There are 1.6 million rental vehicles, including car-sharing in service in the United States. Our industry has a long history of providing safe vehicles for our customers. Nowhere is this more apparant than in our timely and comprehensive procedures for dealing with recalls. Our commitment to safety has led our members to adopt far more conservative standards for recalls than what the law requires or what is recommended by the auto manufacturers, as overseen by the National Highway Traffic Safety Administration (NHTSA). Current data confirm that the manner in which our industry handles recall notices is working well. The reality is, the rental car industry addresses the repair of recalled vehicles at a rate demonstrably superior to any other class of vehicle owner.

Current Industry Practices

Prompted by the unprecedented Toyota recalls of early 2010 affecting tens of thousands of rental vehicles, the industry, through ACRA, publically stated its strict adherence to the following practices:

• When we receive a recall notice from a manufacturer, we will not re-rent that vehicle until all repairs are completed. If a member makes an exception, it would only be when they are satisfied that the vehicle is safe to operate under the circumstances presented by the particular recall and based on information and direction provided by the manufacturer. In all cases our policy is to have the recommended work done as quickly as possible.
• Further, when manufacturers direct that a recalled vehicle not be driven because of the severity of the safety issue, we stop renting such models and immediately contact customers already in those vehicles to provide them a replacement as quickly as possible.
• All decisions the car rental industry makes concerning the “roadworthiness” of any vehicle are based upon information and direction provided by the auto manufacturers. Our processes have continuously evolved to improve the timeliness of recall repairs, and consequently, an overwhelming percentage of vehicles are now repaired and returned to service within the first month.

The question of regulation

The public debate regarding the need for regulation of our industry stems from two issues:

• Almost seven years ago, two California sisters died in a terrible and tragic crash involving a rented PT Cruiser, which was subject to an open recall notice. The rental company accepted responsibility for the accident, and today that 2004 PT Cruiser would not be rented until it was repaired.
• Data recently obtained from the auto manufacturers and posted by NHTSA have painted an incomplete and outdated picture about our industry’s performance regarding recall repairs. The information contained old, inaccurate (as acknowledged by the manufacturers) and irrelevant data rather than the industry’s current repair rates.

Proponents of regulating the rental car industry’s management of safety recalls cite a need to “close a rental car loophole.” In fact, there is no such loophole. Rental car companies are not treated differently under the law vs. all other vehicle owners and fleet operators. What is different, is the industry’s focus on safety which has resulted in billions of rentals over 10′s of billion of miles since 2004 without a single recall related incident.

Still, we stand ready to work with any government agency or legislative body to achieve improved recall completion rates for all vehicles on the roadways. We believe transparency and accurate information is the key to an effective process. For this reason we have made internal data available to regulators and legislators, and have committed in every forum of debate to support legislation which would mandate our ongoing reporting of recall completion data to NHTSA, who has the expertise to evaluate such data to determine whether the need exists for further regulation.

Read about the case on Auto Rental News.

Read more about the action at Auto Rental News.

For more information and registration, visit CarRentalShow.com.

RECALLS

The California legislation (AB 753) is currently stalled in the legislature, but we anticipate it will come back when legislators reconvene in Sacramento. Through the efforts of several ACRA members, the legislation is drastically different than the original version, which would severely disrupt operations, the industry is still opposing the bill. The legislation has already passed the Assembly and is pending in the Senate, which we anticipate will take action next year. Given the safety track record of our industry and recognizing that our practices and decisions are based upon keeping the safety of our customers paramount, the legislation, in our opinion, is completely unnecessary.

At the federal level, the legislation introduced by Sen. Chuck Schumer (D-NY) and others would impose unprecedented regulations on car rental companies and used car dealers – even more so than the California legislation. As in California, we believe our industry is being unfairly singled out for unnecessary, burdensome regulations. The bill is currently in the Senate Commerce Committee, which could take action on the legislation in early December.

ACRA position on recalls is posted on its website. Many members are signing on to underscore our industry’s solid commitment to safety and to repairing our vehicles in a timely manner.

TAXES

Our industry continues to be a target of state and local governments’ efforts to add or raise excise taxes on our customers in order to deal with budget shortfalls or pay civic projects such as sports stadiums. ACRA successfully fought a number of these taxes last year, but we anticipate several more to come this upcoming year. In Minnesota, the funding question for the a Vikings stadium has not been resolved and rental car taxes have been mentioned there. There will be others.

