STAND. COM. REP. NO. 567

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 775
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which
was referred S.B. No. 775 entitled: 

     "A BILL FOR AN ACT RELATING TO ACTIVITY PROVIDERS AND
     ACTIVITY DESKS,"

begs leave to report as follows:

     The purpose of this measure is to prohibit activity desks
from receiving under-the-table compensation for selling a
specific activity provider and to require activity desks to have
both a trust account and a bond. 

     The Regulated Industries Complaints Office (RICO) presented
testimony in support of the measure with proposed amendments, The
Activity Owners Association of Hawaii presented testimony in
support of the measure, and the Boat Owners Association of the
State of Hawaii, although not present at the hearing, submitted
written testimony in support of the measure.   

     Your Committee finds that activity desks exist to serve the
visitor and provide them with a wide selection of recreational
activities and reputable providers.  Under-the-table payments and
incentives by activity providers to activity desks undermine
competition and threaten the quality of recreational services
within the tourist industry.  Therefore, such payments and
incentives threaten the State's reputation as a world-class
tourist destination, and should be prohibited.

     Your Committee has amended this measure by:

 
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                                   STAND. COM. REP. NO. 567
                                   Page 2


     (1)  Deleting sections 2, 3 and 4 of the measure as
          received, which related to the requirement of a trust
          account and bond;

     (2)  Creating a private cause of action, so that an activity
          provider may bring a suit against either an activity
          desk or activity provider to enjoin them from making or
          receiving under-the-table payments, allowances,
          rebates, refunds, commissions or unearned discounts
          which are not available to other activity desks upon
          like terms or conditions;

     (3)  Inserting an amendment that would allow RICO to take
          action if an activity desk violates an injunction
          granted pursuant to Section 468M-6, Hawaii Revised
          Statutes; and

     (4)  Making technical and nonsubstantive amendments for
          style and clarity.

     As affirmed by the record of votes of the members of your
Committee on Commerce and Consumer Protection that is attached to
this report, your Committee is in accord with the intent and
purpose of S.B. No. 775, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as S.B. No.
775, S.D. 1, and be placed on the calendar for Third Reading.

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



                                   ______________________________
                                   BRIAN KANNO, Co-Chair



                                   ______________________________
                                   BRIAN T. TANIGUCHI, Co-Chair

 
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