers and 
pushing them. I want to ask you about your responsibility.
    You have heard the head of Takata say today the maximum 
they can commit to produce are 300,000 replacement parts a 
month. Their hope, their hope, is to go to 450,000. They are 
unwilling to commit to anything more than 300,000 replacement 
parts a month, which means it will take 3 years. And even if 
they meet the 450,000 goal, the hope, it will take more than 2 
years.
    Isn't that unacceptable?
    Mr. Friedman. Absolutely unacceptable.
    Senator Blumenthal. And so will you commit to use the power 
that you have under the Motor Vehicle Safety Act--it is section 
30120(c)(iii), as you know--to order that the car manufacturers 
use replacement parts from other makers of airbags?
    Mr. Friedman. Senator, we will use all of our authority to 
the full extent----
    Senator Blumenthal. I don't want a vague answer.
    Mr. Friedman. Senator----
    Senator Blumenthal. I want, really, a ``yes'' or ``no'' 
answer, because this is a pretty clear question. I know that 
you will use all of your authority to do the right thing in the 
public interest.
    I want to know that you will recommend to the Secretary of 
Transportation that you will order the automobile manufacturers 
to use replacement parts, even if it means Takata sharing 
proprietary information with them, so that Americans are kept 
safe on the roads for the next 2 to 3 years.
    Mr. Friedman. Senator, if I can determine that that can be 
done safely, absolutely, I will. Absolutely. I have to----
    Senator Blumenthal. How long will it take you to make that 
determination?
    Mr. Friedman. We are in contact with two different airbag 
suppliers. We are asking them what their capacity is, what 
their compatibility is. There may need to be tests involved to 
ensure, because each airbag is tuned for each car, that they 
will be safe.
    We are hiring an expert in propellants in airbags--we are 
seeing a contract with an expert in propellants in airbags. We 
need to get all of these people involved in making sure----
    Senator Blumenthal. Well, I understand, you know, your 
testimony says that you have been in communication with other 
airbag inflator manufacturers to assess what, if any, 
capability those companies have to fill the demand for 
replacement parts.
    You have the power to order them to break exclusivity 
agreements, to share proprietary information. I want to know by 
when you will finish that determination.
    Mr. Friedman. Senator, I will finish that as soon as we can 
determine if that is safe. I have to put the safety of those 
getting these replacement airbags first. I will do so, and we 
will do so as quickly as humanly possible with the resources 
Congress has provided us.
    Senator Blumenthal. Mr. Friedman, would you agree with me 
that there is more than sufficient reason to believe that NHTSA 
was not furnished with enough information by the auto 
manufacturers about these defective products?
    Mr. Friedman. Senator, I can't prejudge a case, but we 
have, because of the exact same concerns that you have, we have 
demanded, under oath, information that will reveal exactly that 
thing. These are gut-wrenching incidents, and----
    Senator Blumenthal. Well, I know you have asked for this 
information under oath. But, you know, when I was a prosecutor, 
we had something called ``probable cause,'' which is enough to 
indict. I recognize you don't have criminal authority. You 
would agree with me that there is pretty close to probable 
cause here to believe you weren't given the information you 
need to protect the public.
    Mr. Friedman. Senator, I am not a lawyer, so I don't know 
the exact meaning of ``probable cause.'' But what I will say is 
that I don't trust that Takata has provided us with--we know 
that Takata has not always provided the auto industry with 
accurate information of all the lots involved. We know that we 
haven't always gotten the information that we need.
    We are looking into this. I have serious concerns, and we 
will hold them accountable based on the findings of our 
investigation.
    Senator Blumenthal. So far as the information that is 
concerned, the maximum penalty now is in the range of $30 
million. As you know, Senator Markey and I and Senator Nelson, 
our Chairman, have proposed the Automaker Accountability Act, 
which would lift that $35 million cap on penalties--it would 
eliminate the cap. Would you support that legislation?
    Mr. Friedman. Senator, we will take all the authority you 
give us and use it to the full----
    Senator Blumenthal. Do you support the legislation?
    Mr. Friedman. Senator, we want that raised.
    Senator Blumenthal. That is a ``yes.''
    Mr. Friedman. The Secretary has already asked for it to be 
raised to $300 million. Me personally, David Friedman, if you 
give me the authority to do more, I will gladly accept that.
    Senator Blumenthal. Well, don't you agree, as the current 
acting administrator, that $35 million, $300 million, may be 
inadequate for some cases, as this one, where people have died 
as a result of failing to report sufficient information?
    Mr. Friedman. There is no doubt that the greater the fines 
that we can levy on the automakers, the greater power we have 
to keep them establishing the new normal that we need from 
them: to always provide us with all the information we need and 
to quickly act on that information and to never fight us when 
we provide them with the data, like we are on driver-side 
airbags, that these recalls need to happen nationwide.
    Senator Blumenthal. My time has expired, but I just want to 
finish by making the request that, by the beginning of next 
week, you come back to this committee in writing, after 
consulting with the Secretary, about how quickly you will have 
a determination as to other companies that can provide these 
replacement parts and whether you will recommend to the 
Secretary--in other words, the timeline for finishing that 
process. And I hope it will be measured in days, not weeks.
    I know that the Secretary of Transportation--I have talked 
to him on a number of occasions--shares our concerns on this 
committee, very strongly shares concerns about the American 
public. And I commend him for not only sharing those concerns 
but also acting to appoint a NHTSA Administrator, which we 
welcome.
    And I would like you to give us a date by which you will 
make a recommendation as to how replacement parts will be 
accelerated under 30120(c)(iii) of the Motor Vehicle Safety Act 
so that Americans can be provided with those replacement parts 
as quickly as possible.
    Because, otherwise, we will be waiting 2 to 3 years--under 
the most optimistic estimate, 2-plus years; under the more 
realistic estimate, 3 years--for Americans to be safe on 
American roads with these airbags in their cars. Because they 
simply can't be replaced if there aren't the parts to replace 
them.
    Thank you.
    Senator Nelson. Mr. Friedman, I agree with you that you 
don't have the resources that your little agency needs. And I 
really feel kind of sorry for your successor, who has now been 
named by the president, because as he goes through the 
confirmation process, needless to say there are going to be a 
lot of questions that are going to be asked of him with regard 
to the conduct of your agency on a going-forward basis.
    And just to put this into context, the amount of vehicles 
with Takata airbags worldwide, Senator Blumenthal, is something 
like 100 million. In the U.S., the amount of Takata airbags are 
something like 30 million. So this could be a problem of 
gargantuan proportions that is going to need the aggressiveness 
of the Federal regulator to try to protect the public.
    And we appreciate the hot seat that you are on. I am going 
to be visiting with your boss, who is the Secretary of 
Transportation. I am going to ask him, as I have said earlier, 
to start socking it to the folks that are dragging their feet, 
not answering questions, with the financial penalties that he 
has under law. And then we will try to change the law so as to 
eliminate that cap.
    I want to thank everybody for participating.
    The meeting is--and before I adjourn it, let me say that 
the record will remain open for 10 days. And all witnesses are 
expected to answer any and all questions for the record from 
the members of this committee.
    The Committee----
    Mr. Friedman. Mr. Chairman?
    Senator Nelson. Yes.
    Mr. Friedman. I apologize. I am wondering if I could just 
say one more thing to close.
    Senator Nelson. Of course.
    Mr. Friedman. NHTSA is an agency of people who wake up 
every day with nearly 100 reminders of how we need more 
resources and to work harder to protect the American public, 
because nearly every day 100 people die on our roads because of 
drunk driving, distracted driving, and vehicle defects. Each 
hour, we come to work with over 2,000 reminders of people who 
are injured, over 2,000 people every hour, of our need for more 
resources and to continue to improve and act aggressively to 
save people's lives.
    That is what every NHTSA employee and what I do every 
single day, is dedicate ourselves to protecting the American 
public. We will work aggressively in this case. I welcome your 
support. I welcome the added resources that you are looking to 
provide us. We will act aggressively to protect the American 
public.
    Senator Nelson. Mr. Friedman, we appreciate that, and we 
appreciate the dedication of the Federal employees who often 
are not given that appreciation. And on behalf of the 
Committee, I express that.
    We now have a new problem that we are addressing, which is, 
in effect, a live hand grenade in front of a driver and a 
passenger in the vehicles that have been enumerated. And it 
must be addressed, and it must be addressed immediately.
    And, with that, thank you. And the meeting is adjourned.
    [Whereupon, at 12:47 p.m., the hearing was adjourned.]
                            A P P E N D I X