ACRA is pursuing a federal solution to this local tax problem. H.R. 2469 was introduced by Rep. Steve Cohen (D-TN) and Rep. Sam Graves (R-MO), along with other co-sponsors of both parties. This bill would prohibit future discriminatory taxes imposed upon car rental customers by state and local governments. The principles of the legislation are similar to other federal laws that protect the railroad, airline, commercial bus and commercial trucking industries from state and local discriminatory taxes. The bill has been referred to the House Judiciary Committee and we anticipate a hearing early in 2012.

PRIMARY LIABILITY

ACRA will once again engage legislators in Arizona, Maryland and New York to pass legislation that will re-order the priority of payment of third party claims. Currently the rental company is first in line to pay such claims. As we reported earlier, the industry undertook efforts last year to change the law in this area and came up a bit short. The insurance lobby weighed in heavily against the legislation, which led to its ultimate defeat. But, we believe with continued education of lawmakers, we can ultimately prevail on the issue. The fact remains that these states are in the severe minority of states that require the rental company to pay out first, if there is other valid insurance from the renter available.

FAILURE TO RETURN

In Florida, there are conflicting and confusing statutes governing when a rental car company can report a vehicle stolen and when law enforcement adds those vehicles to the “Hot Sheet”. Adding to the confusion is that there are some local jurisdictions that create additional conditions that rental companies must meet before law enforcement will consider a vehicle stolen. This takes time – and the more time it takes for a vehicle to be put on the Hot Sheet, the less likely we are to recover our vehicles. There will likely be ACRA-supported legislation in Florida to modify the law to create one statewide standard of when law enforcement should consider a rental vehicle stolen.

MINI TORT REFORM

In Michigan, there is an effort underway to re-examine the state’s mini tort system. Among other changes, some are wondering whether the current system results in a particular injustice to those involved in auto accidents that are not at fault. Michigan is one of the few “no-fault” states remaining in the country. That said, there is at least some accounting for fault in the state mini-tort provisions, which serve as a vehicle for the injured party to recover the amount of a deductible from the wrongdoer. Such a provision is necessary because both parties to an accident file claims with their own respective carriers in a “no fault” scheme. Because of the way the current statute is written, the injured party is not entitled to loss of use – only deductible reimbursement. Some believe that amending the law to allow for loss of use compensation and deductible reimbursement is only fair given society’s reliance upon the automobile. Never mind the fact that the auto capital of the world doesn’t recognize this basic right that is taken for granted in other states, the fact is that it may be time, and if the rental car industry could stand to put a few more cars on the road as a result, we should consider participating in the policy debate.

LOSS OF USE

In Wisconsin, the Wisconsin Car Rental Alliance “WICRA” is considering a reform of the statutory rules that govern the circumstances under which a rental car company may be entitled to “loss of use” from a renter who damages a car while on rent. WICRA may seek to pass a bill with language similar to the following:

“In addition to the customer’s responsibility for damage to the vehicle (as defined in the state statute) the renter is also responsible for loss of use. Loss of use shall be the total labor hours (body, paint and mechanical) from the repair estimate divided by 4 hours to determine the number of days out of service. The days are then multiplied by the daily rental rate on the customer’s rental agreement excluding any optional products or accessories.”

Specifically, we have recommended that our members apply a far more conservative standard than what the law requires or what is recommended by the auto manufacturers, as overseen by the National Highway Traffic Safety Administration (NHTSA). On behalf of our member companies, the American Car Rental Association (ACRA) has collected the best policies, practices, and procedures of our member companies and developed a Rental Car Recall Statement.

