The Economy Hub
8:00 AM EST, January 26, 2014
Nothing seemed to underscore the revolving door between federal regulators and the companies they regulate as vividly as the two milestones marked on Jan. 17 at the National Highway Traffic Safety Administration.
One was NHTSA's announcement that it was closing its contentious investigation of fuel tank fires in Chrysler Corp. SUVs, including its Jeep Grand Cherokees. The agency accepted the automaker's remedy of installing trailer hitches in more than 1.5 million vehicles to protect the tanks from rupture in rear-end collisions. That's a solution that some safety advocates think may make the cars even more dangerous.
The other milestone was that it was the last day at work for David Strickland, the NHTSA administrator who had overseen the investigation and was leaving for a new job with Venable, a Washington law firm that lobbies for Chrysler.
"It's awful and shameful, on the face of it," remarks Louis V. Lombardo, a Washington auto safety expert.
Strickland said in an interview that there was no connection between his departure and the closing of the investigation — indeed, that NHTSA keeps its defects investigation process "jealously protected from the input of political" appointees like himself. "We want these decisions to be made based upon strong science, engineering and data," he said.
The timing of the investigation's closure, he added, arose from the natural progress of the probe. And he says he recused himself from matters Venable had before the agency the day of his first interview with the firm.
There's no indication that Strickland, who was appointed NHTSA head in December 2009 and formally submitted his resignation Dec. 12, soft-pedaled the Cherokee case or any other during his four years in office. Indeed, he gets high marks from such safety advocates as former NHTSA Administrator Joan Claybrook for implementing aggressive fuel efficiency standards. "They're really tough, and the industry hates them," she said.
In connection with sudden-acceleration problems with Toyota and Lexus vehicles, which have been blamed for dozens of deaths, Strickland imposed a series of record fines on Toyota, including $48.8 million in 2010 and $17.4 million in 2012.
But those actions haven't been enough to cleanse NHTSA of its reputation for having a remarkably cozy relationship with its regulated industry.
"It's become like a consulting agency to the auto companies," says Ralph Nader, who made his name as a consumer advocate with an auto safety crusade in 1965 — a crusade that led to NHTSA's founding. "You can see how weak their recall authority has been exercised, you can see it in their settlements, in the enormous delays in their standards."
Not that NHTSA is necessarily unique. The well-rutted career path from agency to lobbying firm is perhaps the most noxious practice in a Washington that today seems exclusively devoted to the quest for the main chance.
Master lobbyist Jack Abramoff, who did time for stretching the influence peddling rules to the breaking point, distilled the practice to its essentials in his 2011 post-prison memoir, "Capitol Punishment." Once he dangled a lobbying job in front of a congressional staffer, he wrote, "I would own him and, consequently, that entire office. No ruled had been broken … but suddenly, every move that staffer made, he made with his future at my firm in mind."
The revolving doors may be well-distributed around Washington, but NHTSA has long been viewed as a particular problem child. In 2001, at the request of Sens. John D. Rockefeller IV (D-W.Va.) and Mark Pryor (D-Ark.), the Department of Transportation's inspector general compiled a list of NHTSA officials who had moved directly between the agency and the auto industry over the previous 27 years.
The list ran to 63 names. Those jumping directly to the industry included four administrators (the top job), two chief counsels and dozens of department heads, engineers and attorneys.
Upon leaving her government post, for example, NHTSA Administrator Diane Steed (who served during the Reagan administration in 1983-89) helped organize the Coalition for Vehicle Choice, an industry front created to fight against strict fuel efficiency standards. She's still a prominent business lobbyist in the capital. Former NHTSA Chief Counsel Erika Z. Jones, who joined the law firm Mayer Brown, remains a familiar face at NHTSA as a representative of automakers facing safety and defect investigations by her old agency.
In perhaps the most glaring case, Toyota staffed up with former NHTSA officials as it faced an inquiry into sudden acceleration in its Toyota and Lexus vehicles. Over 10 years, more motorists died from such accidents in Toyota and Lexus vehicles than in cars from all other manufacturers combined.
As my colleagues Ralph Vartabedian and Ken Bensinger reported in 2009, one lawyer preparing to depose a Toyota executive in a related lawsuit recalled being met by "a virtual NHTSA alumni club" working for the automaker. The executive, former NHTSA defects investigator Christopher Santucci, said in the deposition that he negotiated his job with Toyota while he was still employed at NHTSA. At Toyota he reported directly to another former NHTSA official, Chris Tinto.