 Response to Written Questions Submitted by Hon. Richard Blumenthal to 
                            Hiroshi Shimizu
    Question 1. USCAR-24 on ``Inflator Technical Requirements and 
Validation'' is a specification published by the United States Council 
for Automotive Research. It outlines testing procedures for the 
inflator module used in airbags and requires the inflator to undergo a 
number of tests in a variety of extreme conditions, including high 
humidity. USCAR represents a collaboration of Chrysler Group LLC, Ford 
Motor Company, and General Motors.
    Mr. Shimizu, does Takata require all of its inflators to pass 
USCAR-24 specifications? Please describe Takata's understanding of its 
obligations under USCAR-24.
    Answer. Takata does not require all of its inflators to pass USCAR-
24 specifications. The USCAR-24 specifications were developed by a 
private industry council and are not a Federal regulatory requirement. 
USCAR-24 was published in 2004 and applies only to products delivered 
to Ford, Chrysler, and General Motors. Other automakers have prescribed 
their own testing specifications for inflators.

    Question 2. Takata has conceded that ammonium nitrate is the main 
ingredient for the inflator's propellant, but this inexpensive chemical 
is known to have a tendency to absorb moisture. Therefore, it would be 
important for any inflator design to make sure the propellant is 
hermetically sealed.
    Mr. Shimizu, you said during the hearing that Takata has taken ``a 
couple steps'' to improve the problems the robustness of the product 
against the humidity. Please provide a more detailed technical 
description of what changes Takata has made to improve the safety of 
your inflators. Please provide information on specific changes made to 
the propellant formula as well as to the design and production of the 
inflator. For example, what have you done to make sure the propellant's 
container is better sealed off from moisture?
    Answer. Takata has made many improvements in its inflator 
manufacturing processes and product handling since 2000. These include, 
among others, improvements in the press technology used to form 
propellant wafers and tablets in Takata's propellant-manufacturing 
facility in Moses Lake, Washington, and improvements in plant-wide 
humidity control measures in Takata's inflator-assembly plant in 
Monclova, Mexico. The two specific improvements highlighted by Mr. 
Shimizu were the following:

        First, beginning in September 2001, Takata utilized an ``auto-
        reject'' function that can detect and reject propellant wafers 
        with inadequate compression by monitoring the compression load 
        that had been applied. However, for the next year, that 
        function could be turned on and off manually by the machine 
        operator in the plant. No later than September 12, 2002, the 
        machine was modified by the addition of an interlock feature 
        that precluded production of propellant wafers without the 
        auto-reject function in place.

