More Auto Regulations Coming?

Posted on Sat 05/01/2010 by

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By Nicolas Loris

The aftermath of the unintended acceleration hearings involving Toyota is moving to the front burner again as lawmakers are proposing legislation that would increase auto safety regulations to address all potential sources of unintended acceleration. The bill would also increase the budget of the National Highway Traffic Safety Administration (NHTSA) as well increase the maximum financial penalty Congress could impose on an automaker. Draft legislation titled The Motor Vehicle Safety Act of 2010 has been introduced in the House by Rep. Henry Waxman (D-Beverly Hills) and Rep. Bobby Rush (D-Ill.).

The Los Angeles Times reports that:

“The bill is likely to face opposition from automakers, in particular over a provision that would remove the existing $16.4-million cap on civil penalties against vehicle manufacturers for violations of safety laws and boost the fine for each violation to $25,000, from the current $6,000.

It would create a new tax of $9 per new vehicle after three years, payable by the manufacturer, to help fund NHTSA and some of the new requirements of the law. The tax could raise more than $100 million a year based on current sales figures.

Beyond fines and taxes, the bill would dramatically overhaul the federal government’s ability to oversee rapidly advancing electronics technology that is at the heart of new vehicles. It would create a center for vehicle electronics and emerging technologies. The measure would require automakers to adopt so-called brake overrides, which cut engine power back to idle when the brake pedal is depressed. It would also set separate new standards on the placement of foot pedals, keyless ignition systems and transmission shift controls.”

In what the LA Times article calls “one of the biggest overhauls of federal motor vehicle safety regulation in a generation”, the new regulations will certainly cost consumers more than nine dollars per vehicle. The important question is what will the real cost of the new regulations be and will the benefits outweigh those costs?

To put the risk of unintended acceleration into perspective, Carnegie Mellon Professor and risk expert Paul Fischbeck calculated the unintended acceleration increased the risk of driving only 2 percent. Fischbeck says, “Walking a mile is 19 times or 1,900 percent more dangerous than driving a mile in a recalled Toyota. Driving while using a cell phone would increase risk much more than the chance of having a stuck accelerator.”

Further, Toyota’s already making moves to win back consumers and improve the quality of its vehicles. Consumers are reaping the benefits of generous incentive packages and Toyota has set up a new design quality division consumer complaints of any design defects. At a time when consumer demand for vehicles remains weak, piling on more regulations that will increase the cost of vehicles certainly won’t help. With financial regulation, Supreme Court nominations and immigration usurping the headlines, this will be something to keep an eye on.

Nicolas Loris is a Research Assistant at The Heritage Foundation’s Roe Institute for Economic Policy Studies. Loris studies energy, environment and regulation issues such as the economic impacts of climate change legislation, a free market approach to nuclear energy and the effects of environmental policy on energy prices and the economy.

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