Arbitration between auto-dealers and makers on fast track

Congress is fast-tracking legislation to restrict the ability of General Motors and Chrysler to close thousands of auto dealerships as part of their restructuring.

House Majority Leader Steny Hoyer (D-Md.) and Senate Majority Whip Dick DurbinRichard (Dick) Joseph DurbinSenate Dems petition Saudi king to release dissidents, US citizen GOP moves to rein in president's emergency powers Senate votes to confirm Neomi Rao to appeals court MORE (D-Ill.) unveiled legislation late on Tuesday that would expand an arbitration process for dealer closings.


The new language has already been added to the financial-services appropriations bill that is part of a broader $447 billion spending package. House Democrats want to pass the bill this week.

The Obama administration has been opposed to reversing closures because of the impact that would have on the car manufacturers’ ability to reorganize as they emerge from bankruptcy.

But a Senate Democratic aide said lawmakers intend to pass the auto measure before Christmas.

GM and Chrysler last week announced new plans on how to close the dealerships, but the companies said the plans would not be carried through if Congress pushed forward on legislation.

GM and Chrysler are planning to close more than 2,000 auto dealerships. The companies are attempting to restructure after receiving tens of billions of dollars in bailout aid and passing through bankruptcy proceedings.

The House earlier this year passed legislation that was much broader than the current effort and required the car companies to reverse the dealer closings.

Rep. Steven LaTourette (R-Ohio) has pressed all year for legislation to help reinstate auto dealerships.

The measure unveiled on Tuesday would not automatically reopen closed dealerships. Instead, it would require an arbitrator to balance the economic interests of the terminated dealership, the car companies and the general public.

The arbitrator would also consider the dealership’s profitability during the last four years and the impact that a closing would have on nearby dealerships. The policy allows the manufacturers and dealerships to reach an agreement outside of arbitration.

GM said in a statement that it continues to discuss the issue with lawmakers.

“We will continue to work constructively with congressional members and dealers on a resolution that balances the interests of GM and its dealers,” GM said.

The new policy is supported by the National Automobile Dealers Association (NADA), the National Association of Minority Automobile Dealers and the Automobile Trade Association Executives.