tions underway that go to detailed action on each element from communication to case management to test to make sure everyone of those -- and i am highlighting we are doing 44. we will continue to look for every place possible to make changes. with that, i think we will look for internal changes we can but what is critical about the report also, both outside the report to talk about the resources, so many people heard me discuss 80,000 complaints. we are literally looking at an individual screener having to have five reports analyzed every hour. each report takes an hour. so when the ig report says it is inadequate i agree and we have to change those. >> you identified three general concerns in the audit with the office of defects and investigation.

in your opinion, what does nhtsa need most? more information? more expertise? or better practices for analyzing the data they receive? >> i would say it is on nhtsa to press forward with the changes we outlined in the audit report and testimony today. very pleased to understand the administrator has concurred in all 17 of our recommendations and in fact in his response to our audit report last week indicated a very aggressive schedule signaling his intent to press forward. i understand the administrator's request for resources that ultimately represents a policy decision between the administration and congressism. i am aware of that and respect my role. i would have to say allocating more resources to an effort or agency whose processes are not

in line in the first place doesn't seem like a good idea. we would urge the administrator to press forward with the aggressive timeline to address our recommendation as well as his own process in order to handle this. >> mr. rosekind, you have recently taken unprecedented steps with regard to nhtsa's handling of the inflaters including a pres preservation order. how does the agency plan to implement this program? >> it was this committee that helped focus the issue and the action needed. that all changed on may 19th. we went from denying the defect to acknowledging it with the

consent order helping us evaluate the remedy. there is more advance prior priortization. we have sent a letter outlining all of the information we need to determine how this has to proceed. the first meeting is scheduled for july 1 with each of those groups. there will be individual and group meetings through july with hope that august will take all of the information, put to together, and planning for a public hearing in september that would allow us to lay out the program which is complicated. >> and very quickly, mr. scovel, can you discuss the difficulties receiving consumer complaint and how would clearer guidelines benefit the public. >> we would highlight a couple things for the committee's attention.

first in the way nhtsa collects the data. data quality has to be an ultimate concern for the effort to identify vehicle safety defects because if that is not of the highest quality then defects will be missed and resources may be squandered. the accuracy and timeliness is essential. and data comes from a number of sources. the early reporting data from manufacturer needs to be improved. as we have shown, and nhtsa has acknowledged, the categorizeing of the defects means the data quality is diffused and the best analyst would not be able to reach a proper conclusion on data that is not supportable. we also would note that, and i

commend the administrator for his attention to that and remarks of them intending to follow-up with manufacturers more often. in our interviews of every employee in the office of defects and representative of each contractors that work in that effort, we learned from the highest sources in that office that they generally employ what he calls an honor system to determine whether manufacturers are meeting the requirement for the early reporting data. for a safety regulator to take that approach, sir, we think is not keeping the best interest of the public in mind. consumer complaints, mr. chairman, which has been the primary source for nhtsa to identify safety concerns are also diffused, have been watered down in affect because of a lack of guidance from the agency to

consumers who were seeking to report accidents and defects through the agency. but they will find themselves at a loss when con firming on the website 18 different category codes in a vehicle that has 15,000 components and they themselves are not automotive experts. some consumers are going to get it wrong. many others, the most well meaning and those who have been impacted by vehicle safety defects, will read the data and attempt to follow it as best as they are able to. the agency performance will improve as a result. >> senator nelson. >> you know, there is a pattern here among these regulatory agencies that are supposed to be looking out for the consumer. we saw this about ten years ago

with a consumer product safety commission when we had all of that chinese drywall problem the defective chinese toys and no forth, and theyed a card table was their research department, we are hearing stuff about the agency we are trying to sort out. tell me, mr. rosekind, you came

up with 33.8 million vehicles to be recalled on this tekata matter. how did you come up with that number? >> so, our estimate is that there are about 34 million inflaters that are defective. and they are in about 32 million vehicles. so that is acknowledgment that come vehicles have driver and passenger airbags that need to be replaced. it includes some cars have remedies they need to come back again. that is why 34 million inflaters in 32 million vehicles. >> do you have the vehicle identification number for all of those? >> they have been provided by all 11 manufacturer at this point. >> we will be giving a list of everything we are discussing but it is an ongoing investigation. we cannot start looking. i am give you 44 areas and if you want, i would rather give you the list for the moment. but part of it has to be that list and ongoing evaluation to make sure we are improving the process and doing it better. >> i want to suggest one area. in this odni, as the inspector general has talked about, you get about 80,000 complaints each year yet there is one person that person who spends four hours a day on this would have to review, process and follow on and flag over 80 complaints an

hour and that is less than one complaint a minute.

so how in the world can you get it done? >> you can't. and that is why i agree the ig's report. it specifically called out the scanning of those reports inadequate. it is. and that is a resource issue. you have too many complaints and not enough people. that is a triage point to get it somewhere else. >> i will yield the rest of my time. >> senator mccaskill is up next. >> thank you, chairman and senator nelson for your focus on this issue. as chairman and the ranking member know we did a lot of hearing around the gm recall and the nhtsa. i want to begin with safety. honda confirmed that the eighth

death linked to a faulty airbag , this was a rental car from sunset rental car in san diego that never made the repairs after the recall. there is legislation that would prohibit a rental car from being rented until open safety recalls are in fact remedied. we have support of the rental car industry, consumer and safety advocates and insurance companies and general motors but unfortunately many automanufacturers are blocking this legislation through the alliance of automobile manufacturers. they are saying they should only be grounded if there is a do not drive. have any of the 11 manufacturers issued a do not drive recall related?

>> not that i am aware of and annual that is small. >> what about nhtsa? do you support the efforts we have going on to ground rental cars that haven't been prepared? >> absolutely. >> i would like to put the american car rental association and consumer safety's written statement for the record if i might. >> without objection. >> i want to go to this audit and my colleagues are patient because i am an audit weirdo. i used to read this and calvin scovel knows i happen somebody who assumes these things. this audit report is one of the worst i have ever seen in terms of government agencies. the reason it is so bad -- i agree calvin scovel, this isn't about resources. this is about blatantly being in incompetent.

