[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]






                   TAKATA AIRBAG RUPTURES AND RECALLS

=======================================================================

                                HEARING

                               BEFORE THE

           SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                            DECEMBER 3, 2014

                               __________

                           Serial No. 113-183
                           
                           
                           
                           
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 



      Printed for the use of the Committee on Energy and Commerce
                        energycommerce.house.gov
                                   ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

94-147                         WASHINGTON : 2015 
-----------------------------------------------------------------------
  For sale by the Superintendent of Documents, U.S. Government Publishing 
  Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
         DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                          Washington, DC 20402-0001                        
                       
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                        
                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman
RALPH M. HALL, Texas                 HENRY A. WAXMAN, California
JOE BARTON, Texas                      Ranking Member
  Chairman Emeritus                  JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky                 Chairman Emeritus
JOHN SHIMKUS, Illinois               FRANK PALLONE, Jr., New Jersey
JOSEPH R. PITTS, Pennsylvania        BOBBY L. RUSH, Illinois
GREG WALDEN, Oregon                  ANNA G. ESHOO, California
LEE TERRY, Nebraska                  ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan                GENE GREEN, Texas
TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
  Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
PHIL GINGREY, Georgia                JIM MATHESON, Utah
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                JOHN BARROW, Georgia
CATHY McMORRIS RODGERS, Washington   DORIS O. MATSUI, California
GREGG HARPER, Mississippi            DONNA M. CHRISTENSEN, Virgin 
LEONARD LANCE, New Jersey                Islands
BILL CASSIDY, Louisiana              KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky              JOHN P. SARBANES, Maryland
PETE OLSON, Texas                    JERRY McNERNEY, California
DAVID B. McKINLEY, West Virginia     BRUCE L. BRALEY, Iowa
CORY GARDNER, Colorado               PETER WELCH, Vermont
MIKE POMPEO, Kansas                  BEN RAY LUJAN, New Mexico
ADAM KINZINGER, Illinois             PAUL TONKO, New York
H. MORGAN GRIFFITH, Virginia         JOHN A. YARMUTH, Kentucky
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina

           Subcommittee on Commerce, Manufacturing, and Trade

                          LEE TERRY, Nebraska
                                 Chairman
                                     JANICE D. SCHAKOWSKY, Illinois
LEONARD LANCE, New Jersey              Ranking Member
  Vice Chairman                      JOHN P. SARBANES, Maryland
MARSHA BLACKBURN, Tennessee          JERRY McNERNEY, California
GREGG HARPER, Mississippi            PETER WELCH, Vermont
BRETT GUTHRIE, Kentucky              JOHN A. YARMUTH, Kentucky
PETE OLSON, Texas                    JOHN D. DINGELL, Michigan
DAVE B. McKINLEY, West Virginia      BOBBY L. RUSH, Illinois
MIKE POMPEO, Kansas                  JIM MATHESON, Utah
ADAM KINZINGER, Illinois             JOHN BARROW, Georgia
GUS M. BILIRAKIS, Florida            DONNA M. CHRISTENSEN, Virgin 
BILL JOHNSON, Missouri                   Islands
BILLY LONG, Missouri                 HENRY A. WAXMAN, California, ex 
JOE BARTON, Texas                        officio
FRED UPTON, Michigan, ex officio
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Lee Terry, a Representative in Congress from the State of 
  Nebraska, opening statement....................................     1
    Prepared statement...........................................     3
Hon. Janice D. Schakowsky, a Representative in Congress from the 
  State of Illinois, opening statement...........................     4
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     5
    Prepared statement...........................................     6
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, prepared statement..............................     7

                               Witnesses

Hiroshi Shimizu, Senior Vice President for Global Quality 
  Assurance, Takata Corporation..................................     9
    Prepared statement...........................................    11
    Answers to submitted questions...............................   104
Rick Schostek, Executive Vice President, Honda North America.....    16
    Prepared statement...........................................    18
    Answers to submitted questions...............................   150
Craig Westbrook, Vice President, Aftersales, BMW of North America    23
    Prepared statement...........................................    25
    Answers to submitted questions...............................   201
Abbas Saadat, North American Regional Product Safety Executive, 
  Vice President, Vehicle Safety and Compliance Liaison Office, 
  Toyota.........................................................    29
    Prepared statement...........................................    31
    Answers to submitted questions...............................   211
David J. Friedman, Deputy Administrator, National Highway Traffic 
  Safety Administration..........................................    65
    Prepared statement...........................................    67
    Answers to submitted questions...............................   250

                           Submitted material

Takata test results by the National Highway Traffic Safety 
  Administration, submitted by Mr. Waxman........................    89
Letter of December 2, 2014, from Takata to the NHTSA, submitted 
  by Ms. Schakowsky..............................................    93
Article entitled, ``Takata's Switch to Cheaper Airbag Propellant 
  is at Center of Crisis,'' New York Times, November 19, 2014, 
  submitted by Mrs. Blackburn....................................    97
Article entitled, ``Airbag Maker Takata Saw and Hid Risk in 2004, 
  Former Workers Say,'' CNBC, November 7, 2014, submitted by Mr. 
  Upton..........................................................   100

 
                   TAKATA AIRBAG RUPTURES AND RECALLS

                              ----------                              


                      WEDNESDAY, DECEMBER 3, 2014

                  House of Representatives,
Subcommittee on Commerce, Manufacturing, and Trade,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:03 a.m., in 
room 2123, Rayburn House Office Building, Hon. Lee Terry 
(chairman of the subcommittee) presiding.
    Present: Representatives Terry, Lance, Blackburn, Harper, 
Guthrie, Olson, McKinley, Kinzinger, Bilirakis, Long, Barton, 
Upton (ex officio), Schakowsky, Sarbanes, Welch, Yarmuth, 
Matheson, Barrow, and Waxman (ex officio).
    Also Present: Representative Burgess.
    Staff Present: Charlotte Baker, Press Secretary; Sean 
Bonyun, Communications Director; Leighton Brown, Press 
Assistant; Graham Dufault, Policy Coordinator, CMT; Melissa 
Froelich, Counsel, CMT; Kirby Howard, Legislative Clerk; Paul 
Nagle, Chief Counsel, CMT; John Ohly, Professional Staff 
Member, O&I Olivia Trusty, Professional Staff Member; Michelle 
Ash, Minority Chief Counsel, Commerce, Manufacturing and Trade; 
Jen Berenholz, Minority Chief Clerk; Peter Bodner, Minority 
Counsel; Stacia Cardille, Minority Chief Counsel; Brian Cohen, 
Minority Staff Director, Oversight & Investigations, Senior 
Policy Advisor; Lisa Goldman, Minority Counsel; Debbie Letter, 
Minority Staff Assistant; Elizabeth Letter, Minority 
Professional Staff Member; Karen Lightfoot, Minority 
Communications Director and Senior Policy Advisor; and Nicholas 
Richter, Minority Assistant Staffer.

   OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEBRASKA

    Mr. Terry. I want to welcome everyone to our hearing today 
for the Commerce, Manufacturing, and Trade Subcommittee. This 
is our last hearing of this congressional session, assuming no 
emergency for next week. So next year, Mr. Burgess, as I 
understand, is going to take over the gavel for this 
subcommittee, and so even though he is not currently a member 
of the subcommittee is joining us today to just kind of get a 
feel for the importance of this subcommittee, and certainly, 
the importance of this hearing today.
    So the title of this hearing is ``Takata Airbag Ruptures 
and Recalls.'' Safety recalls are often marked by tragedy; that 
is what brings it to our attention. But they are even more 
troubling when the very equipment being recalled is intended to 
save lives. Now, this morning we will begin piecing together 
the history of a safety defect that became known only by what 
appears to us as fits and starts, and seemingly has several 
potential causes.
    The first known rupture occurred in 2004 in Alabama. Three 
more ruptures in 2007 led Takata to identify a bad stamp press 
at a manufacturing facility in Moses Lake, Washington. In 2008, 
Honda recalled 3,940 cars in the U.S., however, two more 
airbags ruptured in May and June of 2009, one of which killed 
the driver. At that point, it appears that Takata believed the 
airbag inflators were being improperly exposed to moisture 
during the production process. However, around the same time, 
Takata confirmed that a stamp press was to blame for the at-
risk airbags.
    In early 2011, uncertainty about the cause of the 
continuing ruptures led to another recall. And previous recalls 
were expanded in late 2012 upon the discovery that Takata's 
production records were in disarray. NHTSA, Takata, and car 
manufacturers all indicate that the vehicles with faulty 
airbags tied to manufacturing or storage issues have been 
recalled. And yet, several more ruptures subsequently occurred 
in southern states. This led manufacturers and NHTSA to believe 
that the prolonged exposure to high absolute humidity levels 
was a major contributing factor. However, NHTSA recently 
demanded that manufacturers broaden the current recalls in 
southern states to the national level.
    NHTSA believes that the recent incidents in California and 
North Carolina indicate the possibility of ruptures in areas 
with lower absolute humidity. I understand Takata disagrees 
with NHTSA's assessment, and I look forward to learning more 
about that, while the OEMs that are before us today have all 
stated publicly that they are willing to do a national recall.
    Now, there are several questions here to address. For 
example, are the current testing methods adequate? How much 
testing is enough to determine a cause and how quickly it is 
being carried out? What is the appropriate level of 
coordination between NHTSA automakers and their suppliers? What 
metric should be used to determine whether a recall is 
necessary? There are also questions about the supply of 
replacement parts and whether those replacement parts are truly 
safer than the parts being recalled.
    Our highway safety depends on the vigilance of 
manufacturers as well as NHTSA. Sometimes the regulator is in 
the best position to defend the defect, and sometimes it is the 
manufacturer. The time has come to bring the facts together and 
make sure that the unsafe airbag inflators are off the market. 
Consumers can get their faulty parts replaced and the future 
recalls are handled better. The safety of American drivers 
depend on our collective success.
    So I thank the witnesses for being here today and help 
achieve these goals and put a stop to this deadly problem, and 
there is 1 minute left of mine.
    Marsha, would you like to claim that?
    Mrs. Blackburn. Yes. Thank you, Mr. Chairman.
    Mr. Terry. Yield to you.
    [The prepared statement of Mr. Terry follows:]

                Prepared statement of the Hon. Lee Terry

    Safety recalls are often marked by tragedy. But they are 
even more troubling when the very equipment being recalled is 
intended to save lives.
    This morning we will begin piecing together the history of 
a safety defect that became known only by fits and starts, and 
seemingly has several potential causes.
    The first known rupture occurred in 2004 in Alabama. Three 
more ruptures in 2007 led Takata to identify a bad stamp press 
at a manufacturing facility in Moses Lake, Washington.
    In 2008, Honda recalled 3,940 cars in the U.S. However, two 
more airbags ruptured in May and June 2009, one of which killed 
the driver.
    At that point, it appears that Takata believed the airbag 
inflators were being improperly exposed to moisture during the 
production process. However, around that same time, Takata 
confirmed that a stamp press was to blame for at-risk airbags.
    In early 2011, uncertainty about the cause of the 
continuing ruptures led to another recall. And previous recalls 
were expanded in late 2012 upon the discovery that Takata's 
production records were in disarray.
    NHTSA, Takata and car manufacturers all indicate that the 
vehicles with faulty airbags tied to manufacturing or storage 
issues have been recalled.
    And yet several more ruptures subsequently occurred in 
southern states. This led manufacturers and NHTSA to believe 
that prolonged exposure to high absolute humidity levels was a 
major contributing factor.
    However, NHTSA recently demanded that manufacturers broaden 
the current recalls in southern states to the national level. 
NHTSA believes that recent incidents in California and North 
Carolina indicate the possibility of ruptures in areas with 
lower absolute humidity.
    I understand Takata disagrees with NHTSA's assessment and I 
look forward to learning more about that.
    So there are several questions to address:
    For example, are current testing methods adequate?
    How much testing is enough to determine a cause and how 
quickly is it being carried out?
    What is the appropriate level of coordination between 
NHTSA, auto-makers and their part suppliers?
    What metric should be used to determine whether a recall is 
necessary?
    There are also questions about the supply of replacement 
parts and whether those replacement parts are truly safer than 
the parts being recalled.
    Our highway safety depends on the vigilance of 
manufacturers as well as NHTSA. Sometimes the regulator is in 
the best position to find the defect and sometimes it's the 
manufacturer.
    The time has come to bring the facts together and make sure 
the unsafe airbag inflators are off the market, consumers can 
get their faulty parts replaced, and future recalls are handled 
better.
    The safety of America's drivers depends on our collective 
success on those fronts.

    Mrs. Blackburn. Thank you. And I thank our witnesses also 
for being here. And as the chairman said, 2004 is the first 
time we knew of this issue. It was when the first inflator 
exploded, and then we go through the process of looking at the 
propellent change and finding out when the change was made 
going to ammonium nitrate in 2001.
    Now, we do hope that this hearing is going to give us an 
opportunity to talk with you about the decision-making process, 
who was involved in that, why they made the decisions that they 
did. We will drill down on that. We are very disappointed in 
Takata refusing to work with NHTSA on the deadline for a 
national recall of the driver's side airbags that expired last 
night. We will want to address that with you.
    We welcome our witnesses. And I am finishing right on time, 
Mr. Chairman. Back to you.
    Mr. Terry. Well done.
    Now the chair recognizes the ranking member, the gentlelady 
from Illinois, for 5 minutes.

       OPENING STATEMENT OF HON. JANICE D. SCHAKOWSKY, A 
     REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

    Ms. Schakowsky. Thank you, Mr. Chairman, for holding this 
important hearing today.
    Before I turn to today's business, I would like to thank 
Ranking Member Waxman for his decade of leadership and his 
service as chairman and ranking member of this committee. He 
will leave an indelible legacy of achievement when he retires 
at the end of this year, and I am so proud to have learned from 
and worked with him on so many issues of great importance to 
the American people.
    And, Mr. Chairman, I would also like to recognize you for 
your eight terms in the House representing the people of 
Nebraska. And I have enjoyed working with you during your 
chairmanship of the subcommittee over the past 2 years. I wish 
you the best of luck in your future endeavors.
    I am deeply saddened that we are here again today to 
discuss preventable deaths, but I am determined to understand 
exactly what happened and to respond in a way that improves 
driver and passenger safety. In 2004, a driver in Alabama was 
killed by shrapnel ejected by a Takata airbag. Four years 
later, the company issued the first recall to address airbag 
ruptures, a recall that expanded over the next 5 years. Earlier 
this year a new regional recall was initiated to find the root 
cause of similar ruptures, and last week, NHTSA asked Takata to 
order a national recall, and yesterday the company rejected 
NHTSA's request.
    Media reports suggest that Takata and Honda knew about the 
serious risks its airbags posed to drivers and passengers as 
early as 10 years ago. If prompt action had been taken to 
investigate the airbag ruptures and truly address the cause, we 
wouldn't be here today. Because Takata refused NHTSA's request 
for a recall, auto manufacturers, whose customers are driving 
vehicles equipped with airbags that could be deadly, now have 
to determine whether they would recall the airbags on their own 
while the mandatory recall process moves forward.
    I have received letters from constituents who are literally 
afraid to drive their cars, and this is unacceptable. I want to 
know why Takata has been so slow and ineffective to respond, in 
responding to this deadly defect and why it believes a national 
recall is not warranted. I want to know what commitments Takata 
and the auto companies represented here today plan to make in 
the immediate future to protect their customers.
    I want to know what more NHTSA needs to do in order to 
prevent problems like this from continuing to repeat themselves 
in the future. And I want to know, since the cause of the 
airbag ruptures is still not certain, whether replacement of 
these potentially dangerous airbags with very similar products 
actually eliminates the risk of airbag explosions in the 
future.
    So I look forward to our witness' answers to these 
questions and more. The incredibly slow response to this 
problem is just the latest reminder that we need stronger laws 
to protect drivers and passengers and to hold manufacturers 
accountable for the cars they sell.
    Earlier this year, I introduced H.R. 5654, the Vehicle 
Safety Information Act, legislation to improve auto safety and 
the efficacy and efficiency of recalls. That bill would expand 
and clarify the information manufacturers must provide NHTSA 
about defects and fatal incidents, increase information about 
auto defects that NHTSA must share with the public, increase 
financial penalties and remove the statutory maximum penalty 
for manufacturers that violate NHTSA reporting requirements, 
provide an imminent hazard authority so that NHTSA can expedite 
recalls of potentially deadly cars, limit the resale of cars 
with this serious defect, unless the problem has been fixed or 
the buyer has been notified and end regional recalls. I urge 
the chairman to bring this bill up for consideration in this 
subcommittee or to ask House leadership to put it on the 
suspension calendar without delay.
    And with that, I yield back the balance of my time.
    Mr. Terry. Chair now recognizes full committee chair, Mr. 
Upton.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Well, thank you, Mr. Chairman, and I appreciate 
your leadership the last number of years and we also will miss 
Mr. Waxman, and I think we will have, at some point, a formal 
recognition of both of your service.
    So I am from the auto state. I am sorry to say that it has 
been a bad year for auto safety. The latest danger for drivers 
malfunctioning airbags that, in fact, can shoot shrapnel 
through the air and make a bad accident even worse. Drivers are 
being told that their vehicle is being subject to a recall, but 
there are not enough parts to fix it, and if they do get a 
replacement that airbag maybe subject to the same safety 
failure in the future because we still don't know if the root 
problem has been addressed.
    There are still lots of questions surrounding these airbag 
defects and recalls, and today we all want some answers. 
American people deserve to have confidence that the cars that 
they drive are safe and that the industry and the government 
are doing everything that they can do to improve safety. The 
first question that has to be determined is whether or not it 
is a design flaw for the airbag or is it a manufacturing issue? 
Until that question is answered, you are not going to be able 
to resolve the issue.
    Unfortunately, deadly auto defects and massive recalls are 
not new subjects for this committee. I have listened to and led 
multiple recall hearings ranging from the Ford Firestone crisis 
to the Toyota floor mat problem, obviously to the GM ignition 
switch debacle earlier this year. And over a decade ago, I 
authored the bipartisan TREAD Act so that we could help catch 
and then fix defects sooner and avoid the kind of disaster that 
we are facing today. Yet, here we are again.
    TREAD Act was very simple: Requiring manufacturers to 
report the information needed to help NHTSA quickly identify 
vehicle defects and remove flawed cars from the road right 
away. Our goal was to prevent injuries and save lives, but we 
need industry and NHTSA to do their part. Cars are safer today 
but not because a company hires lawyers and consultants to 
avoid reporting safety incidents.
    I am going to ask some tough questions regarding what we 
have read and heard about Honda manipulating the system to 
report as little as possible. Companies need to know that there 
isn't anything safe about shorting safety. We need more 
automakers to make safety a priority and institute safety 
incentives. In the case of GM, they acknowledged their safety 
failure, their CEO volunteered to testify, and they hired a new 
safety officer to implement company-wide culture changes. I 
would like to see that same level of urgency, that same 
admission of mistakes, and that same commitment to do better 
today.
    Complex safety technology can lead to complex problems, and 
the Takata airbag issues are indeed complex. There were 
manufacturing issues and there were handling issues. And as 
soon as one problem was identified, it seemed like another 
sprang up, sort of like Whac-a-Mole. And now we are waiting to 
find out if humidity is the issue or if there are other 
manufacturing concerns.
    In the meantime, testing is slow, and we are short on 
replacement parts. What is worse, no one can say for sure that 
the replacement parts are any safer than the originals. We may 
be right back here after the replacement parts have reached 
their humidity half-life. But complexity is not an excuse for 
incompetence. We need to make sure that companies and 
regulators can keep pace with innovation. We need a regulatory 
agency that breeds confidence and offers solutions, not one 
that is often part of the problem.
    For our witnesses, I pose this question: What should I say 
to the mom in Michigan who asked me if she and her family are 
safe behind the wheel? Families across the country expect 
safety devices in their vehicles to work. They expect them to 
provide life-saving protection that they can count on in the 
event of an accident, and they expect that problems from 
earlier models be reported and fixed, and they expect to be 
able to get their defect repaired when they find out about it; 
but sadly, I don't think I can give that assurance right now. 
One thing is for sure, we have got a lot of issues to resolve.
    I want to again thank Chairman Terry for calling this 
hearing to start the process. I want to thank him from the 
bottom of my heart for his service as a leader of this 
subcommittee and wish him well in the future, and yield back my 
time.
    [The prepared statement of Mr. Upton follows:]

