On April 14, 2023, following a nearly seven year delay, the U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) published proposed rules implementing the whistleblower provisions of Motor Vehicle Safety Whistleblower Act (MVSWA).
According to leading whistleblower attorney Stephen M. Kohn, these regulations “will be pivotal in determining the overall success of the Auto Safety Whistleblower Program in incentivizing auto manufacturing insiders and preventing deadly motor vehicle safety defects.”
Passed in response to a number of high-profile auto safety scandals, the MVSWA established an auto safety whistleblower program offering monetary awards and anti-retaliation protections to individuals who report auto safety concerns to the NHTSA.
Kohn, a founding partner of Kohn, Kohn & Colapinto, reviews the DOT’s proposed rules in a new piece published by Reuters entitled “Rulemaking process a critical juncture for DOT’s auto safety whistleblower program.”
“Overall, the rules proposed by the DOT largely mirror the rules of the hugely successful SEC Whistleblower Program,” Kohn writes. “This makes sense given that the whistleblower provisions of the auto-safety whistleblower program were largely modeled off those found in the Dodd-Frank Act, which established the SEC program.”
“There are three major areas in the proposed rules, however, which could potentially undermine the success of the auto-safety whistleblower program,” Kohn continues. “In their proposal, the DOT requests comments from stakeholders on these areas. The direction the DOT chooses to go will have major consequences.”
The three main issues of concern outlined by Kohn are the discretion of the NHTSA Administrator to deny a fully qualified whistleblower from receiving an award, the strictness of filing requirements for the official whistleblower disclosure form WB-INFO, and the lack of clarity of whether internal reporting requirements extend to compliance programs which serve a company’s general counsel.
Kohn addresses all these issues and more in a detailed comment on the rulemaking process filed with the DOT on June 13. Having played a key role in the rulemaking process for the SEC Whistleblower Program, Kohn explains in great detail which elements of the proposed rules will incentivize and protect whistleblowers and which unfairly discriminate against them.
On June 13, the National Whistleblower Center (NWC) also filed a comment on the rulemaking process. Back in 2016, NWC filed a detailed recommendation to the DOT outlining whistleblower program regulations modeled off those of the SEC and IRS.
“NWC reaffirms our recommendations in the 2016 comment and proposes that the DOL establish rules modeled on the SEC’s and IRS’s whistleblower reward laws,” writes NWC Executive Director Siri Nelson.
The DOT has not publicized a date by which final rules will be adopted. Under the MVSWA, the DOT was mandated by Congress to publish final rules by July 6, 2016.
While the DOT has failed to finalize regulations, it states that “The whistleblower protection and award provisions are statutory and not contingent on a rule being in place. NHTSA has an active, ongoing whistleblower program.”
However, due to the absence of regulations for the program, the auto-safety whistleblower program has floundered since the passage of the MVSWA over seven years ago. The NHTSA confirmed in its rule proposal that it has only issued 1 whistleblower award since the program was created. The award, $24 million to a whistleblower for exposing untimely recalls from the automobile manufacturer Hyundai and Kia, speaks to the high-stakes impact of fraud in the automobile sector.
“It remains to be seen whether the DOT will learn from other whistleblower award programs and adopt rules which instill the largest levels of faith in the program among whistleblowers,” Kohn writes in conclusion of his Reuters piece.