-- blatant incompetent mismanagement. let's go through one of many shortcomings and this jumped out at me. when to open an investigation. if nhtsa isn't clear about when an investigation should be opened we might as well shut it down. severity of issues and identification of root cause. here's the scary part. based on the interviews the inspector general did there is disagreement in your agency on when an investigation can be opened even. the general council said severity must be established for

all cases along with frequency and root causes. the section chief says all three should be met. the odi's director doesn't think a root cause is necessary and prefers to focus on safety consequences and the two investigative chiefs agree a root cause is not necessary. you have got key personnel within your agency that are not even on the came page about when an investigation should occur. do you believe everyone working there knows their authorities? did you believe there is a clear understanding about what the investigative authorities are at nhtsa?

>> i think the people that have this specific authority assigned to them are aware of those but you have just highlighted where those lines have been blurred and clarification is needed. >> well, on average, only four times a year over the past four years has odi even requested underlying documentation for death and injury reports. four times a year. that is stunning to me. and although you have the authority to inspect manufacturer's records, nhtsa told the ig the agency has never used this authority. never used the authority to inspect manufacturer's records for compliance with early morning requirements.

i think you understand the severity of the situation before you, but i was shocked when i read this report how bad it was. i knew it was bad when the acting director before you didn't even know you had subpoena power. we will be watching the kind of work you do immediately. i disagree with my colleague. i am not about to give you more money until i see meaningful progress on reforming the internal processes in the organization. you cannot start throwing money until you have a system in place until you can make sure it will function like it should. we have a long way to go and i would hope mr. chairman we do a follow up every four to six months to see how they are doing on the ig's list because i think the public does so much better

from the cop on the beat. >> senator klobuchar. >> thank you for holding this hearing. i think it is incredibly important we follow-up with hearings like this after something major happens. last november, it was found takata airbags were rupturing in high humidity areas i called on them to expand the recall nationwide and they responded last month. one of the individuals affected by the takata airbags was a woman from north oaks, minnesota is now blind. she was a passenger in what we consider a minor fender bender and she is blind. what tools does nhtsa need to make companies act sooner? >> we are looking at authorities, other safety

agencies have imminent hazard. if a hazard was identified we would have been able to take the takata airbags off the street sooner. >> would that be established by law? >> yes, those are authorities, you congress, have to provide. >> this is fully responding to nhtsa's order in getting them to act. >> yes, and i think you were pointing out we were able to go to $14,000 a day. but on the list of authorities in grow america that is another one. the maximum penalty is $35 million and we are looking for $300 million. >> last month, nhtsa filled intent of opening a coordinated program to consider whether, and if so, how nhtsa will exercise authority to prioritize the recall and remedy program.

how are they approaching the replacement of the airbags to insure vehicles most at risk are replaced first? >> that is why we sent out information to 11 manufacturers and seven suppliers and collecting information to put a plan together for just that. people talked about an accelerated remedy and this is prioritizing to make sure people in the area who have been identified, those people need to replace as soon as possible. >> switching to the gm issue which you are also aware of, we had a case of a woman from minnesota riding in a chevy cobalt and the car's power went out and barreled ahead at 71 miles per hour and the woman and a passenger were killed when it ran into a tree.

the report found keith young conducted an investigation into the crash that made the link between the defective ignition switch and failure of the airbag to deploy. it cracked the code. he wrote the two front seat airbags didn't deploy and it appears the ignition switch was turned from the run position to the accessory prior to the collision. we know this is troubling and in december i asked what concrete changes would be made to improve the customer complaint process and i would like to know what system nhtsa put in place to make sure if the investigators are in possession of critical information like trooper young's report i would like insurance they are acting. >> i will start by acknowledging this committee whether it is your opening statement mentioning safercar.gov or you

talked about the tragedies going on. it is critical to know these are real people being affected. thank you for doing that. i would say specifically we talked about this in my . . confirmation hearing and we have new systems in place such as a case management system allowing crash investigators and screenings and panels to look at the information from multiple sources all in one place. it is an attempt to connect the dots so the people working on this have available information. >> i know there were 260 complaints over an 11-year period from consumers that the vehicle turned off while they were driving. and over the 11 years they were not connected you said there has been a change but how does the change and work affect? >> panels and screeners having access to information. there could have been an update previously to information and the person responsible for the

case didn't get an alert of the update. you have more data and making sure every time there is new data the individual responsible gets all of the information in one place. >> very good. well, thank you very much. i will have more questions for the record probably. thank you again, senator thune and senator nelson. >> next up is the ranking member on the subcommittee for consumer protection, somebody who has been involved in these issues. i would like to recognize senator blumenthal. >> thank you, mr. chairman. i want to express my appreciation to you having this hearing today which i know reflects your own interest in caring about the subject and to my colleague from florida, thank you for your powerful statement. i want to pursue some of the lines that have been raised. lines of questions that reflect the real life consequences you said. just to show you first, one of

the airbags that actually bears the mark of the, in effect exploding shreds of metal that injured eight people and were killed and many others, but the real fault is not with the a airbag. there is no blood on the airbags but some may say there is blood on the hands of the takata executives who concealed and covered up the deadly affects of the explosion. the fault is really this device. the inflater. because it contained a substance that caused this explosion ammonioum nitrate and the

question for takata today is whether these devices are any safer then they were when they killed eight people. and the evidence may well show that these inflaters are as dangerous today as they were when takata first learned they were potential killers, some years ago as early as 2004-2006 and that they are as dangerous today and should be completely revamped and revised in their basic design and structure. the number of deaths reported so far is eight. i feel that that number is a lot like the number 13 that was first acknowledged by gm as caused by its defective ignition

switch. we now know that number is at least 117 because of the findings of the compensation fund that gm established only after i and others on this committee called for them to do it. that number of eight may grow. it may be only the tinaly fractional tip of the iceberg of death that was caused by these exploding airbags. and so, i believe, as has been stated, that this report is a devastating indictment of an agency that was responsible for are protecting the public. let's not forget the responsibility of corporate executives who could have and should have fully disclosed and then protected their customers

from these devastatingly deadly devices. i think that that record of coverup and concealment is one of the low points in corporate conduct. and it represents the need to strengthen not only the agency that you had, mr. rosekind, we need to strengthen that agency, not strangle it. we need to provide more funds not cut. but a cop that is only as good as the legal tools that she has a cop is only as good as the laws that are enforced. and so i have proposed along with my colleagues a collection

of new laws that will strengthen your legal tools. we can use all the rhetoric we want, but the rhetoric is no good without real action and isntitutional change and new laws that give you the tools you need. for example elminating the caps on penalty, not just waiting for them, but eliminating the penalty for nondisclosure. the early warning reporting act so you can take action, the automaker accountability act that i propose as well as criminal penalties not just on the company billed the corporate executives when they cover up or conceal the defects.

