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From Products Liability Law Daily, July 31, 2013

Legislation banning rental car companies from renting recalled vehicles clears senate committee

By Joseph Bichl

Legislation (S. 921) that would ban car rental companies from renting or selling vehicles that are under manufacturer recall passed the Senate Commerce, Science, and Transportation Committee by voice vote (The Raechel and Jacqueline Houck Safe Rental Car Act of 2013 (S. 921),; Sen. Charles Schumer News Release, July 30, 2013).

Background. The measure, called The Raechel and Jacqueline Houck Safe Rental Car Act of 2013, was named after two sisters who were killed driving a rental car that had been recalled for a power steering hose defect but had not been repaired. The car caught fire because of the defect while traveling on the highway, causing a loss of steering and a head-on collision with a semi-trailer truck.

Current law. While current law prohibits car dealerships from selling recalled vehicles to consumers, no law bans rental car companies from doing the same or renting them to consumers. Current law also prohibits auto dealers from selling a new car under recall unless the defect has been remedied.

Bill provisions. Under S. 921, rental companies would not be able to rent or sell recalled vehicles until the vehicles were fixed. However, rental companies would be permitted to sell a damaged vehicle subject to recall for parts or scrap with a junk title.

The measure would require vehicles under a safety recall to be grounded no later than 24 hours after the rental company received a safety recall notice. Rental companies would have up to 48 hours for recalls that include more than 5,000 vehicles in their fleet.

As a practical matter, the legislation would permit rental companies to rely on temporary steps identified by manufacturers. This means that if a manufacturer’s recall notice specifies measures that can be taken to eliminate the safety risk until parts are available, then a rental company would be able to continue to rent the vehicle if those steps were put in place. However, once parts become available, the rental company would be required to ground and repair the vehicle.

Finally, the bill would hand the National Highway Traffic Safety Administration the authority to investigate and police rental companies' recall safety practices.

According to bill supporters, the legislation has been endorsed by major car rental companies such as Hertz, Enterprise, Avis Budget, Dollar Thrifty, and National. The bill also is supported by the Truck Renting and Leasing Association, representing the majority of truck renting and leasing operations in the United States, as well as AAA and State Farm.

MainStory: TopStory LawsPendingLegNews MotorVehiclesNews

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