• When a member receives a safety recall notice from a manufacturer, they should not re-rent that vehicle until all repairs are completed. The only exception is when they are satisfied that the vehicle is safe to operate under the circumstances presented by the particular recall notice and/or after consulting with the auto manufacturer about the safety of the vehicle. In all cases, our member’s policy is to have the recommended work done as quickly as possible.
• Further, when manufacturers direct that a recalled vehicle not be driven because of the severity of the safety issue, the members should stop renting such models and take steps to immediately contact customers already in those vehicles to provide them a replacement as quickly as possible. All vehicles falling under these criteria shall be grounded until such recall is completed.
• All decisions our members make concerning the “roadworthiness” of any vehicle always should be based upon information and direction provided by the manufacturer of the vehicle in question.
• Members shall track recall completion rates at the 30-,60-,90-, and 120-day mark and make available to NHTSA annually on a collective basis their completion rates. Furthermore, members shall make available to NHTSA the same information on company-by-company basis for any individual recall when NHTSA so requests including information on staged recalls or parts delays.
• Members shall work with NHTSA and the automobile manufacturers to improve the recall system. ACRA hopes that the industry’s experience in purchasing more than 12 percent of the new passenger vehicles sold in the U.S. can provide valuable insight for the benefit of all vehicle owners.

This statement is intended to capture and consolidate the many diligent and responsible recall practices ACRA’s members currently follow to ensure that their rental cars comprise the safest fleet on the road today. Furthermore, ACRA’s members believe their public statement serves to further clarify their level of commitment and ensures that this level of diligence is documented and maintained in the future.

The Obama Administration released its blueprint to Congress for what they hope will be the next highway program reauthorization bill later this year. Included in the Administration plan is a specific provision that would repeal the Graves Law and its nationwide prohibition on states imposing vicarious liability in the owners of rented and leased vehicles. If enacted, this provision would expose leasing and rental companies to liability based solely upon ownership of a vehicle involved in a claim. In some states, like New York, potential liability is unlimited.

ACRA moved two steps closer to gaining the support of the entire industry when Avis Budget Group, Inc. and Dollar Thrifty Automotive Group joined the association. Sharon Faulkner, Executive Director of ACRA, stated: “The companies joined at the best of times. The car rental industry is stronger than it has been in a very long time and yet it is facing significant issues that require a unified voice that carries a consistent message. In this new era of solidarity, ACRA can make a difference for everyone in the car rental industry.”

Robert E. Muhs, Vice-President of Government Affairs and Counsel for Avis Budget Group, Inc. , has joined the ACRA Board of Directors and will be an important contributor to our legislative forum. Bob has been involved in the car rental industry since 1994 and is responsible for all federal and state government relation activities and directs the lobbying efforts before the U.S. Congress for Avis Budget Group. The company has a total rental fleet of more than 345,000 vehicles and is a leading vehicle rental operator in North America, Australia, and New Zealand including licensees that operate in more than 100 countries throughout the world. They also operate one of the largest truck rental businesses in the U.S.

Bill Walker, Corporate Attorney for Dollar Thrifty Automotive Group since 1995, will represent the company’s membership. His years of experience in legislative affairs will be extremely valuable in addressing the issues that affect the car rental industry. Together Dollar and Thrifty have operations in over 80 countries throughout the world including approximately 600 corporate and franchised locations in the U.S. and Canada.

Each large and midsize rental company, every franchise owner, independents of all sizes, and each member of ACRA reaps the benefits of having the knowledge and the experience of our Board Members who have been involved with the industry for a mean average of over 30 years.

If the industry has a concern that needs an immediate response with level-headed reactions and decisive actions, ACRA has the power to address the issue. Powerful lobbyists make all the difference when a bill is introduced to the legislature and ACRA has some of the very best in the industry. But ACRA needs everyone’s support to continue to be successful.

Judging by the high attendance at this year’s Car Rental Show in Las Vegas, it’s apparent that the car rental industry is ready to grow stronger and become more profitable, more sustainable, and it’s doing this under an all encompassing umbrella of solidarity, the American Car Rental Association.

Minimum Financial Responsibility (Opposed). Final Result: Defeated
SB 1806 by Sen. Diaz de la Portilla (R-Miami) and HB 1439 by Rep. Jamie Grant (R-Tampa) would have increased the minimum financial responsibility for rental car companies. As a result of meetings with leadership and local Enterprise professionals discussing the issue with their local legislators (in the district and during Tallahassee visits), these bills were not given a hearing in any committee. We expect this issue to surface again next session.