and as my colleague already said rental car companies need to be held accountable to the used car dealer at least one of these occur as a result of a used car and they can't find the owner of the car because he or she bought it as a used car. they are required to repair under the current law but there is no requirement if they fix any outstanding safety defects before selling used cars and this gap is in the consumer protection and puts people at risk.

so i think there are a number of acts that can be taken and not the least of which has happened with the gm ignition defect to be disclosed. the settlements ought to be banned. that's why it still poses the sunshine litigation act. i want to know whether you will join me in seeking these basic fundamental reforms. we can blame as much as we wish for the failure of the past, and there have been deadly failures. but repairing the system and restore to and we forgive you

for reforming it ought to be our concern and it's not just oversight but it's addressing these problems giving you new tools at your successor so that there is real institutional change to the hispanic i just want to start by saying thank you because what you are seeing are the tools available to us to get action. if we don't have those authorities or even the maximum is effective, we can't do our job. so we will support and provide any assistance to help the new authorities. >> and you need more resources do you not? the faa has something like 30 times your budget and 6,000 employees. is that not a glaring deficiency that doesn't reflect a lack of investment in the agency and in the safety of the roads and drivers? >> you are citing a chart that makes that comparison?

so with under 500 deaths they have over 6,000 safety professionals working at that number. in the rail industry they have 110, and they've got close to 700 professionals working on that and 32,719 lives lost on the roadways and we have 90 people dealing with those. >> is our airplane and airspace were as dangerous as the cars and roads, corporate officials would be indicted and there would be sweeping changes in the airline industry. the lack of dramatic crashes is perhaps what enables the crash by crash tragedies that have been detailed and the nation has to make the kind of investment in your agency that has made him the safety of our airspace.

>> the senator followed by senator daynes. i will go over and vote and if we want to ask people questions and we will pick up as soon as we get you with the vote. >> thank you very much. senator blumenthal and i have a bill. the reporting system improvement act that requires automakers to automatically provide more documents about potentially defective cars that requires them to make more of that information available to the public so that it can protect itself and we can't get back the people whose lives were lost to the ignition switch effect.

we can't get back the people who were related to the airbags. but you do have the authority to implement many of the changes that the marquee blumenthal early reporting bill requires. you can take permanent measures. to put them information about the defects into the hands of the public in case the analysts failed to spot the next ignition switch exploding airbag defect. you can look at the families that lost their parents and children, spouses, siblings because of these defects into and you can tell them that you did everything. you could to make sure that their lives were not lost in vain. will you call for the blue

making to require automakers to alert them to fatal defects and to have ntsa look into this? >> we will make that information available. many have already been raised and available that would have helped save lives. our interest will be to look at that and the current legal requirements of the confidentiality wouldn't actually impede that objective. >> will you do a rulemaking in order to make sure that there is a formalized process to insure that the information does. they don't have the federal restrictions in the privacy for example.

>> will you do a rulemaking consistent with the privacy act and confidential proprietary information to ensure the rulemaking that any information will be made public and that the auto industry will be forced to give you that information will you conduct a rule making to conduct that will? >> whether or not it is even needed. >> so you will do everything that is allowed by law to insure that they will provide you with the information about the defects and that will then release that information? will do everything that is allowed by law to access to mcvey will look into it to provide transparency, yes.

>> and you're saying you do not need a rulemaking to accomplish that? will you do with a rulemaking if one is required after you determine the scope of the authority with the existing rules will you do with a rulemaking if it is necessary? >> if evaluation shows it would be useful for the transparency yes. >> that's very important. i think that while give the information to the public. if people can go online to buy the car they should be able to go online to determine if the car had a defect. the sooner you put it online the sooner you put that information up, the sooner they get that information out there it is accountable into the industry will know that the consumers will be came. -- will be king. they will be protecting the family. they will be able to ensure any successor ntsa is accountable

and if ensures that information is made public. we have another bill and that phil is -- bill is one that says it's a used car that may have a recall. that actually ensures that there is a replacement part. but the person that purchased the car really doesn't know about it. so, our bill would require that when the owner registers the cars they are made aware of the safety defects and that those repairs are made. would you support that? >> it would be the touch points to get that informed. we talk about it because at this point there is no sense of the technology to do that and making sure that the consumers basically don't have any

negative effects. so it could be the that such point that is used. we are suggesting a pilot program to work out the technology to figure out how it could go national. >> i'm doing the heavy lifting right now with the gavel. >> i hear you when you say that they need our help and if the agency is going to be able to deliver effective oversight, we need to consider increasing the funding for the crash data collection systems and enhance the office of defect investigations. but before that happens you must prove your agency can do this

and have the procedures to ensure it is done in a timely manner. often times it means more death and problems. i see the incredible effort they are making for the collision avoidance and mitigation. the new developments are going to be traveling on the nation's roads much safer, smarter, energy efficient and less congested. in congress i believe they need to do their part to promote the policies to help us in this area of safety and mobility to ensure that nhtsa has the resources to not only address the major issues of this facing one in particular with airbags but also encourage the development of the technologies that have the potential to save thousands of lives in the future but it will be difficult to secure the funding and the ability to move

this incredible technology forward if folks like myself and fellow members are not confident that the resources were going to be deployed in an effective manner and as the report has made clear, there is a considerable amount of work to do. this is a -- to recall is unprecedented in the scale. and you've introduced a number of programs and initiatives in order to do this. in your own internal funding report and how you anticipate the agency being about to implement these recommendations before the end of the year can you say that nhtsa can adequately coordinate if you are in the middle of right now and implement reforms without more funding from congress? >> we already have that plan in place. there will be an opportunity to

