[Congressional Record Volume 145, Number 77 (Wednesday, May 26, 1999)]
[Senate]
[Pages S6057-S6058]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. McCAIN (for himself, Mr. Ashcroft, Mr. Bond, Mr. Burns, 
        Mr. Gorton, and Mr. Inhofe):
  S. 1130. A bill to amend title 49, United States Code, with respect 
to liability of motor vehicle rental or leasing companies for the 
negligent operation of rented or leased motor vehicles; to the 
Committee on Commerce, Science, and Transportation.


               motor vehicle rental fairness act of 1999

  Mr. McCAIN. Mr. President, I rise to introduce the Motor Vehicle 
Rental Fairness Act of 1999. The measure is short, simple and 
important. It will assure that companies who rent or lease motor 
vehicles are not held liable for accidents caused by their customers 
when there is no way the companies could prevent these accidents.
  Normally under our system of jurisprudence, defendants in lawsuits 
are held liable based upon their action or inaction. Unfortunately, a 
small number of states ignore this general principle. This minority of 
states subject rental and leasing companies to unlimited liability for 
accidents caused by their customers that involve the company's 
vehicles--despite the fact that the company was not at fault. This type 
of vicarious liability, liability without fault, holds these companies 
liable even when they have not been negligent in any way and the 
vehicle operated perfectly.
  The measure I am introducing prevents states from holding companies 
liable for accidents based solely upon their ownership of the vehicles. 
The bill makes clear that rental companies would still be liable if the 
vehicle did not operate properly. It makes clear that companies are not 
excused from meeting state minimum insurance requirements on their 
motor vehicles. Minimum insurance requirements ensure that people 
involved in accidents with vehicles owned by rental companies have 
recourse to recover some damages.
  The reason most often cited for imposing vicarious liability is to 
ensure that an innocent third party can recover damages in an accident. 
Unfortunately, this quest for a financially responsible defendant has 
lead to absurd results. If a vehicle is purchased from a bank or 
finance company, then there is no vicarious liability. However, if that 
same vehicle is leased, vicarious liability applies.
  This problem attracted my attention because of the impact the 
policies of a small number of states have on interstate commerce. 
Settlements and judgments from vicarious liability claims against 
rental companies cost the industry over $100 million annually. And let 
me be clear, it is the consumer who is paying this cost.
  For these reasons, this bill and the reforms it implements are long 
overdue. Everyone, companies and individuals alike should be held 
liable only for harm they caused or could have prevented. The only way 
these companies can prevent this harm would be to go out of business. 
This is an absurd expectation that will be remedied by this bill.
  I look forward to hearings on this matter and working with my 
colleagues to ensure its passage. I ask unanimous consent that a copy 
of the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1130

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Motor Vehicle Rental 
     Fairness Act of 1999''.

     SEC. 2. FINDING.

       The Congress finds that the vicarious liability laws, the 
     ultimate insurer laws, and the common law in a small minority 
     of States--
       (1) impose a disproportionate and undue burden on 
     interstate commerce by increasing rental rates for motor 
     vehicle rental and leasing customers throughout the United 
     States; and
       (2) pose a significant competitive barrier to entry for 
     smaller motor vehicle rental and leasing companies attempting 
     to compete in these markets,

     in contravention of a fundamental principle of fairness that 
     there should be no liability in the absence of fault.

     SEC. 3. LIMITATION ON LIABILITY.

       (a) In General.--Part C of subtitle VI of title 49, United 
     States Code, is amended by adding at the end thereof the 
     following:

[[Page S6058]]

    ``CHAPTER 333. LIABILITY FOR COMPANIES THAT RENT OR LEASE MOTOR 
                               VEHICLES.