                 Prepared statement of Hon. Fred Upton

    I'm from the auto state and, I'm sorry to say it's been a 
bad year for auto safety. The latest danger for drivers? 
Malfunctioning air bags that can shoot shrapnel through the air 
and make a bad accident worse. Drivers are being told their 
vehicle is subject to a recall but there are not enough parts 
to fix it, and if they do get a replacement, that airbag may be 
subject to the same safety failure in the future because we 
still don't know if the root problem has been addressed. There 
are still a lot of questions surrounding these airbag defects 
and recalls, and today I want some answers. The American people 
deserve to have confidence that the cars they drive are safe 
and that industry and the government are doing everything they 
can to improve safety. I don't understand after all these years 
whether it is a design flaw or a manufacturing issue. You can't 
fix the problem until that basic question is answered.
    Unfortunately, deadly auto defects and massive recalls are 
not new subjects for this committee. I've listened to and led 
multiple recall hearings, ranging from the Ford/Firestone 
crisis, to the Toyota floor mats problem, to the GM ignition 
switch debacle earlier this year. Over a decade ago, I authored 
the bipartisan TREAD Act so we could help catch and fix defects 
sooner and avoid the kind of disaster we are facing today. Yet, 
here we are.
    The TREAD Act is simple--require manufacturers to report 
the information needed to help NHTSA quickly identify vehicle 
defects and remove flawed cars from the road immediately. Our 
goal was to prevent injuries and save lives, but we need 
industry and NHTSA to do their part.
    Cars are safer today, but not because a company hires 
lawyers and consultants to avoid reporting safety incidents. I 
am going to ask some tough questions today about what we have 
read and heard about Honda manipulating the system to report as 
little as possible. Companies need to know that there isn't 
anything safe about shorting safety. We need more automakers to 
make safety a priority and institute safety incentives. In the 
case of GM, they acknowledged their safety failure, their CEO 
volunteered to testify, and they hired a new safety officer to 
implement company-wide culture changes. I'd like to see that 
same level of urgency, that same admission of mistakes, and 
that same commitment to do better today.
    Complex safety technology can lead to complex problems, and 
the Takata airbag issues are complex. There were manufacturing 
issues and there were handling issues. As soon as one problem 
was identified another one sprang up. Now we are waiting to 
find out if humidity is the issue or if there are other 
manufacturing concerns. In the meantime, testing is slow and we 
are short on the replacement parts. What is worse, no one can 
say for sure that the replacement parts are any safer than the 
originals. We may be right back here after the replacements 
have reached their humidity half-life.
    But complexity is not an excuse for incompetence. We need 
to make sure that companies and regulators can keep pace with 
innovation. And we need a regulatory agency that breeds 
confidence and offers solutions, not one that is too often part 
of the problem.
    To our witnesses, I pose this question: What should I say 
to the mom in Michigan who asks me if she and her family are 
safe behind the wheel? Families all across the country expect 
the safety devices in their vehicles to work; they expect them 
to provide lifesaving protection they can count on in the event 
of an accident. They expect problems from earlier models to be 
reported and fixed, and they expect to be able to get a defect 
repaired when they find out about it. But sadly, I can't give 
those assurances right now. One thing is for sure--we have a 
lot of issues to resolve. I thank Chairman Terry for calling 
this hearing to start the process, and I want to thank him for 
his service as a leader of this Subcommittee and wish him well 
in his next endeavor.

    Mr. Terry. Thank you, Mr. Chairman. That is much 
appreciated.
    Now it is time to introduce our panel and----
    Mr. Waxman. Mr. Chairman.
    Mr. Terry. Oh, I am sorry. Getting ahead of myself. 
Gentleman from California is recognized for 5 minutes.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Waxman. Thank you very much, Mr. Chairman. Neither you 
nor I have left the committee yet, which we will do at the end 
of this year. And I thank our colleague, Ms. Schakowsky, for 
her kind words.
    Here is what we know so far about the Takata airbag 
recalls. We know that there has been a series of airbag recalls 
affecting millions of vehicles dating back to 2008, and we know 
that at least five people are dead and dozens have been injured 
by these defective airbags. There are questions about the 
Takata airbags that remain unanswered. We do not know exactly 
what Takata and auto manufacturers knew about these defective 
airbags and when they knew it.
    We do not know, and it appears that the National Highway 
Traffic Safety Administration, Takata, and the auto 
manufacturers do not know either the root cause of all these 
exploding airbags. So we have questions about whether the 
replacement airbag inflators are safe.
    New documents provided to the committee reveal new 
questions. The National Highway Traffic Safety Administration, 
known as NHTSA, recently requested a national recall of all 
defective airbags on the driver's side of the car, but has 
limited its action to regional recalls of passenger side 
airbags. But data we have received is raising new questions 
about the safety of passenger side airbags and the scope of 
recalls.
    Takata has tested over 2,500 driver and passenger side 
airbags for ruptures. None of the driver's side airbags 
ruptured in these tests. But Takata has observed over 60 
passenger side airbag ruptures. Given these testing results, we 
need to understand why NHTSA has requested a broader recall for 
driver's side airbags but has not made the same request for 
passenger side airbags.
    Mr. Chairman, I have some documents that I have referred to 
showing these test results, and I would ask unanimous consent 
to put them in the hearing record.
    Mr. Terry. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Waxman. We need to find answers to these questions, and 
I hope the committee will continue its investigation even after 
the time you and I, Mr. Chairman, will be gone. But we know 
enough now to begin our legislative work.
    Mr. Chairman, last April, I joined Representative 
Schakowsky to introduce H.R. 4364, the Motor Vehicle Safety Act 
of 2014. There are many important provisions in this 
legislation that would address problems that the committee 
found in our investigations of Takata's exploding airbags and 
the GM ignition switch failure. In both cases, auto 
manufacturers and auto parts manufacturers failed to provide 
key information to the Federal agency, NHTSA, in a timely 
fashion.
    And we learned last week of another major auto safety 
failure. For over a decade, Honda failed to report to the NHTSA 
more than 1,700 claims of injuries or deaths caused by 
accidents in its vehicles. Our legislation improves the early 
warning reporting system by making more reported information 
public and ensuring that NHTSA receives significantly more 
information for manufacturers on any fatal incident involving a 
safety defect.
    Additional data and greater transparency will help NHTSA 
identify deadly safety defects sooner. In both the GM and 
Takata cases, NHTSA has been criticized for failing to 
recognize and act quickly enough as evidence mounted of deadly 
auto defects. Our bill provides more resources to give them the 
additional enforcement authority and increases the fines for 
manufacturers that violate vehicle safety laws.
    Mr. Chairman, today we will learn of other needed fixes to 
the current system. I think our legislation is a good place to 
start. While I have very short time left, I would like to yield 
to the gentleman from Vermont the balance of my time.
    Mr. Yarmuth. Thank you very much.
    The two concerns that I have that I hoped are addressed in 
this is, one, public safety. Obviously, automobiles are 
extremely important but can be dangerous with the defect; and 
number two, public confidence. When a serious incident happens 
that threatens a life, costs us a life, it raises immense 
public insecurity around the driving public. And obviously, in 
my view, the burden has to be on the manufacturer and our 
governmental agencies to take the appropriate steps to revive 
and restore public confidence.
    Thank you.
    Mr. Terry. Thank you.
    Now it is the appropriate time to introduce the panel. I 
will introduce the panel as a whole and then we will start with 
Takata as the first speaking witness. So today our first panel 
representing Takata is Hiroshi Shimizu; from Honda; Rick 
Schostek, from BMW, Craig Westbrook; from Toyota, Abbas Saadat. 
I appreciate all of you being here. We will go from my left, 
your right and start with Mr. Shimizu.
    But before I ask you to start, I want to recognize that you 
are appearing with a translator because English is not Mr. 
Shimizu's first language. And while the committee will allow 
Mr. Shimizu to confer with the translator for the purpose of 
clarification, you will be required to answer the committee's 
questions in his own voice and in English. We have already 
discussed that, and I appreciate your acceptance of that.
    So Mr. Shimizu, you are now recognized for 5 minutes.

STATEMENTS OF HIROSHI SHIMIZU, SENIOR VICE PRESIDENT FOR GLOBAL 
QUALITY ASSURANCE, TAKATA CORPORATION; RICK SCHOSTEK, EXECUTIVE 
  VICE PRESIDENT, HONDA NORTH AMERICA; CRAIG WESTBROOK, VICE 
PRESIDENT, AFTERSALES, BMW OF NORTH AMERICA; AND ABBAS SAADAT, 
    NORTH AMERICAN REGIONAL PRODUCT SAFETY EXECUTIVE, VICE 
PRESIDENT, VEHICLE SAFETY AND COMPLIANCE LIAISON OFFICE, TOYOTA

                  STATEMENT OF HIROSHI SHIMIZU

    Mr. Shimizu. Thank you. Chairman Terry and Ranking Member 
Schakowsky, and distinguished members of the subcommittee, I am 
honored to be here on behalf of Takata Corporation.
    Mr. Chairman, Takata is dedicated to making products that 
save lives. Millions of Takata airbags have inflated properly 
preventing thousands of deaths and avoiding serious injuries in 
hundreds of thousands of accidents around the world. But any 
fear of even one airbag to perform as designed in an automobile 
accident is incompatible with Takata's mission. All of us at 
Takata know that the airbag inflator ruptures that has been the 
subject of recent recalls involve serious issues of public 
safety. We are deeply sorry about each case where Takata airbag 
has not performed as designed and the driver or passenger has 
suffered personal injuries or death.
    Takata is working closely with the automakers and NHTSA to 
support the ongoing recalls and field actions and to address 
the potential for inflator rupturing. We are increasing our 
production quality replacement kits to fulfill the automakers' 
orders. We are also devoting extensive efforts and attention to 
answering requests for information about these models from 
NHTSA and other investigators. We are committed to being fully 
transparent with the government.
    One important function of the regional field action is to 
retrieve inflators for testing and analysis. In the past 
several months, we have tested thousands of returned inflators 
in our Michigan facilities, and we are increasing our testing 
capacity. We regularly share all of these test results with the 
automakers and the NHTSA. Based on the data currently available 
and our best engineering judgment, Takata continues to believe 
that the public safety is best served if the area of high 
absolute humidity remains a priority for the replacement of 
suspect inflators.
    But make no mistake, we will take all actions necessary to 
advance the goal of safety for the driving public, including 
working to produce additional replacement units to support any 
further recalls that may be announced by automakers. Takata is 
also prepared to collaborate where feasible with other inflator 
producers to create additional production capacity for 
replacement units over the long term.
    We are confident that the inflators we are producing today 
are safe because we have confidence in the integrity of our 
engineering and our current manufacturing processes here in the 
United States and across the world. We believe that property 
manufactured and installed, the inflators we are producing 
today would work as designed to save lives for the expected 
life of the automobiles.
    To provided added quality assurance for the public and the 
automakers, Takata is forming an independent quality assurance 
panel to audit and prepare an independent report regarding our 
current manufacturing processes for the production of safe 
inflators, including inflator propellent. Upon completion, the 
panel's report will be made public.
    Thank you, Mr. Chairman.
    Mr. Terry. Thank you.
    [The prepared statement of Mr. Shimizu follows:]
  
  [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
  
  
    Mr. Terry. Now, the gentleman from Honda, Mr. Rick 
Schostek, you are recognized for your 5 minutes.

                   STATEMENT OF RICK SCHOSTEK

    Mr. Schostek. Mr. Chairman, Ranking Member Schakowsky and 
members of the subcommittee, thank you for this opportunity to 
testify. My name is Rick Schostek. I am executive vice 
president with Honda North America.
    I want to begin by expressing our deepest sympathies to 
those individuals and families who have been affected by these 
tragic incidents. We offer our sincere apologies to the 
families of those who have died, who have been injured, or who 
have been, in any way, inconvenienced due to the defects in the 
Takata airbags in our vehicles. Airbags save thousands of lives 
each year, but we recognize that even one customer who is 
injured or loses their life when an airbag does not perform as 
intended is one too many, and it is completely unacceptable.
    On November 17, NHTSA called for a nationwide recall of the 
driver airbag inflators that have been included in the regional 
safety improvement campaign undertaken in four states and 
territories with consistently high absolute humidity. We 
understand that Takata has not identified or acknowledged any 
defect of the driver airbag inflators, and thus far, Takata has 
not announced plans to follow NHTSA's request for a national 
recall. We want to inform you that Honda is going to expand our 
existing regional safety improvement campaign on affected 
driver airbag inflators to a national campaign. Why are we 
doing this? Because our customers have concerns and we want to 
address them.
    We believe this expansion and acceleration of current 
action, we believe there will be a part shortage that may 
occur, despite Takata's efforts to increase the supply of 
inflators. To further increase the parts supply, we have been 
in discussions with Takata and two other suppliers, Autoliv and 
Daicel, about expanding the production of replacement 
inflators. These talks have been encouraging, and we believe 
will ultimately reduce the duration of any shortage; however, 
until those parts are available, we will continue to discuss 
with NHTSA and Takata how to best manage the supply issue.
    Based on the information from them, we believe it is best 
to prioritize the replacement of driver airbag inflators in 
what are considered to be the highest risk areas in the 
country. In addition, Honda believes that all stakeholders 
would benefit from expert third-party testing of Takata airbag 
inflators that was announced yesterday as an industry-wide 
program. By coming together as an industry and sharing 
information and testing, and with Takata's continued 
cooperation, we believe we can achieve greater results more 
quickly.
    Let me briefly summarize how we got to this point. Between 
2008 to 2014, Honda has conducted seven national recalls 
related to specific Takata manufacturing defects. Since June of 
2014, Honda, along with other automakers, has been supporting 
NHTSA's request to conduct regional safety improvement 
campaigns in States and territories with high absolute 
humidity.
    We understand the urgency of the current situation, and we 
have been taking proactive steps to address the needs of our 
customers. In addition to the required first-class mail 
notification, we have made hundreds of thousands of phone 
calls, used overnight mail delivery, and routinely sent letters 
in both English and Spanish. We have also hired a search firm 
to help us locate hard-to-find customers in some circumstances. 
And importantly, for customers whose vehicles cannot be 
immediately repaired, Honda has instructed our dealers to 
provide loaner or rental cars at no cost to the customer.
    To summarize, we are going to expand the safety improvement 
campaign on affected driver bag inflators nationwide, 
prioritizing the high-risk areas. We are working with multiple 
suppliers to increase parts availability and we are 
participating in the joint industry research effort. Our entire 
company is operating with the greatest energy and focus to 
quickly address our customers' needs and concerns. In the days 
ahead, with every action of our company, we are dedicating 
ourselves to honor the relationship we have with our customers.
    Thank you.
    Mr. Terry. Thank you.
    [The prepared statement of Mr. Schostek follows:]
   
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
   
    
    Mr. Terry. And now Mr. Westbrook, you are now recognized 
for 5 minutes.

                  STATEMENT OF CRAIG WESTBROOK

    Mr. Westbrook. Thank you, Chairman Terry, Ranking Member 
Schakowsky, and members of the subcommittee for your invitation 
to participate in today's hearing. My name is Craig Westbrook, 
vice president of BMW of North America. I am here on behalf of 
our company representing the 70,000 people who have jobs 
provided and supported by the BMW group in the United States.
    In total, the BMW Group's presence is represented in 48 
States, this includes our North American headquarters in New 
Jersey, our financial services in Ohio, and our manufacturing 
facility in Spartanburg, South Carolina, just to name a few 
locations. In fact, BMW Group's South Carolina production site 
is the largest single exporter of vehicles by value in the 
United States of America.
    The BMW Group has been in the United States for nearly four 
decades. We have worked hard to become part of the fabric of 
the communities in which we are present. Central to our 
investments and commitment to the United States has been a 
focus on earning our reputation for delivering on our word, and 
building trust with customers and communities alike. Vehicle 
safety is fundamental to the BMW Group. Because of this, I 
highly appreciate the opportunity to appear today before this 
subcommittee.
    I will share a brief timeline of BMW North America's 
activities related to Takata airbag recalls. In May of 2013, 
after Takata informed BMW North America of production issues 
with certain inflators, we initiated a voluntary national 
safety recall. This involved the passenger front airbag on 
approximately 42,000 model year 2000 to 2003 BMW vehicles. In 
May of 2014, NHTSA met with Takata to discuss consumer-reported 
issues with certain passenger and driver airbag inflators.
    In mid-June, after follow-up calls with Takata, NHTSA 
opened a preliminary evaluation. In an unprecedented approach 
to determine the root cause and the potential safety risk NHTSA 
held a conference call with all affected automakers. During 
this call, automakers were asked for their support to conduct a 
voluntary parts collection campaign in specific high-humidity 
regions. BMW North America promptly agreed to participate in 
this campaign.
    In July of 2014, out of an abundance of caution, BMW North 
America expanded its voluntary campaign and previous 2013 
recall of passenger front airbags. On July 15, 2014, BMW North 
America notified NHTSA of the voluntary nationwide recall of an 
additional 574,000 vehicles. The next day, July 16, 2014, BMW 
dealers were notified of the recall after notification to 
NHTSA.
    Standard practice for notifying customers involves an auto 
company preparing a draft customer notification letter for 
NHTSA's review. In late August, NHTSA approved our letter. BMW 
of North America mailed its notification letters to our 
customers in mid-September using first-class mail as required 
by NHTSA regulation.
    Another way customers are informed of recalls is at our 
dealerships. When a customer visits a dealership, the service 
advisor at every BMW dealer conducts a vehicle inquiry for 
outstanding recalls. Once the VIN is identified, the service 
advisor cross-references the VIN against our recall database. 
If applicable, customers are informed that their vehicle is 
subject to a recall. Repairs are either taken care of on the 
spot or an appointment is scheduled as soon as possible.
    We have also made the recall information available on our 
consumer site, BMWUSA.Com. Additionally, the information is 
also available on the NHTSA site, www.SaferCar.gov. On either 
side, customers have the ability to access recall information 
just by entering their VIN. We even issued a press release 
regarding the Takata's airbag recall for BMW. In total, this 
voluntary nationwide recall affects approximately 616,000 model 
year 2000 to 2006 3 Series vehicles. NHTSA estimates over 7.8 
million vehicles industry-wide are currently affected bring the 
Takata airbag recall and parts collection campaign in the 
United States.
    BMW of North America is also currently conducting a 
voluntary regional parts collection campaign in certain states. 
This campaign affects the driver's front airbag on 
approximately 11,600 model year 2004 to model year 2006 BMW 3 
Series vehicles.
    We are significantly increasing our loaner fleet to provide 
any BMW customer who needs a loaner, rental vehicle, or 
alternative transportation of the customer's wish. I can assure 
the subcommittee that BMW of North America will continue 
working with NHTSA and Takata on a these issues. We will remain 
vigilant in identifying safety issues and proactive in 
addressing them.
    Thank you for your time and attention.
    Mr. Terry. Thank you, Mr. Westbrook.
    [The prepared statement of Mr. Westbrook follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
    
    
    Mr. Terry. Now, Mr. Saadat, you are recognized for your 5 
minutes.