see the effectiveness of the agency to be able to use these resources, to be able to do this in an expedited way. the lack of transparency and accountability the severely sufficient workforce in volume and expertise as i mentioned earlier and you've mentioned here you deliver to 17 recommendations and nhtsa has concurred. you've provided detailed actions and steps to make the changes but based on now you have intimate knowledge of the agency as a result of your work. do you bb the agency is capable of making these changes and how long do you think it will take? >> i would hold the administrator to his word when he responded to the audit report he indicated not only

concurrance, but a very aggressive intent to make good on all of those and a relatively short timeframe in our experience dealing with similar reports and other modes of the department of transportation. clearly the burden is on the agency at this point to make good on its promises to reform its processes so that it may then come to congress and say we are prepared to handle what we have and by the way we may be able to do and even better job should the policy matter be afforded more resources. >> you set an aggressive timeline of one year again based on the in based on the knowledge and e. have a lot of experience with a lot of different agencies. is that a realistic timeline? >> is. we will bird-dog these

organizations and implementation of them as carefully as we have anything else in our long history of providing oversight for the department of safety regulatory agencies. >> we will be working with you closely. that's been my frustration when you get the recommendations from the ig, there's lipservice but never follow the surface but never follow through and one-year term than two years and three years. in the work of the case of the agency its people's lives at stake and we need to have a robust regulator that is also able to help us in the industry and in the auto industry to move to even more dramatic safety improvements with some of the technologies coming forward so i look forward to working with both of you, thank you so much. >> it looks like you and i are

going to have a one on one conversation. it's not because i don't appreciate your work and i appreciate both witnesses being here and i will complete the questioning we have more members back when they get back from the floor so hopefully if not we will go to recess until they do. but i want to talk about it about the gap in the protection that others are talking about . last saturday i dropped my daughter's car off at the dealership. i usually do most of the work myself, my father owned in automotive business and it was an independent auto repair service and so the question becomes the second owner, third owner, fourth owner of a particular vehicle. when i went into that dealership, do they have an obligation to tell me if there is a recall on a particular make and model? >> it's part of of our growth america request to get that independent.

if you go to that new car dealer they should get that for you automatically. >> if you go to a new car dealership today, are they obligated on a service maintenance contract that you might have with them to tell you if there is a recall? what are they obligated on, are they required? >> yes. >> because i did ask and they gave me the reason to. but i don't know that i've ever been to the dealership that i've dropped a car off and that they've told me -- and maybe they don't have to unless you have a recall so i'm not putting that into question. so if i took the vehicle instead of to a jiffy lube they wouldn't be obligated to tell me if there was a recall? none of them are responsible. how is that going to change? >> we have asked them to change that so that everybody not just the new car manufacturers would also be required to run a check

and inform you. >> so if your tendency is to bring your car to an independent station, what is your alternative than to know about the recall? >> if anybody on the regular basis even weekly goes to look at the number. i guarantee my daughter wouldn't. there is the gap. i know that you are a parent and i hope you had a good father's day. how do you protect that child as a parent that represent everybody in the room how do you protect that child knowing? a better question. >> i'm going to find that out.

we are with you. there's so there is so much discussion about recall fatigue. it's already creating a national campaign. they ran quick to the ticket. we want to use the same effectiveness to go after the issue. it's great to come here and announce that there are too many people like our kids that are not going to do that. we have to find how to fill those gaps. >> thank you for the hard work both of you. i'm going to go down on the floor i will turn it over at this point. thank you very much. >> i truly am grateful for the

highlighting the safety challenges of takata's airbags that killed eight people. last summer there was an international model 4800 that the front axle seized and caused the shaft to break, seized up that the left wheel, front wheel. it was coming down highway 12 outside of hello my montana. i drive this all the time. during the daylight hours, the weather conditions were fine and they veered into oncoming traffic and the volunteer fire chief in the truck was held in a very violent head-on collision and there was a family of five.

i would drive back and forth and it stays after it happened and you can see the marks coming in is in the straightaway. this particular has been called in to the 500 vehicles. the notifications went out and it turns out this exact component was a nhtsa approved solution to the previous recall that occurred in 2003. with that as background, the

recent oig report frequently makes references to the defects and the lack of process procedures in the data and analysis contained in analysis contained in the reports, which i've looked over. they made 17 recommendations to improve early data verification processes and things in the external reviews and evaluates the staff training needs among the other recommendations. fortunately this isn't the first time any of the recommendations have been made. they had similar issues and made similar recommendations in 2002 and 2004 and 2011 and 2014, and now here we are in 2015. so, my question is how they declared a safety recall two months after the accident.

they moved quickly in the interim solution. 12 months after the final recall is being sent into and a solution is being executed. you mentioned in the testimony of the automaker's response ability to remedy the defects of compliments. my question is why is it taking a year for something like this and whether the science and engineers doing to expedite the solution to mitigate the safety risks for all of americans. >> i said this earlier and i don't know if i can say it enough, but story about the tragedy of the lives lost can't be told enough so we add a human face to every one of the tragedies. what you're highlighting is something we've emphasized. if they are not remedied you still have the risk and that's what is going on here and part of the challenge you're citing

is making sure that in a timely manner the correct long-term permanent solution is in place. so you can count on me going back to find out the specifics even more than you are telling me now to see what is going on. >> is also the face of innocence turning back to three or four spots. it was a nice evening and a straightaway and you see this young couple and kids in the back of a pickup and if it is a road i drive all the time it's the innocence of the lives lost. if you look at the speed of which the remedies are put in place, i would greatly appreciate you taking a look at that. and part of that is how many times has a nhtsa had more than one recall on the same people components? and i know that you are new to the job and i appreciate your leadership and i know we have belonged a long to do list but i would appreciate you looking into that.

