Federal Regulators – Whose Interests Do They Serve?

Apr 9, 2014

GM, oh GM, what to do about you? You hid dangerous defects from the public and federal regulators, you determined 57 cents was too high a cost, to you, to fix the problem, and as a result Americans have needlessly died. If it weren't for those pesky family members who lost a loved one seeking accountability from you, and the trial lawyers that represent them, you wouldn't be the butt of late night comedy sketches. But, you have somewhat of an explanation, it wasn't all your fault.

I've spoken in the past about federal regulatory agencies being used in the Bush era to further corporate interests. I have explained how the Consumer Product Safety Commission, the National Highway Traffic Safety Administration (NHTSA) and the Food and Drug Administration, had all used rule changes to preempt citizen lawsuits against manufacturers of defective products, by preempting state negligence standards and replacing them with corporate approved agency standards.

Manufacturers of harmful products have been very good in convincing federal agencies of their point of view. However, they have been less successful in convincing juries in state courts that they should not be held accountable for injuries and deaths that could have been prevented with reasonable and feasible safety modifications. The citizen lawsuits in state courts have been an incentive for industries to improve the safety of products. Often, industries agree to safety standards only after they have been held accountable by juries in state courts for injuries and deaths that could have been prevented with reasonable and feasible safety modifications.

To Obama's credit, his administration has not followed that corporate strategy, and it has reversed many of the preemptions granted manufacturers under Bush. But, one area where the Obama administration is the same as the Bush years, actually is the same as under every administration since the 1960s, is that of corporate influence over the regulatory process. Every administration operates under laws imposed by Congress, and with few exceptions Congress has assured that federal regulators' hands are tied when it comes to effectively protecting citizens from harmful products.

For a little background on GM's current predicament, we need to go back to 1965, the year Ralph Nader's book, Unsafe At Any Speed, was published. Nader argued that corporations ignored safety in favor of larger profits, and that the only way to hold auto manufacturers accountable to the public was federal regulation.

Rather than rebutting Nader's charges about GM's unsafe products, or better yet making it's products safer, GM hired a private detective to shadow Nader and probe into his personal life to try to find something to “kill the messenger.” When the unsuccessful detecting by GM was revealed, Congress actually enacted the first auto safety laws.

Now, Congress didn't want to get too carried away with protecting the public from dangerous autos. Since it's creation in 1970, NHTSA has always operated under Congressional laws and restrictions that has kept it from being “too protective” of the public. One of the ways Congress has protected corporations is true of NHTSA and all other federal agencies - by limiting the money provided to an agency to do its job. Agencies can't do their jobs effectively with inadequate funds for research and enforcement. And, even if adequately funded, agencies are further hamstrung by limitations on their enforcement powers.

Corporate auto makers have been very successful at convincing NHTSA of their point of view. Tight purse strings have led to standards written by the auto industry and their agents in NHTSA. Never mind whether the standards do little to actually protect citizens from known safety hazards that account for thousands of deaths each year. Never mind whether the industry has known about a clear link between design defects and severe injury for decades. Never mind that corporations can keep dangerous defects secret from NHTSA. Never mind that NHTSA can't force corporations to recall dangerous vehicles until well after lives are needlessly lost.

Congress has assured that corporations get standards that fall well short of truly protecting consumers. And, it could be possible that the revolving door of working at NHSTA, then working for the corporate auto makers, then working for NHSTA again, and so on, also has something to do with that.

GM's latest problems have followed a familiar pattern. GM knew of the defect and kept it secret, they made a financial decision to not correct the defect, they got sued by the families of victims killed by the defect, they settled cases in secret to further hide the problem, and finally, a family's lawyer found the smoking gun documentation of the problem, and the coverup.

Corporate America too often acts like a spoiled child. Their reaction to questioning of why they don't reveal safety problems sooner is too often like a poorly parented child's - “I only hid that from you because if I told you what I'd done, you would have punished me.” As any good parent knows, telling the truth is a positive, but it does not mean that punishment through accountability and responsibility is ignored.

So what can be done? Let's give regulators the money and tools they need to truly protect the public. And, let's prevent secret settlements that hide dangerous risks from the public.

This is Al Smith for the Montana Trial Lawyers Association.