The White House on Wednesday blasted growing, bipartisan congressional efforts to aid closed auto dealers but stopped short of threatening a veto.
An amendment to put dealers back in business survived a challenge in the House Rules Committee on Tuesday and is to be voted on as part of the financial services appropriations bill this week.
The Obama administration said reversing dealer closings would set a “dangerous precedent, potentially raising legal concerns, to intervene into a closed judicial bankruptcy proceeding on behalf of one particular group at this point.”
The statement is consistent with the administration’s position during the bankruptcies of General Motors Corp. and Chrysler LLC, in which the automakers shed more than 3,000 dealerships.
Nonetheless, battle lines are being drawn as a number of high-ranking congressional Democrats back a measure opposed by a president of their own party.
Democrats are far from unanimous Senate Majority Leader Harry Reid, Nevada Democrat, threw cold water on the dealer rights bid Tuesday, saying it was not a priority. Unlike in the House, however, the chief sponsor of dealer legislation in the Senate is a Republican, Sen. Charles E. Grassley of Iowa.
The administration was instrumental in this spring’s bankruptcy reorganizations of GM and Chrysler. The automakers argued with administration backing that they needed leaner, more profitable dealer networks.
GM spokesman Greg Martin said Tuesday that the dealer legislation puts the automaker’s current restructuring plan “at risk.”
A leading supporter of dealer relief, House Majority Leader Steny H. Hoyer, Maryland Democrat, defended the amendment Wednesday but signaled there was room for compromise.
“While this legislation is not perfect, it does represent real concerns expressed by many individuals across the country about an unfair and unclear process for closing auto dealerships,” he said.
“I encourage all parties to continue discussing this issue and work toward a compromise that protects jobs while giving the auto companies the opportunity to return to success.”
While the dealer amendment was proposed by a Republican, Rep. Steven C. LaTourette of Ohio, it was supported by House Appropriations Committee Chairman David R. Obey, Wisconsin Democrat, as well as by Mr. Hoyer and others.
A spokesman for Rep. Chris Van Hollen, Maryland Democrat and original co-sponsor of a separate, standalone dealer bill, said the congressman will continue to seek a fair resolution for dealers.
“We understand the White House has concerns about Congressman LaTourette’s amendment, and we will continue to work with the administration to ensure that auto dealers are given fair treatment in this process,” said Doug Thornell, a spokesman for Mr. Van Hollen.
Mr. LaTourette said he was not surprised.
“It’s disappointing, but not surprising that they just don’t get it,” he said. “Many members of the [president’s auto] task force don’t own cars or drive foreign ones so I’m not shocked by the lack of empathy for dealers.”
Tammy Darvish, vice president of Darcars Automotive Group, of Silver Spring, said that President Obama has gotten bad advice.
“I truly believe in my heart that President Obama is not aware of the gross abuse of power his task force has exercised through this process,” she said.
Mrs. Darvish, a top supporter of the separate bill, the Automobile Dealer Economic Rights Restoration Act, said support for that measure continues to grow. The bill now has 248 co-sponsors in the House and 26 in the Senate, she said.
Rep. Frank Kratovil Jr., Maryland Democrat and one of the chief sponsors of the dealer rights bill in the House, said the auto bankruptcies are unique.
“This clearly is not a typical bankruptcy situation, given the massive taxpayer stake in the proceedings. All we’re looking for here is some level of fairness that resembles the basic protections dealerships would otherwise enjoy under state laws,” he said.
The House Judiciary Committee is scheduled to hold a hearing on the auto bankruptcies next week, and Rep. Mike Coffman, Colorado Republican, requested Tuesday that the panel subpoena documents from the automakers related to internal decisions on dealer closings.
Staff writer Amanda Carpenter contributed to this report.