Limitation on Toll Administration Fees (Opposed). Final Result: Defeated
Language to cap the amount a rental car company can charge as an administrative fee for renters who go through toll booths was defeated this session. Earlier in the session, the Miami-Dade Toll Authority amended it to a large transportation package. However, working with the other rental car companies, we had the language taken off the bill at the next committee stop. We suggested to those who advanced this language that an interim study on toll authorities fees and operations procedures may be warranted.

PIP Reform (Supported). Final Result: Defeated
With approximately four weeks left in session, the PIP Reform effort was narrowly defeated in the House Health and Human Services Committee. While reform proponents worked to revive the issue on other bills, it was not added to legislation that was ultimately approved. Two separate bills were originally filed – one that addressed attorneys’ fees and one that tackled fraud surrounding auto accidents.

The sponsors of the attorney fee bills were Rep. Mike Horner (R-Kissimmee) and Sen. Garrett Richter (R-Naples). The sponsors of the bills that address vehicle accidents were Rep. Jim Boyd (R-Bradenton) and Sen. Ellyn Bogdanoff (R-Ft. Lauderdale). At the final committee meeting where the bill was defeated, the two House bills were combined to include the below provisions that were an attempt at a compromise package:

• Required long-form crash reports to be filed;
• Capped attorney fee awards in PIP disputes at $200 per billable hour and barred the use of contingency risk multipliers in determining PIP fee awards;
• Required compliance with policy terms, including submission to examination under oath by insureds, as a condition precedent to receiving policy benefits;
• Entitled medical providers to reasonable compensation for attending an EUO;
• Tolled the 30-day period for payment of PIP benefits when there is reasonable belief that insurance fraud has been committed;
• Established that a premature pre-suit demand letter for unpaid PIP benefits is defective;
• Created a rebuttable presumption that an insured’s failure to appear for two scheduled examinations (mental or physical) is an unreasonable refusal to submit to examination;
• Provided that submission to examination is a condition precedent to eligibility for policy benefits; Barred payment of PIP benefits to persons who submit false statements or commit fraudulent insurance acts; and
• Amended the PIP schedule of maximum charges.

Registered Agent (Supported). Final Result: Passed
Language originally proposed by Avis, on which we assisted, was ultimately approved on HB 1087 in the a few days before the end of session. Below is the specific language approved:

“627.4137 Disclosure of certain information required.—
(3) Any request made to a self-insured corporation pursuant to this section shall be sent by certified mail to the registered agent of the disclosing entity.”

Current law requires motor vehicle insurance notice to the “named insured” for: (1) intent not to renew; (2) intent to transfer a policy; and (3) eligibility for insurance through the Automobile Joint Underwriting Association in the event of cancellation or nonrenewal. The party designated to receive the notice under current law is the “named insured,” the persons or entities listed on the policy declaration page. However, at times the named insured may include one or more individuals particularly in commercial coverage. The named insured of a policy may often include persons or entities related by common ownership or common enterprise.

The bill adopts the previous industry practice of delivering certain required policy notices to only the party with administrative authority on the policy, the “first named insured” for notices of renewal premium, cancellation, intent not to renew, intent to transfer, and eligibility for insurance through the Automobile Joint Underwriting Association in policies providing motor vehicle insurance.

Rental Car Surcharge Re-Direct. (Neutral) Final Result: Died
A plan to consolidate the state’s economic development efforts appears to be on its way to passage; however the details have not yet been worked out. Of interest to Enterprise, is that for FY 2011-12, $26.3 million generated by the rental car surcharge will be put into a fund to assist with bringing more companies and jobs to Florida. Currently, much of the surcharge is provided to Visit Florida but the funds will now flow through this new entity. Further, the Governor would be given discretion over a yet to be determined amount of funds to lure businesses to the state.

A grass roots effort was immediately undertaken by ACRA, its members, and the South Florida Car & Truck Rental Association. Lobbyists were engaged, letters were written, and phone calls made, and within a 48 hour window, we were successful in having the language removed by explaining this is not a profit center, but a cost recovery for actual labor incurred to chase down the violators and to pay the State.