                   STATEMENT OF ABBAS SAADAT

    Mr. Saadat. Chairman Terry, Ranking Member Schakowsky, and 
member of the committee, thank you for inviting me here today. 
My name is Abbas Saadat, and I am the regional product safety 
executive and the vice president at Toyota North America. I am 
a senior executive in the United States responsible for 
Toyota's interaction with NHTSA and currently have oversight 
responsibility for field action in the U.S. regarding the 
Takata airbag inflator recalls. I am an engineer by training 
and function.
    First, Toyota shares your goals of helping those affected 
by these recalls and keeping them safe. We are committed to 
resolve this issue for our customers as quickly, conveniently, 
and safely as possible. We believe the actions we have taken 
reflect this commitment. From the beginning, Toyota has 
responded to defect information from Takata, coordinated with 
NHTSA, and supported Takata and NHTSA in their ongoing 
investigation.
    In April of 2013, Toyota launched a nationwide recall for 
front passenger airbag inflators. This recall is still in 
effect today. In June of this year, we expanded the remedy for 
this recall to replace all affected Takata inflators. Also in 
June, in response to NHTSA's request to the industry, we were 
among the first automakers to recover airbag inflators for 
testing by Takata. In October, Takata provided testing data to 
Toyota and NHTSA that suggested the safety risk was highest in 
the area of consistently high absolute humidity. In response, 
we intensified our effort to reach customers in those humid 
areas, which was publicized nationwide.
    Throughout these recalls we have worked to alert customers 
and get them the information they need. Beyond our initial 
national outreach, we have mailed more than 300,000 
notification letters to known owners in the designated humid 
region. We also have made it easier for customers to find 
recall information on Toyota's Web site. In addition, we have 
started a secondary customer outreach program in humid areas 
that include telephone calls, email, and direct mail, and we 
are staffing our call centers to handle any increase in Takata-
related inquiries.
    At the same time, we are working to get replacement parts 
to Toyota dealers, and this effort is going well in humid 
regions. If parts are unavailable, we have empowered dealers to 
meet our customers' needs and minimize their inconvenience. For 
example, in humid areas, dealers can disable the front 
passenger airbag and affix a prominent glove box label that 
warns against using that seat until a replacement inflator is 
installed. Dealers are also making loaner vehicles available 
and towing affected vehicles for customers, if necessary.
    To this point, the faster we get replacement parts, the 
faster we can fix our customers' vehicles. Takata estimates 
that its supply will increase significantly starting this 
month. Like you, we want additional assurances about integrity 
and quality of Takata's manufacturing processes, particularly 
in the light of previous experiences. For instance, in 2010, 
Toyota had to recall certain Takata inflator in Japan to 
address a different manufacturing problem not involving U.S. 
vehicles.
    In terms of testing, we have conducted and continued to 
conduct some testing on Takata inflators, and we have also 
inspected Takata production facilities. Additionally, we have 
retained an independent engineering firm to evaluate affected 
Takata inflators and replacement parts. Separately, Toyota is 
inviting all affected automakers to participate in a joint 
industry-wide initiative to conduct independent testing of 
Takata airbag inflators.
    Toyota will further address the issue of testing in our 
response to NHTSA's recent general order and ongoing 
communications with the agency. Again, our nationwide recall 
remains in effect, and we plan to replace all involved 
inflators as parts become available. In closing, Toyota is 
taking this issue very seriously. We will continue to respond 
promptly to new development and do what is best for our 
customers.
    Thank you, and I am happy to answer your questions.
    Mr. Terry. Thank you, Mr. Saadat.
    [The prepared statement of Mr. Saadat follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
    
