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Transportation Bill Finally Closes Rental Car Loophole

On December 4, 2015, President Barak Obama signed the Fixing America’s Surface Transportation (FAST) Act into law. The transportation bill includes several measures intended to address auto safety recalls.

Most importantly, the law will prohibit the rental of vehicles with unrepaired safety defects. The provision is a hard fought victory for the mother of Raechel and Jacqueline Houck, for whom the Safe Rental Car Act was named. The two young women died in a 2004 California car accident involving a recalled Enterprise rental car. A month before Enterprise Rent-a-Car rented a PT Cruiser to Raechel Houck, 24, and her sister Jacqueline, 20, the rental agency was informed of a serious safety defect—power steering fluid could leak and ignite under the hood. Because Enterprise failed to remove the vehicle from its fleet of rental cars, the two sisters later died in a fiery crash.

The new requirements will apply to rental car companies and dealerships with a fleet of 35 or more vehicles, banning them from renting unrepaired recall vehicles. While draft legislation imposed the requirement on those with a fleet only five vehicles, the auto industry was successful in increasing the threshold. Nonetheless, the new law will still go a long way to keeping defective vehicles off our roadways. It also expands NHTSA’s recall authority to cover rental car companies, allowing the agency to investigate and punish violators.

The FAST Act also increases the maximum penalty the National Highway Traffic Safety Administration can impose on auto manufacturers from $35 million to $105 million. In addition, the law will significantly increase NHTSA’s funding for its vehicle safety programs.

With regard to increasing the effectiveness of the recall program, the FAST Act requires the NHTSA to implement a final rule requiring manufacturers to make electronic notification of recalls to consumers, such as sending emails or launching social media campaigns. The law also requires the agency to improve its website so that it is readily accessible and easy to use.

As San Diego product liability lawyers, we are hopeful that Congress will also enact legislation to promote used car safety. While existing law requires new car dealers to repair vehicles with existing recalls prior to sale, the same rules do not apply to previously owned vehicles. As we have discussed on this blog, several used auto dealers, such as CarMax, have come under scrutiny for selling recalled vehicles to unsuspecting consumers. A measure that would have prohibited used-car dealers from selling vehicles with unrepaired recalls was proposed as part of the FAST Act; however, it was not included in the final law.

If you have suffered serious harm due to a dangerous or defective vehicle, you may be entitled to compensation for your injuries, including payment of lost wages and medical expenses. We encourage you to contact a San Diego product liability attorney at the Law Offices of Robert Vaage for a free consultation.