STAND. COM. REP. NO. 791-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 1977
                                     H.D. 2




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred H.B. No. 1977, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO GASOLINE DEALERS,"

begs leave to report as follows:

     The purpose of this bill, as received by your Committee, is
to:

     (1)  Reduce the time period for a manufacturer or jobber to
          operate a former dealer operation retail service
          station from twenty-four months to sixty days; and

     (2)  Require manufacturers or jobbers to report all changes
          to the ownership or type of operation involving a
          branded service station to the Petroleum Advisory
          Council (PAC) within 14 days.  These reports are
          required to be made available for public inspection.  

     Testimony in support of this bill with several proposed
amendments, was submitted by several independent gasoline
dealers.  Testimony in strong opposition to H.B. No. 1977 HD1 was
submitted by Aloha Petroleum Ltd., Tosco Corporation, Tesoro
Hawaii, Rosehill & Associates, and several independent gasoline
dealers.  The Department of Commerce and Consumer Affairs (DCCA)
commented on this measure by opposing a provision requiring the
DCCA to update a 1991 impact study.


 
 
 
                                 STAND. COM. REP. NO. 791-00
                                 Page 2

 
     Your Committee finds that H.B. No. 1977, as originally
drafted, would have amended the existing gasoline retail
divorcement law and allow a manufacturer or jobber to operate a
former dealer retail service station if the current or former
dealer was in agreement and the dealer had a contractual interest
in the operation.  However, this bill does not provide for this
exception and instead provides for additional restrictions and
reporting requirements for manufacturers or jobbers that operate
a former dealer retail service station.

     Your Committee has incorporated the following amendments to
this measure:

     (1)  Amended the limitation on a manufacturer or jobber to
          operate a dealer operated retail service station for
          sixty days to  ________ days to facilitate further
          discussion;

     (2)  Reinstated the provision that permits a manufacturer or
          jobber to operate a retail service station provided
          that there be an effective agreement between the
          contract dealer and the manufacturer or jobber who
          owns, leases, or controls the retail service station;

     (3)  Included an exception to the one-eight and one-quarter
          mile proximity exclusions for contract dealers who
          operate a retail service station; 

     (4)  Defined "contract dealer" to include dealer operated
          retail service stations that:

          (A)  Surrender their unexpired franchise agreement in
               consideration for an agreement with the
               manufacturer or jobber to operate the service
               station; and 

          (B)  Does not sell retail more than an average of
               75,000 gallons of gasoline per month for six
               months;

     (5)  Included a provision to require the manufacturer or
          jobber to report to the PAC every six months from the
          date of the agreement between the contract dealer and
          the manufacturer or jobber;

     (6)  Included the requirement that every manufacturer or
          jobber report to the PAC for contract dealer gasoline
          sales by a manufacturer or jobber that operates a
          former dealer operated retail service station;

 
                                 STAND. COM. REP. NO. 791-00
                                 Page 3

 
     
     (7)  Deleted the requirement that the DCCA prepare a report
          on the impact of direct retailing of motor fuel by
          refiners and distributors in competition with
          franchised independent service stations; and 

     (8)  Amended the effective date by leaving it blank to
          ensure further discussion. 
     
     One of the issues raised by your Committee was penalties for
non-compliance with the reporting requirements of the PAC.

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of H.B. No. 1977, H.D. 1, as amended herein, and
recommends that it pass Third Reading in the form attached hereto
as H.B. No. 1977, H.D. 2.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Consumer
                                   Protection and Commerce,



                                   ______________________________
                                   RON MENOR, Chair