    Mr. Terry. At this time, we are now to the question-and-
answer period, and I have the opportunity to ask the first 
questions.
    Mr. Shimizu, following NHTSA's June, I think it was 19, 
2014, request to Takata and 10 vehicle manufacturers to 
participate in a regional field action, how many passenger side 
and driver's side airbag inflators have been tested to this 
date? So June 14 to today.
    Mr. Shimizu. To my knowledge, up to today, we complete the 
test around 4,000 pieces.
    Mr. Terry. Now, the 4,000 tests, are they evenly divided 
between passenger and driver's side?
    Mr. Shimizu. Most of the product is the passenger side. And 
I think for driver's side, quantity is about, I believe, around 
400.
    Mr. Terry. 400?
    Mr. Shimizu. Yes, 400.
    Mr. Terry. So 3,600 of the tests were on the passenger 
side?
    Mr. Shimizu. Yes.
    Mr. Terry. So out of the 3,600 on the passenger side 
airbags, how many ruptures have occurred?
    Mr. Shimizu. I don't have an accurate number, but I believe 
around, a little bit less than 60.
    Mr. Terry. Less than 60, OK. How about on the driver's side 
of the 400 that were tested?
    Mr. Shimizu. Zero at this moment.
    Mr. Terry. Zero. How many tests are you doing currently, 
per day?
    Mr. Shimizu. Currently, we are testing about 100 inflators 
per day.
    Mr. Terry. One hundred what per day?
    Mr. Shimizu. One hundred pieces per day.
    Mr. Terry. Pieces. Are those all passenger, or again, is it 
both?
    Mr. Shimizu. It is sometimes only passenger side, sometimes 
only driver's side, or mix. It depends on what kind of inflator 
we collected from the region.
    Mr. Terry. Very good. Then with your continued stance on 
opposing a national recall, what about Takata's test results 
leads you to believe that a national recall of all driver's 
side airbags is not needed or appropriate?
    Mr. Shimizu. Based on the data we are collecting from the 
inflator from the region and also other regions, the data still 
support that we should remain focused on the region with high 
temperature and high humidity.
    Mr. Terry. OK. Now, the crashes in California and North 
Carolina led NHTSA to believe that the Takata airbag inflators 
pose a risk outside of the States with high absolute humidity. 
So why do you disagree with NHTSA's conclusion here?
    Mr. Shimizu. First, let me just state what I mentioned in 
opening statement. We are not opposing NHTSA's direction. We 
will commit to take any action necessary to advance the goal of 
safety for the driving public, that also includes working to 
produce the additional replacement kits to support the further 
recall that was announced by automakers. So once automakers 
decided to expand or change their range of recalls, we support 
it.
    And regarding your question about California event and 
North Carolina event, the California event, the vehicles are 
covered by current regional recall, but also I want to explain 
that we do some investigation about that event but it is not 
completed yet and still under investigation. And regarding the 
event in North Carolina, at this time, we have no chance to 
check the vehicles and action materials. We only have the 
production, the serial number information, and the pictures. So 
we will inspect the actual vehicles later together with NHTSA 
and automakers and Takata.
    Mr. Terry. Very good. Well, I only have 28 seconds left, so 
I will yield back my time and recognize the ranking member from 
Illinois for 5 minutes.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    Mr. Shimizu, am I saying it correctly?
    Mr. Shimizu. Yes.
    Ms. Schakowsky. In the letter Takata sent to NHTSA 
yesterday, the company rejected a national recall. Your 
director of product safety wrote that ``Under the NHTSA 
statute, only manufacturers of motor vehicles and replacement 
equipment are required to decide in good faith whether their 
products contained a safety-related defect, and if so, to 
conduct a recall.''
    And Mr. Chairman, I would like to submit this letter for 
the record.
    Mr. Terry. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Ms. Schakowsky. Mr. Shimizu, let me ask you, do you agree 
with the conclusions in the letter sent by your company 
yesterday?
    Mr. Shimizu. Yes, Congresswoman.
    Ms. Schakowsky. So Mr. Shimizu, do you agree that Takata is 
not required to decide in good faith whether your products 
contain a safety-related defect?
    Mr. Shimizu. Congresswoman, I agree with that statement. It 
is the best data we have, that doesn't support the change from 
regional recall to national recall at this moment.
    Ms. Schakowsky. So are you telling us that your company has 
no legal responsibility to determine if airbags are defective 
and to recall them?
    Mr. Shimizu. If our products are defective and supported by 
scientific data, we are responsible for that.
    Ms. Schakowsky. So you believe that you are responsible for 
that if they are found to be defective, but it is really up to 
you to decide that?
    Mr. Shimizu. Yes. We need extensive research of the 
products involved in the incident or whatever. So once we 
determine that it is defective, yes, it is our responsibility.
    Ms. Schakowsky. So moving forward, Takata will be producing 
millions of replacement airbags. Are the replacement airbags 
that you are having installed as a result of the recall safe?
    Mr. Shimizu. Yes. It is true that we have issued in the 
past, and we identified the root of cause and addressed all 
issues we had in the past and took care of this. And currently, 
products including replacement kits we are producing from well-
controlled manufacturing processes and should perform a design 
and I consider is safe.
    Ms. Schakowsky. So you believe that you have, in fact, 
discovered the root cause of the ruptures?
    Mr. Shimizu. Excuse me?
    Ms. Schakowsky. Are you sure and certain that you have 
discovered, Takata has discovered the root cause of the airbag 
ruptures?
    Mr. Shimizu. Yes, we identified the root cause of the 
issues of the products we did a recall in the past. However, we 
still continue the investigation for the incident that happened 
in an area with high humidity and high temperature. So we need 
to continue to investigate these inflators collected from these 
regions.
    Ms. Schakowsky. So are you saying that it is only in high 
humidity areas that this is a problem, that that is the root 
cause?
    Mr. Shimizu. We considered it a main contribution to the 
problem is the high temperature and absolute humidity, together 
with age of the products and probably maybe a combination with 
manufacturing issues. That is why we collect inflators from 
these regions with support from all the vehicles at NHTSA and 
then continue to analyze these inflators.
    Ms. Schakowsky. Interesting.
    So who is the highest ranking Takata official that has 
actually signed off on production of the airbags that are now 
being recalled? The ones that are being recalled, who is the 
highest ranking official that has actually signed off on that?
    Mr. Shimizu. Any court-related issue and statement from a 
company, I usually sign.
    Ms. Schakowsky. You sign it, OK.
    And who is the highest ranking Takata official with 
oversight over the production approval process?
    Mr. Shimizu. Production approval is usually signed by head 
of operation, and also production, which means I sign.
    Ms. Schakowsky. And let me just ask each of the 
manufacturers--oh, and one more question for you, Mr. Shimizu: 
Have any of these individuals, including yourself, been held 
accountable for these decisions?
    Mr. Shimizu. Excuse me, can I ask my interpreter?
    Ms. Schakowsky. Yes.
    [Confers with interpreter.]
    Ms. Schakowsky. Have there been consequences?
    Mr. Shimizu. We are more focused on collecting problems and 
we are not addressing that area yet.
    Ms. Schakowsky. OK. But let me quickly, could I ask just 
yes or no, are Toyota, Honda, and BMW cars on the road right 
now nationally both for drivers and passengers with Takata 
airbag safe? The real question is, would you tell your children 
and spouses there is no danger of this type of rupture, so keep 
on driving? Mr. Schostek and then----
    Mr. Schostek. Congresswoman, we want our customers to be 
safe and to feel safe in our cars. As you have heard, there are 
national recalls in effect. What we want our customers to do 
is, first, understand whether their car is subject to a recall. 
They can do that either by checking our Web site, by calling 
us, or by visiting their local dealer and finding out if they 
are subject to a recall. If they are, we want that car, we want 
to replace that part. If they are not subject to a recall, we 
believe they are safe in those cars.
    Ms. Schakowsky. Mr. Westbrook.
    Mr. Westbrook. Yes.
    Ms. Schakowsky. Mr. Saadat.
    Mr. Saadat. Please keep in mind, for Toyota vehicles, the 
problematic inflators are all on the passenger side, not 
driver's side. I just want to make that clear for Toyota 
vehicles. But in terms of----
    Ms. Schakowsky. How do you know that all the deaths were on 
the driver's side? All the deaths, not necessarily in Toyota, 
but all the deaths----
    Mr. Saadat. No, I understand.
    Mr. Terry. Gentlelady's time has expired.
    Ms. Schakowsky. Thank you.
    Mr. Terry. Chair now recognizes the full committee chair, 
Mr. Upton.
    Mr. Upton. Thank you, Mr. Chairman.
    And I want to go back to my opening statement where this 
committee has been very involved in auto safety, rightly so, 
for a lot of years. And I can remember rolling a flawed tire 
down this very dais about 10 years ago, really seeking action. 
And we did it. We worked at the end of the session, we 
significantly raised the fines, and we added criminal sanctions 
for violations: Jail. It was tough to get through, but we got 
it done. And I want to say it was certainly bipartisan, and it 
was pretty close to unanimous in terms of what we did.
    And what that TREAD Act did was really forcing the 
manufacturers to share details with the regulator to make sure 
that consumers, us, got the information and felt safe behind 
the wheel. Now, there is a report that came out this morning, I 
have not read it, just literally within the last half hour or 
so. But it says, ``Reuters is reporting today that Takata ran 
an investigation into an airbag inflator that ruptured in a BMW 
as early as 2003, and is that additional testing for airbag 
inflator defects was done in 2004, 10 years ago.'' That was the 
time when we were passing the TREAD Act. ``Both of these 
revelations would indicate that Takata was investigating this 
hazard well before it has been previously disclosed.''
    Can you comment, Mr. Shimizu, on the 2003 and 2004 
investigations? Are they related to the current recall?
    Mr. Shimizu. Congressman, my answer is no.
    Mr. Upton. You can use the mic.
    Mr. Shimizu. Excuse me, can you hear me now? OK. My answer 
is no. Regarding the BMW incident in 2003, to my knowledge, it 
happened in Europe, I believe Switzerland, and that the cause 
of the problem is not the inflator propellent issue we are 
talking about right now. That was manufacturing issues that 
caused that problem, so it is not same as the problems we are 
discussing right now.
    Mr. Upton. So they are not related, is what you are saying?
    Mr. Shimizu. Not related to the current issues.
    Mr. Upton. So do you know whether the issue today is 
manufacturing-related, or is it a design flaw in the inflator 
itself? Do you know the answer to that question? Yes or no?
    Mr. Shimizu. In my knowledge, the current issue is most 
likely manufacturing-related, not design-related.
    Mr. Upton. It is not manufacturer related?
    Mr. Shimizu. It is manufacturer related.
    Mr. Upton. It is manufacturer-related, OK. Thank you.
    Mr. Schostek, in 2011, a Honda associate recognized an 
issue related to the recording of a verbal date code in a legal 
file management system that could have affected the accuracy of 
the early warning reports. And additionally, in 2012, NHTSA 
made Honda aware that it was underreporting claims. Why didn't 
Honda follow up with the issue in 2011, and why didn't Honda 
take conclusive action in 2012?
    Mr. Schostek. Chairman Upton, thank you very much for that 
question. And I understand your involvement in the 
establishment of the TREAD Act more than 10 years ago, and I 
can understand the disappointment that you feel by the 
shortcomings that have been evidenced by our company. And I 
want to explain to you what happened. The problem that we had 
with underreporting in the TREAD Act is a systematic problem 
that began at the outset of the TREAD Act. As you know, it went 
into effect in 2003. Our staff at the time did not properly 
program computers and set up systems that would accurately let 
data flow and feed into TREAD reports.
    It is difficult for me to say, sir, but that setup 
continued unchecked until 2011, 2012. You are right that an 
internal Honda associate did mention a concern as well as a 
discussion with NHTSA. They asked about the omission of certain 
incidents in our TREAD reporting. We did look into that, sir, 
in early 2012. We did not look into it effectively. We found 
one of what eventually we came to know would be three problems. 
We found one problem and took substantial action to address 
that one problem, but, sir, it did not complete our compliance 
requirements.
    Mr. Upton. Can I just have an additional minute? So what 
was----
    Mr. Terry. Without objection.
    Mr. Upton. And we are going to be asking NHTSA, who is 
filing, what was NHTSA's response when--you did correct it with 
NHTSA; is that not right? I mean, you did fess up, in essence, 
to NHTSA, right?
    Mr. Schostek. In 2012, sir, we had a problem about 
converting oral claims into written claims. We made what we 
call a countermeasure internally to report those written 
claims.
    Mr. Chairman, we did not close the loop with NHTSA, and we 
did not act with the urgency we needed to.
    Mr. Upton. Did NHTSA come back and say, what happened? Was 
there any dialogue? What was NHTSA's response? I mean, did----
    Mr. Schostek. As you know, sir, we engaged a third party to 
do an audit in September of this year, and we had a dialogue 
with NHTSA in October of this year about the preliminary 
findings of that audit. They actually found--I am glad that we 
used an outside third party to do that audit because they found 
two more instances of our noncompliance.
    So, based on that, we had discussed that with NHTSA, our 
preliminary findings, in mid-October of this year. As you know, 
we just submitted our information to NHTSA on Monday, and we 
are waiting for their response.
    But I think what we have done in the meantime, sir, is to 
begin to fix the computer programs, to provide training, to 
augment the staffing, but, most importantly, to establish 
accountability within our organization. There are many 
functions that feed information for TREAD, and we did not 
designate a single responsible person, and that is our failing, 
sir.
    Mr. Upton. OK.
    I yield back.
    Mr. Terry. Thank you.
    Now the chair recognizes the full committee ranking member, 
Mr. Waxman.
    Mr. Waxman. Thank you very much, Mr. Chairman.
    On November 18, NHTSA announced its intention to expand the 
regional recall of driver-side airbags to a nationwide recall. 
And on November 26, NHTSA formally requested that Takata expand 
to a national recall. But yesterday Takata responded that, 
quote, ``the currently available reliable information does not 
support a nationwide determination of a safety defect,'' end 
quote.
    Mr. Shimizu, why does Takata believe that there is not 
enough evidence to support a national driver-side airbag 
recall?
    Mr. Shimizu. Yes, Congressman. As you know, we were 
collecting the data from the inflator we collected for the 
regional recalls. And according to the data we have, there is 
actually zero anomaly from driver side. And then we have some 
anomaly found in the passenger side, but all of them come from 
Florida and Puerto Rico.
    So, based on these datas, we consider that still we should 
stay focused on this area. And, at this moment, there is not 
enough scientific evidence to change from regional recall to 
national recall. That is the background.
    Mr. Waxman. Do you recall the same thing is true for the 
regional recalls of passenger-side airbags?
    Mr. Shimizu. As I said, Congressman, all anomalies found in 
the passenger-side inflator came from Florida and Puerto Rico.
    Mr. Waxman. OK.
    Now, let me see if I can understand this decision a bit 
more from the consumer prospective. In the continental United 
States, the recall only covers cars in Florida; isn't that 
right?
    Mr. Shimizu. Are you talking about regional recalls?
    Mr. Waxman. Yes.
    Mr. Shimizu. Yes. The regional recalls covered Florida, 
Puerto Rico and Hawaii and Virgin Islands, and some automakers 
covered even more around the Gulf Coast.
    Mr. Waxman. But if I have a car with a Takata airbag in 
Yulee, Florida, just south of the Georgia line, it is an urgent 
matter that I bring it in for a recall. But if I instead live 
15 minutes north of that line in Kingsland, Georgia, I gather 
the position is that my car is perfectly safe. Is that a 
correct assumption?
    Mr. Shimizu. Based on the data we collected, temperature 
and humidity and also what we call the dew point, and that is 
the background about how we can determine the area which we 
focus on that. So that is covered quite a wide area. And if it 
is a vehicle used or registered outside the area, we consider 
it safe and no concern at this moment.
    Mr. Waxman. OK.
    Mr. Schostek, does that make sense to you? Fifteen minutes 
north, you are OK, but if you are in Florida just below the 
line, you have to go in and get a replacement?
    Mr. Schostek. Right, Congressman Waxman. I think it is also 
important, as we talk about this, to distinguish the recalls 
regarding the manufacturing defects from this more recent 
regional recalls. I just want to make sure that the committee 
understands that the recalls that we conducted from 2008 
through 2014 that were related to specific Takata manufacturing 
defects, those were national in scope. So, for those recalls, 
we believe we understand the cause of the problem--that is, 
Takata's manufacturing defects. And those cars are being 
recalled no matter where they are.
    What we are talking about now is from 2014 to the present, 
so approximately the last 5 months. And all of us in the 
industry have been asked by NHTSA to do a safety improvement 
campaign to gather information and recall or bring back the 
inflators that are in those high-humidity States. I know when 
we looked at that, we included contiguous counties, and we 
expanded beyond what NHTSA asked us to do, but----
    Mr. Waxman. But the idea is that if you are in certain 
areas the heat and humidity would require you to comply with a 
regional recall, but--let me just ask a different question.
    If I live in, say, Houston, Texas, it is slightly less 
humid there, but not by much, than Jacksonville, Florida. Can 
we be certain that my car won't develop the same defect but 
perhaps 2 or 3 years later?
    Mr. Schostek. That is a good question, Congressman, and we 
asked that question ourselves. And that is why we expanded our 
regional recall to include Texas.
    Mr. Waxman. Yes.
    And, Mr. Shimizu, do you still not know the root cause of 
these airbag failures?
    Mr. Shimizu. Congressman, if the question is asking about 
regional recalls, these are----
    Mr. Waxman. But I am just asking, do you know the root 
cause of this problem?
    Mr. Shimizu. At this moment, we don't have the root cause. 
We know the factors may contribute to this problems, so that is 
why we are still researching these inflators collected from 
regions.
    Mr. Waxman. Well, the confusing, contrary, uncertain, and 
sometimes purely nonsensical information that comes from Takata 
is confusing to drivers. They don't know whether their cars are 
safe.
    This confusion is exacerbated by the different ways that 
auto manufacturers are handling the situation. For example, 
until this morning, Honda had chosen to expand its regional 
action to 13 high-humidity states and territories. This 
morning, we learned that Honda will be expanding to a national 
recall of driver-side airbags.
    Mr. Schostek, when and why did Honda decide to expand its 
recall to the 13 States and territories?
    Mr. Schostek. Congressman Waxman, we have heard this 
morning about NHTSA's request to Takata and the answer that 
Takata gave yesterday. We have been seriously considering, as 
Honda, expanding the safety improvement campaign nationally so 
we can gather more data nationally. Once we understood that 
answer yesterday from Takata, we decided to take action. We 
want to take care of all of our customers on a nationwide 
basis.
    However, sir, as I said in my opening statement, we still 
believe that the highest risk is in the southern areas, those 
high-humid areas, and that those should be prioritized with 
respect to replacement parts.
    But we believe that our customers have concerns, and our 
job is to satisfy our customers. So we want to expand the 
recall--the safety improvement campaign to include all areas of 
the country, again, keeping a priority on those regional areas.
    Mr. Waxman. OK. Thank you very much.
    Thanks, Mr. Chairman.
    Mr. Terry. The gentleman's time has expired.
    The chair recognizes the gentlelady from Tennessee, the 
vice chair of the full committee.
    Mrs. Blackburn. Thank you, Mr. Chairman. And I thank you 
for your good work on this.
    And I thank our witnesses for being willing to answer these 
questions, because we are trying to get to the root cause of 
this--Mr. Waxman just mentioned that term.
    And, Mr. Shimizu, I want to go that direction with you. 
Let's go specifically to the November 19th New York Times 
article that tries to give a framework, a timeline, a 
chronology to this.
    We can solve this problem, and, by and large, we have 
talked about what we are doing about this, what you all are 
doing about it. But let's go back to how we got into this mess 
in the first place and why we got into this mess in the first 
place. And that is covered in some part in this New York Times 
article.
    And, Mr. Chairman, I would like to submit this for the 
record. I think it speaks to both Mr. Waxman's question and to 
mine.
    Mr. Terry. You said ``this.'' Would you please----
    Mrs. Blackburn. New York Times article.
    Mr. Terry. Without objection, so ordered.
    Mrs. Blackburn. OK. Thank you, Mr. Chairman.
    [The information appears at the conclusion of the hearing.]
    Mrs. Blackburn. Mr. Shimizu, I want to read to you from the 
article. It says, ``By 1999, Takata researchers in Michigan, 
pressured by executives, developed a propellant based on 
ammonium nitrate,'' he said, ``but the engineering team in the 
Moses Lake plant raised objections to basing a propellant on 
such a risky compound.''
    Now, let's talk about that for a minute, because I also 
found Michael Britton, a Takata chemical engineer, stated the 
following: ``It was a question that came up. Ammonium nitrate 
propellant, won't that blow up?'', a question he asked. And, 
number two, Mark Lillie, a former senior engineer with Takata: 
``It is a basic design flaw that predisposes this propellant to 
break apart and, therefore, risk catastrophic failure in an 
inflator.''
    And these all were before you all made this decision. You 
made the decision anyway to move forward with this. Now, that 
is a problem for us and for the American consumer and for the 
individuals that have lost their lives or have lost their 
eyesight or have been hurt by this.
    So what was Takata's response to the concerns raised by Mr. 
Britton and Mr. Lillie?
    Mr. Shimizu. Congresswoman, let me explain about materials, 
ammonium nitrate we are using. And, first, that material itself 
is safe and stable. And I am not aware of----
    Mrs. Blackburn. Mr. Shimizu----
    Mr. Shimizu. Yes.
    Mrs. Blackburn. I am sorry to interrupt you. That is not 
the response that I am asking you for. I understand what 
ammonium nitrate is. I know very well what it is.
    I am asking you: You had two people, a senior engineer and 
a chemical engineer, that brought it to your attention that 
this was not a wise choice. I am asking you, sir, when they 
brought this to your attention, what did you and your team at 
Takata say in response to these engineers? Did you blow it off 
and say, it doesn't matter, it costs less? Did you say, we 
think we can get by with this because it is an aggressive 
propellant? I want to know what your response was to them.
    Mr. Shimizu. Congresswoman, I was not involved at that 
time. However, I know it has been a lot of discussion about the 
selecting materials for a new type of inflator, and we 
considered the chemical properties and also combustion 
characteristic of the materials, both advantages and 
disadvantages. And we decided that we can control--that we 
are--some weak area and we can----
    Mrs. Blackburn. Mr. Shimizu, you are avoiding the question, 
so let's move on.
    What was your first date of employment with Takata? When 
did you start to work for them?
    Mr. Shimizu. With Takata?
    Mrs. Blackburn. Yes.
    Mr. Shimizu. Since 1978.
    Mrs. Blackburn. Since--oh, so you were around.
    Mr. Shimizu. Yes.
    Mrs. Blackburn. So we established that you were around 
during that time in 1999 when this decision was made. So let me 
ask this another way. Did any other Takata employees or outside 
parties warn Takata about using ammonium nitrate propellant in 
its airbags, yes or no? Anybody else--did you or anybody else 
warn them?
    Mr. Shimizu. I am not aware of that.
    Mrs. Blackburn. You are not aware of that. So you don't 
know if anybody else other than these two engineers warned them 
that this was a really bad idea. You don't know that.
    Mr. Shimizu. No.
    Mrs. Blackburn. Were concerns about using an ammonium 
nitrate propellant relayed to executives at Takata, yes or no? 
And do you know who or when?
    Mr. Terry. Go ahead and answer the question.
    Mr. Shimizu. Can I confirm your question, please?
    Mrs. Blackburn. OK. Were the concerns about using ammonium 
nitrate as a propellant relayed to executives at Takata? Do you 
know if it made it up the food chain to the C Suite?
    Mr. Shimizu. I don't know about that.
    Mrs. Blackburn. You don't know. OK. Well, you have a good 
team with you. We will allow you to respond.
    My time has expired. Let's see. I have five other 
questions. I will submit these in writing, and we would like an 
answer before the end of the year.
    Yield back.
    Mr. Shimizu. Yes.
    Mr. Terry. Thank you.
    The chair now recognizes the gentleman from Maryland. Mr. 
Sarbanes, you are recognized for 5 minutes.
    Mr. Sarbanes. Thank you.
    Mr. Shimizu, Takata, as I understand, has agreed to the 
recall, at its expense, with respect to both driver-side and 
passenger-side airbags within the regions where there is high 
absolute humidity. Is that correct?
    Mr. Shimizu. Yes.
    Mr. Sarbanes. OK.
    And you said to Congressman Waxman a moment ago that you do 
not yet know the root cause of the defect or the problem with 
the deployment of those airbags with respect to that regional 
recall. Is that correct?
    Mr. Shimizu. Congressman, we haven't identified the root 
cause yet. That is why----
    Mr. Sarbanes. OK.
    Mr. Shimizu [continuing]. We continue collecting the 
inflator. But we have a strong opinion of what will contribute 
to this defect.
    Mr. Sarbanes. OK.
    Mr. Shimizu. Which is high humidity and temperature and the 
life of the product.
    Mr. Sarbanes. Mr. Chairman, I am good to take more time 
than you want to give me, but the timer is not running. So I 
just thought I--that was a courtesy. I will get that back later 
sometime.
    Mr. Terry. That is nice of you.
    Mr. Sarbanes. Appreciate it.
    My question is, if you don't know the root cause, how do 
you know that the replacement part that you are providing 
solves the problem? Is it different enough in its design that 
you have confidence that the replacement doesn't continue to 
have the same problem?
    Do you understand----
    Mr. Shimizu. Yes.
    Mr. Sarbanes [continuing]. My question?
    Mr. Shimizu. Congressman, the current product we are 
producing right now is produced from the most recent line, 
which is all countermeasure and the lessons learned from the 
previous issues was built into that. So I am quite confident 
that products produced from the current production line, 
including replacement kits, should work as designed and are 
safe.
    Mr. Sarbanes. OK. So the production line--the issue is that 
you can't yet quite identify the root cause that was part of 
the prior production line that created this problem, but you 
have confidence that, as a result of the new production line, 
whatever that problem might have been is now solved going 
forward----
    Mr. Shimizu. Yes.
    Mr. Sarbanes [continuing]. With respect to the replacement 
vehicles.
    Mr. Schostek, you implied the idea that, not withstanding 
Takata's decision to resist a national recall, that to the 
extent the auto manufacturers on their own initiative decide to 
expand a recall nationally that, as a practical matter, we 
could end up having a national recall. Although I guess there 
are some differences of opinion by the manufacturers as to the 
scope of that, and I am going to ask Mr. Westbrook about that 
in a moment.
    I take it that if you on your own initiative decide to 
expand the recall beyond what Takatais agreeing to, you are 
making a decision to, at least on the front end, incur the 
expense of getting that replacement airbag in place and then 
you will, I guess, down the road try to recover that? Is that 
how it works? As opposed to where they have agreed to the 
recall, the expense is absorbed on the front end by Takata; is 
that right?
    Mr. Schostek. Congressman Sarbanes, for us, we start and 
end with our customers, what is right for our customers. And 