the office of inspector general maintained stats on how often the components are recall it more often than once. it is something to look at in the process and of a systemic challenges that exist with the goal of preventing the tragedies from ever happening again. the pain never goes away. they had over a decade to implement the numerous

recommendations from your office. what do you see the challenge on why it is taking so long to implement? >> some of those recommendations were for the circumstances in the programs we were examining at the time. in the 2004 reports that you referenced, we are examining nhtsa's ability to implement requirements of the newly enacted act. in 2011, we were looking at the investigative phase can barely have nhtsa's obligations operations and in the early phase i don't want to sound like an overly parsing this that we are trying to defect every phase of the application with the idea of being able to command what's going on right, what's going on wrong and make effective recommendations to improve. the recommendations in this case

all concurred by the agency very aggressive timeline for their implementation. we believe they can all be implemented in fact in the current resources. and i think that is the agency's intent. most commendable on their part. but the doctor is attempting to do in our estimation is to change the organizational culture at least the defect investigation and resolution part of the operation. >> and i spent 20 years in business before i took this different job on the hill. they always say it's what you in insects, not expect and in the clear metrics. it should be gone speed instead of how quickly we are going from an accident to action in the field here that's going to correct the defect. it seems like when they were in

the field within the two months why to take the federal agency of the year before we -- gives a ten month gap. >> and i think you're talking about safety steps that can be taken by way of corrective action or by way of recall. remember for again if you will come out worker and audit focused on the pre- investigative phase, we did get to the timing element of that part of nhtsa's effort. our audit report, but so much the statement today, but a report released at the end of last week did discuss at some length, the length of time it took for the investigative proposal to be evaluated if and assessed in the investigation. that is a step of of course because the longer you won't ever going to get to the action or the recall in the position of the influence by nhtsa unless you get through this investigation proposal of the evaluation and decision stage.

we found one instance where the investigation languished five months. this is recently. another one had been on the books for more than a year without resolution. there is a pattern for evaluation and discussion within the office of the defect investigation of some of these investigative proposals. but again, to pick up on the opening remarks at this point, question assumptions. one of the assumptions that desperately must be questioned is how can we speed up the decision so that we can get to the decision to investigate sooner and hopefully upon the investigation get to the decision on the corrections. >> i'm assuming they are for though and we probably identified the problem and how to mitigate the risk.

it just seems as though we are seeing a pretty big gap and i appreciate your efforts to change the culture and look at the ways that we can move faster. the senator and the chairmen have just returned. i am going to turn it back to you. thank you for the comments. >> thank you for presiding here. that wraps up the first panel. so thank you for your time and testimony and response to the questions. i want to invite the second panel to come up and we will get going on it.

senator thune: we want to welcome our second panel of witnesses this morning. thank you for being here for your testimony. i will hand it off for opening statements. we have with us with kevin

kennedy, executive vice president of north america for takata. mr. scott kunselman who is the senior vice president, vehicle safety and regulatory compliance with chrysler. formerly known as chrysler group. and mr. rick schostek, executive vice president for honda north america. so i'm going to ask if we could on my left and your right, mr. kennedy, if you will proceed with your testimony and we'll go from there. and if you can, confine it to close to five minutes as possible. mr. kennedy. [inaudible] mr. kennedy: is it on now? my apologies. chairman thune, ranking member nelson and distinguished members of the committee, i'm honored to be here on behalf of takata and our employees throughout the united states. for takata, safety is the core

of what we do and who we are. we're proud that takata air bags have saved thousands of lives and prevented serious injuries in hundreds of thousands of accidents. it is unacceptable to us for even one of our products to fail to perform as intended. we deeply regret each instance in which someone has been injured or killed. we will do everything in our power to address the safety concerns raised by air bag ruptures. our chairman met twice with administrator rosekind and made that commitment personally. that's why after months of testing and extensive analysis we voluntarily agreed with nhtsa to take broad action in conjunction with the automakers to respond to your concerns and those of the public. our agreement with nhtsa contemplates dramatically

expanded recalls, including national recalls, going well beyond the scope of the risks suggested by the sciencing and the testing. based on more than 57,000 tests of returned inflators in years of research by leading experts from around the world, our best current judgment is that the rupture issues are related to long-term exposure over many years to persistent conditions of high heat and high humidity. for some inflators these may also involve potential manufacturing and vehicle-specific factors. most field ruptures have involved older inflators in the region of high heat and absolute humidity. the potential for rupture is limited to an extremely small fraction of inflators. that's why takata's filings say the say safety related defects may rise in some of the inflators. not all inflators are defective but even one rupture is too many so our remedy program is much broader.

most of the injuries and all of the fatalities in the u.s. are from driver-side inflator that featured the bat wing shape propellers. we have agreed to replace all of the bat wing driver inflators. from the start of production through the end of production in any vehicle registered anywhere in the united states. these recalls will proceed in stages and the final stage will include the replacement bat wing inflators previously installed as remedy parts. we are ceasing production of the bat wing inflators altogether. there have been far fewer field ruptures involving passenger side air bags. nevertheless, our agreement with nhtsa also contemplates significantly expanded recalls for passenger air bag inflators. to support these recalls, our total production of replacement kits for north america will soon reach one million per month.

we have adjusted our capacity to produce replacement kits by including inflators made by other suppliers. we are investing in innovation and working with our automaker customers to develop a range of new inflator products. at the same time, takata continues to serve its customers by producing air bag inflators to use ammonium nitrate propellant which has efficiency benefits over alternative propellants. we're using various technologies in response of the recalls. the process of qualifying new products takes time and for certain types of air bags and certain models the best solution today is to use existing technologies in placement of the units. we agree with nhtsa it's absolutely the right response to public safety concerns not to wait but to replace an older unit with a new inflator.

