28K and counting: Federal regulators fine GM $7,000 a day

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Federal regulators have fined General Motors $28,000 — a total that will grow $7,000 with each passing day — over its failure to answer questions about its ignition switch recall.

GM had until April 3 to answer 107 questions related to the National Highway Traffic Safety Administration’s investigation into why it took the automaker more than a decade to reveal an ignition switch defect that has been linked to 13 deaths.

The $7,000-a-day fine will continue until the company responds to all questions, the NHTSA said. The federal agency may ask the U.S. Department of Justice to take civil action to compel the automaker to respond. The automaker could face a maximum penalty of $35 million in civil fines for failing to respond fully or truthfully, according to details in NHTSA’s original special order of investigation to GM.

In February, the automaker issued a recall of the 2005 to 2007 model year Chevrolet Cobalt, Pontiac G5 and Pontiac Pursuit as well as 2003 to 2007 Saturn Ions, 2006 to 2007 Chevrolet HHRs and 2006 to 2007 Pontiac Solstice and 2007 Saturn Sky models. The recall was later expanded to include all model years, affecting about 2.6 million cars worldwide.

MORE: Can GM afford compensating victims for its malfunctioning cars?

Under certain conditions, the ignition switch can move out of the “run” position, causing a partial loss of electrical power and the engine turning off, according to GM. The risk increases if a driver’s key ring is carrying added weight or if the vehicle experiences rough road conditions. When the ignition switch is not in the run position, the air bags may not deploy if the vehicle is involved in a crash.

NHTSA’s chief counsel Kevin Vincent said in a letter to GM that the automaker did not respond to more than a third of the agency’s questions by the deadline. A day after the deadline passed, GM told regulators it didn’t fully respond because of its internal investigation led by former U.S. attorney Anton Valukas, according to Vincent’s account in the letter.

“Mr. Valukas’ investigation is irrelevant to GM’s legal obligation to timely respond to the special order and fully cooperate with NHTSA,” Vincent wrote.

GM has produced nearly 21,000 documents totaling more than 271,000 pages, according to an email from a GM spokesman. The documents came from 75 individual custodians and additional sources.

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“Even NHTSA recognizes the breadth of its inquiry and has agreed, in several instances with GM, to a rolling production schedule of documents past the April 3 deadline,” GM said in an e-mailed response.

NHTSA says it didn’t object to GM taking additional time to respond to technical engineering questions. Many of the requests that GM has yet to respond to are basic questions, according to the letter.

Among them was a question regarding the redesign of the ignition switch. A GM engineer approved changes to the ignition switch in April 2006, but the parts number was never changed — a highly unusual practice that prompted congressional lawmakers last week to accuse the automaker of a cover-up.

Delphi began providing GM with the redesigned switch during the 2007 model year. In its investigation, NHTSA asked GM if it approved a change to the ignition switch at any other time. GM failed to respond to that, and other requests, according to the Vincent letter.

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“It is deeply troubling that two months after recalling the vehicles, GM is unwilling or unable to tell NHTSA whether the design of the switch changed at any other time,” Vincent wrote in the letter.

Problems with the ignition switch were identified as early as 2001 in a pre-production report for the model year 2003 Saturn Ion, according to documents provided to the House Subcommittee on Oversight and Investigations.In 2004 GM opened an engineering inquiry to look into a complaint that a 2005 Chevrolet Cobalt vehicle could be “keyed off” while driving. Ultimately, no action was taken. A year later, the driver of a 2005 Chevrolet Cobalt was killed in a crash. A NHTSA investigation determined the frontal airbag system didn’t deploy and that the vehicle power mode status was in “accessory,” not “run.”

GM has more than doubled its first-quarter charge to $750 million to cover the cost of recall-related repairs. This amount includes a previously disclosed $300 million charge for three safety actions announced in March and the ignition switch recall.

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