that is the action we are trying to take here.
    It is true that, as an industry, with regard to what have 
been regional recalls up to this--regional safety improvement 
campaigns up to this point in time, and now we are going to 
make it for our vehicles a national safety improvement 
campaign, it is true that we have theories but we don't know 
the cause. So our interest is getting as much information as 
possible.
    It is also why, as was announced yesterday--and we 
appreciate Toyota's leadership on this issue--that we as 
manufacturers have decided we need to share--we need to, first 
of all, engage an expert outside third party. Takata will 
continue to do their tests, and we will continue to receive 
that information from them. But I think, as an industry, as an 
auto industry, we are saying it is going to be better for all 
of us if we can gather information more quickly. And it is in 
all of our interests, Congressman, to find the cause and then 
to be able to reassure all of our customers and reassure the 
public of safety on the roads.
    Mr. Sarbanes. Thank you.
    Let me just--Mr. Westbrook, let me ask you, because I have 
just 1 minute, I understand that Honda supports a national 
recall on the driver-side airbags. And on the passenger side--
which, by the way, on the driver side, Takata does not support 
that, and Takata does not support it on the passenger side.
    But BMW does support it on the passenger side, although not 
on the driver side, right? And that that may be because BMWis 
concluding that there may be some other problem specific to the 
passenger-side airbags that you think goes beyond or is 
separate from this other issue we have been talking about.
    Can you just briefly--you have 15 seconds--explain this 
discrepancy?
    Mr. Westbrook. Thank you.
    We have a unique design on the passenger side that might 
not be known to the committee. Our passenger-side airbag is 
unique in its design and its manufacturer.
    From Takata, in 2013, we had our first indicator through 
production processes that the parts were out of specification. 
In 2014, they gave us another indication that, due to high-
absolute-humidity areas, we might have a risk. And we took, 
then, the third indicator that our unique design could create 
the risk of additional airbag-related injuries--not related to 
a ruptured inflator, because as of today we have never seen one 
single ruptured inflator.
    So we are simply trying to cover our risk and look after 
our customers. We think they deserve that.
    In terms of the national campaign, we are complying with 
what NHTSA has sanctioned, which is--excuse me, the local 
campaign or the regional campaign. That was what we are working 
on right now.
    And we will begin independent testing. We are under 
contract with a well-known European testing organization that 
actually specializes in propulsion and airbag safety. This is 
underway, and we expect to get results. We will share those 
results. We will collaborate. We will make everything--as we 
have always tried to get ahead of this thing and just do the 
right thing.
    Mr. Sarbanes. All right.
    Thank you.
    Mr. Terry. Thank you.
    The gentleman's time has expired.
    The chair now recognizes the chairman emeritus. The 
gentleman from Texas is recognized for your 5 minutes.
    Mr. Barton. Well, thank you, Mr. Chairman.
    You know, here we go again. I wasn't here for the opening 
statements, but it seems like every few years we have a hearing 
with some automobile manufacturer that they have had some sort 
of a defective part and they treated it as more of a 
manufacturing quality-control issue and not as a serious safety 
issue.
    It is ironic, in this case, that the part is something that 
is supposed to protect the driver or the passenger, and it 
turned out that the airbag or the deflator or something in the 
airbag was defective.
    None of us--I mean, we have some people that are 
technically trained on the committee, but we are not automotive 
engineers or safety experts. So, we ask questions of you folks 
and then later on of NHTSA, and then we kind of cross our 
fingers.
    I am just puzzled and disappointed that, here we go again.
    So my most serious questions will be reserved for the NHTSA 
witness in the second panel, but I would ask Mr. Shimizu if--
and I may not be pronouncing your name correctly--in the short 
term, the old saying is ``don't dig the hole any deeper.'' I am 
told by my friends at General Motors that there is a shortage 
of repair kits to do the replacements. And there are a couple 
of GM products that were using the Takata airbags.
    How soon will you have enough good kits available so that 
we can go ahead and do the recalls for the cars that we have 
already recalled?
    Mr. Shimizu. Congressman, regarding our capacity of the 
replacement kits, we are now boost up to 350,000 pieces per 
month, and it is going to increase to 450,000 pieces per month 
the January by adding 2 more lines.
    And we continue to work on--are discussing with automakers 
to increase the capacity. And as Mr. Schostek mentioned, that 
is we also are taking option to evaluate our competitors' 
inflator if it is feasible.
    So we would take every action necessary to support to speed 
up the replacement of the----
    Mr. Barton. OK. Well, now, I am just an old Aggie engineer, 
so I am--but there are about 7 million cars, I think, that 
have, all in all, been recalled. At 450,000 kits a month, that 
is a year and a half or longer. Do you think that is 
acceptable?
    Mr. Shimizu. It is not speedy enough. We understand the 
issues. So that is why we are discussing to add the capacity of 
the productions, but it takes a month to be ready for that. But 
we do everything we can do at this moment.
    Mr. Barton. Well, what does the driver do with a vehicle 
that is in a recall that is not going to be repaired for 
another year and a half or 2 years? Do you just disconnect the 
airbag? Just hope you don't have----
    Mr. Shimizu. Not on the driver side. No, it is impossible. 
I understand the situation, so that is why----
    Mr. Barton. I mean, I am not trying to be rude about it, 
but----
    Mr. Shimizu. So, actually, one, the data shows that still 
we should focus on regional area. In that case, we can supply 
to fulfill the demand of our carmakers at this moment, if we 
focus on that area first as a priority. Or if we do a phase, 
taking a phase, that is, by adding production capacity, we can 
catch up the supply-ability to the demand.
    Mr. Barton. Well, my time is about to expire.
    Are there other manufacturers that manufacture an 
equivalent airbag product that you could substitute for your 
airbag and repair these cars that have already been recalled? 
Or is that just not, technically and engineering-wise, 
feasible?
    Mr. Shimizu. It requires some validation tests, but is a 
certain competitor's inflator could be used to replace----
    Mr. Barton. I would suggest that you look at that.
    Mr. Shimizu. Yes, Congressman.
    Mr. Barton. Because the sooner the cars that have already 
been identified are repaired, the better off you are going to 
be, in my opinion.
    With that, Mr. Chairman, I yield back.
    Mr. Lance. [Presiding.] Thank you very much, Mr. Barton.
    The chair recognizes the gentleman from Kentucky, Mr. 
Yarmuth.
    Mr. Yarmuth. Thank you, Mr. Chairman.
    And I thank the witnesses for their testimony today.
    You know, I wish I could say I felt better about this 
situation now than I did when I talked about into the room, but 
I think I feel a little bit more uncertain than I wish I did.
    I have a little bit of a personal history with this issue 
because I was a young Senate staffer on the Commerce Committee 
in the early 1970s when Ralph Nader came to the Congress and 
urged the mandatory airbag legislation. And so I know we have 
been putting airbags in cars for a long time.
    Mr. Schostek--I would like to hear from all the 
manufacturers how long you have been putting airbags in your 
vehicles.
    Mr. Schostek. Congressman, it is since the 1990s, I am 
pretty sure, the 1990s.
    Mr. Yarmuth. Early 1990s.
    Toyota?
    Mr. Westbrook. I am not quite so sure, but I think it was 
the late 1980s that we started. Could have been early 1990s.
    Mr. Yarmuth. And BMW?
    Mr. Saadat. Same.
    Mr. Yarmuth. Same thing.
    And while I know that historically there have been 
incidents involving spontaneous deployment of airbags and so 
forth, but correct me if I am wrong, the issue we are dealing 
with today, these inflator ruptures, did not happen before this 
era that we are talking about, within the last 10 years; is 
that correct? Are you aware of any instances of an inflator 
rupture that occurred before the turn of the century?
    Mr. Westbrook. No.
    Mr. Yarmuth. All right.
    And I assume that there was no relevance of humidity in any 
of the prior instances of malfunction of airbags prior to the 
turn of the century, essentially, this 10-year period.
    So I am getting at this issue of the root cause.
    And, Mr. Shimizu, what possibly changed other than the 
change in propellant that you used from before this time period 
when you actually changed propellents? Is there anything else 
that changed in the technology that you could reasonably 
identify as a potential cause of this inflator rupture prior to 
this period?
    Mr. Shimizu. We understand it is the characteristic of the 
materials we use, which is ammonium nitrate, and we considered 
moisture have to be controlled during the operation, and we do 
it. And unfortunately we have some issues in the past of the 
equipment and the moisture control, but we believe that with 
real control we will manage the environment of the operation.
    Mr. Yarmuth. But what I am getting at is I think we have 
pretty much excluded any other potential root cause other than 
the propellant that is being used. Nothing else changed in 
technology. None of these occurrences happened before the 
change in propellant.
    So, regardless of whether it is humidity-related, 
temperature-related, the propellant seems to be the only 
variable that could be responsible for these kinds of 
malfunctions. Is that correct or not?
    I mean, if nothing else changed and we never saw it before 
you changed propellents, wouldn't you say that it is reasonable 
to assume that the propellant is the root cause?
    Mr. Shimizu. Congressman, this rupture case happened 
because of either abnormal chemical reaction inside the 
inflator or weakness of the inflator body. So either, if the 
balance was not there, then a rupture may happen.
    So we are focused on the materials also now, but also one 
of the factor we can consider is the body side. But at this 
moment, according to our investigation, we didn't see any 
abnormality on the body side. That is why we focus on the 
materials.
    Mr. Yarmuth. OK.
    Going a little bit further--and this is expanding on Mr. 
Sarbane's question--you filed a 573 Safety Recall Report just a 
month or so ago involving a defect in the airbags produced in 
Mexico. Is that correct?
    Mr. Shimizu. Yes, the airbag was produced in Mexico for----
    Mr. Yarmuth. Right. So you are actually still producing 
airbags that have defects in them. And I don't know what the 
nature of that defect was, but, again, it goes to the question 
of--and I know we don't have too much time--it goes to the 
question of whether we can be confident that even the 
replacements that are being provided are safe.
    And I guess any of the manufacturing representatives who 
are here might want to respond. How can you be confident that 
the replacement parts you are putting in or that the airbags 
you are putting in today are safe if you are still buying them 
from Takata?
    Mr. Shimizu. Congressman, that specific issue happened in 
Mexico, but it is not currently--many years ago. And if my 
understanding is correct, that plant is already closed and 
moved to Mexico.
    And, as I said, all lessons learned from previous issues, 
we addressed to--we identified the problems and addressed to 
the production process and are taken care of. So the current 
production is, as I said, capable to produce the quality parts, 
and I am very confident that the quality is there.
    Mr. Yarmuth. All right.
    I would like to submit, Mr. Chairman, that question and 
have the manufacturers respond to the committee as to how we 
can be confident that the equipment that they are using today 
is safe.
    Mr. Terry [presiding]. Absolutely.
    Mr. Yarmuth. Thank you very much. I yield back.
    Mr. Terry. The chair recognizes the vice chair of the 
subcommittee, the gentleman from New Jersey, Mr. Lance.
    Mr. Lance. Thank you, Mr. Chairman.
    Mr. Saadat, are Toyotas on the road in the United States 
today safe, regarding the airbag issue?
    Mr. Saadat. Sir, every time there is a safety recall----
    Mr. Lance. Yes.
    Mr. Saadat [continuing]. And the vehicle has yet to be 
repaired----
    Mr. Lance. Yes.
    Mr. Saadat [continuing]. There is always a risk.
    Mr. Lance. Yes.
    Mr. Saadat. OK. In the case of people residing in the area 
of high humidity, we are urging our customers to please follow 
the instructions of the letters that we have sent to them. And 
as long as they do that, they can operate the vehicle safely.
    Mr. Lance. And if that is done, there are enough airbags 
available so that that can be accomplished immediately?
    Mr. Saadat. Takata has indicated they have significantly 
increased the production starting from this month, and I think 
we have a good amount of inflators that we should be----
    Mr. Lance. Thank you.
    Mr. Westbrook, the same question to you, regarding BMWs.
    Mr. Westbrook. Would you repeat, please? I am sorry. Are 
they safe?
    Mr. Lance. Yes. Are BMWs safe for the driving public in the 
United States of America today?
    Mr. Westbrook. We believe they are. We have no knowledge of 
any inflator rupture, to this date, on any BMW on any airbag on 
any side of the car.
    Mr. Lance. Same question to you, Mr. Schostek, regarding 
Hondas.
    Mr. Schostek. Yes, Mr. Vice Chairman. There are recalls in 
effect for Honda vehicles from the past, and we are urging 
those customers to get their vehicles fixed. If there is not a 
recall, then I think we do believe that those customers are 
safe.
    I do want to address the situation----
    Mr. Lance. And there are enough airbags so that for those 
that are being recalled the problem can be fixed immediately?
    Mr. Schostek. That is where I was going, sir. Yes, at the 
present time, we have seen the supply of replacement parts is 
adequate to match the demand.
    We appreciate the attention on this issue. It is actually 
causing more customers to come forward and to get their 
vehicles repaired. These are usually older vehicles, and 
getting a high completion rate on recalls is difficult to do.
    Mr. Lance. And you are confident that the recalls you have 
suggested are inclusive of all of the problems?
    Mr. Schostek. Yes, sir.
    Mr. Lance. And that there is not likely to be further 
recalls of Hondas?
    Mr. Schostek. There is a safety information campaign where 
Takata has not yet identified the defect or cause of that. We 
are participating, as are other industry members, with that. We 
are going to expand that to a national campaign, as we talked 
about this morning. And there may be, sir, a time when 
replacement parts become a little short.
    That is why we are working with not only Takata but two 
other manufacturers, Autoliv and Daicel. And we believe, based 
on recent discussions with those others companies, that there 
are good prospects to reduce the shortage.
    There is not a shortage right now, sir. We expect there may 
be a shortage in the foreseeable future but that we are trying 
to do our best to----
    Mr. Lance. Thank you. Thank you.
    Mr. Shimizu, I have in front of me the letter that Takata 
sent in response to the request of the government. The letter 
is dated yesterday. It is from Mike Rains, the director of 
product safety.
    Does he work for you?
    Mr. Shimizu. Yes.
    Mr. Lance. And he is director of product safety in this 
country or throughout the entire system?
    Mr. Shimizu. Mainly focused on this country.
    Mr. Lance. This country. Thank you.
    I find the response tendentious, argumentative, and not 
particularly helpful.
    For example, Takata complains that you have only had 2 
working days to respond, given the intervening Thanksgiving 
holiday. How long has Takata known about this problem? 
Certainly more than 2 working days.
    Mr. Shimizu. Excuse me. Could you repeat the question 
again?
    Mr. Lance. I find the response--and we will be asking NHTSA 
about this later, because NHTSA is our next witness. I find the 
letter very unhelpful and extremely tendentious.
    ``Takata's current view, based upon reliable information, 
does not support a nationwide determination of a safety defect 
in all vehicles equipped with the subject driver-side 
inflators.''
    That is not the view of the agency at the Federal 
Government that protects the American people. And so you are 
dramatically and diametrically in opposition to the view of 
NHTSA. Is that accurate?
    Mr. Shimizu. Can I confirm the question?
    Mr. Lance. Certainly.
    Mr. Shimizu. Excuse me.
    [Confers with interpreter.]
    Mr. Shimizu. Congressman, sorry to take so long.
    Mr. Lance. Certainly. You have every right to confer with 
your colleague.
    Mr. Shimizu. Yes. Correct. That is our statement.
    Mr. Lance. Thank you.
    In conclusion--and we will be asking this of NHTSA later in 
the hearing--on November 26, NHTSA demanded a national recall 
of driver-side frontal airbags in writing, with a deadline of 
December 2nd. You have responded in the negative. If the 
company fails to act, NHTSA will continue the statutorily 
required process needed to force Takata to act. And, certainly, 
my line of questioning this afternoon will be related to that.
    I think that we have to work more closely together to make 
sure that the American people are safe.
    Thank you, Mr. Chairman.
    Mr. Terry. Thank you.
    And the chair recognizes the gentleman from Mississippi, 
Mr. Harper, for 5 minutes.
    Mr. Harper. Thank you, Mr. Chairman.
    Thank each of you for being here today.
    Mr. Shimizu, this is a matter of safety and concern for 
everyone who is a driver and families, children, those that 
might be impacted.
    Can I ask you, the propellant that is used, the ammonium 
nitrate-based propellant that is used now, when was the 
decision made to--and when did you stop using tetrazole and 
move to the ammonium nitrate-based propellant?
    Mr. Shimizu. I am not sure, Congressman, exactly which 
year, but I believe it was added to them 2003 or--let me 
confirm the exact date, so I will get back to you.
    Mr. Harper. It has been at least more than 10 years ago, 
correct?
    Mr. Shimizu. Yes.
    Mr. Harper. Maybe late 1990s, early 2000?
    What is the cost difference between the propellant 
tetrazole versus what is used now? How much does that affect 
the price of an airbag?
    Mr. Shimizu. According to my knowledge, there is not much 
difference, but I don't know the actual cost.
    Mr. Harper. OK. But isn't tetrazole much more expensive as 
a propellant?
    Mr. Shimizu. Only I can guess, is ammonium nitrate is not 
more expensive than tetrazole.
    Mr. Harper. Well, why was the decision made to switch from 
one to the other but for cost?
    Mr. Shimizu. No, the reason to change--the reason to change 
to ammonium nitrate is not the cost. It is because of the--
there are many other reasons why we choose ammonium nitrate.
    Mr. Harper. What is the propellant for the replacement 
airbags that you are manufacturing as we speak?
    Mr. Shimizu. Excuse me?
    Mr. Harper. What propellant is used on the replacement 
airbags, the ones that you are manufacturing now?
    Mr. Shimizu. Yes, it is the same propellant we used before.
    Mr. Harper. Do you foresee changing the propellant as you 
move forward with ramping up your production of those to 
approximately 450,000 per month?
    Mr. Shimizu. If we have to change the materials to replace 
parts for the recalls, then it is--because of characteristics 
of the inflator itself is different. So we have to go through 
the validation test. That is the main reason we continue to use 
the same inflator. And of course that would come from the 
current production line, so it is considered safe.
    And one more thing, sir, if I can. We have second-
generation inflator also, which we use for another type of 
models, and we continue to work on improving the performance of 
the propellant or inflator.
    Mr. Harper. Do you believe that the cause of the ruptures 
or the early deployment of these airbags or the ineffectiveness 
of that, is that due to the propellant, or do you believe that 
it is some other cause?
    Mr. Shimizu. My understanding is this cause of the problems 
is not materials we use. It is because of the manufacturing 
processes and the humidity control in the plant.
    Mr. Harper. I certainly want to--I would like to ask Mr. 
Saadat some questions, if I may, with Toyota on the approach 
that you have had. How many vehicles, Toyota vehicles, are 
impacted by the recall?
    Mr. Saadat. Approximately 878,000.
    Mr. Harper. OK. And it is my understanding that Toyota was 
the first to initiate a nationwide recall. Is that correct?
    Mr. Saadat. Our nationwide recall has been in effect since 
2013, April of 2013.
    Mr. Harper. And just as a matter of convenience, are you 
providing loaner vehicles to the customers who come in? Are you 
giving them a vehicle, a loaner or a rental?
    Mr. Saadat. Yes, if that is what they--if that is what they 
desire, yes.
    Mr. Harper. OK.
    Mr. Westbrook, is that something that BMW is doing?
    Mr. Westbrook. That is what we are doing, yes.
    Mr. Harper. OK.
    And Honda?
    Mr. Schostek. Yes, Congressman. Right now, as I said, parts 
are in adequate supply right now, but if a customer needs a 
loaner vehicle or a rental car, we provide that to them at no 
charge.
    Mr. Harper. Mr. Saadat, if I may ask, you mentioned 
earlier, and I know you covered it, but you said there are not 
any driver-side airbag issues for Toyota. Why is that?
    Mr. Saadat. The problematic inflators that Takata has 
identified, they are not installed in our driver side in the 
U.S.
    Mr. Harper. Different supplier for your driver-side airbag?
    Mr. Saadat. Yes.
    Mr. Harper. OK.
    What prompted you, Mr. Saadat, to start supplying inflators 
to Takata for testing?
    Mr. Saadat. There was a preliminary evaluation that was 
open by NHTSA in June of this year and requested all automakers 
to send parts that they have collected----
    Mr. Harper. OK.
    Mr. Saadat [continuing]. And send them to Takata for 
testing. And that is what prompted us.
    Mr. Harper. What about independent testing? What are we 
doing there?
    Mr. Saadat. In terms of independent testing, we have 
retained the service of an independent engineering firm to be 
able to help us and give us more assurances on the root cause 
of this issue.
    Mr. Harper. OK.
    Mr. Westbrook, any independent testing that BMWis engaging 
in yet?
    Mr. Westbrook. We are under contract to begin engaging in 
that. We are collecting the airbags under, you know, this 
regional campaign, and we will start that shortly and make 
those results available.
    Mr. Harper. Thank you very much.
    My time has expired. I yield back.
    Mr. Terry. The chair recognizes the gentleman from 
Missouri, Mr. Long, for 5 minutes.
    Mr. Long. Thank you, Mr. Chairman.
    Mr. Shimizu, how many people would need to die before you 
would be willing to do a nationwide recall?
    Mr. Shimizu. Five people died from the incident.
    Mr. Long. That is what have died now, but my question is, 
how many more would need to die before you do what NHTSA 
recommends, which is a nationwide recall?
    Mr. Shimizu. I don't think----
    Mr. Long. Do you have a litmus test? I mean----
    Mr. Shimizu. Again, we are still doing regional recalls for 
researching purpose, and we didn't identify the root cause of 
this problem yet. But such an incident, serious incident, a 
chance to have such an incident in outside region is minimal, 
according to the data we have.
    Mr. Long. It is my understanding that the airbag, when it 
explodes, it is metal projectile, shrapnel, so to speak, that 
has cut veins and led to some of these deaths. Is that correct?
    Mr. Shimizu. Once it has happened, that is the phenomenon, 
yes.
    Mr. Long. So it is sort of tantamount to driving down the 
highway with possibly a shotgun aimed at you behind the 
steering wheel or behind the glove box, I guess, and not 
knowing which airbag is going to explode at what time and act 
as a shotgun would, such as shrapnel.
    Mr. Shimizu. Congressman, in the past, 2 million times the 
airbag deployed as designed and saved the people lives and also 
saved the peoples from the serious injury from the accident. 
And, yes, we have some issues, and we have to address that, as 
we did in the past.
    So we considered products we are making right now today is 
safe, and also we have some concerns on the region, which is 
with the high temperature, the high humidity. That is why we 
are continuing to investigate to identify the root cause right 
now.
    Mr. Long. You are confident the ones you are making now are 
safe, but we all know that the ones that are on the road now, 
there is a possibility they are not safe, correct, that would 
be covered with a nationwide recall?
    Mr. Shimizu. Excuse me. Let me confirm the question.
    Mr. Long. Sure.
    [Confers with interpreter.]
    Mr. Shimizu. Congressman, sorry to take time.
    For the area outside regional recall, all data we have 
doesn't support such a risk at this moment. So we consider it 
safe.
    Mr. Long. I don't know that I understood the answer.
    Mr. Shimizu. Yes, OK. I----
    Mr. Long. My question is, the ones that are being 
manufactured today you are confident are safe, but the ones 
that are out there on the road now that will be not be recalled 
because you are not willing to do a nationwide recall, those 
are not safe, perhaps, correct?
    Mr. Shimizu. We considered it safe----
    Mr. Long. You think they are safe.
    Mr. Shimizu. Pardon?
    Mr. Long. You think they are safe?
    Mr. Shimizu. Yes.
    Mr. Long. OK.
    And you are confident--from the testimony I have heard 
today, I am given to understand that you think that it is a 
humidity and a heat--function of heat and humidity. Is that a 
one-time situation, or is it a compound situation?
    And let me give you an example. If I live in Cheyenne, 
Wyoming, low humidity, and I want to go a wedding in 
Jacksonville, Florida, in my Honda that has a Takata airbag, 
should I make that trip? Am I OK to go down there? I am only 
going to be there a few days in the heat and humidity. Would 
that be a safe trip to take or not?
    Mr. Shimizu. Congressman, I consider it is a kind of 
compound situation, which is the vehicles or products have to 
be extensive period of time under a high-temperature, high-
humidity condition.
    Mr. Long. OK. So if I was going to move from Cheyenne, 
Wyoming, to take a job in Jacksonville, Florida, and I was 
going to there, then you would recommend that I get my airbag 
replaced, correct? If I was going to live there year-round and 
there was going to be heat and humidity year-round, you would 
recommend I get the airbag replaced.
    Mr. Shimizu. There are many----
    Mr. Long. I want to keep my family safe.
    Mr. Shimizu. I consider it safe, but that is why--we still 
didn't identify root cause yet, so that is why we continue to 
test. Sorry, it is hard to answer to the question.
    Mr. Long. Let me ask the gentleman from Honda.
    Mr. ``Schostek''--is that correct?
    Mr. Schostek. ``Schostek.'' That is right, sir.
    Mr. Long. Same question to you. I live in Cheyenne, 
Wyoming, and I want to go to Jacksonville, Florida, take the 
family down there for a wedding. Are you confident I am safe in 
a Honda to do that, or is it a compound effect on the heat and 
humidity? Should people not travel to high heat and humidity 
areas with Takata airbags for short trips?
    Mr. Schostek. Again, we have had national recalls related 
to Takata manufacturing defects----
    Mr. Long. That is not my question. I appreciate you have 
done that.
    Mr. Schostek. OK.
    Mr. Long. I mean, that is what I think Takata should do, is 
a national recall. And I appreciate that Honda has done that.
    My question is, if someone was going to make a trip and had 
not done the recall process----
    Mr. Schostek. Yes, Congressman Long, the phenomena of 
inflator ruptures that we have seen over the years is occurring 
in vehicles that are fairly old vehicles--8 years old, 10 years 
old, 12 years old. It seems to be some function of time----
    Mr. Long. So the five deaths in Hondas have been in older 
cars?
    Mr. Schostek. Yes. And I think the discussion about heat 
and humidity, the theory about that is it is over a prolonged 
period of time of that heat and humidity cycle potentially 
affecting the propellant.
    Mr. Long. What is the newest car someone has deceased in in 
a Honda? What is the latest year model?
    Mr. Schostek. Sir, I believe it was a 2004, but I would 
have to check.
    Mr. Long. And that would have been what year that the 
tragedy occurred?
    Mr. Schostek. The most recent one occurred this year, sir, 
but in a 2004 model.
    You know, there have been four fatalities in Honda 
vehicles. All----
    Mr. Long. I thought there had been five, so----
    Mr. Schostek. I am sorry. Four in the U.S. and one in 
Malaysia. So there have been four fatalities in the U.S. In 
Honda vehicles. All of those vehicles were subject to that 
national recall. One was----
    Mr. Long. Right. No, no, and I appreciate Honda doing that. 
I appreciate that, but----
    Mr. Schostek. And, sir, we wish that we had gotten----
    Mr. Long [continuing]. I just think Takata should do that.
    Mr. Terry. The gentleman's time has expired.