        Second, some propellant wafers used in inflators produced at 
        Takata's plant in Monclova, Mexico, between October 4, 2001 and 
        October 31, 2002 may have been exposed to uncontrolled moisture 
        (ambient humidity) conditions. Those wafers could have absorbed 
        moisture beyond the allowable limits. Production processes were 
        revised by November 1, 2002 to assure proper handling and 
        environmental protection of in-process propellant. Additional 
        improvements in humidity control were instituted at Monclova 
        more recently.

    With regard to the integrity of the inflator seal, each inflator 
and production lot undergo testing at the time of production. Every 
inflator coming off the production line is subjected to a helium leak 
test to check that the inflator vessel is properly sealed. Takata has 
improved the method used for the helium leak test to make the test more 
accurate. In addition, samples of every inflator production lot undergo 
weld-seam analysis, hydroburst structural testing, and ballistic 
performance testing. Moreover, Takata has increased the thickness of 
the O-ring used in passenger-side inflators to improve the quality of 
the seal.
    Most of the inflators subject to recall use a propellant 
formulation called ``2004,'' which first went into production in 2000, 
and the replacement units for most of these inflators also contain the 
2004 propellant formulation. Takata has introduced additional lines of 
propellant, including the ``2004L'' formulation, which went into 
production in 2008. Both the 2004 and 2004L propellant formulations use 
ammonium nitrate as the oxidizer, but the 2004L propellant uses a 
different fuel (BTA) from the fuel used in the 2004 formulation (BHT). 
In addition, all inflators using the 2004L propellant, and some 
inflators using the 2004 propellant, include desiccant in the design.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Bill Nelson to 
                             Rick Schostek
Loaner/Rental Car Availability
    Question 1. You indicated in your testimony that you are providing 
free access to loaner cars and rental cars to your customers who own 
vehicles with recalled, defective Takata air bags. Specifically, in 
your written testimony submitted to the Committee, you stated: 
``Customers with affected vehicles who desire alternative 
transportation until their car is fixed have access to loaner cars and 
rental vehicles--at no cost to the customer--if we experience a 
situation where a dealer's service capacity or the availability of 
replacement air bag inflators is insufficient to meet the customer's 
needs.''
    Similarly, the Honda website states that: ``For customers concerned 
about the issue of Takata airbags in certain Honda and Acura vehicles, 
our customer service will make arrangements for, as appropriate, the 
replacement of airbag inflators and the provision of or reimbursement 
for temporary alternative transportation.''
    How does Honda define the terms ``access to'' and ``as 
appropriate'' in the context of offering loaner cars or rental car 
reimbursement to owners who cannot have defective Takata air bag 
inflators replaced in a timely manner?
    Answer. American Honda uses the terms ``access to'' and ``as 
appropriate'' because dealer vehicle programs can vary and not all 
customers request the same type of alternate transportation. For 
instance, not all dealers participate in our loaner car program and 
therefore, some customers are only offered rental cars. Similarly, some 
customers may only need a ride to work while their vehicle is repaired. 
Most dealers offer a shuttle service to address those needs. Honda's 
policy is to use our best efforts to accommodate a customer who 
requests a vehicle.

    Question 1a. Has Honda issued a specific written policy to dealers 
to implement these statements?
    Answer. Honda's Dealer Operation Manual includes our written policy 
for use of rental or loaner cars. The program's primary purpose is to 
make available to service customers alternate transportation while 
their vehicle is being serviced or repaired. On November 26, this 
policy was changed for airbag inflator affected customers. The dealer 
has been empowered to authorize up to a 3 day rental without contacting 
the District Parts & Service Manager. After the 3 day period, we ask 
that the District Parts & Service Manager be notified.

    Question 1b. What steps is Honda taking to ensure that the loaner 
or rental cars offered to consumers are not subject to either the 
Takata recall, or any other safety related recall?
    Answer. The latest model affected by the Takata airbag inflator is 
the 2011 Element. Since rental car fleets and Honda loaners consist of 
new model vehicles, they are not affected by the inflator campaigns. 
For all recalls, American Honda mails recall notices to the registered 
owner. This includes vehicles that are owned by rental car companies.
Recall Repairs
    Question 2. Do you include a provision in the franchise agreements 
with your dealerships that requires them to perform safety recall 
repairs prior to offering used cars of your brand/make for sale to 
consumers?
    Answer. Yes. In section 12.12 of the Honda and Acura Dealer Sales 
and Service Agreements, authorized Honda and Acura dealers specifically 
agree to ``perform any and all warranty, campaign, recall, product-
improvement or product-update service in compliance with instructions 
and directives issued by American Honda. . . .'' With regard to safety 
recalls, the primary instructions and directives are contained in the 
Honda Service Operations Manual, and the Acura Dealer Operations 
Manual, which contain specific policies and procedures relating to 
parts and service support for Honda and Acura owners. Section 7.2.1 of 
those Manuals both read, in pertinent part, as follows: ``It is illegal 
for a dealership to sell or lease a new vehicle that is subject to a 
safety or emissions recall without first completing the recall 
procedure outlined in the applicable service bulletin. If a dealership 
sells or leases a vehicle subject to a safety or emissions recall to a 
customer without first completing the recall procedure, the dealership 
may be entirely responsible for all consequences, including any claims 
or lawsuits that may arise from the failure to complete a recall 
procedure prior to sale/lease, and the defense and indemnity of 
American Honda in such a claim or lawsuit.''

