NHTSA Fines Takata Up to $200 Million, Recommends Ban on Ammonium Nitrate in Airbags

The National Highway Traffic Safety Administration announced today that it would fine Takata Corp. up to a record $200 million for failing to provide regulators with timely information on its defective airbags, which are currently linked to 19 million recalled vehicles from 11 automakers in the U.S.

Related: Is Your Car Part of the Takata Airbag Recall?

Calling the situation "a mess," Secretary of Transportation Anthony Foxx told reporters today that Takata has provided years of "incomplete, inaccurate and misleading information to NHTSA, to the companies using its inflators and to the public."

No More Ammonium Nitrate

NHTSA also said it's ordering Takata to stop producing ammonium nitrate, the chemical used in defective inflators that regulators believe causes airbags to rupture when exposed to years of high absolute humidity.

"The combination of Takata's delays and denial, plus unexplained issues with ammonium nitrate in inflators not already under recall, leave us without confidence in these products," Foxx said. "So, we are ordering Takata to phase out production of new inflators using ammonium nitrate. And unless new evidence emerges, the company will have to recall all of its ammonium nitrate inflators."

NHTSA said it lacks particular confidence in ammonium-nitrate propellant without a chemical called desiccant, which combats the effects of moisture. It's not immediately clear how many Takata airbags — already on the road or scheduled as replacements — still use ammonium nitrate, with or without desiccant. In a statement today, the supplier said it will phase out Phase Stabilized Ammonium Nitrate airbags without desiccant "by the end of 2018," adding that "we deeply regret the circumstances that led to this."

It's unclear whether Takata can continue to manufacture airbags with desiccant, and Foxx claimed Takata is "not going to be putting ammonium nitrate in new airbags going forward."

A spokesman for Takata did not immediately respond to our questions beyond providing the company's statement.

'Potentially Millions More Cars' Affected

A 2014 New York Times investigation into ammonium nitrate raised the possibility that Takata adopted the chemical because it's cheaper, something the company denied at the time. Other airbag manufacturers said they use other chemicals.

Takata is immediately barred from any new contracts for ammonium-nitrate inflators, NHTSA said. It must eventually recall all ammonium nitrate inflators. The agency wouldn't say if any other cars that are not part of the existing 19 million under recall will need to be recalled, but there's "potentially millions more cars impacted," Foxx said. "As we go forward into the future on this, we'll have to figure out the true scope of this recall."

That could take time. The total number of ammonium nitrate airbags on the road "is unknown," NHTSA Administrator Mark Rosekind said. "We would have to go through the same painstaking accounting procedure we went through this summer to come up with the current coordinated remedy [for the 19 million cars under the current recall] to even have a sense of what that number would be."

As of right now, Foxx said there aren't any current 2015 or 2016 models that can't be sold today due to NHTSA's order. But "any airbags that contain the substance today — again, absent proof from Takata that this is a safe substance — those cars are going to have to be fixed," he said.

$70 Million Now, Up to $130 Million Later

NHTSA calls Takata's $200 million fine "the largest civil penalty in NHTSA history." It said it's also imposing additional oversight, including a new independent monitor, as well as requiring new safety practices. Takata is firing some of its employees because of the investigation.

Takata will pay $70 million over six installments between now and 2020. It will be fined up to the remaining $130 million if it violates the consent order or the Motor Vehicle Safety Act, according to NHTSA. Takata said it's agreed to the penalty structure.

Under the Consent Order, Takata must phase out ammonium nitrate airbag propellant and recall "all remaining" ammonium nitrate inflators "by a prescribed schedule" unless it can prove to NHTSA that the inflators are safe, Rosekind said.

NHTSA said it's speeding up the recalls and ordering automakers to replace bad inflators "months, if not years, earlier than it would happen if we took no action."

Four Risk Pools

A "coordinated remedy order" uses NHTSA's authority to order all 11 automakers to complete their recalls "on an accelerated schedule," prioritized based on risk, Rosekind said. NHTSA has divided the 19 million cars under recall into four risk pools based on inflator age, length of exposure in areas of high absolute humidity, and whether it's on the driver's side, passenger side or both.

For cars with defective driver's side airbags:

• If it's an older model in a hot and humid area, it has the highest risk.
• If it's a newer car in any area, it has intermediate risk.

For cars with defective passenger side airbags:

• If it's an older vehicle in a hot and humid area, it has intermediate risk.
• If it's a newer vehicle in any area, it has lower risk.

For cars with defective airbags on both sides:

• If it's an older model in a hot and humid area, it has the highest risk.

Cars that already have interim replacement inflators have the lowest risk. The replacement inflators effectively reset the clock on humidity exposure, which experts believe is linked to the risk of a rupture.

How long does the clock reset? In an Oct. 22 presentation, Scott Yon, chief of the vehicle integrity division in NHTSA's Office of Defects Investigation, quantified long-term exposure to high absolute humidity as "something more than five years." Still, owners of those cars will need to get a second inflator replacement when it eventually becomes ready.

Even for the lower- and lowest-risk groups, "these inflators still pose an unreasonable risk," Rosekind said. "There remains risk of inflator rupture for all four priority groups."

Deadlines for a Fix

For the top three groups, NHTSA said automakers and Takata now face a series of deadlines in 2016 and beyond.

• The highest-risk group needs a sufficient supply of replacement inflators by March 31, 2016.
• The intermediate-risk group needs a sufficient supply by Sept. 30, 2016.
• The lower-risk group needs a sufficient supply by the end of 2016.

Automakers, dealers and suppliers must work together to replace the airbags for all three groups (not just have enough on hand) by the end of 2017. The lowest-risk group needs to have permanent remedies in place by the end of 2019.

Rosekind said the schedule will accelerate the remedy by about two years versus how long it would take if regulators did nothing. Still, the industry has a long way to go. On Oct. 22, NHTSA said that as of earlier in the month, just 22.5 percent of the recalled airbags had been fixed.