    Mr. Long. I don't have any time, but I would yield it back 
if I did. Thank you.
    Mr. Terry. The gentleman from Illinois is recognized for 5 
minutes.
    Mr. Kinzinger. Thank you, Mr. Chairman.
    We are going to miss you. You have been a fantastic 
chairman, a good friend. And I know you have some great 
chapters ahead, but congratulations on the work you have done 
on this committee.
    To all of you, thank you for being out here.
    Just a couple of quick questions. I may not even take all 
my 5 minutes. We will make up for Billy Long there.
    Sorry, Billy.
    To the three of you, I will just ask generally: Do you 
believe there is currently sufficient data available to support 
NHTSA's call for a national safety recall for all Takata 
driver-side airbags?
    Mr. Westbrook. No.
    Mr. Kinzinger. OK. We will just ask down the line for you 
guys. Go ahead.
    Mr. Saadat. In reference to driver side, as I stated, we 
don't have any of those problematic inflators on our driver 
side.
    Mr. Kinzinger. OK. So you haven't seen that.
    Mr. Schostek. And as we informed the committee today, we 
are taking the action to expand our safety improvement campaign 
for driver-side recalls from regional to national. We want to 
get more information to help others in the industry, as well as 
Takata and ourselves, to understand what the defect is, if 
there is a defect, and to determine the cause.
    I think it is important to understand from the customer's 
viewpoint, Congressman, that we use these words, ``safety 
improvement campaign'' and ``recall,'' and I know it can be 
confusing to customers, and we are certainly sympathetic and 
empathetic toward that. The notice that arrives in the 
customer's mailbox, whether it is one or the other, says, 
``Your vehicle is subject to recall. Please bring it in.''
    So we have really focused our attention on, OK, what is 
happening in the field, what is happening with our customers, 
how do they understand what is going on here. And we are really 
trying to redouble our efforts to make sure that they 
understand that we want them to bring that vehicle in so that 
we can replace the inflator.
    And then we need to do testing. Takata needs to do testing. 
We, as OEMs, need to do testing. We have talked about engaging 
a third-party expert engineering firm to do testing.
    Mr. Kinzinger. OK.
    Mr. Schostek. Because there is still engineering work to 
do. We are all engineering companies here.
    Mr. Kinzinger. Yes, I got you.
    Mr. Schostek. We want to find the answer to this.
    Mr. Kinzinger. I am going to----
    Mr. Schostek. In the meantime, I think our focus has to be 
on what we can do to our customers.
    Mr. Kinzinger. OK.
    Mr. Schostek. And just----
    Mr. Kinzinger. I got you.
    Mr. Schostek. OK.
    Mr. Kinzinger. Yes. I appreciate it.
    I am going to shift gears. There has been a significant 
discussion about regional recalls and the movement of recalled 
vehicles from high-humidity States to other States outside of 
those regions.
    I believe an area that needs focus by automakers is the 
commerce of recycled original equipment manufacturer parts. 
Each day, over a half-million recycled OEM parts, the very same 
parts designed by your companies to meet your fit, finish, and 
durability standards, are sold by professional automotive 
recyclers. These parts play an important part in the automotive 
supply chain and are readily sold from one State or region of 
the country to another.
    Recently, GM reached out to professional automotive 
recyclers offering to buy back or purchase recalled GM ignition 
switches. To accomplish this, GM provided specific OEM part 
numbers for the ignition switches that were critical to ensure 
that automotive recyclers could identify the specific recalled 
parts in their companies' inventories.
    To those representing the car companies, do you agree that 
sharing OEM part numbers and other identifiable information 
with the professional automotive recycling industry would 
increase safety?
    And--yes. So we will start with that.
    Mr. Schostek. Congressman, I myself am not familiar with 
the GM action that you described, and I will gladly check into 
it and get back to you on that.
    But I would bring up another point. Counterfeit airbags are 
a problem in this country, as well. And we have been working 
hard to, state by state, try to stop the use of counterfeit 
airbags. That is a big danger to consumers. We think it is a 
big danger to our customers.
    Mr. Kinzinger. All right.
    Mr. Schostek. We have had some success in some states.
    But on the recyclers, sir, I would like to check and get 
back to you.
    Mr. Kinzinger. And you two?
    Mr. Westbrook. We have a process called the Automated Parts 
Return. And any component, like an airbag, is subject to this 
process. As far as I know, whether it is a recall or not, those 
go back to us. If a company like a recycler wants our mirror 
caps, they can have them.
    Mr. Saadat. Sir, I am an engineer, and I can't really 
comment on legislative issues, but I will be happy to provide a 
response to you later.
    Mr. Kinzinger. OK. And would sharing that information, 
would that assist your companies in tracking recalled parts?
    Mr. Westbrook. Sharing what information, please?
    Mr. Kinzinger. The OEM part numbers with recyclers.
    Mr. Westbrook. I can't say that.
    Mr. Kinzinger. OK. All right.
    Do Honda, Toyota, and BMW currently have a similar buyback 
problem in place with professional automotive recyclers? You 
guys might have already addressed that.
    Mr. Schostek. I am sorry, Congressman. I am not aware of 
that. I will be happy to check and get back to you.
    Mr. Kinzinger. OK. Great. Thanks.
    And, Mr. Chairman, I will yield back 10 seconds.
    Mr. Terry. Thank you.
    And now the chair recognizes the gentleman from Florida, 
Mr. Bilirakis, for 5 minutes.
    Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate all 
your good work on this committee and in Congress as a whole, 
and we are going to miss you.
    This is a fundamental issue of safety, and Americans must 
be able to trust that the cars they drive are safe. I am sure 
you will agree with that. Instead, millions of Americans have 
been driving cars with potentially deadly airbags.
    The area that I represent, of course, has an increased risk 
because this defect has generally been in parts of the country 
with high humidity, and that has been stated. Florida has many 
residents that are transient. I know you know that, too.
    Mr. Saadat, Mr. Schostek, and Mr. Westbrook, the question 
is for you: What measures are you taking to correctly identify 
customers whose vehicles have been in high-humidity areas for 
prolonged periods? How are you contacting them?
    We will start with Mr. Saadat.
    Mr. Saadat. First of all, in terms of region, what we have 
is we basically look at the latest registration, number one. We 
are also looking at snowbirds. If a vehicle is transferred and 
brought to the region. And, in general, if there is a regional 
recall, we contact our customers outside of a region who had 
their vehicles in the region or vice versa. So that is----
    Mr. Bilirakis. What about if somebody buys a used car? How 
would you address that?
    Mr. Saadat. We look at the latest registration.
    Mr. Bilirakis. Yes.
    Mr. Saadat. And based on that, we get information, we will 
contact them.
    Mr. Bilirakis. OK. Mr. Schostek.
    Mr. Schostek. Yes, thank you, Congressman. Thank you for 
asking that question. Florida has been the site of 17 of the 
incidents that involve Honda vehicles, by far the most of any 
state and by far our biggest concern. In fact, there was an 
article, I think, in late September in one of the newspapers 
that inaccurately reported that Honda was asking dealers not to 
contact customers. They were misconstruing a message that we 
had sent to our dealers.
    In fact, what had happened at that very same time, sir, in 
the State of Florida, we had begun 93,000 calls, sent out 
125,000 emails, and sent out 76,000 postcards. We believe the 
risk is highest in your State, and we are putting extra effort 
into locating customers in your State and having some success 
with that, sir.
    Mr. Bilirakis. OK. Next, I would like to hear from Mr. 
Westbrook.
    Mr. Westbrook. We have maybe half of it covered. We have a 
way to track the car that was bought in Florida because it 
would be subject to the recall and that is linked to the VIN by 
our database. I do not have an answer to how we would have a 
way to track a car. Maybe it was bought in Michigan and spent 
the other half of the year in Florida, but I would like to get 
back on that.
    Mr. Bilirakis. Well, please, work on that, and I would like 
to hear from you.
    Mr. Westbrook. I will.
    Mr. Bilirakis. OK. Again, for the entire panel, would you 
let a family member drive a car with a Takata airbag? I would 
like for you to answer that. Would you let a family member 
drive a car with a Takata airbag?
    Mr. Schostek. If the car was subject to recall, I would 
advise that family member to get it in as soon as possible and 
get it fixed. If the car is not subject to a recall, yes, I 
would let my family member. I would drive a car with a Takata 
airbag.
    Mr. Bilirakis. I would like to hear from the entire panel.
    Mr. Shimizu. Yes, I do. I would drive the car with our 
airbag.
    Mr. Bilirakis. Mr. Westbrook.
    Mr. Westbrook. I would drive a BMW with the passenger 
recall in place.
    Mr. Saadat. If a family member lives in the high-risk area, 
I urge them to take the vehicle, and actually--first of all, 
follow the instruction, the letters that we have sent to them 
and they can operate it safely and take the vehicle. We will 
try to take care of them.
    Mr. Bilirakis. Would you let them drive it after they went 
through that? Or in other words, would you allow them to drive 
it, or would you prefer that they drive it?
    Mr. Saadat. After the remedy is done, based on the 
information that Takata has indicated, that they have addressed 
the root cause, yes. But----
    Mr. Bilirakis. And you would trust Takata?
    Mr. Saadat. As I said before, we have retained the service 
of an independent engineering firm to give us more assurances, 
sir.
    Mr. Bilirakis. OK. Next question. I know I don't have much 
time. Mr. Shimizu, Takata has known there were potentially 
issues with its airbags as far back as 2004. A decade has 
passed by, a full decade. Why hasn't your company been able to 
fix this life-threatening defect since then?
    Mr. Shimizu. Congressman, every time we recognize the 
incident or issues, we immediately jump on to the problems and 
try to find root cause of the issues and as soon as we identify 
the root cause, we took care of that. We addressed the issues 
and we take care of the problems.
    Mr. Bilirakis. Yes, but, sir, I mean, it has been a full 
decade. Ten years.
    Mr. Shimizu. It is a series of----
    Mr. Bilirakis. I don't think there is any excuse for not 
solving the problem.
    Mr. Shimizu. It is every time we found problems and we 
immediately take action; however, it is true that we have 
series of recalls and different timing and we have some 
different cause of the problems. So it is not the same problems 
all the time.
    Mr. Bilirakis. OK. Thank you. I yield back, Mr. Chairman.
    Mr. Lee. Thank you.
    Gentleman from West Virginia is recognized for 5 minutes.
    Mr. McKinley. Thank you, Mr. Chairman.
    Let me try to focus a little bit on the recall notices, 
because we are not going to have success with this unless 
people bring their cars in and get this thing taken care of. 
And we also know that traditionally, 30 to 40 percent of people 
ignore their recall notice. And if you think back a little bit 
about when Moses came down from the mountain, he came down with 
Ten Commandments. He didn't come down with 10 good ideas.
    So I am concerned about how much of an emphasis is in that 
notice that you better get your car back in. Because I have got 
two notices on my car. I have got a Chevy Cruze and I haven't 
done anything with it yet, because I don't know yet whether or 
not it is a life-threatening situation in my car and I have 
ignored it. So I know that 30 to 40 percent of people ignore 
them. How effective is the notice that you all are giving that 
this car could provide, as Mr. Long said, a shotgun flashing at 
you. I am just curious, what is the content of your notice? Is 
it just a good idea to bring it in, or if you don't bring it 
in, we are going to come after it?
    Mr. Saadat. If I may answer first. We have recently 
implemented a second-day outreach program, and one, in 
particular, is contacting each customer by phone, e-mails, and 
follow-up mail to urge them to bring their vehicle in. If they 
don't feel safe, we ask them--we will tow the vehicles to the 
dealership. And so that is the second-day outreach program. We 
have improved our----
    Mr. McKinley. Could you share with us a notice that you put 
out? You are doing the telephone call as well, with it. I don't 
know what BMW or anything--I mean, we have got 10, 12 
manufacturers are using these. I am just curious, could you 
send our office just a typical notice when you put out a 
recall? I am just curious to see what value is it. You really--
do you scare them? Is this a commandment or is this just a good 
idea?
    Mr. Schostek. I think, Congressman, you are hitting on a 
fundamental problem. It is a very important question, because 
we need to reach our customers. We have to convince our 
customers to get these recalls. We are talking about older 
vehicles here. We will send you, sir, both the notice that we 
send with regard to a recall and the notice we send with regard 
to a safety improvement campaign. I have looked at both of 
them. The letter is pretty strong. The request is pretty 
strong. Please bring----
    Mr. McKinley. If you just send that to me, I would 
appreciate it very much.
    Let me go to another step with this recall notice. CARFAX 
apparently doesn't tell you where your car is. So if I am going 
to buy a used car, I don't know--and maybe you can inform me or 
educate me about it--but I don't know, I don't believe CARFAX 
says that car came from Florida. But now I own a car that has 
been in Florida for 12 years, and I buy the car in West 
Virginia. Am I going to get a notice that there is a recall?
    Mr. Schostek. If that car is recalled, sir, we are checking 
our VIN numbers with----
    Mr. McKinley. It is a yes-or-no answer. Thank you.
    Mr. Schostek. Yes, you should. If a car has ever been 
registered in one of those states----
    Mr. McKinley. I guess if you go by the VIN number it will 
say----
    Mr. Schostek. Yes.
    Mr. McKinley [continuing]. That you know that car. Because 
let's just say I bought a car in West Virginia so it is 
registered in West Virginia, but then I take it to Florida and 
then I use it in Florida for 12 years and then I bring it back 
to West Virginia, or however.
    Mr. Schostek. Right.
    Mr. McKinley. Who knows where that car really is?
    Mr. Schostek. It is a very good question, and, obviously, 
we can't sit here and provide you with 100-percent assurance 
that we are able to track a car. We do check registration 
information in the various States, so we do know it that way, 
but it is an area that we need to work harder at, sir.
    Mr. McKinley. That is Honda. What about BMW? What about 
Toyota? What are you all doing? I am just curious from a pure 
mechanical standpoint, how are we checking this?
    Mr. Westbrook. This is similar to the answer that I gave to 
Congressman Bilirakis from Florida. I think we have it in the 
car going the one ways. In other words, if the car is 
registered in Florida and we have a campaign in Florida, it is 
going to be cross-linked to that vehicle identification number. 
The other way around is more difficult to figure out, and as 
committed earlier, we will try to get to the bottom of that.
    Mr. McKinley. OK. Let me ask, the final question with this, 
is that if I have a concern about my car, and I have not 
received a recall notice and I take it to a dealer and I say, I 
am just uncomfortable. I see across the Nation there have been 
deaths reported of this, and I would like to have my airbag 
replaced. What does a dealer do? He says, sure, I will take 
care of it next week? Or does he say, you don't fit the 
profile, therefore we are not going to replace it? If that is 
the case, if he says no, where is the liability then?
    Mr. Schostek. Congressman, we have instructed our dealers 
that we want our customers to be taken care of and want them to 
feel comfortable. If they are concerned about their car, we 
have loaner cars available, we have rental cars available if a 
part is not available to be--and just this week, Congressman, I 
requested our service division to contact each and every dealer 
we have in the United States. We have more than 1,300 Honda and 
Acura dealers, to contact them individually and ensure that the 
treatment that the customers are receiving and the respect that 
the customers are receiving with regard to these inflator 
issues is up to our expectations. We expect our dealers to 
accommodate our customers' individual needs.
    Mr. McKinley. Even though they have not been recall 
noticed, they are going to be taken at no cost to the owner?
    Mr. Schostek. At no cost to the owner.
    Mr. McKinley. Thank you very much. I yield back my time.
    Mr. Lee. Chair recognizes the gentleman from Ohio for 5 
minutes.
    Mr. Johnson. Thank you, Mr. Chairman. And I would like to 
also add my thoughts to you as you make this transition. It has 
been great serving with you on this committee, and I wish you 
the absolute best.
    Mr. Shimizu, I want to get a little bit into the 
manufacturing. Prior to coming to Congress, I worked for an 
automotive supplier. We made electronic components. Some of the 
plants were located near where some of your plants are located. 
We understand that there are five inflator types that have been 
subjected to these recalls. In terms of producing replacement 
kits for those that have to be replaced, can Takata 
simultaneously produce new inflators for each type as well as 
replacement kits for each type simultaneously?
    Mr. Shimizu. Congressman, most of the case, each type of 
inflator has their own exclusive line, so the answer is yes, we 
can do it.
    Mr. Johnson. You can do replacements and new? OK.
    Mr. Shimizu. Yes.
    Mr. Johnson. Along these same lines, are passenger and 
driver airbag inflators produced on the same line or on 
separate lines?
    Mr. Shimizu. Passenger inflator and driver inflator would 
produce a completely different line but from the same plant.
    Mr. Johnson. Same plant but different line?
    Mr. Shimizu. Yes.
    Mr. Johnson. OK. Does an increase in the production of 
replacement parts, driver's side replacement parts, affect your 
ability to produce passenger airbag inflators?
    Mr. Shimizu. Could you repeat your question again?
    Mr. Johnson. Does an increase in the production of driver's 
side airbags, does that affect your ability to produce 
passenger sides bags? Since they are on separate lines, I think 
the answer to that is no, correct?
    Mr. Shimizu. Correct.
    Mr. Johnson. OK. All right. For our folks at Honda, what 
analysis, and I saw the press release about the analysis that 
you are going to be doing, I think, if I have got it right 
here. ``Honda today called for a coordinated industry-wide, 
third-party testing of Takata airbag inflators with the goal of 
ensuring that all of the inflators that require replacement are 
accurately identified and fixed as quickly as possible.''
    What analysis did Honda undergo, if any, and have you done 
any independent analysis to date to determine if a recall of 
the airbags are necessary--or the inflators, rather?
    Mr. Schostek. Thank you, Congressman. I think we need to 
separate the recall decision versus testing. So the recall 
decision that we make is based on information that we receive, 
for example, from Takata with regard to manufacturing defects, 
they told us what those manufacturing defects were. We did not 
simply blindly accept their analysis, but our engineers looked 
at it and was it reasonable, and therefore, based on that, we 
have effected recalls over time.
    With regard to the current problem, which is trying to 
understand is there a defect and what could be the contributing 
causes, for example, heat, humidity, we began some independent 
testing very recently, but we were really appreciative that 
others in the auto industry, and especially with Toyota's 
leadership that we were able to announce yesterday that many of 
us are coming together to share information about testing.
    So we still have high expectations of Takata to continue to 
do their testing, but I think I can speak for Honda, I can't 
speak for the other OEMs, but I can speak for Honda that we 
feel a need to validate that and see what else we can come up 
with using an expert third-party engineering firm.
    Mr. Johnson. Just real quick, we know that at least some of 
the data has indicated that humidity, temperature, climate has 
had an effect on these inflators. Are you folks doing testing 
on virtually every climate scenario in America, the different 
regions of the country, and seasonal? Because it changes from 
season to season and from region to region of our country. So 
are you looking at things other than humidity, like dryness, 
whatever?
    Mr. Schostek. A very good question. And I can't go as far 
as to say every climactic condition in the country, because 
that would be going a little too far, I think, but we are 
testing from the humid areas but also from other areas of the 
country. The purpose of a good engineering study is to have 
different samples to look at.
    Mr. Johnson. Yes.
    Mr. Schostek. And that is what we are doing.
    Mr. Johnson. Mr. Chairman, I am prepared to yield back, but 
let me just make this statement. Again, coming from an 
automotive supplier myself, and I appreciate your candor, but I 
think it is a little bit shortsighted to say that we can't test 
for all the different climate conditions in the country. If we 
already know these inflators are affected by humidity, for God 
sakes, we don't know what other climate situations affect the 
inflators as well, and I think we need to get to the bottom of 
that as well.
    So with that, Mr. Chairman, I yield back, and thank you.
    Mr. Lee. Thank you.
    Does the gentleman from Texas, Dr. Burgess, have any 
questions?
    Mr. Burgess. Thank you, Mr. Chairman, for letting me be 
here. I will not seek time from this panel. I am anxious to 
hear from our next witness.
    Mr. Lee. Thank you.
    There has been a request from the full committee chair, 
therefore, by my set of rules, he is recognized for 5 minutes.
    Mr. Upton. Just to pose another question. And there has 
been a number of different articles that have been written over 
the last number of weeks regarding secret tests, and I am 
looking at--we will give you this for the record--this is a 
CNBC story. And it reads, ``The Japanese manufacturer at Takata 
secretly conducted tests on 50 airbags that it retrieved from 
scrap yards, according to two former employees involved in the 
test, one of whom was a senior member of its testing lab. 
Results were so startling that engineers began designing 
possible fixes in preparation for a recall, but instead of 
alerting Federal safety regulators to possible danger, Takata 
executives discounted the results and ordered the lab 
technicians to delete the testing data from that their 
computers and dispose of the airbag inflators in the trash, 
they said.'' It goes on, and USA Today, other publications have 
reported similar stories.
    This particular story indicates that a Honda spokesman, 
this must have been last week, on Thursday, Chris Martin from 
Honda said in a statement, ``This is a serious allegation about 
actions taken by Takata. It is our intention to determine 
whether anyone at Honda has any evidence that these claims are 
credible,'' so I am anxious just to get a quick response. But 
more disturbing, of course, is that a Takata spokesperson, Alby 
Berman, declined to comment on the disclosure of the testing.
    [The information appears at the conclusion of the hearing.]
    Mr. Upton. So if I could just hear from Takata and Honda 
briefly, if you would like to respond in writing, you can. But 
I am truly troubled by these stories, which is what helped lead 
us to this hearing today, and will be asking similar questions 
of NHTSA who follows you now. But I ask for the indulgence of 
the committee to get a response and maybe we will hear----
    Mr. Schostek. Congressman Upton, you mentioned Mr. Martin, 
a Honda representative quoted in there. We are continuing to 
look and to see if we have any reason to add any credibility to 
that. Up to this point, sir, as I sit here, I cannot add any 
credibility to that. We will continue to look, but I don't know 
of any Honda awareness of that testing in 2004, sir.
    Mr. Upton. And this story indicates that testing was done 
in Auburn Hill, that is in Michigan. And, of course, this was 
about the time that we were doing the TREAD Act, which was a 
pretty big story in Michigan.
    Mr. Shimizu. Congressman, my answer to your question is, 
first, we don't conduct any secret test during 2004. However, 
according to our record, we conducted a series of tests in 2004 
because of the cushion issues. And we have some cushion tear 
issues that happened, and after NHTSA, the one is found during 
the test, and then NHTSA informed automakers and then end up to 
request us to do a series of tests within a limited time.
    So we conduct a series of tests because of cushion tear 
problems, not inflators. And we don't use any inflators from 
junk yards either. So I think that article is not accurate. But 
the fact is, we did conduct a series of tests because of 
cushion issues, and actually NHTSA knows about it because it is 
an original request from NHTSA. And then after we finished the 
test, we found the root of cause, which is the abrasion between 
seat cover and the cushions that weaken the cushion and end up 
to cause the cushion tears, which it was reported back to 
automakers and NHTSA, and automakers end up to do the actual 
recall later in 2004.
    Mr. Upton. When was it reported to NHTSA?
    Mr. Shimizu. I believe it was during 2004. Before NHTSA 
back, I believe it is from automakers because they have to do 
the recall and I believe November 2004.
    Mr. Upton. Well, if you could confirm that in writing 
before the end of the week, we would certainly appreciate it.
    Mr. Shimizu. Yes. We can get back to the subcommittee by 
the end of this week, yes.
    Mr. Upton. Yield back.
    Mr. Lee. Thank you, Mr. Chairman.
    Now the ranking member has one additional question as well.
    Ms. Schakowsky. Mr. Schostek, another news report from 
November in The New York Times reported that after a 2004 
airbag rupture in a Honda vehicle, your company reached a 
nonpublic settlement agreement with the injured party and also 
reported that you reached nonpublic settlement agreements after 
three airbag ruptures in 2007. So I am just wondering how many 
settlements like that there are, and if the company feels 
itself required to inform NHTSA or the public about these 
nonpublic settlements?
    Mr. Schostek. Thank you, Congresswoman, for the question. 
There certainly are settlements in lawsuits; that is not 
unusual in our legal system. But with regard to these airbag 
inflators, we have made NHTSA aware of every inflator rupture 
that has occurred in a Honda vehicle. So we do not intend to--
the confidentiality of legal settlements is part of our system 
here, but that is not to us a reason that is going to cover up 
any safety information. We are providing the safety information 
regarding inflators to NHTSA.
    Ms. Schakowsky. So in all of these particular cases, you 
did also give NHTSA the information?
    Mr. Schostek. We provided NHTSA with information about all 
inflator ruptures, yes, Congresswoman.
    Ms. Schakowsky. OK. And in a timely way, 2004, 2007?
    Mr. Schostek. So let me just be clear, because there is two 
ways. We have been sharing with NHTSA all information about 
inflators. We have fallen short on our TREAD obligations, as I 
mentioned before. There were eight of them, eight out of the 
1,700 related to Takata airbag inflator ruptures. Did we report 
those on our TREAD report? The answer to that is no, 
Congresswoman. But NHTSA had that information on the basis of 
our other communications with them, so it did not, in our view, 
hinder the process of continuing to investigate, as we have 
been, since 2007, these Takata airbag inflator ruptures.
    Ms. Schakowsky. So these legal settlements have nothing to 
do, you are saying, with the actual reporting of the problem 
for which the lawsuit arose?
    Mr. Schostek. Congresswoman, what I am saying is that we 
have shared information about Takata inflator ruptures with 
NHTSA.
    Ms. Schakowsky. OK. Thank you. I yield back.
    Mr. Lee. Thank you, and that does conclude the questions 
for our first panel. As discussed throughout, there was 
mentions of written questions, QFRs. We want to let the panel 
know that it is likely you will have written questions 
submitted to you. We will do our best to get those to you in a 
timely manner, which always means a couple of weeks. And if you 
could, likewise, then answer them within a couple of weeks, we 
would greatly appreciate them and get them back to us.
    So this panel, thank you for your contribution in helping 
us better understand. Obviously, this committee is dedicated to 
making sure that the people that are driving vehicles are as 
safe as they can possibly be. I think you share that as well. 
So appreciate your time here today. You are dismissed.
    All right. I think it looks like we are set. Acting 
Administrator, Mr. Friedman, I appreciate you being here. I 
hope you enjoyed the last couple hours of their testimony. And 
now you are recognized for your 5 minutes, and welcome.