``Sec.
``33301. Limitation of liability

     ``Sec.  33301. Limitation of liability

       ``(a) In General.--Notwithstanding any State statutory or 
     common law, no State or political subdivision of a State may 
     hold any business entity engaged in the trade or business of 
     renting or leasing motor vehicles liable to others for harm 
     caused by a person to himself or herself, to another person, 
     or to property resulting from that person's operation of a 
     rented or leased motor vehicle solely because that business 
     entity is the owner of the motor vehicle.
       ``(b) Application with Certain Other Laws.--
       ``(1) Negligence.--Subsection (a) does not apply to 
     liability imposed under a State's statutory or common law 
     based on negligence of a motor vehicle owner.
       ``(2) Financial responsibility laws.--Nothing in this 
     section supersedes the law of any State or political 
     subdivision thereof--
       ``(A) imposing financial responsibility or insurance 
     standards on the owner of a motor vehicle for the privilege 
     of registering and operating a motor vehicle; or
       ``(B) imposing liability on business entities engaged in 
     the trade or business of renting or leasing motor vehicles 
     for failure of such entity to meet financial responsibility 
     or liability insurance requirements under State law.
       ``(c) Definitions.--In this section:
       ``(1) Business entity.--The term `business entity' means a 
     sole proprietorship, corporation, trust, limited liability 
     company, company, association, firm, partnership, society, 
     joint stock company, or other legal entity, and includes a 
     department, agency, or instrumentality of the government of 
     the United States, a State, or a political subdivision of a 
     State.
       ``(2) Motor vehicle.--The term `motor vehicle' has the 
     meaning given that term by section 13102(14).
       ``(3) Owner.--In this section, the term ``owner'' means--
       ``(A) a person who is a record or beneficial owner or long-
     term lessee of a motor vehicle;
       ``(B) a person entitled to the use and possession of a 
     motor vehicle subject to a security interest in another 
     person;
       ``(C) a lessee or bailee of a motor vehicle in the trade or 
     business of renting or leasing motor vehicles, having the use 
     or possession thereof, under a lease, bailment, or otherwise.
       ``(4) Person.--The term `person' has the meaning given to 
     it by section 1 of title 1, but also includes a government 
     entity.
       ``(5) Government entity.--The term `government entity' 
     means an agency, instrumentality, or other entity of Federal, 
     State, or local government (including multijurisdictional 
     agencies, instrumentalities, and entities).''.
       (b) Conforming Amendment.--The analysis for part C of 
     subtitle VII of title 49, United States Code, is amended by 
     inserting after the item relating to chapter 331, the 
     following:

``333. Liability for companies that rent or lease motor veh33301''.....

     SEC. 4. EFFECTIVE DATE.

       Section 33301 of title 49, United States Code, as added by 
     section 3 of this Act, applies to any civil action commenced 
     on or after the date of enactment of this Act.

 Mr. ASHCROFT. Mr. President, I rise today in support of the 
legislation being introduced by the distinguished Chairman of the 
Senate Commerce Committee--the senior Senator from Arizona. I strongly 
support the reforms to state vicarious liability laws contained in the 
``Motor Vehicle Rental Fairness Act of 1999'' and urge my colleagues to 
support this important bill and move it swiftly towards enactment.
  I commend the chairman for taking the lead on this important 
legislation. His bill, of which I am proud to be an original co-
sponsor, seeks to put a halt to an absurd aberration in our legal 
system. Under the vicarious liability laws of a very small number of 
states, companies that rent or lease motor vehicles are held strictly 
liable if their renters or lessees are negligent and cause an accident. 
The company does not have to be negligent in any way. The vehicle may 
operate perfectly and be maintained properly. These states simply hold 
the company liable because of their ownership of the vehicle.
  The only way for these companies to avoid this liability would be to 
stop renting or leasing these vehicles. This is not an acceptable 
resolution to this problem. The American justice system should be based 
on the general principle that a defendant should be held liable only 
for harm he or she could prevent--not merely because the defendant has 
a ``deep pocket.''
  Vicarious liability laws undermine competition in these states and 
have driven smaller rental and leasing companies out of business. In 
fact, vicarious liability acts as a tax on all rental and leasing 
companies--and their customers--nationwide because these companies must 
try to recover their losses from vicarious claims through rental rates 
nationwide.
  It is time to put a stop to this legal disconnect. Hold these 
companies liable if they are negligent. Hold them liable if they fail 
to properly maintain one of the vehicles they rent or lease. But do not 
hold them liable simply for being in business--for fulfilling the needs 
of our traveling constituents.
  Mr. President, I look forward to hearings on the Senator from 
Arizona's legislation at the earliest possible date and hope to move 
this legislation through this body as quickly as possible.
                                 ______