doing so provides an important safety benefit. we have agreed with nhtsa to do ongoing testing to verify the safety and the service life of these remedy parts. if they need to be replaced in the future, we will act before a potential risk of rupture develops. we are also supporting the testing work of the automakers and nhtsa as well as the work of the independent quality assurance panel led by former secretary of transportation sam skinner. and we will work with the automakers to get the word out to consumers to help maximize recall completion rates. we will continue to do all we can to ensure uncompromised safety and we will keep you and the public updated on our progress. thank you, mr. chairman. senator thune: thank you, mr. kennedy. mr. kunselman. mr. kunselman: thank you. chairman thune, ranking member nelson, members of the committee. thank you for the opportunity to appear today and provide an update on this important matter. my name is scott kunselman and

i'm the senior vice president, head of vehicle safety and regulatory compliance at f.c.a. u.s., l.l.c., formerly known as chrysler. we have a mission re-we emigration with passion. as you know f.c.a.'s involvement with takata air bags is extensive, proactive and ongoing. 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 even consumers. f.c.a. looks forward to continuing this collective engagement with takata and nhtsa to help address this critical situation related to air bag

inflators. f.c.a. has remained actively engaged with takata since i spoke with this committee last year. much as transpired since that time. through multiple campaign expansions and based on information from both takata and actions by nhtsa, f.c.a. is now in the process of recalling 4.8 million inflators in approximately 4.2 million vehicles across the united states. we are also aggressively taking actions on multiple fronts to assist in determining the root cause of inflator ruptures which remains unknown at this time. f.c.a. is an active participant in the independent testing coalition, a group consisting of all 11 affected manufacturers formed in december of 2014 and again, trying to independently determine the root cause of inflator ruptures. in addition, f.c.a. continues to return recalled inflators to takata to further their research and understanding. but despite the lack of root

cause determination to date, f.c.a.'s mission to identify and implement solutions that will improve the safety of our customers has not been delayed. today i'm pleased to share with the committee that as of june 8, 2015, f.c.a.'s replacing all driver side inflators involved in the recall with an alternative and permanent design provided by t.r.w. customers who receive the t.r.w. inflator replacement will require no other action on their vehicles. the takata inflators are no longer needed are being quarantined and returned from our dealers to takata. all of the approximately 50,000 customers who previously received a takata inflator will be notified to return for the t.r.w. update as well. in addition to these driver side efforts, f.c.a. has been working with takata to develop improved versions of the passenger inflator designs. these new versions will contain an improved igniter material as well as a desiccant to help

protect the propellant from moisture. f.c.a. will start installing those at the beginning of the year. there is a single incident of a high pressure deployment involving a driver side air bag causing an injury in one of our vehicles. our actions demonstrate the abundance of caution we are employing to protect our customers. in closing, i'd like to reiterate our belief that promoting and ensuring vehicle safety is the responsibility shared by automakers, suppliers, government and consumers and f.c.a. will continue to collaborate with takata and nhtsa and others to aggressively address this matter. i once again extend my thanks to the committee for discussing this important issue, and i would be pleased to answer any questions. senator thune: thank you, mr. kunselman. mr. schostek. mr. schostek: i appreciate the committee. let me begin by acknowledging that in the past two weeks we have confirmed that two more

customers lost their lives. one in september, 2014, and the other in april of this year as a result of takata air bag inflator ruptures that have occurred in our older model vehicles. this is heartbreaking. and a painful reminder to us of the reason we continue to urgently accelerate our actions to repair the affected vehicles. but of course the real pain is experienced by the families of the victims. we sincerely apologize to them and extend our deepest sympathies. we are working very hard to solve this problem. over and above the required mailed notification to affected customers, we have pursued new and creative ideas to encourage our customers to check their vehicle identification number in order to increase the rate of response to the recalls. we have enhanced our general recalls website and created a new microsite dedicated to this issue to keep our customers informed and make it easy for

them to check their vehicles for open recalls. honda also voluntarily initiated a bilingual regional advertising program in march to implore customers to repair their vehicles. this campaign of radio commercials and full-page newspaper ads represented here to my left was designed to grab the attention of customers in the nine high temperature and absolute humidity states and to u.s. territories. we're also using social media channels in a targeted way including via facebook with good success and let me add, mr. chairman, whenever we issue a press release or statement on this matter we specifically request that the news media help us spread the word by directing customers to our recall reserve the balance of my time websites so they can look up their vin and get their vehicle repaired. and we have repaired the -- and we have appreciated the news media help with this effort. to increase the supply of air

bag inflators, honda proactively began searching for alternative supply solutions to more quickly facilitate the repairs of these older model vehicles. and that effort led to others to help with replacement parts as well as takata. by the actions taken by our dealers, we are averaging more than 50,000 repairs per week. we have also asked our dealers to expand their service hours and never turn away a customer with an affected vehicle. we require dealer to check the vin that comes to their dealer. to support this policy in february we initiated a new system that alerts dealers whenever their staff fails to check a vin of a car brought in for service to see if it has an open recall. we've also reinforced with our dealers honda's firm policy to provide affected customers with a loner or rental car free of charge while their vehicle is being repaired or if they're

waiting for a replacement part to be delivered. all dealers are authorized to make a vehicle available to a customer without prior approval from honda. we've also been searching salvage yards nationwide to find and secure recalled inflators. we've already identified many thousands of inflators from salvage yards now will never be installed in another vehicle. in some markets we've enlisted a special investigatively firm as part of our effort to get hard to reach owners affected by the takata recalls. mr. chairman, it's particular difficult to locate the customers the. we need to find a way to tie the annual state vehicle registration process that safety defects be addressed before completion of vehicle registration. subsequently, stephanie who was injured by a takata inflator

rupture, and who was here last fall joined me in support of the idea of such a registration requirement. we continue to believe there is substantial promise with this approach and we want to thank senators markey and blumenthal for introducing s. 617. i recognize there are some issues about the concept that require further discussion. but i am convinced this is the single most significant step we can take. again, i very much appreciate the opportunity to be here before the committee and be happy to address your questions. thank you. senator thune thank you. mr. kennedy, takata has urged to get -- even if the root cause is not yet been identified in those replacements may have to be replaced again some years down the road. we're all concerned that this very serious safety issue has

persisted for way too long. we got eight people have died. numerous others have received serious injuries. takata's been looking at this problem for several years. we need to know why this happened and make sure it doesn't happen again. so tell me what takata's doing to find the root cause. mr. kennedy: well, senator. we have been working with a number of avenues to get to root cause. as you mentioned, we have been working on this for a number of years. we have been working with an institute from germany who is the leading expert in the world on propellants and pressure vessel designs. we have learned much, especially in the last six to eight months, as to what the root cause of this is. we understand the mechanism. we understand -- excuse me -- a number of the factors that caused the issues. but as you said, we do not have a definitive root cause that we

