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States reach a $650 million settlement over exploding Takata air bags

Virginia, Maryland and the District on Thursday were among dozens of states to to reach a $650 million settlement with the U.S subsidiary of a Japanese company that manufactured faulty air bags installed in millions of automobiles worldwide, bags that sprayed deadly shrapnel that killed at least 22 people and injured hundreds more.

The agreement was reached with TK Holdings, Inc., the American subsidiary of Takata as part of a settlement between 44 state governments and the District, requiring a $650 million payout by the Japanese firm. Nearly 34 million of the 250 million vehicles on U.S. roads have been part of the largest recall in U.S. history.

Unlike most air-bag makers, Takata uses ammonium nitrate to trigger a small explosion that inflates the air bag when the vehicle strikes something. But in some vehicles — particularly those that were several years old and kept in regions of the country with high humidity — the ammonium nitrate burns too fast, causing the chemical’s container to explode and spray drivers and passengers with metal shrapnel.

“Companies have a moral and legal obligation to protect their customers from defective products like these incredibly dangerous airbags,”  Virginia Attorney General Mark R. Herring said. “Just like the Volkswagen emissions scandal showed, we will move as quickly as possible to protect Virginians from defective or unsafe vehicles and will hold manufacturers accountable when they deceive drivers or place them at risk.”

Faced with the massive cost of worldwide recalls, Takata filed for bankruptcy in the U.S. and Japan last year. The company signed an agreement in November to sell most of its assets to a Chinese company for $1.58 billion, promising to use the proceeds to compensate victims of the accident and repay debts.

The recall announced by the National Highway Traffic Safety Administration will continue until next year, and millions of drivers worldwide have yet to respond to the announcement.

Court documents filed in the U.S. said that Takata was aware of test failures as early as 2004, but took no action for more than a decade, failing to notify regulators that there product was defective.

In addition to Virginia, Maryland and the District, the states that settled with TK Holdings are Alabama, Alaska, Arizona, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Washington, and Wisconsin.