STATEMENT OF DAVID J. FRIEDMAN, DEPUTY ADMINISTRATOR, NATIONAL 
             HIGHWAY TRAFFIC SAFETY ADMINISTRATION

    Mr. Friedman. Thank you, Mr. Chairman, ranking member, and 
members of the subcommittee. Thank you for inviting me to 
testify about the serious issues of safety defects in Takata 
airbags. Over 10 million vehicles across ten automakers have 
been recalled because of inflators that can rupture when 
airbags deploy. More than half of these are part of older 
recalls associated with known manufacturing problems and four 
related deaths that have occurred in the United States.
    Many of these vehicles have already been repaired, but many 
have not. That is why NHTSA alerted consumers this year to 
bring their vehicles in for repairs. Recalls are serious safety 
issues and vehicle recall completion rates remain far too low. 
I encourage all owners to go to SaferCar.Gov/vinlookup to find 
out if their vehicle needs to be repaired under these or any 
existing recalls.
    In addition to NHTSA's efforts to help consumers, industry 
must step up. Automakers must do a better job to aggressively 
reach out to consumers to get their vehicles repaired, and they 
must report all information required under the TREAD Act. 
Dealers have to check VIN numbers for open recalls every time a 
vehicle is brought in for service. And, as the administration 
proposes in the Grow America Act, rental car companies and used 
car dealers should never be allowed to rent or sell vehicles 
without fixing them first. Congress can also provide help to 
States to implement programs directly linking vehicle 
regulation to the repair of open recalls.
    Now I want to address the latest airbag recalls. NHTSA 
moved to open an investigation based on three consumer 
complaints about airbags from three different manufacturers. We 
connected the dots. Takata was the common supplier and all were 
from Florida and Puerto Rico. We reached out to Takata and the 
manufacturers, discovered three additional ruptures, and the 
airbags with these or similar inflators are used by several 
more manufacturers.
    Initial data suggested that the defects in the driver and 
passenger airbags were related to prolonged exposure to high 
heat and humidity, and so NHTSA acted quickly. And within days 
of opening investigation, obtained recalls in areas of 
demonstrated risk from manufacturers with the same or similar 
inflators. Automakers responded to our call and declared 
defects based on a handful of incidents, and, thankfully, no 
reported deaths.
    Our policy is clear: Vehicle recalls are nationwide, and we 
have denied and will continue to deny requests for regional 
recalls unless the manufacturer provides solid information 
indicating that the risk is regionally limited. The data we had 
at the time on the regional nature of the problem was 
compelling, and we wanted the manufacturers to quickly recall 
the vehicles of those that demonstrated risk. But that was far 
from the end of our efforts.
    We are actively looking into other claims of injury or 
death to determine if they could be related. And while we 
continued those efforts, we refused to wait until someone else 
got hurt. We had Takata begin testing airbags from vehicles 
across the country. The tests so far have provided data 
supportive of the regional recall approach for passenger side 
airbags, as you can see in this chart.
    But when we quickly connected a more recent driver's side 
injury in North Carolina to one in California, as you can see 
in this chart, and others that did happen in Florida, we acted. 
And I called on Takata and the vehicle manufacturers with 
driver's side airbags with the same or similar inflators to 
expand the driver's side recall nationwide.
    Mr. Chairman, it is time again for industry to step up and 
put safety first. But we learned last night that Takata has 
refused to issue a nationwide notice of a defect in these 
driver's side airbags. Until they and automakers act, affected 
drivers won't be protected. We are now engaged in a detailed 
review of Takata's response to our demand and special order and 
will follow up with all appropriate steps to ensure Takata and 
automakers protect the driving public nationwide.
    Takata must also increase their testing to provide us with 
more data to determine the extent and full nature of the 
defects. I was encouraged by Toyota, Honda, and Ford's 
agreement to engage in coordinated, independent testing in 
response to our general order and expect all automakers to step 
up. In addition, Takata and the manufacturers must quickly ramp 
up production of replacement parts and make these remedies 
available to vehicle owners, including by working with other 
airbag suppliers.
    Finally, if our continued investigation or added testing 
show that the passenger side airbag defects are not limited to 
regions of high heat and humidity, we will act quickly. Until 
then, we want to ensure that the limited supply of passenger 
side replacement parts are made available to those that 
demonstrated risk.
    Mr. Chairman, each day more than 90 Americans lose their 
lives due to drunk driving, not wearing a seat belt, and the 
many other causes of traffic fatalities. Each hour more than 
200 Americans are injured in traffic crashes. As we work each 
day at NHTSA, these are tragic reminders of the importance of 
our efforts and how we must build on our many successes and 
continue to work hard and even harder to protect the American 
public.
    The case of defective Takata airbags is no different, and 
so let me be clear to you: We will continue our aggressive 
efforts to protect Americans from defective Takata airbags. We 
have acted swiftly and based on the evidence and we will 
continue to do so. And if we find any evidence of wrongdoing, 
those responsible will be held accountable. Thank you.
    Mr. Lee. Thank you for your testimony.
    [The prepared statement of Mr. Friedman follows:]
   
