NHTSA hands out $35 million fine to Forest River Inc.

By Tyson Fisher, Land Line staff writer | 8/4/2015

Just one week after handing Fiat Chrysler the administration’s largest fine to date, the National Highway Traffic Safety Administration has dished out another stiff penalty. Forest River Inc. will have to pay a civil penalty of $35 million for violations of the Safety Act.

Forest River Inc., located in Elkhart, Ind., is a large manufacturer of RVs, pontoons, cargo trailers, and other recreational vehicles. It’s parent organization is Berkshire Hathaway.

According to documents filed by the Office of Defects Investigation, the civil penalty consists of a cash penalty of $5 million and stipulated penalties. Forest River must retain an independent monitor for audits of compliance. Additionally, several performance obligations must be met, including an in-house consultant and remedies for past noncompliance.

If audits reveal failure to resolve issues outlined in the Consent Order, Forest River will have to pay portions of the stipulated civil penalties.

Opened last September and closed last Saturday, the ODI investigation found that Forest River violated the following Safety Act regulations:

  • Failed to submit accurate early warning reports.
  • Failed to file certain field communications or reports of Canadian safety campaigns.
  • Did not provide copies of notices, bulletins and other communications as required.
  • Failed to file certain quarterly recall reports in a timely manner.
  • Sent notices to dealers without required information.
  • Failed to submit communications to manufacturers, dealers, owners and purchasers directly related to a defect or noncompliance.
  • Failed to notify vehicle owners and dealers of defects and noncompliance.
  • Did not timely notify NHTSA of safety-related defects within five days.
  • Failed to conduct timely recalls for Recalls 15V-080 and 15V-156.
  • Failed to respond to NHTSA’s Oct. 2, 2014, Special Order by the deadline.

ODI documents reveal that Recall No. 15V-080 applied to 2014 Rockwood and Flagstaff recreational vehicles equipped with the Chill Chaser option. Excessive foam insulation and loose wiring could touch the Chill Chaser heating element, increasing the risk of a fire. Recall No. 15V-156 dealt with 20014 Palomino SolAire trailers. Affected vehicles were built without an exterior furnace vent. Exhaust fumes could be vented inside the trailer, and heat buildup could cause a fire.

In the Special Order mentioned in the above violations, NHTSA warned Forest River that failure to respond fully or truthfully could lead to a referral to the Department of Justice for civil actions. The Special Order informed Forest Rivers that it could be subject to penalties up to $7,000 per day, up to a maximum penalty of $35 million. Falsifying or withholding information can also lead to a criminal penalty of a fine and/or imprisonment of up to 15 years.

In what appears to be an attempt to clean house, NHTSA punished Fiat Chrysler last week with a $105 million civil penalty for a series of safety recalls that affected more than 11 million vehicles. It is the largest NHTSA fine, with the previous record being held by Honda in January for a $70 million, twice what Forest Rivers is currently facing.

NHTSA has been under a lot of scrutiny this year. Just over a week ago, two senators introduced a bill addressing the vulnerability of software in newer vehicles. Dubbed the SPY Car Act, the bill calls for NHTSA to regulate and enforce new rules that will keep vehicles safe from hackers. The very next day, Chrysler announced that more than 1 million vehicles will be recalled due to vulnerable software.

In late June, an Office on Inspector General audit reports blasted NHTSA for being insufficient in its defect investigations due to a lack of detailed guidance. The audit was a reaction to a massive GM recall that affected nearly 9 million vehicles.

In early June, NHTSA established new safety teams after a separate report was released in response to the GM recall. Titled “NHTSA’s Path Forward” and “Workforce Assessment: The Future of NHTSA’s Defects Investigations,” the two internal reports addressed many concerns raised by the GM recall.

Related stories:
Fiat Chrysler receives harshest penalty on record by NHTSA
More than one million Chrysler vehicles recalled over vulnerable software
Audit report blisters NHTSA for 'insufficient' defect investigations
New NHTSA safety teams established after two internal reports released

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