can turn on and off. but in spite of that, we have gone forward with nhtsa and the automakers to replace parts because this is in the best interest of the public safety. senator thune: without a root cause we don't know whether or not the new replacement inflators have the same defect. so why is it a good idea to put new inflators into cars that might have the same defect? mr. kennedy: let me talk about that a little bit. many of the replacement parts are alternative designs. they are not the same design that was originally used. as i mentioned, the -- particularly on the driver side, the bat wing inflators were the ones that had -- have caused all the fatalities in the field as well as most of the serious injuries and we are not replacing with bat wings. we will go out and get every bat wing that was ever made including all of the remedy parts. and we're also -- as mr. kunselman and mr. schostek

talked about, we're using alternative inflators from many of our competitors in order to speed replacement parts out into the field. and then we are continuing to work to improve the current inflators, as mr. kunselman mentioned as well, in order to make them more robust. and part of the consent order requires us and nhtsa and the automakers to continue to get the parts back and evaluate the remedy parts to make sure that they are safe. senator thune: well, these replacement bags, though, are they going to be safer than the original equipment, than the inflator, the original air bags? mr. kennedy: well, what we do know is that it takes a considerably long time for this condition to manifest itself. previously administrator rosekind had said seven to 12 years. we know there is a large increase in public safety and in the margin of safety by just putting a brand new inflator in.

and we do know that on some of the passenger side ones there were some manufacturing defects that we've been able to uncover with the testing we've done in the last six months. so we feel very confident in the inflators that we are making today. senator thune: mr. kunselman takata has said that the replacement inflators are safe in the interim but require replacement later at date. nhtsa has supported this approach. you stated that fiat chrysler of america will be replacing all recalled driver side inflators with an alternative design by t.r.w. and described t.r.w.'s design as permanent. the customers who receive the t.r.w. replacement will not need to come back in for another replacement. given that we still don't know the root cause for this defect why are you so confident that the t.r.w. inflators will not have to be replaced in the near future? mr. kunselman: the one that

we're replacing has a proven -- it has a track record and we are not aware of any issues in the field. we were fortunate to have an available inflator with the right characteristics to utilize in our vehicle program that has a track record. and i'm unaware of issues in the past. that explains the confidence. senator thune: mr. kunselman and mr. schostek, for our automakers -- i'm sure you recall lieutenant stephanie erman who was seriously injured by shrapnel. she took her vehicle to honda dealership three times without them saying she was subject to an open recall. that's pretty incredible. three times. and so the question is, you know, what steps have y'all taken since then to work with your dealers? i know you described some of this, mr. schostek, in your testimony. how are you going to give us an

insurance that these important safety recalls have been addressed and ensure that recall information and vehicle safety issues will be shared with customers when they get their cars in and get them serviced? mr. shosktek: we have more than 1200 honda and acura dealers in the united states. we're working with them. we've done a number of things since we were last here in november. we initiated a new report that flags if a dealer neglected to check a v.i.n. when a customer came in. moreover, we had face-to-face meetings with our dealers. they have personally visited every dealer and talked to each dealer about the importance of checking for open recalls. we have periodic regional meetings of our dealer principals. we have in the last several months reinforced again that obligation. mr. chairman, there is sometimes turnover at a dealership.

we need to continue to make sure that education is well understood. make sure that the dealers understand, the owners of the dealerships understand that this is our expectation of them, and that we will check every one of these areas we have taken multiple efforts already. we will continue to do more to remind them of their obligation. >> i would reiterate many of the same points he made. i would add something he mentioned earlier. we have made sure that the technology is also there to make this an automatic step in the process. when a vehicle rolls into the service they of a dealer, in most cases, in an automated fashion, the service writer is flagged for open read -- recalls. the service provider goes out of their way to schedule that activity on that visit or on and immediately subsequent visit. in addition to the reminders of

responsibility and urgency, we are making sure technology exists to make this an automatic step. senator thune: senator nelson. senator nelson: would you all hold of that photograph, please. this is a picture of a massive explosion in 2006 in your mexico plant. it was so massive that it blew out windows a kilometer away. this plant used ammonium nitrate propellant to make airbag inflators. is that correct? >> that is correct. senator nelson: in your written

response to the november letter , they said it was caused by improper storage of repellent to scrap. >> that's correct. senator nelson: is that the type of concerned that the safety audits were intended to identify? >> one of them yes sir. senator nelson: why would to cotton -- why would takata decide to halt before financial reasons? >> i believe you are referring to the report yesterday by the committee. that mr. zappers -- misrepresents what exact we happen. if you would allow me, i will explain that. what that was referring to -- first of all there are a number of safety and quality audits done on a product. the audit you are referring to

was not the safety or quality audit on the product, first of all. i think that was implied or inferred from the report. second, the only thing that was suspended was the participation of people from other regions of the world. we held the local safety audits. we held the local quality audits. they were all done on schedule and completed. the only thing that e-mail was referring to was that participants from other parts of the world were not to be included in the audit. senator nelson: i am trying to get at this. hasn't taktaata blames the defective airbags on how the plants handle the ammonium nitrate propellant? and how your plants assemble the inflators? >> there were earlier recalls announced in 2008 and 2009 where we identified manufacturing the

compressing of propellant discs, as well as the exposure to humidity during the process. senator nelson: the answer is yes. if you are saying these pyrotechnic handling problems had to do with the safety of the inflators, wouldn't you have had a clue in 2006 when that happens? mr. kennedy: absolutely. we had issues at the plant where scrap material was mixed. that is what led to that particular incident. fortunately, no one was injured in that incident, other than someone spraining the risk -- wrist walking out the door. no one was injured and no one was hurt in a particular thing. we revised a number of our safety and handling procedures following that that were completely redone after that.

senator nelson: yes, knowing that something is going on here, it is nine years later. now we see. explain this batwing. why do you think that is the culprit? mr. kennedy: the batwing design -- it is a name the engineers came up with to describe the shape of the wafer inside the airbag inflator. there is nothing about it other than that. senator nelson: the propellant that caused the explosion? mr. kennedy: it was the mixing of different types of propellant and energetic material that led to that incident. senator nelson: did it occur to you back in 2006 that humanity may have said -- had something to do with it? mr. kennedy: i haven't referred to the report and i while and i don't remember.

