WASHINGTON, D.C. -- In a setback for the industry's federal tort reform efforts, the House on April 1 rejected a proposed transportation bill amendment aimed at repealing all state vicarious liability laws. The proposed amendment was defeated in a voice vote.

Submitted by Representative Sam Graves (R-Missouri), the amendment would have prevented vehicle rental and leasing companies from being held liable for injury, death or property damage arising from someone's negligence while renting or leasing a vehicle.

The amendment was backed by the Vehicle Renting and Leasing Fairness Alliance, a coalition of car rental and leasing companies. The Truck Renting and Leasing Assn. (TRALA) spearheaded the coalition's formation.

"We're now in a stage of exploring what our options are," said Tom James, vice president of government relations for TRALA. "I think the vote puts us at a severe disadvantage. This is a setback, but it's still not over."

In states with vicarious liability laws, a rental or leasing company can be held liable for third-party death and injury -- even though it acted without negligence -- solely because of its status as owner of the vehicle. The amendment's protection would have extended only to leasing and rental companies meeting state-imposed liability coverage limits for the vehicle.

On April 2, the House approved the six-year, $275 billion highway bill. The Senate approved a $318 billion transportation bill in February. At that time, Senator Fritz Hollings (D-S.C.) used Senate floor procedures to thwart efforts to introduce a smiliar amendment repealing state vicarious liability laws.

Negotiations between the two chambers will produce a transportation bill to be submitted to President Bush. However, Bush has threatened to veto any transportation bill calling for more than $256 billion.