Departments Of Transportation And Housing And Urban Development, And Related Agencies Appropriations Act, 2010 - Conference Report

Floor Speech

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Mr. DURBIN. Yes, it is my understanding that the only dealerships entitled to arbitration are those dealerships that were terminated as a result of the manufacturers' bankruptcy, rather than those that may have closed for other business reasons.

Ms. STABENOW. The statutory language for the arbitration process provides criteria that will be used to review each case. Is it the Chairman's goal that by considering the economic interest of the public at large the arbitrator should focus on maximizing the return of taxpayer dollars that have been invested in the company?

Mr. DURBIN. Yes, the economic interest of the public at large must be considered to ensure that the investments will be recovered as quickly as possible.

Ms. STABENOW. Additionally, when reviewing the cases, does the statutory language ensure arbitrators take into consideration the stability and protection of the existing dealer network?

Mr. DURBIN. Yes, the statutory language will allow arbitrators to review the potential impact of reinstating a dealership on the existing dealer network for the covered manufacturer, as well as on any dealer retained by the covered manufacturer in a given market territory.

Ms. STABENOW. I thank the Chairman for these clarifications and for his ongoing efforts to ensure a fair process for all stakeholders as the auto industry continues to restructure.

Mr. LEVIN. Mr. President, I would like to discuss with the chairman of the Financial Services and General Government Appropriations Subcommittee, Senator Durbin, as manager of the Financial Services Subcommittee section of the bill before the Senate, two aspects of the provision included in that bill that establishes an arbitration process for review of decisions made by Chrysler and GM to terminate or wind down auto dealerships earlier this year. Under the process laid out in this provision, an arbitrator is to balance the economic interests of the covered dealership, the covered manufacturer, and the public at large by considering a number of factors. Those factors include the covered dealership's profitability, the covered manufacturer's overall business plan, the covered dealership's satisfaction of the performance objectives of the franchise agreement, and the covered dealership's performance in relation to the criteria used to terminate the dealership.

Is it the chairman's understanding that in looking at these factors, and in particular in looking at the dealership's profitability and the manufacturer's overall business plan, that the arbitrator will consider the profitability of the dealership with respect to the new vehicles sales of the covered manufacturer?

Mr. DURBIN. Yes, that is my understanding. In making decisions about the makeup of the dealership network, profitability in terms of new vehicles sales for that manufacturer is what is critically important to the long-term financial health of the manufacturer. That manufacturer's long-term health is also vitally important to the Federal Government because of the significant taxpayer investment in these companies.

Mr. LEVIN. I thank the chairman for his assurances and his clarification.

I would also like to raise a question about the arbitration process established in this bill. The statutory language could be interpreted to allow for potentially as many as hundreds or thousands of arbitrators each involved in individual reviews of dealership decisions. I am concerned that a very large number of arbitrators would be unduly burdensome and impractical to the point of being unworkable. The statutory language requires that arbitrations be conducted in the State where the covered dealerships are located. It is my hope that the arbitration process could be managed in a given State so that there would be one arbitrator or a small manageable panel of arbitrators within any given State. Does the chairman believe that the statutory language would allow for management of arbitration in this way?

Mr. DURBIN. Yes, the statutory language would allow for that. The primary intent of this provision is to ensure that covered dealerships have a fair and impartial review of the termination decision. I agree with the Senator from Michigan that we should try to avoid a situation where there would be hundreds or even thousands of individual arbitrators.

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