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
   
    
    Mr. Lee. Now I will recognize myself for 5 minutes to start 
the questions. So bluntly: Does NHTSA believe that humidity is 
the problem?
    Mr. Friedman. It is clear that humidity is one of the 
factors and clearly is a major factor when it comes to 
passenger side airbags. When it comes to driver's side airbags, 
we have to follow the evidence, and the evidence is clear that 
the problem is not limited to areas of very high absolute 
humidity.
    Mr. Lee. All right. So Takata believes that a national 
recall of driver's side airbags is unnecessary. Can you explain 
with some level of specificity why NHTSA now disagrees, 
especially in light of the fact that NHTSA had initially called 
for a regional action?
    Mr. Friedman. Mr. Chairman, first of all, I was deeply 
disappointed by Takata's response and Takata's failure to take 
responsibility for the defects in their products. The 
fundamental explanation is we have followed the data. 
Initially, all of the incidents that occurred in the real 
world, with both passenger and driver's side airbags, all 
occurred exclusively in Florida and Puerto Rico. When we 
expanded the testing and pushed Takata to do the testing, the 
same held true for the testing of all passenger airbags, as you 
can see in this chart over here.
    However, when we saw real-world incidents on the driver's 
side, one in California, we pushed Honda to make sure that 
their recall covered that region. Then, very recently, we 
became aware of a driver's side incident in North Carolina. 
With six total incidents, two of which are outside that region, 
we can no longer support a regional recall.
    Our policy is clear: Recalls must be nationwide unless the 
manufacturers can demonstrate that they are regional. With the 
new data, it is clear, they can no longer demonstrate that the 
region that was used before was appropriate for driver's side 
airbags.
    Mr. Lee. Specifically, the cars that you referenced, North 
Carolina, and the California, Santa Monica area, what is the 
level of absolute humidity there, and is it so different that 
you can say, backing up what you are saying is that it needs to 
go to a more national level?
    Mr. Friedman. If we could put up chart D over here. What 
chart D is, is data from NOAA indicating the median annual dew 
point temperature. And dew point dumper is basically the 
measure of the total amount of water in the air or the absolute 
humidity.
    As you can see, the brown areas are where we saw initially 
all the incidents. Then we started to see some passenger 
incidents in the red areas. The new incidents in California and 
in North Carolina are roughly around the edge of the yellow and 
green areas, clearly indicating that they are outside of the 
areas of the regional recalls and in areas of lower humidity.
    Mr. Lee. This is why this issue is particularly difficult 
to get my mind around. So if the issue is the absolute 
humidity, what caused the defect in California and North 
Carolina autos?
    Mr. Friedman. Mr. Chairman, you are asking the exact same 
questions we are asking. One of the most frustrating parts 
about this is that neither the automakers nor Takata have been 
able to get to the bottom of the root cause on this. We have 
been pushing them to do so. We are also working and hope to 
within a week hire outside expertise and begin standing up our 
own testing capabilities so that we can supplement the work 
that they are doing.
    But they are responsible legally for getting to the bottom 
of this, and we have pushed them to do so including requiring 
answers to questions under oath to force them to do so. But 
between the fact that the root cause on the driver's side is 
not clear, now that it is clear that it is outside of those 
areas of high temperature and high humidity, and the fact that 
we now have six total incidents, it is clear to us that a 
regional recall is no longer appropriate for the driver's side 
airbags.
    Mr. Lee. Very good. I appreciate that. So in regard to the 
humidity aspect, the three automakers testify that they believe 
humidity is the root cause. I don't have the level of 
confidence in that, but they have said they are going to hire a 
third-party independent inspection of whether it is related to 
the humidity or something else. So my question--very quickly 
answer--do you believe that as well, that a third-party 
independent inspector is absolutely necessary?
    Mr. Friedman. I believe we need to put all resources 
forward to address this issue. But also, let me be clear: A 
root cause is not required for a recall. All that is required 
for a recall is an unreasonable risk to safety, and that is 
clear on the driver's side that there is an unreasonable risk 
to safety outside of the areas of the highest humidity and 
temperature.
    Mr. Lee. I agree with that latter part, but the reality is 
for the consumer is if the root cause isn't identified, how can 
you have confidence that they have solved the problem by 
putting in a new airbag?
    Mr. Friedman. And we share your concern and we will 
evaluate the adequacy of the remedy to make sure that the 
American public is safe.
    Mr. Lee. Thank you.
    Mr. Friedman. Thank you.
    Mr. Lee. Recognize the ranking member, Jan Schakowsky.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    On November 26, NHTSA issued a recall request letter to 
Takata acknowledging that, as you have just said, that there is 
a safety-related defect regarding the driver's side airbags. I 
wanted to know why did this request go to Takata alone, either 
instead of or in addition to the manufacturers? Why hasn't 
NHTSA issued recall request letters to the automakers demanding 
that they expand the recalls of the driver's side airbags?
    Mr. Friedman. Ranking member, on November 17, I called on 
Takata and then followed up the next day and called on all the 
involved manufacturers to recall these vehicles. So I made a 
verbal demand to them. The reason why we put a written demand 
to Takata is because once Takata does the right thing and 
agrees to this, it doesn't matter what the automakers do. There 
is a clear statement of a defect and all the automakers must 
recall those vehicles. So what we are looking to do is to get 
these vehicles recalled as quickly as possible.
    Ms. Schakowsky. No, I understand that, but Takata has said 
no to you.
    Mr. Friedman. Absolutely.
    Ms. Schakowsky. And so it would seem to me, since that was 
their option, that it would make sense to go to the automakers 
as well.
    Mr. Friedman. So we are evaluating Takata's response, and 
in our next steps, we will work to push Takata and the 
automakers to recall these vehicles nationwide. I noted the 
action by Honda today----
    Ms. Schakowsky. Correct.
    Mr. Friedman [continuing]. Which is a clear and promising 
action, but clearly also not enough. Much more needs to be done 
and we will push and use all the extent of our authority to 
push Takata and the manufacturers to address the safety----
    Ms. Schakowsky. Well, what is the authority now that Takata 
has said----
    Mr. Friedman. Well, our authority under the Safety Act is, 
our next step could be to issue an initial decision of a defect 
and then we would hold a public hearing giving Takata the 
opportunity to provide any evidence they have. So far they have 
not provided any compelling evidence. We would give the same 
opportunity to the automakers. After that hearing, we would 
weigh all the evidence and make a final determination.
    Ms. Schakowsky. And how long would that take?
    Mr. Friedman. I cannot tell you yet because we just got the 
materials----
    Ms. Schakowsky. Frame of reference. Order of magnitude. How 
long?
    Mr. Friedman. Order of magnitude before a hearing could be 
certainly multiple weeks and likely multiple months.
    Ms. Schakowsky. OK. Let me also ask you a question about 
your climate map. The darkest part--well, there is Florida, but 
then there is also Texas. And yet, on the original regional 
recall, you didn't include any part of Texas. Why is that?
    Mr. Friedman. So all of the original incidents occurred in 
Florida or Puerto Rico, and so Florida and Puerto Rico were 
included in those regions. This chart doesn't show all the 
gradations in humidity levels. That said, we have pushed all of 
the automakers involved to cover the same region, at least the 
same region, not just in Florida and Puerto Rico, but all 
around the Gulf Coast to ensure not just that the darkest color 
is included, that there is a significant buffer zone outside of 
the darkest area and the red area.
    Ms. Schakowsky. No, I understand. It is just curious to me, 
if you think that at least humidity is a key factor, why the 
first choices wouldn't be those areas of highest humidity in 
your initial recall?
    Mr. Friedman. Well, it was because all of the data pointed 
to incidents in initially kind of the more southern parts of 
Florida and Puerto Rico. So we went with the initial data, but 
as we got more data, we acted quickly to make sure that the 
recalls were expanded. That was one of the benefits of the 
testing that we pushed Takata to do is that we started seeing 
failures outside of that area and that made clear to us that 
the evidence was pointing to the need for a broader recall. 
Every time the evidence has pointed to the need for a broader 
recall, we have pushed industry to act on that evidence.
    Ms. Schakowsky. OK. I want to go to another topic. You know 
that our ranking member of the full committee, Waxman, and I, 
had introduced new auto safety legislation this year, which, 
among other things, would improve the early warning reporting 
system by requiring manufacturers to provide more information 
making more information public. Could you--let's see, maybe I 
will just put this in writing. If you could briefly describe 
how the early warning reporting system currently works. If you 
could provide us that information, that would be great.
    Mr. Friedman. We will do so. Thank you.
    Ms. Schakowsky. OK. Thank you.
    Mr. Lee. Thank you.
    The chair now recognizes the full committee chairman, Mr. 
Upton for 5 minutes.
    Mr. Upton. Thank you, Mr. Chairman.
    And welcome back, Mr. Friedman. So you have seen these 
reports----
    Mr. Friedman. Yes.
    Mr. Upton [continuing]. The one that I cited earlier and 
USA Today. I think you might have actually written a response 
to that in terms of the editorial, as I recall, a number of 
weeks ago. So as you try to connect the dots, since these 
stories have emerged, what have you done as it relates to going 
back to Takata and seeing whether or not do they really do 
these? I mean, were they really off hours and weekends, and 
what do they do with the evidence, and how does that comply?
    I don't know if there is enough evidence--I am not a 
lawyer--enough evidence to go back to the TREAD Act and see if, 
A, they were true, if there is actually someone as liable for 
criminal sanctions. I mean, what is your response behind the 
scenes to what has been reported publicly?
    Mr. Friedman. Mr. Chairman, we took two steps: First of 
all, we looked into all of our information; but second of all, 
we issued special order to Takata compelling them under oath to 
provide us with all information on any testing that they have 
done related to the use of the bags.
    Mr. Upton. And have they done that? Have they reported back 
yet?
    Mr. Friedman. They have. They provided their submission as 
of December 1, and my team is now pouring through the 
voluminous data to get to the bottom of this. I share your 
concerns. When we saw those reports, we acted quickly to ensure 
that we could get to the bottom of this.
    Mr. Upton. So since they only reported back Monday, will 
you be able to share with us what they submitted?
    Mr. Friedman. We will dig into all that information, and we 
will be more than happy to brief you and the committee on what 
we find.
    Mr. Upton. What has been your response to the the reports 
and the underreporting, the 1,700-some cases by Honda as 
relates to how you-all are supposed to function?
    Mr. Friedman. My personal response was shock and 
frustration that Honda has failed so significantly to follow 
the TREAD Act. Again, we issued a special order to Honda to get 
to the bottom of this and to push them to discover not only 
about the 1,700 failures, but what other failures are 
associated with their reporting of early-warning data and 
information. Our team has gotten back that information, also 
just recently. We are digging through that information and to 
determine--they have already basically admitted their guilt. 
Now the question that we are trying to determine is how many 
different ways did they fail, and how many different ways might 
we have to consider fining them to the full extent of the law?
    Mr. Upton. And have you communicated with the other auto 
companies, all of them, in terms of what Honda did and to make 
sure that, in fact, the other companies have not followed that 
same type of pattern?
    Mr. Friedman. So we have two steps along those lines. One, 
and my expectation is, you would have asked me that exact same 
question, and so today I am calling on each and every automaker 
to do an audit of their early-warning reporting and provide 
that information to us to ensure that they are fully following 
the TREAD Act and can demonstrate that to us.
    We are looking at other measures, potentially compelling 
them to provide such information. But I think every automaker 
should take the responsible step right now of doing their own 
audit to determine and ensure that they are appropriately 
following the TREAD Act, and, if they are not, report that 
information to us and fix the problem immediately.
    Mr. Upton. Now, you indicated in your testimony that you 
have been responsible for Takata quadrupling their testing. 
Have you determined that by quadrupling that rate, would that 
be sufficient to generate the needed data to understand the 
current problems?
    Mr. Friedman. No. In fact, I was very encouraged to hear--
well, first of all, we continue to push Takata to do more; 
second, I was very encouraged to hear Toyota, Ford, and Honda 
agree to do additional testing; further, we issued a general 
order to each and every automaker involved to require them to 
provide us with all the information they have on testing. We 
are trying to push the entire industry to ramp up their 
testing. We are also working to stand up some test facilities 
of our own so that we can verify the work that they are doing.
    Mr. Upton. Appreciate it. I yield back.
    Mr. Lee. Chair recognizes the full committee ranking 
member, Mr. Waxman.
    Mr. Waxman. Thank you very much, Mr. Chairman.
    On November 18, NHTSA announced that it was calling on 
Takata and automakers to expand the current regional recall of 
defective driver's side airbags to a national recall. NHTSA 
based this decision to expand the recall on airbag failures 
that occurred outside of the high-humidity areas covered by the 
regional recall.
    Mr. Friedman, have you determined that humidity is no 
longer a key factor or contributing factor to ruptures in these 
airbags, and have you determined that consumers outside of 
high-humidity regions are potentially in danger from ruptures?
    Mr. Friedman. Regarding passenger side airbags, all the 
data continues to point to an issue associated with high 
temperatures and high humidity over long periods of time. On 
the driver's side airbag, while humidity may still be a 
contributing factor, it is now clear based on the evidence, 
that that is not simply the dominant factor, which is why we 
have called on them and made clear to them that while we accept 
regional recalls where the evidence supports it, the evidence 
no longer supports a recall limited to those previous areas.
    Mr. Waxman. Yes. In September, Ranking Member Schakowsky 
introduced a bill that requires that all recalls occur on a 
national basis. Mr. Friedman, cars are mobile and often moved 
from state to state. Can you commit to reevaluate the procedure 
that allows for regional recalls based on climate or 
environmental conditions?
    Mr. Friedman. Ranking member, each and every day we are 
looking at how we can do more and do better for the American 
public. This issue has certainly caused us to continue to look 
into this issue.
    Mr. Waxman. Yes. Mr. Friedman, the committee has received 
Takata's testing results from over 2,500 airbags that were 
collected as part of the regional recalls or safety improvement 
campaigns. These results are a bit perplexing. They show no 
ruptures from the driver's side airbags but they show more than 
60 ruptures of passenger side airbags. In the case of one auto 
manufacturer with one type of airbag, one of every eight 
airbags from southern Florida vehicles ruptured during tests.
    Can you help us understand why NHTSA has asked for a 
national recall on the driver side airbags but has not done so 
with the passenger side airbags, even though Takata test 
results seem to show higher risk for those airbags?
    Mr. Friedman. So if you look at chart A, the red dots are 
multiple cases during the testing of where there have been 
failures in passenger side airbags. Each and every one of the 
failures in the real world and in testing have all happened in 
areas of high temperature, high humidity, consistent exposure 
to those areas. In this case, we must follow the data, and the 
data on the passenger side clearly indicates that the problem 
is in those areas.
    That said, our investigation is far from over. We are 
pushing for additional testing. And if we receive any evidence 
indicating that the problem is broader, we will act and we will 
act quickly to protect the American public.
    Mr. Waxman. Is the issue with the driver's side airbags a 
different issue than with the passenger side airbags? What is 
the difference that makes you confident in calling for a 
national recall only on the driver's side airbag?
    Mr. Friedman. We are following the data and that is the 
basis for our decision. We do know that there are design 
differences between passenger side and driver side airbags. But 
let me be clear: As Takata and the automakers indicated, they 
have not yet gotten to the bottom of the root cause of this 
issue. That is a critical step that we are pushing for and we 
are involved in because getting to the root cause will help 
dramatically clarify things for consumers, for automakers, for 
suppliers, and for the actions that each and every one must 
take.
    That is a critical step, and we will continue to push 
ourselves and industry to get to the bottom of this. That is 
one of the reasons why we are now looking to get under contract 
hopefully within about a week and expert in propellents and 
airbag production and design so that we can have added 
expertise on top of the experts we already have to get to the 
bottom of this as quickly as possible. We will leave no stone 
unturned in our efforts.
    Mr. Waxman. Honda failed to report 1,729 serious accidents 
resulting in injuries or deaths to NHTSA between 2003 and 2014. 
Eight of these incidents involved Takata airbags. Can you 
explain how this information could have been used by NHTSA if 
Honda had reported it like it was supposed to, and can NHTSA 
penalize Honda for this failure to report? And in your view, 
would increasing the penalties help ensure that manufacturers 
report the information they are supposed to do?
    Mr. Friedman. Ranking member, the way we would use and the 
way we use all of the early-warning information is to spot 
trends the spot cases where there are potential defects. 
Anytime an automaker fails to provide that information to us, 
it leaves us more hamstrung in our ability to find these 
problems quicker and to get these problems fixed sooner.
    One of the things that we are determining right now, based 
both on Honda's admission of their failure and on the 
information they have provided, is to what degree penalties are 
appropriate, but I can assure you we will hold them accountable 
to the full extent of the law. That said, as you indicate, our 
maximum penalty for any single incident is only $35 million. 
Sadly, for too many car companies, that is pocket change. That 
needs to change.
    And under the Grow America Act, the President and the 
Secretary have called for the maximum penalty to be increased 
to at least $300 million so that it will send a much clearer 
message. We have worked over the last 6 years and have fined 
automakers more than $160 million using our authority, more 
than any administration ever has before, but it is clear to us 
that we need a bigger stick.
    Mr. Waxman. Thank you. Thank you, Mr. Chairman.
    Mr. Terry. Thank you, Mr. Waxman.
    Now recognize the vice chairman, Mr. Lance, for 5 minutes.
    Mr. Lance. Thank you very much. Mr. Chairman.
    I am interested in the time frame moving forward.
    In answer to Congresswoman Schakowsky's question, you said 
it might be weeks or months. I would like a little more 
specifics on that.
    Your November 26 letter--well, there was a response on 
December 2nd, a response with which you fundamentally disagree, 
and I would imagine I disagree as well.
    What is your next step, Mr. Friedman?
    Mr. Friedman. Thank you, vice chairman.
    Our next step--in fact, my team already began, once we 
received that--the information from Takata both on Monday in 
response to our special order and yesterday in response to our 
recall demand, we are digging into that data. We are evaluating 
their arguments. We are marshaling our evidence.
    Mr. Lance. Is their argument in the three-page response 
that they gave you? Because----
    Mr. Friedman. That is the extent of their argument.
    Mr. Lance. Rather weak, weak tea, in my judgment.
    Mr. Friedman. I would agree.
    Mr. Lance. So what is the timeframe? Because the American 
people need to be assured that their automobiles are safe, and 
what is your next step and when will that occur?
    Mr. Friedman. Our next step after evaluating all that 
information would be to issue an initial determination--initial 
decision of a defect to Takata and the automakers. After that 
we would hold a public hearing.
    Mr. Lance. And how soon can you initiate that?
    Mr. Friedman. As soon as humanly possible. Vice chairman, 
the key--because we want to protect the American public, we 
need to make sure that we build the strongest case possible 
because at the end of the day, if Takata and the automakers 
continue to refuse to act, we are going to have to take them to 
court, and we want to make sure that we have a case prepared 
that we will win in that circumstance.
    Mr. Lance. You can build a court case over time. So can you 
estimate for the committee and through the committee to the 
American people when your next step will be taken?
    Mr. Friedman. We have already begun our next step of diving 
into the data.
    Mr. Lance. That doesn't answer my question, Mr. Friedman. 
The next legal step, not just diving into the data, when will 
you next do something officially regarding Takata and the 
automakers?
    Mr. Friedman. Vice chairman, I apologize, but at this point 
because there is voluminous data from Takata, I can't give you 
an exact estimate. My team is working furiously and as a 
quickly as possible, and as I indicated earlier, it could be 
weeks, it could be months, but it certainly won't be many 
months if it is. I could see something happening----
    Mr. Lance. And then if that were to occur, let's say it 
occurs by the 1st of February, and I would hope sooner than 
that, and then what happens?
    Mr. Friedman. We will hold the hearing if they refuse----
    Mr. Lance. And the hearing has to be held within what time 
frame?
    Mr. Friedman. The Safety Act does not establish a 
specific----
    Mr. Lance. Does not 45 days or 30 days or----
    Mr. Friedman. Right. The Safety Act does not establish 
that. We will move to have that----
    Mr. Lance. So from our perspective, I think it should be 
time of the essence?
    Mr. Friedman. I agree.
    Mr. Lance. And then what happens after that?
    Mr. Friedman. And then after that we will--if the evidence 
still points to the need for a broader recall, we will issue a 
final determination that will compel Takata and the automakers 
to act. If they fail to act, then we will have to work with the 
Justice Department to bring them to court and force that 
action.
    Mr. Lance. And it is the Justice Department that brings 
Takata, potentially, and the manufacturers to court.
    Mr. Friedman. I would have to get back to you on the exact 
process, but my understanding is yes, that we would work with 
the Justice Department.
    Mr. Lance. And this is a civil action?
    Mr. Friedman. I belive that is the case, yes.
    Mr. Lance. And then do you refer situations for criminal 
prosecution?
    Mr. Friedman. Under certain circumstances, the law does 
allow us to do that.
    Mr. Lance. And, for example, Honda's significant 
underreporting under the TREAD Act, is that then referred to 
DOJ for civil action or for criminal action or for both?
    Mr. Friedman. Well, we have the authority, and we expect 
Honda, frankly, to come in and agree to a significant penalty 
associated with that. So----
    Mr. Lance. That would be a civil penalty.
    Mr. Friedman. Yes, that we won't have to move to the 
Justice Department on that specific matter.
    Mr. Lance. Thank you, Mr. Chairman. I yield back the 
balance of my time.
    Mr. Terry. Thank you.
    The chair recognizes the gentleman from Mississippi, Mr. 
Harper, for 5 minutes.
    Mr. Harper. Thank you, Mr. Chairman.
    And, Mr. Friedman, what is a reasonable period of time to 
notify someone?
    Mr. Friedman. Automakers are required by law to notify 
NHTSA within 5 days of either determining a defect or 5 days of 
when they should have known that there was a defect. Then under 
regulation, they have no more than 60 days to get a letter like 
this into the hands of consumers notifying them that this is an 
important safety recall and that they must take action.
    That said, even that 60 days, to me, is longer than I would 
like to see, which is why we have a VIN look-up tool that every 
American can go to at safercar.gov/vinlookup, and even before 
you receive these recall notices, you will be alerted of 
whether or not there is an open recall for your vehicle. You 
can also sign up for added alerts from our app.
    Mr. Harper. Sure. Because it is important for the public, 
the driving public and passengers in those vehicles, to know 
when there is a safety issue. Correct?
    Mr. Friedman. It is critically important. Any recall is an 
unreasonable risk to safety. Automakers must act quickly to 
inform consumers, and consumers should act quickly to get their 
vehicles repaired.
    Mr. Harper. Well, explain to me how it is that NHTSA knew 
that Honda had underreported back in 2012, yet delayed on doing 
anything about that?
    Mr. Friedman. Well, in 2012, we became aware of a limited 
number of unreporting and----
    Mr. Harper. A limited--1,700, right?
    Mr. Friedman. At the time we were only----
    Mr. Harper. Is that a limited number? Why wasn't 
something--if we are talking about timeliness being important, 
NHTSA didn't meet your own standard.
    Mr. Friedman. At the time, we were only aware of eight. It 
was only recently that we became aware of these 1,700 problems. 
Based on those eight, we pushed Honda to follow standard 
process, which is to update their records. Once we found out 
that the problem was bigger, we went after Honda. We forced 
them under oath to provide us extensive information, and we 
will hold them accountable for their failings.
    Mr. Harper. But nothing was really done on those eight at 
that point, and those 8 were important to the eight incidents 
that were involved, obviously. Were they not?
    Mr. Friedman. They were important, and we made sure once we 
discovered this, that Honda reported that information to us so 
that we could act on it. At the end of the day, the safety of 
the American public is always our top priority, and making sure 
we had that information was critical to us.
    Mr. Harper. Well, it sounds good, but it doesn't seem that 
that was exactly the case back in 2012, but I will move on and 
ask you, Mr. Friedman, at the November 20th Senate Commerce 
Committee hearing, you said NHTSA acknowledged a plan 
authorizing dealers to disable potentially defective passenger 
side airbags where replacement parts were unavailable as long 
as they also tell consumers not to put someone in that 
passenger seat.
    Is NHTSA's acknowledgement of this approach an endorsement 
and should it be an opinion for all manufacturers of vehicles 
with passenger side airbags subject to recall?
    Mr. Friedman. Congressman, the first and foremost priority 
should be getting those passenger airbags fixed.
    Mr. Harper. I understand, but is this an acknowledgement 
that this is the appropriate plan until you can get a 
replacement?
    Mr. Friedman. If the parts aren't available and if the 
vehicle doesn't have an occupancy set, sir, that would disable 
those airbags, then yes, it is clearly an appropriate step to 
take in the interest of safety.
    Mr. Harper. Can I ask this. As the Nation's top highway 
safety traffic official, can you tell this subcommittee that 
you will put into writing the legal and policy basis supporting 
the disabling of recalled airbags until replacement parts are 
variable, or is that already in writing?
    Mr. Friedman. Well, this is--so it has been part of our 
standard process, one, if a part is broken, then an automaker 
can disable it without facing any legal penalties, and we have 
made that clear to the automakers involved.
    Mr. Harper. So is that a written formal policy of NHTSA?
    Mr. Friedman. No.
    Mr. Harper. Will it become one?
    Mr. Friedman. We will investigate that.
    Mr. Harper. OK. Let me ask you, you were in here for the 
testimony on the first panel. Correct?
    Mr. Friedman. Yes.
    Mr. Harper. Did you hear when Mr. Shimizu at Takata 
discussed manufacturing versus design and he classified this as 
a manufacturing issue? Do you believe it is a manufacturing 
problem or design problem, or do you just not know at this 
point?
    Mr. Friedman. Well, I would argue his testimony was 
inconsistent because he was clear that the industry is not 
clear yet on the root cause of the problem, which is why we are 
pushing to get to the bottom of this.
    Mr. Harper. And I know we don't know yet, but do you view 
the propellent as the prime suspect right now?
    Mr. Friedman. It is clear that the propellent is involved. 
That said, we know that other manufacturers in the 1990s used 
the same propellents. We are looking to determine whether or 
not there have been any ruptures associated with those. So far 
we have not found it. If there are no ruptures with those, it 
is an indication that if you have a good design and good 
manufacturing, the propellent may on its own be safe to use, 
but clearly no matter what, if you don't have the appropriate 
design and you don't have the appropriate manufacturing, you 
have failed to live up to your responsibilities.
    Mr. Harper. Even some previous Takata scientists have 
indicated early that using an ammonium nitrate-based propellent 
was not a safe or good idea. Do you agree with that or disagree 
with that?
    Mr. Friedman. We are asking the exact same questions, which 
is why we have compelled under oath all information from Takata 
on all the changes that they have made to the propellent and 
why we are bringing in outside expertise who has actually had 
experience with these propellents.
    Mr. Harper. Thank you, Mr. Friedman. My time is expired and 
I yield back.
    Mr. Friedman. Thank you.
    Mr. Terry. Does Dr. Burgess wish to ask any questions?
    Mr. Burgess. Yes. Thank you, Mr. Chairman, I would 
appreciate the ability to ask questions of our witness.
    Mr. Terry. You are recognized for 5 minutes.
    Mr. Burgess. I thank the chairman for the courtesy of the 
recognition.
    And, Administrator Friedman, thank you for being here. 
Obviously we have had a chance to interact on other 
subcommittees in other roles, particularly with the Cobalt 
ignition problem earlier this year.
    Let me ask you a question. Mr. Yarmuth of Kentucky posed a 
question to Takata, and then he posed it generally to the 
manufacturers, but his time was running short. So he said he is 
going to request an answer in writing, and his question 
basically was how can we be confident that the replacement 
airbags are safe. So let me pose that question to you. Thereis 
a recall going on. Various manufacturers are providing 
replacement parts. To the extent--can the public be reassured 
that these replacement parts are indeed safe?
    Mr. Friedman. We believe that the replacement parts, for 
example, on the passenger side are safer than the ones that are 
in the vehicles. The data points to a median time of over 10 
years before the failures have occurred. That said, we are 
looking into the adequacy of this remedy, and if we determine 
that it is not adequate and it doesn't ensure the safety of the 
American public, we will push them to take other steps. This 
ties in part back to the root cause question. Getting to the 
root cause is part of the key of determining the 
appropriateness and the effectiveness of this remedy.
    Mr. Burgess. I would just point out there is more than a 
semantic difference between safe and safer.
    Mr. Friedman. I agree, and I use that term intentionally 
because we are still looking into the adequacy of this remedy. 
That said, our job is to protect the American public, and if 
the American public can be provided with airbags that are 
safer, I truly believe that is the right step because that can 
save lives.
    Mr. Burgess. Well, let me ask you a question, because, I 
mean, you just dealt with the propellent a bit, and that has 
come up several times this morning, and the fact is the 
propellent did change from the '90s to the last decade. 
Currently are there ongoing studies to look at the type of 
propellent, and, in fact, are there safer 21st Century 
propellents that ought to be considered?
    Mr. Friedman. Certainly we are aware of the industry 
looking at a variety of different propellents. Different 
manufacturers use different propellents. Takata themselves has 
evolved the formulation of their propellent, and that is one of 
the reasons why, as we learn more about that, we have compelled 
them to provide all the information under oath of those 
changes. We have also been reaching out and been----
    Mr. Burgess. Can I stop you there for a second?
    Mr. Friedman. Yes. Absolutely.
    Mr. Burgess. And it is just--I don't want to project, but 
in many ways, the answers today provided by Takata seemed less 
than forthcoming, and I don't know whether that is just me that 
picked up on that, but do you have similar concerns?
    Mr. Friedman. I share your concerns, and that is why, one, 
we have required them to answer questions under oath because 
now it is not just their word that is at stake. It is much 
more, because we can penalize them or ultimately they can be 
held much more broadly responsible if they lie under oath.
    Second, we are not simply trusting Takata. We are in 
conversations with multiple other airbag suppliers, and we are 
bringing in outside expertise on this propellent, because we 
agree with you. We cannot simply trust the information that 
Takata gives us. We need to make sure that we are covering all 
our bases to get to the bottom of this for the safety of the 
American public.
    Mr. Burgess. Well, let me go back to something I think both 
Mr. Lance and Mr. Waxman brought this up. Many, many years ago 
when not this sub committee but our committee in Energy and 
Commerce was doing an investigation into uncommanded 
accelerations in vehicles in 2009, ultimately there was--and 
you, in response to Mr. Waxman, your--the amount that you can 
fine someone is capped at $35 million, but in that instance, 
there was, over and above that fine, there was an action by the 
Department of Justice. At this point, are you contemplating 
additional referral to the Department of Justice on anything 
that you have uncovered in this investigation?
    Mr. Friedman. We have actually been working and cooperating 
with the Department of Justice and helping them in their 
efforts since September.
    Mr. Burgess. So that is--that is on the table as far as a 
future action would be concerned?
    Mr. Friedman. My understanding is the Department of Justice 
is looking into this matter. I would direct you to them for 
additional comment.
    Mr. Burgess. Well, I appreciate that, but it--certainly 
when that occurred in response to the uncommanded acceleration 
issue, while I might agree that your ability to fine is 
limited, certainly the past seems to be a fairly significant 
legal stick that you had at your disposal and another tool that 
might be useful in compelling cooperation.
    Mr. Friedman. Well, fundamentally, it was discovered that 
Toyota lied to us. Despite their lies, we got to the bottom of 
that problem, determined the problem, and got those vehicles 
recalled.
    That said, we fined them not just once but multiple times 
because of their failings, and in that case, we also worked 
very closely with the Justice Department in efforts that 
ultimately led to their fine of more than a billion dollars, so 
we----
    Mr. Burgess. For the record, I did not mention a 
manufacturer, you did. I want that to be clear.
    Mr. Chairman, I appreciate the time and I will yield back.
    Mr. Terry. Thank you.
    Recognize the gentleman from Maryland for 5 minutes.
    Mr. Sarbanes. Thank you, Mr. Chairman.
    I just have a question about your capacity as an agency and 
whether you feel that you have the resources you need to do the 
job, and, you know, what your capacity currently is in terms of 
reinforcing public disclosure and encouraging greater 
transparency, and looking at this particular incident that we 
are investigating or that we are having testimony on today; 
would enhanced capacity, additional staff dedicated to the 
Office of Defect Investigations to the early warning reporting 
and so forth, would that have assisted your agency in this 
instance? And then more broadly, if you could speak to your 
capacity. That would be helpful.
    Mr. Friedman. If mean, the simple and straightforward 
answer is yes. I mean, we are a small agency that I would argue 
punches well above our weight. Over the last decade, our 
efforts have led to the recall of nearly one million vehicles, 
but it is also clear when you have a fleet of over 260 million 
vehicles and multiple manufacturers, multiple potential safety 
issues, that we need more resources to ensure that we can do 
everything we can to keep the American public safe. The 
President's budget has continued to request additional 
resources both for our Office of Defects investigation, but 
also for the rest of our agency.
    Congressman, 33,561 people died in 2012. 33,561 tragic 
lives lost because of issues such as drunk driving, people not 
wearing their seat belts, vehicles that could have had more 
technology on board to keep them safer. There is no doubt in my 
mind that with more resources, we can do more to address the 
epidemic that faces Americans in terms of fatalities and 
injuries every year on our roads.
    Mr. Sarbanes. I would imagine that those resources would 
help you both kind of chase information on the front end, it 
would get you to a place of, you know, pushing for solutions as 
well as not having to maybe triage or prioritize in ways once 
you have got the information in because you have the capacity 
to address a number of these things simultaneously.
    So I appreciate your providing that testimony, and with 
that, Mr. Chairman, I yield back.
    Mr. Terry. Thank you. Having no other members requesting 
time that then concludes your testimony and questions, and this 
committee, as you know, we can submit written questions to you. 
I would expect that. We will try to be timely, and request that 
your office be timely in their providing us responses to those 
questions.
    Thank you. You were very informative. We like charts. So 
nice job with the visual aids.
    Now, have any other closing?
    A quick note before we adjourn here is that this 
subcommittee and full committee bipartisanly have concerns 
about the role NHTSA plays in continuing these--continuing 
large-scale recalls, and I hope that NHTSA will fully cooperate 
with the GAO as GAO carries out the bipartisan request to look 
at NHTSA's internal procedures and processes.
    Mr. Friedman. Mr. Chairman, we will definitely cooperate, 
and I look forward to working with the committee on ways that 
NHTSA can get additional resources, additional people, 
additional computer tools so that we can do the very best job 
for the American public.
    Mr. Terry. Very good.
    Mr. Sarbanes. Mr. Chairman, could you acknowledge me for--
--
    Mr. Terry. Yes. Gentleman from Maryland.
    Mr. Sarbanes. Just wanted to take the occasion to thank the 
chairman for his service on this committee and in this House. 
We have appreciated his leadership and wish him well.
    Mr. Terry. Thank you. I appreciate that.
    So we are adjourned.
    [Whereupon, at 1:19 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    
    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
   
    

                                 [all]