VW reinforces need for auto whistleblower law

There are now 11 million more reasons to create a whistleblower program for the auto industry modeled on the Dodd-Frank Act.  The Senate took the first step earlier this year when it unanimously passed the Motor Vehicle Safety Whistleblower Act.  It is time for the House of Representatives to confront the tidal wave of wrongdoing at car manufacturers and follow their lead.

Volkswagen’s announcement of as many as 11 million diesel-powered cars worldwide with the software to cheat emissions tests is just one more example of the industry’s blatant disregard for government regulation.  Only one week prior, General Motors agreed to pay a fine of $900 million to resolve the Justice Department’s criminal investigation into its delayed recall of automobiles for faulty ignition switches. 

{mosads}The House may already be gearing up to take on the auto industry.  One House Subcommittee, Oversight and Investigations, has already announced a hearing into Diesel Gate and the Commerce, Manufacturing and Trade Subcommittee is beginning to review the proposed whistleblower legislation.  However, Volkswagen’s deception reveals the need for a few changes to the joint bill before it is sent to President Obama for signature. 

The House should expand the reward program beyond matters involving auto safety.  The Senate bill was designed to reward reports of violations which are “likely to cause unreasonable risk of death or serious physical injury.”  In light of the problems revealed by Toyota, Takata and GM, this focus was reasonable at the time. However, it is now clear that compliance is a broader problem throughout the industry.   

Beyond Volkswagen’s defeat device, a broader whistleblower incentive would also capture overstated fuel economy claims like the ones at issue in the combined $300 million penalty against Hyundai Motor and Kia Motors in 2014.  The standards at issue in Volkswagen and Hyundai were put in place to protect both the environment and public health.  Noncompliance with these regulations pose long term threats to our way of life and should not be tolerated. 

The House bill should appropriately incentivize individuals to come forward and report violations of the emissions and fuel economy standards.  There would be a major gap in the whistleblower program from the outset if Volkswagen’s Clean Air Act violations, which could lead to a penalty of as much as $18 billion, were not included. 

Additionally, the discovery of Volkswagen by third parties makes clear the importance of opening up the whistleblower law’s incentives beyond industry employees to everyone.  Volkswagen’s undoing was in part the result of work by the NGO International Council on Clean Transportation and a $50,000 research study at West Virginia University’s Center for Alternative Fuels, Engines and Emissions. Neither organization would have qualified for an award under the Senate bill because of its restriction to auto manufacturers, part suppliers or dealership employees.  Instead, the incentives should broadly encourage third party industry experts, consumers and other individuals to come forward if we are to fulfill the goal of stopping corporate wrongdoing in this area as soon as possible. 

In only five years, the Dodd-Frank whistleblower program has become a key aspect in the U.S. government’s fight against securities fraud.  Congress should model the auto whistleblower law after Dodd-Frank and enact a comprehensive program to thwart these violations once and for all.  By casting a wider net in terms of the people eligible for rewards and the types of misconduct that can be reported, the U.S. government can get us back on the right path to safe and environmentally friendly vehicles.

Young is a whistleblower attorney and partner at McEldrew Young in Philadelphia.  Contact him at eyoung@mceldrewyoung.com.


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