Commenting on the effort, Bob Barton, President of ACRA, stated: “This is a perfect example of how effective we can be when we all work under the umbrella of ACRA. When Florida went to a cashless toll system, the State of Florida did not recognize or consider the burden this placed on rental companies, private felt companies, and other individuals using non-personal vehicles. We have the obligation as the owners of the vehicles for tolls, yet there is quite a significant labor effort in tracking down and collecting from the renter who actually incurred the violation. By consolidating our effort under the ACRA banner, we were able to convince the legislators that this language, while attempting to protect consumers, actually shifted a large cost burden to operators for the consumer’s lack of compliance with the law.”

ACRA will continue to take a leading role in driving sensible legislation as it relates to our industry.

Letter of Appreciation Received by ACRA

On behalf of all of us at HTA, thanks for your efforts last week with regard to the proposed legislation in Florida.  This was shaping up to be a substantial undertaking, and I’m glad we were able to avoid expensive lobbyists and resources on fighting it.

Thanks again,
David Centner
President & CEO, Highway Toll Administration LLC

The tax would raise $7.5 million a year, according to an estimate made a decade ago by the Legislative Fiscal Office. The money would go to the Birmingham-Jefferson Convention Complex authority.

A lobbyist for the authority, Johnny Crawford, said the money would be used to maintain and renovate the convention complex.

State lawmakers approved the tax in 2001, but the law includes a provision that the tax couldn’t be collected until counsel for any bonds issued by the BJCC authority certified that there would be enough money from the tax and other sources to repay $300 million in bonds. That hasn’t happened.

Senate Bill 323 by Sen. Jabo Waggoner, R-Vestavia Hills, would erase that provision and allow immediate collection of the tax.

Senators who represent the county voted 3-4 against the bill. Waggoner said he would not try again this spring to pass the bill.

Voting for the bill were Waggoner, Sen. Linda Coleman, D-Birmingham, and Sen. Priscilla Dunn, D-Bessemer. Voting against it were Sen. Scott Beason, R-Gardendale, Sen. Slade Blackwell, R-Mountain Brook, Sen. Greg Reed, R-Jasper, and Sen. Rodger Smitherman, D-Birmingham.

Waggoner said the vehicle rental tax in Birmingham now is 2.25 percent, compared to 16 percent in Charlotte, 14 percent in Memphis, 13 percent in Nashville, 7 percent in Jacksonville, Fla., and 6 percent in Louisville. He said Birmingham’s rate still would be lower, even after an increase of 3 percentage points.

Smitherman recalled that lawmakers in 2001 approved the vehicle rental tax in a bid to raise enough money to finance construction of a domed stadium.

Joe Fine, a lobbyist hired to represent Enterprise rental car company, said that more than 70 percent of vehicles rented in Jefferson County are rented by area residents, not out-of-towners, and that Senate Bill 323 in effect would be a tax increase on local people.

The information provided by Ford, Chrysler and General Motors to NHTSA in response to the NHTSA Audit Query questions does not accurately reflect the performance of the car rental industry. Instead, the reported data understates the frequency and speed with which the car rental companies have been and are responding to such notices.

Read the Joint Letter to NHSTA here

Since 1976, automobile manufacturers have been required by Federal law to provide notice to vehicle owners when the manufacturer determined that a vehicle contains a defect which relates to vehicle safety, or fails to conform to an applicable motor vehicle safety standard. The notices include “an evaluation of the risk to motor vehicle safety reasonably related to the defect or noncompliance” and a statement of the precautions, if any, that owners should take to reduce the chance that the defect or noncompliance will cause a malfunction to occur. The law does not require the manufacturer to advise whether the vehicle should continue to be operated until the defect or noncompliance is remedied.

Every year, auto manufacturers recall millions of vehicles under “Safety Related Recall Bulletins.” In total, more than 390 million vehicles have been recalled and posted on the National Highway Traffic Safety Association (NHTSA) website for recalls.

Currently all vehicle owners, including rental companies, must decide whether to continue to operate vehicles subject to a recall based on the information provided by the manufacturer and NHTSA in the recall notice. Such notices rarely provide clear guidance as to whether the vehicle can continue to be operated. Additionally, while the rules prohibit a dealer from selling a new vehicle subject to a recall, no prohibition is placed on the sale of used vehicles.

