It might be hard to call the many recent reports of record fines from the National Highway Traffic Safety Administration (NHTSA) or the Consumer Product Safety Commission (CPSC) “news”, so routine have they recently become. In 2014 alone, NHTSA issued more than $126 million in civil penalties, exceeding the total amount collected by the agency during its forty-three year history. As NHTSA trumpets its “success” and regulators are calling on Congress to increase maximum fines dramatically, one wonders when those civil penalties cross the line into criminal territory.
The Supreme Court laid out a seven-factor test for determining whether statutory penalties are civil or criminal in Kennedy v. Mendoza-Martinez, 372 U.S. 144 (1963). That case involved a dual Mexican-U.S. citizen who left the United States to avoid World War II military service. The Court held that depriving him of his citizenship as a penalty for leaving the country constituted a criminal penalty that could not be imposed absent constitutional safeguards.
In 2014 alone, NHTSA issued more than $126 million in civil penalties, exceeding the total amount collected by the agency during its forty-three year history.
Few courts have since applied Kennedy in the context of civil penalties issued under the Consumer Products Safety Act (CPSA) or the National Traffic and Motor Vehicle Safety Act (MVSA), and found the penalties are civil, not criminal. In United States v. General Motors Corp., 565 F.2d 754 (D.C. Cir. 1977), the District of Columbia Circuit addressed a $400,000 fine—then the maximum allowed—levied against General Motors for an alleged failure to report defects. The court rejected the constitutional challenge, holding that the penalty provision serves to encourage the legitimate purpose of the MVSA. In Advance Machine Co. v. Consumer Prod. Safety Comm’n, 510 F. Supp. 360 (D. Minn. 1981), the district court similarly held that penalties under the CPSA were intended to encourage compliance and thus were not criminal in nature.
Where does that leave today’s manufacturers who might face single fines that exceed $100M? The vast increase in fines in today’s regulatory environment might provide a hook for a new constitutional challenge. But the established recognition of the MVSA and the CPSA as civil, not criminal, regimes will be a difficult mantle to throw off.