The sudden-acceleration problem eventually led to the recall of more than 10 million vehicles worldwide by Toyota. The company revealed in an internal document later released by a congressional panel that efforts by its NHTSA veterans and the rest of its Washington team to negotiate a more limited recall order from NHTSA on the acceleration issue saved it more than $100 million.
The DOT inspector general found "no evidence suggesting undue influence or pressure on NHTSA's employees" as a result of the revolving door. But the effects may be more subtle — employees who consciously or subconsciously censor themselves with an eye toward the post-governmental careers, for example.
When former agency officials reappear in their old agency's hallways, says Claybrook, "it's not a matter of overt pressure. It's how they guide the client in its dealings with the agency. These people know how decisions are made in the agency, the routine, the flow of paper, what influences the agency. That's how they achieve their goal."
What may make the lobbying at NHTSA by its former insiders effective is that the agency is severely underfunded and understaffed to begin with. Its budget for vehicle safety was $141 million in fiscal 2013; the budget for aviation safety at the Federal Aviation Administration was $1.25 billion. Yet highway deaths easily outstrip aviation deaths year after year — in fact, according to one calculation, the risk of a fatality on the average drive to the airport alone is far more likely than it is on the flight.
Adding to NHTSA's travails is the sheer political power of the auto industry and its legion of Washington lobbyists, who easily outgun auto safety advocates in the halls of Congress.
Safety advocates point to the Jeep Cherokee case as a perfect example. Last June, Chrysler defiantly refused an NHTSA request to recall 2.7 million 1993-2004 Grand Cherokees and other models, despite an agency finding that the faulty fuel tank design made them unusually prone to fires after rear-end collisions. The design had contributed to more than 50 deaths in fires, including one of Cassidy Jarmon, a 4-year-old Texas girl who was strapped in a car seat when her family's Grand Cherokee was hit from behind in 2006 and burst into flames. She died of burns and smoke inhalation two days later.
The standoff was resolved during a private meeting of Strickland, former Secretary of Transportation Ray LaHood, and Chrysler Group CEO Sergio Marchionne. Chrysler agreed to a low-cost option of installing trailer hitches, supposedly to protect the fuel tank from impact, on 1.5 million vehicles. But safety experts say the remedy is unproven and may even be hazardous.
At the very least, says Clarence Ditlow, executive director of the Center for Auto Safety, Chrysler should have been required to test the solution before moving ahead. "In Ronald Reagan's words, trust but verify," says Ditlow, whose group first petitioned NHTSA to investigate the fuel tanks. The car in which Cassidy died was equipped with a trailer hitch, he observes. "I'm terribly afraid there are going to be more 4-year-olds who burn to death in Jeeps with trailer hitches on."
A solution to revolving doors has been sought virtually since the doors started spinning. Under Obama administration rules, former top agency officials are barred from lobbying anyone in the executive branch or representing a client on a matter in which they were involved during their service for two years after departing government.
That may limit Strickland's responsibilities for a time at Venable, which counts Chrysler among its top clients in Washington and has also represented the Alliance of Automobile Manufacturers, which lobbies for all the big automakers. But he acknowledges that he's largely free to advise his new colleagues on tactical approaches in NHTSA cases that may arise over the next two years.
The best safeguard against ethical conflicts from the revolving door is the work ethic of the people moving between industry and government, he says. "I've never thought at any moment about where my decisions will land me next," he says. "If you're a quality employee with great expertise and you're honorable and ethical, you will have opportunities when you decide to leave regardless of what your decisions are."
But that places a great burden on human nature. Government can't pay young staff members or even top officials enough to keep them from seeking higher salaries in the private sector. Only oversight by a Congress and president truly devoted to the public interest, not commercial interests, can keep regulatory agencies focused on the people's business.
But when business gets its say on Capitol Hill and the White House too, what's the ordinary person to do?
Michael Hiltzik's column appears Sundays and Wednesdays. Read his blog, the Economy Hub, at latimes.com/business/hiltzik, reach him at email@example.com, check out facebook.com/hiltzik and follow @hiltzikm on Twitter.
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