ACRA proposes the current rules be modified to a two-tiered system which can properly categorize each recall by the nature of the defect and the potential for harm:

SAFETY RECALL GROUNDING BULLETINS (RGB)

These bulletins, to be delivered to vehicle owners and posted on NHTSA’s website would require the owner or lessee of any vehicle (commercial use or private) to immediately cease operation of the vehicle and park or have the vehicle towed. Such bulletins would be issued when the manufacturer and/or NHTSA believe continued operation of the vehicle pending completion of the recall remedy would pose a significant risk to public safety.

MANUFACTURER PRODUCT INFORMATION BULLETINS (PIB)

Issued based on the determination of the auto manufacturer and/or NHTSA, a PIB notice would permit a vehicle to be operated pending completion of the recall remedy so long as the remedy was completed within an acceptable period of time as determined by the manufacturer and NHTSA. A PIB would also specify whether remedial measures should be implemented pending completion of the recall remedy as a condition of the continued operation of the vehicle. By way of example, several manufacturers in 2010 issued recalls for pedal entrapment. Under the existing rules, the defect would remain until a new accelerator pedal was installed. The auto manufacturer recommended temporary removal of the driver side floor mat until the repair was made.

ACRA FULLY SUPPORTS AN APPROACH THAT ENSURES PUBLIC SAFETY WHILE, AT THE SAME TIME, PROVIDING THE OWNERS AND OPERATORS OF ALL VEHICLES CLEAR, CONCISE DIRECTION AS TO WHEN A VEHICLE SHOULD NOT BE DRIVEN UNDER ANY CIRCUMSTANCE VS. WHEN A CAR CAN BE DRIVEN WITH A LEVEL OF CONFIDENCE BASED UPON THE DIRECTION OF THE MANUFACTURER.

ACRA and the members of the coalition are rallying for support from both Senators and Congressman and the coalition has widespread support. Bob Barton met with Congressman Gus Bilirakis (R) of Florida and Congressman Steve Cohen (D) of Tennessee who both have pledged their support of the bill.

Please click on the documents below to view them

1. Effects of Discriminatory Excise Taxes on Car Rentals by the Brattle Group
2. Excise Tax Briefing Paper
3. Full Legislative Text of Bill H.R. 4175: To protect consumers from discriminatory State taxes on motor vehicle rentals.

ACRA and the coalition will be working diligently to push this bill through the process to secure passage of our legislation in the 112th Session of Congress.

Click here to read iSuppli’s review of potential technology solutions.

Click here to read the Federal Register’s complete publication

According to Clarence Ditlow, Executive Director of the Washington-based Center for Auto Safety, “There can be months of delay between the time a manufacturer notifies NHTSA about a defect and when vehicle owners are informed of a recall. NHTSA could require car makers to notify rental companies sooner.” This would be a positive step towards helping our members in their commitment to  providing customers with vehicles that are safe to drive.

As anticipated the Republicans made significant – in fact, historic – gains in the House. While several races are “too close to call,” it appears as if the Republicans will at least gain 60 seats in the lower chamber. Many of the Democrat losses came in conservative districts, many of which favored Sen. John McCain for President in 2008. Therefore, most of the casualties were moderate to conservative Democrats. This means that the Democrat minority in the House will be a bit smaller, but it will also be a bit more liberal – which will make compromise difficult.

Key defeats for the Democrats were Rep. John Spratt (D-SC), House Budget Committee Chairman and Rep. Ike Skelton (D-MO), House Armed Services Committee Chairman. Rep. Jim Oberstar (D-MN), House Transportation Committee Chairman was also defeated. He had been a foe on our vicarious liability battle. The industry lost a good friend in Rep. Rick Boucher (D-VA). Rep. Boucher was a great voice on vicarious and other tort issues as well as the lead sponsor on our anti-rental car tax legislation. He, like many conservative Democrats, could not stem the Republican tide that swept through several states, including Virginia.

The 10-seat pick up for the Republicans to gain a majority in the Senate proved to be too steep. Two races are considered “too close to call”, but it looks as if the Republicans will have a net gain of six seats. Key wins for the Republicans were Ron Johnson of Wisconsin who defeated Sen. Russ Feingold, Rep. Mark Kirk (R-IL) defeated Alexi Guinnoulias in Illinois, and Pat Toomey defeated Rep. Joe Sestak (D-PA) in Pennsylvania. Sen. Harry Reid (D-NV) and Sen. Barbara Boxer (D-CA) held on to win as did Sen. Michael Bennett (D-CO). It appears Sen. Patty Murray (D-WA) will hold as well – but that has yet to be called. In Alaska, Sen. Lisa Murkowski – who ran as an independent “write-in” after losing the primary to Joe Miller is still battling Miller in the general. That race has yet to be called. Also, longtime industry supporter, Rep. Roy Blunt (R-MO) will be heading to the Senate.

