The legislation brings car rental companies in line with auto dealers, who are barred from selling a car being recalled for a defect until the fault is repaired.

"Today we are closing this loophole in the law once and for all," Senator Charles Schumer, a New York Democrat and one of the measure's sponsors, said in a conference call.

The accord was agreed by Hertz, Avis Budget Group Inc, Dollar Thrifty Automotive Group Inc and Enterprise Holdings' National and Enterprise units.

Those companies make up more than 93 percent of the rental car market. The bill is also supported by the American Car Rental Association, the Truck Renting and Leasing Association and AAA.

The measure stems from a 2004 accident in which two California women, Raechel and Jacqueline Houck, were killed in a head-on collision with a truck.

They lost control of their Enterprise rental car when a hose rubbed against the catalytic converter and leaked steering fluid, their mother, Cally Houck, said on the call. The model, a Chrysler PT Cruiser, had been recalled for the hose defect.

Houck lobbied for the bill, which is named for the two women. Schumer said he hoped for Senate approval in the lame-duck session following the November general election.

The measure - the Raechel and Jacqueline Houck Safe Rental Car Act of 2012 - would bar the rental or sale of vehicles subject to a safety recall, require rental companies to ground vehicles under a recall and let rental companies rely on temporary repairs identified by manufacturers.

The National Highway Traffic Safety Administration also can investigate and police rental companies' recall safety practices. (Reporting by Ian Simpson; editing by Gunna Dickson)

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