    Question 3. Do you include a provision in the franchise agreements 
with your dealerships that requires them to perform safety recall 
repairs prior to offering used cars of other brands/makes for sale to 
consumers?
    Answer. No, we do not, as we cannot compel Honda or Acura dealers 
to complete, nor can we compensate Honda or Acura dealers for 
completing, safety recalls on other brands/makes. In the automotive 
industry, compensation to dealers for completion of safety recalls can 
only be paid by the manufacturer of that brand/make; manufacturers 
cannot pay warranty or recall compensation to dealers of other brands/
makes. Moreover, the genuine OEM parts needed to complete a safety 
recall can only be sourced from the manufacturer of that brand/make. 
For these reasons, only a dealer of a particular brand/make can be 
required to complete, and be compensated for, recall repairs on 
vehicles of that brand/make.

    Question 4. Do you compensate your franchised dealers the same for 
safety recall repairs as for retail repairs, based on the same hourly 
rate and the same time allowed for performing the repairs?
    Answer. Yes, American Honda compensates dealers for recall repairs 
in a manner identical to the compensation paid to dealers for warranty 
repairs. This question asks about two aspects of recall compensation, 
hourly rate and time allowance.
    With regard to the hourly rate each Honda and Acura dealer's hourly 
labor rate for recall and warranty repairs is typically the same as for 
retail repairs. The primary, and unusual, exception is when the 
dealer's requested hourly labor rate for recall and warranty repairs is 
materially higher than the labor rates of other repair facilities in 
the local market.
    The time allowance is a different matter, as in the auto industry, 
neither Honda/Acura nor, to our knowledge, any other auto distributor, 
imposes time allowances on retail repairs. While all auto distributors 
set time allowances for each type of recall and warranty repair, there 
are no analogous time allowances for retail repairs. Dealers spend as 
much time as they spend on a given retail repair, and auto distributors 
have no control or even visibility into how long a dealer might spend 
on that repair.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                             Rick Schostek
Increasing the Rate of Repairs
    Question 1. When a recall happens, it is rare that 100 percent of 
affected vehicles end up being repaired. There is a lot we could do to 
improve that rate--so I'd like to take a minute and talk to the 
automakers about how you notify vehicle owners.
    In addition to posting it on your website, it is my understanding 
that you use postal mail as the way you inform consumers about recalls.
    Well, it's 2014--and so I think it is high time to add e-mail to 
the list of ways people are notified about a recall from their 
automaker.
    I'm not talking about replacing postal mail notifications, because 
there are still people who don't use e-mail regularly, but do you think 
adding an additional electronic recall notification--like an e-mail--
would improve repair rates for recalled cars?
    Answer. As I indicated in my testimony, Honda has experimented with 
numerous techniques to increase recall rates, including the use of 
phone calls, overnight mail, and bilingual letters (English and 
Spanish), just to name a few. Our experience is that e-mail provides 
some lift in response rates. With regard to the current safety 
improvement campaign, Honda has made 93,000 phone calls, mailed 132,000 
post cards and sent 152,000 e-mails in addition to the first-class 
letters we have sent. As discussed below, while e-mail notification can 
be helpful, we do not always have access to e-mail addresses. In 
contrast, an owner's address is typically on file with the various 
departments of motor vehicle registration in the states.

    Question 1a. When vehicles are purchased in your showrooms, do your 
dealers collect the e-mail of the buyer?
    Answer. Dealers routinely ask customers for an e-mail address as 
part of the data collection process at time of purchase. It is not 
however, mandatory and some customers do not wish to provide it. 
Moreover, e-mail addresses change, and unlike physical addresses which 
are on file with state departments of motor vehicles, there is no 
established mechanism by which they are required to be updated.

    Question 1b. Mr. Schostek--you mentioned that in Europe, vehicles 
are required to have all safety recalls addressed each year when they 
are registered. This is much like emissions testing requirements that 
already occur today. What are the impediments to implementing such a 
requirement in the United States? Mr. Kunselman, can you answer as 
well?
    Answer. There are numerous issues that would need to be considered 
in pursuing such a proposal. Vehicle registration is an issue that is 
within the province of state law. While the burden would be on the 
states to adopt and implement such a proposal, there may be incentives 
at the Federal level that could encourage a state to adopt a 
requirement. A requirement that defects be remedied as a condition to 
registration would probably be easier to implement in a state with an 
emissions inspection requirement. It appears that about half of the 
states have regional emissions testing programs in some or all parts of 
the state. For those that do not, an alternative approach would need to 
be developed, perhaps tied to a database with the registering 
authority. Moreover, so that the requirement would not be overly 
burdensome, the system should be flexible, in order to account for 
factors such as the availability of parts and how recent the recall 
campaign was undertaken.
    The following is extracted from a report of the Inspector General 
of the Department of Transportation:

        High compliance rate for vehicle recalls. We found that three 
        of the four nations we visited or contacted had a high 
        compliance rate for vehicle recalls. For example, Japan has a 
        recall compliance rate of about 80 percent, Germany 100 
        percent, and the United Kingdom 92 percent. In contrast, ODI 
        considers a 65 percent recall compliance rate satisfactory. 
        Canada reviews manufacturer recalls on a case-by-case basis and 
        does not calculate an overall compliance rate. Further, Germany 
        and the United Kingdom have laws in place that require the 
        registration of a recalled vehicle with other governments, 
        while the United States does not have a similar law. Through 
        the registration system, the foreign counterparts can identify 
        vehicles that do not meet safety regulation requirements and 
        Germany can declare the vehicles legally inoperable until 
        inspected and repaired according to recall requirements. This 
        vehicle registration requirement may explain the higher 
        compliance rates of ODI's counterparts.\1\
---------------------------------------------------------------------------
    \1\ Office of Inspector General, Audit Report, ``Process 
Improvements Are Needed For Identifying and Addressing Vehicle Safety 
Defects, Rpt. No. MH-2012-001, Oct. 6, 2011, pp. 20-21.
---------------------------------------------------------------------------
Ensuring Dealers Make Repairs
    Question 2. Lieutenant Erdman testified that she had taken her car 
in to the dealer three times between when they were notified about the 
recall and when the accident occurred. But she was not told about the 
recall and nothing was repaired.
    As the automaker--and I'd like to get both Honda and Chrysler's 
perspective on this--what proactive steps are you taking to ensure that 
doesn't happen again--and your dealers check every single car coming in 
the door for open recalls?
    Answer. As noted in our response Senator Nelson's Question 2 above, 
our Honda and Acura Dealer Sales and Service Agreement specifically 
rquires a dealer to ``perform any and all warranty campaign, recall, 
product-improvement or product-update service in compliance with 
instructions and directives issued by American Honda.'' The Honda and 
Acura Service Operations manuals provide additional detail as to how 
the obligation is to be met. Our field staff met with every dealer 
earlier this year to review our policy that requires every VIN be 
checked for open recalls. We have also sent numerous communications to 
dealers reminding them of our policy, including the most recent during 
which every Honda and Acura dealer was contacted during the week of 
November 30 by a member of our field staff.

    Question 2a. Do you believe that we need to make it a requirement 
under law that dealers perform those checks for all open recalls when 
cars come in their door?
    Answer. All dealerships and independent repair facilities could be 
required to check for, and notify the customer of, any open recalls 
before returning a vehicle to the customer. This is something we 
already ask all of our dealers to do. Additionally, as I testified, 
that all outstanding repairs for recalled vehicles be completed before 
a vehicle can be registered in a state. This procedure is not unlike 
the requirement that a vehicle pass emissions testing before it can be 
registered.

    Question 2b. What are the impediments to implementing such a 
requirement in the United States?
    Answer. It is already a Federal requirement that all new recalled 
vehicles must be repaired prior to sale. Expanding this requirement to 
include vehicles in use would add a number of complications. For 
example, as a matter of practicality, it could only apply to dealers 
who are servicing vehicles that are of the same brand or brands that 
the dealer sells. Other dealers and independent shops do not perform 
repairs of recalled vehicles. In addition, there is a need to address a 
customer's right to refuse the repair.
                                 ______
                                 
  Response to Written Question Submitted by Hon. Claire McCaskill to 
                             Rick Schostek
    Question. You have endorsed a proposal by the Auto Alliance that 
rental car companies should be prohibited from renting unsafe recalled 
vehicles only when the manufacturer has issued a ``do not drive'' 
warning on the vehicles. Have you issued a ``do not drive'' warning in 
connection with recalled Takata airbags? If not, why not?
    Answer. Honda generally does not sell its vehicles to fleets and as 
such, has not taken a position on the legislation prohibiting rental 
car companies from renting unsafe recalled vehicles. As independent 
businesses, Honda and Acura dealers may, of course, sell vehicles to 
fleet owners. Honda is not a member of the Auto Alliance. Honda sends 
its recall notices to the owner of a vehicle, be it an individual or a 
fleet, and the notices each receives is identical. Unless all owners 
are advised not to drive a recalled vehicle, which would be highly 
unusual, it is up to the owner of the vehicle--not Honda or Acura--to 
determine whether or not to drive the vehicle until the repair has been 
performed. There have been no such instructions on the recall notices 
associated with the Takata-related recall notices. However, we urge 
owners to have repairs made on recalled vehicles as soon as possible.
                                 ______
                                 
 Response to Written Questions Submitted by Hon. Richard Blumenthal to 
                             Rick Schostek
    Question 1. USCAR-24 on ``Inflator Technical Requirements and 
Validation'' is a specification published by the United States Council 
for Automotive Research. It outlines testing procedures for the 
inflator module used in airbags and requires the inflator to undergo a 
number of tests in a variety of extreme conditions, including high 
humidity. USCAR represents a collaboration of Chrysler Group LLC, Ford 
Motor Company, and General Motors.
    Mr. Schostek and Mr. Kunselman, do you believe Takata provided 
prompt and adequate documentation regarding testing completed in 
accordance with USCAR-24 specifications, throughout the history of your 
respective company's relationship with Takata? Please describe and 
provide documentation showing the nature of your communications with 
Takata and vice versa, on this topic.
    Answer. As of the time of this response, Honda is aware that it has 
specifications for Takata airbag inflators that contain within them 
testing procedures that Honda understands to be substantially similar 
to those required by USCAR-24. In addition, Honda understands that 
airbag inflators used by Honda are also commonly used by U.S. 
automobile manufacturers who apply USCAR-24. Therefore, airbag 
inflators used by Honda should have the same performance and satisfy 
the USCAR-24 standard.

