After introducing the Raechel and Jacqueline Houck Safe Rental Car Act of 2013 in Senate last week, Sen. Claire McCaskill (D-Mo.) led a hearing on the bill yesterday in front of the U.S. Senate Subcommittee on Consumer Protection, Product Safety, and Insurance. This legislation would prohibit rental car companies from renting vehicles that are under manufacturer recall.

The hearing included testimony from the American Car Rental Association (ACRA), rental car companies, auto dealers, auto manufacturers and the National Highway Traffic Safety Administration (NHTSA).

Sharon Faulkner, executive director of ACRA, expressed the importance of making sure that all rental cars are safe to drive. Although the car rental industry initially had doubts about the first recall bill in 2011, the industry was able to work with lawmakers to address concerns.

“The end result is a proposal that will provide our customers additional assurance that the vehicles they rent are safe, and provides our industry with a uniform federal standard across the country and that addresses our original operational concerns,” said Faulkner.

NHTSA Administrator David Strickland expressed why he feels this bill is important to protect drivers.

“The NHTSA is tasked with ensuring the safety and reliability of the U.S. vehicle fleet; we play a critical role in protecting drivers from the risks associated with auto safety recalls,” said Strickland. “… All NHTSA safety recalls address an unreasonable risk to safety and should not be ignored. Unfortunately, we do not have the statutory authority to protect rental car consumers. Currently, there is no prohibition on rental car companies renting vehicles that are under a recall, but have not yet been remedied.”

All of the major car rental companies – Enterprise Holdings (including National and Alamo), Hertz (including Dollar Thrifty) and Avis Budget Group – support the legislation, as does ACRA and NHTSA. But not all speakers at the hearing supported this bill.

Peter Welch, president of the National Automobile Dealers Association (NADA), said that car dealers support the intention of the bill, but they have reservations. Welch asserted that the bill doesn’t differentiate between serious and minor recalls.

“We agree that recalls which require immediate repairs to systems such as steering, fuel delivery, accelerator controls, or other crucial components should not be rented to the public until the defect is remedied,” said Welch. “On the other hand, many recalls are due to defects or non-compliance with technical federal motor vehicle standards which, depending on the circumstances, may not render a vehicle unsafe to operate until a recall fix has been completed.”

According to Welch, sometimes recall work can’t be done. Recall parts may be unavailable or not yet manufactured by the automaker.

In addition, Welch states that this new bill could subject dealers to new federal inspections and costly penalties for violations.

Mitch Bainwol, president and CEO of Alliance of Automobile Manufacturers, agreed that this bill could have negative consequences, including the fact that it “pits” businesses against consumers in recall situations.

“To minimize out of service time, rental car companies will demand (and have demanded) ‘front of the line’ access to parts and service, which may force ordinary consumers - moms and dads driving their family vehicles - to the back of the line for recall repairs,” said Bainwol.

And according to Bainwol, the bill could lead rental companies to pursue damages against manufacturers for “loss of use” of the vehicle while waiting for repair.

“This bill mandates that rental car companies ground recalled vehicles until they are repaired, but it puts no time limit on the repair,” said Bainwol.

Bainwol told the Committee that “…the Alliance stands ready to work with you to ensure that we can continue to achieve our shared goals without creating new, unintended and negative consequences for the driving public.”

By Amy Winter

Click here to see our past coverage on this topic of recalls in the industry.