i don't recall that humanity was an issue in the particular incident at the facility. i can double check that to be sure and get back with you. that is my recollection. senator nelson: what about all of these deaths in the south? do you think humidity is one of the contributing factors? mr. kennedy: we do. the report from the institute has concluded they think it is a combination of age, exposure to absolute humidity and high temperature. senator nelson: how do you explain the california where there is a mild temperature death? mr. kennedy: that is why we are continuing to look into the issue. we have experts from penn state, georgia tech, the german institute, we are working with a vast array of experts in this

field, and we are continuing to investigate so that we can learn exactly what happened. that is why we decided to act with nhtsa and the automakers. it is the right thing to do for public safety. senator nelson: would you want your daughter to drive a vehicle with an airbag that you had replaced? mr. kennedy: my children drive in a car every day that uses one of these inflators. senator nelson: did you replace the that we? is that the only place it is replaced? the passenger side? mr. kennedy: batwing is purely a driver side issue. senator nelson: you are a chair meeting the batwing design two part of the defect. mr. kennedy: all of the serious

injuries have involved the batwing driver inflators. senator nelson: i don't understand your answer that you suddenly jumps to the passenger side. mr. kennedy: maybe i misinterpreted your question. senator nelson: if your drive -- daughter was driving the automobile that you had replaced the batwing design in the drivers seat -- mr. kennedy: i would have no issue with that at all serve. none. senator nelson: i tell you, there are a lot of consumers that would. how do you think the consumers will feel that this thing is fixed? mr. kennedy: that is why sticking with the batwing, that is why we agreed to replace every one of these. to get the parts and get them out of the field. a lot of people have talked today about the efforts to do

that. that is one area where we as industry and governments need to concentrate to get the parts out of the field once there has been a defect analyzed. senator nelson: apparently, you do not feel confident enough that it is fixed area you have gone to new airbag and you factors. tell us about that. >> thank you. as i stated, we were fortuitous in our ability to identify an alternative that would perform appropriately in our the fill rate of the airbag. we moved here to gain confidence that this would be a permanent solution, an absence of an understanding of root cause. senator nelson: may i regurgitate your words, and you tell me what you just said?

we wanted a clear path to greater confidence, so we went with another manufacturer. >> that is correct. senator nelson: ok. thank you, mr. chairman. senator blumenthal. senator blumenthal: thank you for being here today, all of you. mr. kennedy, you have been with the cotton -- you have been with takata for three years? mr. kennedy: no, 10 years. senator blumenthal: you were back here in 2005? mr. kennedy: correct. senator blumenthal: i would like you to commit that takata was that was a compensation fund similar to the one that gm was involved in. mr. kennedy: i cannot do that,

but i will take it back to the chairman and to our team and discuss that and get back with you on that. i am not in a position to commit to that. senator blumenthal: don't you run the company's north american operation? mr. kennedy: i am responsible for certain aspects. our customer activity, including sales and marketing engineering, program management some of our core engineering not related to inflators. as well as some i.t. and communications. senator blumenthal: i am just a country lawyer from connecticut but it sounds like you run this country -- company in north america. mr. kennedy: i report to an executive committee and a president of america. i do not run all aspects. senator blumenthal: how soon can you come back with an answer about a compensation fund? mr. kennedy: i would think in the next four weeks. senator blumenthal: how about

the next two weeks. mr. kennedy: yes or. -- yes sir. senator blumenthal: my view is that takata is as responsible for the eight steps found so far as gm is for the 117 deaths and counting. the number eight is as of today the compensation fund you should establish. it is likely to disclose additional deaths resulting from this product. do you agree echo? mr. kennedy: i agree it is likely, as many of these parts are in the field still. senator blumenthal: let me show you one of those parts. this is a takata inflator that caused the explosion in this airbag that caused these holes. it'd not sure it the airbag, but

the shards that came through the airbag caused by the explosion and you can see the result of that explosion piercing this metal, you can see were the shards emanated. it could well have caused the kinds of deaths we have seen a time so far, demonstrated a time so far correct? mr. kennedy: yes sir, and i want to reiterate how sorry we are for all of the pain we have caused. senator blumenthal: i am not challenging whether you are sorry. i believe that you are. my question is, in replacing these wing -- batwing propellants, have you also replaced the chemicals? ammonium nitrate that was used in these batwing propellants? mr. kennedy: some of the replacement parts we are using

for those that wings include stabilized ammonium nitrate. it is a different design that we have not experienced issues with. senator blumenthal: you have not experienced issues with it because you have not finished testing? mr. kennedy: they have been in the field for a number of years. they have been in the -- in a number of different vehicles. alternative designs have not seen issues. senator blumenthal: why are you continuing to use ammonium nitrate, if it was very likely a contributing factor in causing these exploding inflators? mr. kennedy: i would respectfully disagree. it could be one of the potential factors in it, but faced stabilized ammonium nitrate has many advantages. especially over the materials we

were using prior. the industry was using a highly toxic chemical. and some of the other materials that we have used had issues with handling and manufacturing because they were very, very energetic in a normal state. phased stabilized ammonium nitrate, if you put a torch on it you can't light it. it's very safe and clean. it burns very efficiently, which again addressed some of the concerns in the field with previous propellants that were causing respiratory issues. senator blumenthal: the problem is it becomes unstable when it becomes moist or accumulates moisture, correct? mr. kennedy: it's not a phase stabilization issue. this is what everyone was concentrating on at the beginning that it's an issue with the phase stabilization of ammonium nitrate. the conclusions that the institute came to is this is not a phase stabilization issue. we cannot even measure the loss of phase stabilization that

occurred in these parts. this is a much more subtle issue that takes many, many factors over many, many years and sometimes in certain vehicles, sometimes in one vehicle it will perfect norm perfectly well. the same part in another vehicle and the same exact area will have issues. so there are a number of things we don't understand. but that's why we felt it was time to act and get the parts out of the field so we could continue this analysis of the parts. senator blumenthal: you're continuing to use ammonium nitrate but with a different design? mr. kennedy: we have many designs that use phased stabilized ammonium nitrate. there are, of the six that are involved in this, most are out -- five of the six are out of production. there is another one that will be out shortly. the ones involved in this particular issue, in these particular issues and recalls are not in production any longer.