    Question 2. National news outlets have reported that numerous cases 
involving the defect were settled out of court, and that the details of 
these settlements were sealed.
    Mr. Kunselman and Mr. Schostek, did you report these cases to NHTSA 
under your Transportation Recall Enhancement, Accountability and 
Documentation (or TREAD) Act obligations?
    Answer. Not all of the eligible claims alleging that a death or 
injury occurred as a result of a defect in a Takata airbag inflator 
were reported by Honda to the NHTSA as required by the TREAD Act. The 
audit of Honda's TREAD reporting disclosed that there were 8 such 
claims that were required to be reported under the requirements of the 
TREAD Act that were not reported. However, separate from and in excess 
of the reporting required under the TREAD Act, Honda began providing 
the NHTSA in September of 2009 with detailed information in its 
possession regarding each confirmed rupture event. This communication 
continues today.

    Question 2a. Mr. Kunselman and Mr. Schostek, before settling these 
cases, did you conduct any internal investigations and determine that 
there was documentation that you did not want to be revealed in 
discovery?
    Answer. Honda did not conduct any investigation prior to settlement 
of Takata airbag inflator claims that determined that there were 
documents that Honda did not want to produce in discovery.

    Question 2b. Mr. Kunselman and Mr. Schostek, did the terms of the 
settlements include any prohibition on conveying information to NHTSA 
or other appropriate authorities? Do you agree that such a prohibition 
would be contrary to Federal law?
    Answer. None of the settlement agreements regarding the Takata 
airbag inflator prohibited disclosure of the settlement terms if a 
party to the agreement is compelled to do so by an applicable 
government process or court order. Honda agrees that private settlement 
agreements cannot forbid the disclosure to the NHTSA or other 
appropriate authorities of information that must be provided to the 
NHTSA or governmental authorities.
                                 ______
                                 
     Response to Written Question Submitted by Hon. Deb Fischer to 
                             Rick Schostek
    Question. Mr. Schostek, I received a disturbing message from one of 
my constituents who is concerned about the lack of information 
concerning vehicles impacted by these recalls. She has a Honda Pilot 
that is her family's only four wheel drive vehicle, but she is nervous 
every time she uses it. She has tried to contact Honda for months to 
get definitive information about whether or not her car may contain 
defective airbags, but she has not been able to get an answer. How can 
I get someone from your company to constructively communicate to my 
constituent on this matter?
    Answer. Thank you for your question following the Senate Commerce 
full committee hearing on ``Examining the Takata Air Bag Recalls and 
NHTSA's Recall Process,'' which took place on November 20. As I 
emphasized during the hearing, the safety and satisfaction of our 
customers is Honda's highest priority.
    Ms. Haddad contacted Honda's Customer Relations with concerns about 
her 2004 Honda Pilot, which is registered in Nebraska. When Ms. Haddad 
contacted Honda in early November, her vehicle was not subject to the 
regional safety improvement campaign being conducted for driver airbag 
inflators in II states and territories. Since that time, and as Honda 
announced during the House Energy and Commerce committee hearing on 
Takata airbag recalls on December 3, Honda has transitioned the 
regional safety improvement campaign for driver airbag inflators to a 
national campaign. As such, Ms. Haddad's Pilot is now within the scope 
of affected vehicles. Honda's Customer Relations department has been in 
touch with Ms. Haddad to inform her of her vehicle's status. When she 
visits a Honda dealership for repairs, her driver airbag inflator will 
be replaced at no cost to her. If there is any delay in repairs or if 
Ms. Haddad desires alternative transportation while her vehicle is 
being fixed, Honda dealers have been instructed to provide rental or 
loaner cars to customers free of charge.
    We take our customers' concerns very seriously and endeavor to 
address them to the best of our ability. If you or your staff has 
further questions regarding Honda's recall process and policies, please 
do not hesitate to contact me or Ed Cohen.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Bill Nelson to 
                           Scott G. Kunselman
Loaner/Rental Car Availability
    Question 1. In your oral testimony, you stated that Chrysler would 
likely make loaner or rental cars available to consumers who own 
vehicles with defective Takata air bags whose cars cannot be repaired 
in a timely manner.
    What is Chrysler's specific policy regarding the provision of 
loaner cars or rental car reimbursement to owners who cannot have 
defective Takata air bag inflators replaced in a timely manner?
    Answer. Chrysler's goal is to have the replacements parts available 
and quickly service the vehicle. Our policy is to make rental or loaner 
cars available to customers who need them as we deploy our field 
action. Customers can contact their dealer or us through our hotline, 
which is available on each vehicle brand's website, and we will address 
their needs on a case-by-case basis.

    Question 1a. Has Chrysler issued a specific written policy to 
dealers to implement these statements?
    Answer. Yes. On December 12, 2014, Chrysler issued a revised 
Warranty Bulletin to its dealers, clarifying that dealers have the 
discretion to provide loaner vehicles to customers affected by a safety 
recall, including the Takata airbag campaigns.

    Question 1b. What steps is Chrysler taking to ensure that the 
loaner or rental cars offered to consumers are not subject to either 
the Takata recall, or any other safety related recall?
    Answer. It is our understanding that, due to their age, no Chrysler 
vehicles in the current rental fleet are subject to any Takata inflator 
recalls. Rental cars are typically returned after 18 months of service 
and the Chrysler vehicles included in the Takata inflator recalls are 
2007 MY or older. Additionally, Chrysler understands that the major 
rental car companies reached an agreement in 2012 to voluntarily stop 
renting or selling vehicles subject to a manufacturer recall.
Recall Repairs
    Question 2. Do you include a provision in the franchise agreements 
with your dealerships that requires them to perform safety recall 
repairs prior to offering used cars of your brand/make for sale to 
consumers?
    Answer. Yes, this requirement is included in Chrysler's Dealer 
Policy Manual, which is incorporated into Chrysler's franchise 
agreements by reference.

