Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committees on Energy and Environmental Protection and Consumer Protection and Commerce, to which was referred H.B. No. 2333 entitled:

beg leave to report as follows:

The purpose of this bill is to reduce the time that a manufacturer or jobber may operate a formerly dealer operated station from 24 months to 90 days.

Andy's ARCO Service, Dairy Road Partners, a member of the State House of Representatives and two concerned individuals testified in support of this bill. The Western States Petroleum Association, Libertarian Party of Hawaii, Kahala Shell Auto Care, Inc., and a concerned individual testified in opposition to this measure.

Your Committee finds that the original gasoline dealers divorcement law was designed to protect gasoline dealers from being forced out of business by gasoline stations owned and operated by oil companies. Currently, a manufacturer or jobber is prohibited, with certain exceptions, from operating a former dealer operated service station. This is known as the "once a dealer operated station, always a dealer operated station" arrangement.

This particular provision of the law has been a subject of debate for many years and viewed by some as a loophole that jeopardizes the existence of other dealers by circumventing the intent of divorcement. It is your Committees' intent to use this bill as a vehicle to further discuss the complex issue of gasoline pricing and the enhancement of competition at the retail level.

Your Committees have amended this bill by changing the amount of time that an oil company can operate a former dealer operated service station before finding a new dealer from 24 to 6 months.

As affirmed by the records of votes of the members of your Committees on Energy and Environmental Protection and Consumer Protection and Commerce that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 2333, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2333, H.D. 1, and be placed on the calendar for Third Reading.