Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 295 entitled:

begs leave to report as follows:

The purpose of this measure is to repeal the statutory fee structure for towing operations and require the establishment of fees and charges by administrative rule.

The Hawaii Insurers Council supported this measure with amendments. The Department of Commerce and Consumer Affair (DCCA) opposed the measure. The Department of Customer Services of the City and County of Honolulu (City and County) presented oral comments on the measure.

This measure repeals provisions in the law that establish maximum amounts that may be charged by towing companies and requires the DCCA to establish towing charges and fees by administrative rule. DCCA opposed the measure, citing its lack of expertise and resources to establish and enforce rate requirements and the apparent absence of consumer harm that would justify a change in the rate structure.

Your Committee finds that a statewide rate and fee structure may not be appropriate for towing operations. The cost of operating a tow business is affected by various factors, including population size and density, land and fuel costs, and the degree of competition. The existing statutorily established rates may be inadequate to compensate tow companies in counties where operating costs are higher due to these factors.

Your Committee considered a proposal to require the counties to regulate towing operations. Currently, the City and County regulates only those tow companies it retains under contract to remove vehicles from public areas. Rates and fees are set within the maximum limits of state law and contract provisions govern other aspects of tow operations, including equipment standards, hours of operation, storage of vehicles, recordkeeping, and insurance requirements.

Your Committee further finds that the counties may differ as to the extent of any consumer problem in their communities arising from tow operations and their ability to support regulatory activities. Therefore, your Committee has amended this measure by replacing its existing language with language that authorizes, but does not require the county councils to enact ordinances regulating towing operations. If a county declines to regulate towing operations, state law continues to apply.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 295, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 295, S.D. 1, and be placed on the calendar for Third Reading.