In a groundbreaking move, the National Highway Traffic Safety Administration (NHTSA) has unleashed a resounding enforcement action against car-sharing titan Zipcar Inc., marking a historic moment in automotive safety. The NHTSA's first-of-its-kind fine of $300,000 signifies an unyielding commitment to upholding the Fixing America's Surface Transportation Act, aimed at safeguarding the public from the perils of recalled vehicles.

The NHTSA's First Enforcement Blow

The U.S. Department of Transportation's NHTSA, in a momentous declaration, announced the monumental $300,000 penalty imposed on Zipcar for its transgressions against the Fixing America's Surface Transportation Act. This bold move heralds the NHTSA's inaugural enforcement action against a car rental company for harboring vehicles bearing open recalls in its fleet.

Consent Order Details

The consent order, sealed by Zipcar, specifies a substantial financial obligation. The car-sharing behemoth must disburse $150,000 within a brisk 30-day window, and the remaining half can be averted contingent upon Zipcar's compliance with the NHTSA's stringent prerequisites.

Safety First: The NHTSA's Vigilance

Ann Carlson, the NHTSA's acting administrator, emphasized the paramount importance of this milestone decision, stating, "Vehicles with open, unrepaired recalls pose a safety risk to everyone on the road." She went on to emphasize the agency's unwavering commitment to employing its full array of enforcement authorities to protect the public from safety defects, whether they are in their personal vehicles or rented ones.

FAST Act Empowers NHTSA

Under the Fixing America's Surface Transportation Act (FAST Act), the NHTSA has been bestowed with expanded enforcement powers to go after companies that continue to lease out vehicles with unrepaired recalls. In the case of Zipcar, the NHTSA honed in on the company's practice of leasing out recalled 2015, 2016, and 2017 Ford Transit vans. These vehicles were equipped with a flexible driveshaft coupling susceptible to cracking, which could potentially lead to the driveshaft detaching from the transmission, resulting in a perilous loss of power while driving.

Consent Order Duration

The consent order's validity spans one year, with the NHTSA retaining the prerogative to extend it for an additional year if circumstances deem it necessary.

Zipcar's Obligations

Zipcar is now under stringent obligations. The company must furnish an audit report to the NHTSA within 150 days, delineating all its vehicles with open recalls. Additionally, it must ensure mandatory updates regarding the company's training in compliance with NHTSA standards.

Quarterly Progress Meetings

Quarterly meetings are mandated for Zipcar and the NHTSA to discuss the progress made in fulfilling the obligations stipulated in the consent order. This proactive measure ensures ongoing vigilance in maintaining safety standards.

Zipcar's Response

In a statement to Law360, a Zipcar spokesperson disclosed the company's proactive steps taken since 2018 when they were first notified of the NHTSA's investigation into their practices. These improvements encompass a new automated documentation system for recalled vehicles and ensuring that recalled vehicles are not available for rental. Furthermore, enhanced communication channels have been established between Zipcar's home office and field offices to monitor the status of grounded vehicles and recall repairs, as per the consent order.

The NHTSA's Legal Team

The NHTSA is being represented by an in-house legal team, including Ann Carlson, John Donaldson, Kerry Kolodziej, Thomas Healy, and Sean Ward.

Zipcar's Legal Representation

Zipcar's legal representation is led by Theodore Kornobis of K&L Gates LLP, as they navigate through this unprecedented legal battleground.