    Question 3. Do you include a provision in the franchise agreements 
with your dealerships that requires them to perform safety recall 
repairs prior to offering used cars of other brands/makes for sale to 
consumers?
    Answer. Yes, this requirement is included in Chrysler's Dealer 
Policy Manual, which is incorporated into Chrysler's franchise 
agreements by reference.

    Question 4. Do you compensate your franchised dealers the same for 
safety recall repairs as for retail repairs, based on the same hourly 
rate and the same time allowed for performing the repairs?
    Answer. Yes. Prior to the launch of each recall, a time-study is 
completed to define the required labor to perform the repair. The 
dealer is compensated for the time defined in the study.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                           Scott G. Kunselman
Increasing the Rate of Repairs
    Question 1. When a recall happens, it is rare that 100 percent of 
affected vehicles end up being repaired. There is a lot we could do to 
improve that rate--so I'd like to take a minute and talk to the 
automakers about how you notify vehicle owners.
    In addition to posting it on your website, it is my understanding 
that you use postal mail as the way you inform consumers about recalls.
    Well, it's 2014--and so I think it is high time to add e-mail to 
the list of ways people are notified about a recall from their 
automaker.
    I'm not talking about replacing postal mail notifications, because 
there are still people who don't use e-mail regularly, but do you think 
adding an additional electronic recall notification--like an e-mail--
would improve repair rates for recalled cars?
    Answer. As a normal business practice, Chrysler notifies affected 
consumers using methods beyond the regulatory requirement. After 
sending the initial required mailing and follow-ups for undeliverable 
addresses, Chrysler continues to notify customers every 6 months via 
first class mail until our completion rate thresholds are met. In cases 
where completion rates are not progressing at the expected rate, 
Chrysler may deploy other outreach methods to enhance performance, such 
as e-mail.

    Question 1a. When vehicles are purchased in your showrooms, do your 
dealers collect the e-mail of the buyer?
    Answer. At the time of a purchase, our dealers request a buyer's e-
mail.

    Question 1b. Mr. Schostek--you mentioned that in Europe, vehicles 
are required to have all safety recalls addressed each year when they 
are registered. This is much like emissions testing requirements that 
already occur today. What are the impediments to implementing such a 
requirement in the United States? Mr. Kunselman, can you answer as 
well?
    Answer. There are always opportunities to improve the process. 
While there may be obstacles to implementing this potential 
requirement, Chrysler would be open to exploring this and other 
options.
For Industry, Ensuring Dealers Make Repairs
    Question 2. Lieutenant Erdman testified that she had taken her car 
in to the dealer three times between when they were notified about the 
recall and when the accident occurred. But she was not told about the 
recall and nothing was repaired.

    Question 2a. As the automaker--and I'd like to get both Honda and 
Chrysler's perspective on this--what proactive steps are you taking to 
ensure that doesn't happen again--and your dealers check every single 
car coming in the door for open recalls?
    Answer. When customers bring their vehicles to the dealership for 
service, it is Chrysler's policy to clearly communicate to customers 
the open recalls that exist on that vehicle. All Chrysler dealers use 
electronic systems that require the VIN to be entered before any 
assessment of the vehicle can be completed. This system automatically 
notifies the dealership staff of open recalls as well as the complete 
vehicle history for work done in any authorized Chrysler dealership. It 
is Chrysler's policy that dealers not only communicate information to 
customers about open recalls, but also make every effort to ensure that 
the customer's open recall is serviced on site at that time or that the 
customer schedules an appointment to service the recall before leaving 
the dealership.

    Question 2b. Do you believe that we need to make it a requirement 
under law that dealers perform those checks for all open recalls when 
cars come in their door?
    Answer. As outlined in Question 2a, Chrysler already requires our 
dealers to perform checks for open recalls when cars come to a 
dealership.

    Question 2c. What are the impediments to implementing such a 
requirement in the United States?
    Answer. As noted, Chrysler has already instituted this practice.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Claire McCaskill to 
                           Scott G. Kunselman
    Question 1. You have endorsed a proposal by the Auto Alliance that 
rental car companies should be prohibited from renting unsafe recalled 
vehicles only when the manufacturer has issued a ``do not drive'' 
warning on the vehicles. Have you issued a ``do not drive'' warning in 
connection with recalled Takata airbags? If not, why not?
    Answer. No, Chrysler has not issued a ``do not drive'' warning 
because the data to which we have had access does not support such a 
warning.

    Question 2. Ten years ago, Raechel and Jacqueline Houck were killed 
by a recalled Chrysler 2004 PT Cruiser, after the safety defect caused 
it to catch on fire. Did your company issue a ``do not drive'' warning 
to owners of those vehicles?
    Answer. Chrysler did not issue a ``do not drive'' warning in 
connection with Chrysler Recall D18 and does not agree that the recall 
condition caused the Houck vehicle to catch fire.

