WASHINGTON -- House and Senate leaders agreed to a legislative proposal to give rejected General Motors Co. and Chrysler Group dealers access to third-party arbitration under criteria broader than that planned by the automakers.
A conference committee of congressional leaders approved a financial-services spending bill Tuesday night that included the dealer arbitration provision, Senate Appropriations Committee spokesman John Bray said.
Neutral arbitrators would be required under the legislation to balance the economic interests of dealers, the companies and the public.
The bill -- whose enactment is now virtually assured -- also would allow dealerships to "present any relevant information" during arbitration, a copy of the legislation shows.
Dealers who appeal their termination and win in arbitration would receive a letter of reinstatement from GM or Chrysler within seven business days of the arbitrator's decision.
"It is imperative for both auto dealers and auto companies to have a transparent process that gives dealers a chance to make their case for remaining open, while respecting the companies' need to return to profitability," House Majority Leader Steny Hoyer, D-Md., said in a statement.
Hoyer and Assistant Senate Majority Leader Dick Durbin, D-Ill., hammered out the agreement Tuesday before it was approved by the conference committee.
Heading for a vote
The legislation is now due to be submitted for a final vote by the House this week and by the Senate by the end of next week before heading to the White House for President Barack Obama's signature.
Once Obama signs the legislation, dealers would have 40 days to decide whether to pursue arbitration. The arbitration must begin within another 140 days.
The agreement was praised by the National Automobile Dealers Association and the Committee to Restore Dealer Rights, a rejected-dealer group that had pushed most aggressively for dealer reinstatement.
The bill "establishes a fair, neutral, transparent and balanced arbitration procedure for all dealers who lost their franchises this year," Committee leader Tamara Darvish said.
NADA said in its statement that the bill would "provide a fair process to address dealer concerns about the recent closure of General Motors and Chrysler dealerships.”
In statements today, both GM and Chrysler made no expressions of support for the legislation while hinting that they intended to keep lobbying Congress.
"We will continue to work constructively with congressional members and dealers on a resolution that balances the interests of GM and its dealers," GM spokesman Greg Martin said.
Chrysler said in a statement: "We are committed to work with Congress and the dealers to achieve a process that equitably balances the interests of the discontinued dealers, our current dealers, and the taxpayers relying on Chrysler to repay its loans."
Lawmakers led by Hoyer and Rep. Chris Van Hollen, D-Md., sprang into action this past weekend almost immediately after GM and Chrysler broke off settlement talks aimed at avoiding legislation.
GM and Chrysler announced nearly identical plans to give rejected dealers access to neutral arbitration under the original criteria used by the companies in marking them for termination.
Dealer groups said few dealerships would be restored under these criteria because they were circular and self-fulfilling.
Chrysler was to start implementing its plan this week and GM in mid-January.
Last night's legislative agreement falls far short of a bill pushed by dealer groups to reverse closures of 789 Chrysler showrooms and the planned termination of 1,350 GM dealerships by October 2010. That bill passed the House last summer but stalled in the Senate.
The bill proposed last night would preserve the right of automakers and dealers to enter agreements outside binding arbitration, the statement from Hoyer and Durbin said.
But if dealers seek independent arbitration, arbitrators would have to consider a number of criteria.
Arbitrators would have to assess the dealership's profitability over the last four years, its experience, and its current economic vitality, a copy of the bill shows. Hoyer and Durbin said the latter would include an assessment of how well capitalized the dealership was at the time it was designated for termination.
Arbitrators also would have to consider the dealership's local demography and geography, the bill said. Hoyer and Durbin said local conditions might include contributors to a poor sales performance such as the economy or a natural disaster.
Impact on other dealers
At the same time, though, arbitrators would have to consider automakers' overall business plan and how the dealership measured up against performance goals and corporate criteria used to terminate them, the bill said.
Hoyer and Durbin said arbitrators also would have to consider the impact that reinstatement would have on other dealers in the area.
Eligible dealers would be those that had a franchise agreement in effect as of Oct. 3, 2008 that was terminated or is to be canceled by the end of next year.
All or nearly all Saab, Saturn, Hummer and Pontiac dealerships would not be eligible for arbitration.
One difference from the GM plan is that the legislation would allow dealers to file for arbitration even if they lost franchises for one or more brands but still sell other GM brands, NADA spokesman David Hyatt said. The GM plan would cover only those dealerships that are being completely wound down by October 2010.
Arbitrators would be selected from the regional offices of the American Arbitration Association.
The conference committee report outlined goals that gave ringing support to dealer contributions.
It is in the public interest "to have a competitive and viable automobile distribution network throughout the country," the report said. It also would help the economy "to preserve successful small businesses."
The legislative agreement contains no compensation for rejected dealerships. In September, dealer groups had proposed compensation of $3,000 per vehicle sold in a recent year of the dealer's choosing.