Senator-elect Mark Kirk will actually be sworn in for the lame duck session because he is filling the unexpired term of President Barack Obama. This means the Republicans will have 42 Senators during the lame duck session. The same holds for Chris Coons (D-DE) and Gov. Joe Manchin (D-WV), as they, too, are filling vacancies.

Results
1. House – Republicans: 239
Democrats: 185
Outstanding: 11

2. Senate – Democrats: 52*
Republicans: 46
Outstanding: 2

*Independent Senators Joe Lieberman (I-CT) and Bernie Sanders (I-VT) caucus with the Democrats and are treated as majority members.

Impact on Industry

Lame Duck session – Good News! The results likely mean that very little will get done during the Lame Duck session later in November. That is very good news on the vicarious liability front. The less Congress works on, the fewer chances of any changes to the Graves Amendment. In terms of other broader issues, such as the Bush Tax Cuts…that remains to be seen, but an extension of 1-3 years could happen. Estate taxes and budget issues may also be on the agenda.

Regarding the ACRA-supported anti-rental car tax bill, no action is likely and we will have to find a new lead Republican sponsor in the House and confirm a Senate Democrat.

Next Congress – Great News! The opportunities for the trial lawyers to impact Graves will diminish tremendously. The Republicans will chair every House Committee, which will likely result in no committee action on the issue. Any floor action – if it were to get that far – would likely be defeated as well. In the Senate, despite the Republicans not having the majority, the numbers are such that they will have a greater impact on the shaping of legislation. Therefore, it is most likely any anti-Graves Amendment would not survive.

The anti-rental car tax legislation may actually get a boost with the election outcome. Republicans tend to be more favorable on these tax issues. The Senate is still a bit unclear, but if we land on a good Democrat sponsor, we believe we can make significant progress.

Election Results – States

As the national Republican tide swept through the national elections, there were definite ripple effects in the States. Republicans picked up 10 governorships this cycle and took control of 16 state legislative chambers. In fact, the Republicans won more than 680 legislative seats – the largest gain of either party since 1966. This means that the Republicans will have a significant role in the legislative redistricting in the next year. The North Carolina Senate has a Republican majority for the first time since 1870. The Minnesota Senate – which was nonpartisan until 1974 – is under Republican control for the first time. The Republicans hold a majority in Alabama legislature for the first time since Reconstruction. There are several chambers that could yet switch depending on individual races: Undecided chambers that could still switch are the Colorado Senate; the New York Senate; the Oregon House; and the Washington Senate.

Key Republican Governor pick ups were Rick Snyder in Michigan, John Kasich in Ohio, Tom Corbett in Pennsylvania and Scott Walker in Wisconsin. A key hold for the Republicans was Rick Scott in Florida. California bucked the trend and elected former Governor and current Attorney General Jerry Brown. A close race in Connecticut has not been called.

Results
1. Legislatures:
Full Republicans control: 25
Full Democrat control: 16
Split: 5
Undecided: 4

2. Governors:
Republican: 29
Democrat: 21

3. Key Ballot Initiatives
a. California: $18 increase in car registration fees for parks (defeated).
b. California: Requires 2/3 vote for fee increases (same as tax increases) (passed).
c. Colorado: Prohibited state taking on debt without public approval (defeated).
d. Georgia: $10 increase in car registration fee for trauma center fund (defeated).
e. Washington: Restore requirement that tax increases need 2/3rd requirement for passage or voter approval (passed).

Impact on Industry

With the increased number of legislatures controlled by Republicans, we believe there will be a more concerted effort to deal with budget shortfalls with budget cuts, as opposed to tax increases. This should decrease somewhat the number of rental car tax proposals. But, even some Republicans view these taxes as user-fees, particularly in the context of infrastructure investments. So, we must remain vigilant.