    Question 3. Knowing what happened to Raechel and Jacqueline, do you 
think that the rental company should have been allowed to rent them 
that car, without getting the safety recall performed first?
    Answer. Chrysler supports requiring that rental car companies 
ground all vehicles subject to a stop drive recall until they are 
repaired. For all other recalls, we support requiring that rental car 
companies ground vehicles until they are repaired, unless the rental 
car company: (1) provides customers with written notification of any 
un-remedied defect or noncompliance, including pre-remedy precautions; 
and (2) receives a written acknowledgement by the customer of receipt 
of notification.
                                 ______
                                 
 Response to Written Questions Submitted by Hon. Richard Blumenthal to 
                           Scott G, Kunselman
    Question 1. USCAR-24 on ``Inflator Technical Requirements and 
Validation'' is a specification published by the United States Council 
for Automotive Research. It outlines testing procedures for the 
inflator module used in airbags and requires the inflator to undergo a 
number of tests in a variety of extreme conditions, including high 
humidity. USCAR represents a collaboration of Chrysler Group LLC, Ford 
Motor Company, and General Motors.
    Mr. Kunselman, please describe Chrysler's involvement, as a member 
of USCAR, in the development of these specifications.
    Answer. Chrysler, Ford and General Motors all contributed to the 
creation of the USCAR-24 specification (Inflator Technical Requirements 
and Validation), which was released in June of 2002. The three 
companies also contributed to subsequent revisions published in June of 
2004 and April of 2012.

    Question 1a. Mr. Schostek and Mr. Kunselman, do you believe Takata 
provided prompt and adequate documentation regarding testing completed 
in accordance with USCAR-24 specifications, throughout the history of 
your respective company's relationship with Takata? Please describe and 
provide documentation showing the nature of your communications with 
Takata and vice versa, on this topic.
    Answer. To the best of my knowledge, Takata has provided prompt and 
adequate documentation regarding testing completed in accordance with 
USCAR-24 specifications throughout its relationship with Chrysler. All 
parts, including each Takata inflator used in a Chrysler vehicle, are 
documented by the supplier to be production ready. Proof of production 
ready status is submitted to Chrysler prior to the launch of a new 
vehicle or prior to the introduction of a substantial modification to 
an existing production part. Like other manufacturers, Chrysler refers 
to this practice as the Production Part Approval Process (``PPAP''). It 
is my understanding that all testing completed under USCAR-24 by Takata 
was included in its PPAP submission to Chrysler.

    Question 2. National news outlets have reported that numerous cases 
involving the defect were settled out of court, and that the details of 
these settlements were sealed.
    Mr. Kunselman and Mr. Schostek, did you report these cases to NHTSA 
under your Transportation Recall Enhancement, Accountability and 
Documentation (or TREAD) Act obligations?
    Answer. Yes. Chrysler is aware of only one incident causing injury 
involving a Chrysler vehicle. Chrysler reported this incident to NHTSA, 
as required, in the fourth quarter of 2013.

    Question 2a. Mr. Kunselman and Mr. Schostek, before settling these 
cases, did you conduct any internal investigations and determine that 
there was documentation that you did not want to be revealed in 
discovery?
    Answer. No.

    Question 2b. Mr. Kunselman and Mr. Schostek, did the terms of the 
settlements include any prohibition on conveying information to NHTSA 
or other appropriate authorities? Do you agree that such a prohibition 
would be contrary to Federal law?
    Answer. My understanding is that a confidential settlement in no 
way protects a manufacturer from its obligation to report under the 
Safety Act. I further understand that a prohibition, as posed in your 
question, would be contrary to Federal law. If a manufacturer uncovers 
a safety defect in the course of a product liability suit, the 
manufacturer is obligated under the Safety Act to report that defect to 
NHTSA and undertake a recall.
                                 ______
                                 
 Response to Written Questions Submitted by Hon. Richard Blumenthal to 
                           David J. Friedman
    Question 1. USCAR-24 on ``Inflator Technical Requirements and 
Validation'' is a specification published by the United States Council 
for Automotive Research. It outlines testing procedures for the 
inflator module used in airbags and requires the inflator to undergo a 
number of tests in a variety of extreme conditions, including high 
humidity. USCAR represents a collaboration of Chrysler Group LLC, Ford 
Motor Company, and General Motors.
    Mr. Friedman, to what extent is NHTSA involved in the development 
and acceptance of the USCAR specifications for inflators?
    Answer. USCAR-24 is an industry sponsored, industry only effort to 
establish its own criteria for manufacturing quality and processes when 
developing and validating parts from the suppliers which support the 
OEM vehicle manufacturers. There was no government involvement 
including from NHTSA in developing the USCAR 24-2 specification.

    Question 1a. Mr. Friedman, USCAR-24 specifications were last 
updated in April 2013. Did this update reflect knowledge that NHTSA has 
had since at least 2008, regarding inflator vulnerabilities in certain 
environmental conditions such as high humidity?
    Answer. USCAR-24 effort remained an industry only group and there 
was no government involvement, including from NHTSA. The Takata air bag 
recalls in 2008 were related to manufacturing problems. NHTSA did not 
have knowledge of the inflator vulnerabilities related to long term 
exposure to high absolute humidity until early to mid-2014.

    Question 1b. Mr. Friedman, now that we know that Takata's 
propellant can explode violently if exposed to any kind of moisture, 
what is NHTSA doing to make sure the next revision of USCAR-24 will 
subject inflators to more stringent requirements and testing?
    Answer. This is an industry only group and NHTSA has no expectation 
of being part of it. However, if NHTSA determines that air bag 
propellant presents a safety concern that warrants further agency 
action, the agency will determine whether regulation, additional 
enforcement, guidelines or a combination of activities would be the 
proper course of action to pursue.

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