Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Conference on the disagreeing vote of the Senate to the amendments proposed by the House of Representatives in S.B. No. 44, S.D. 2, H.D. 2, entitled:

having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.

The purpose of this measure is to provide economic relief to airport concessionaires whose businesses have been affected by the September 11, 2001, terrorist attacks, subsequent implementation of stricter safety measures, and reduced number of air travelers.

Both houses passed substantially similar versions of this measure, which served as the base for the C.D. 1 version. Your Committee on Conference amended this measure based on language submitted by the airport concessionaires, in part to address concerns raised by the Federal Aviation Administration (FAA).

Your Committee on Conference amended this measure to include force majeure language, which states that all airport concession contracts may contain language authorizing the Department of Transportation (DOT) to negotiate contract modifications with concessionaires if there is a drop in gross receipts resulting from a reduction in passengers due to events beyond either party's control. If negotiation is unsuccessful, the matter is resolved via the courts unless arbitration or another form of alternative dispute resolution is agreed to.

Your Committee on Conference also amended this measure to basically restate as session law many of the provisions that are codified in other portions of this measure. This amendment does not mandate that the DOT provide any relief. If the DOT does not provide relief to concessionaires whose businesses decline the specified percentage, the DOT may either terminate the concessionaire's contract or allow the concession to operate on a no profit, break even basis. Disputes under this section will be resolved by a court appointed arbitrator

Under this section, if a concession is terminated, it has no claims against the State, but can recover its security and bonds and will not be barred from doing business with the State for five years, as provided under existing law.

Any concessionaire who received relief under Act 15, Third Special Session Laws of Hawaii 2001, will have its relief under this measure offset accordingly. Likewise, a concessionaire may not received duplicative relief under the various provisions of this measure.

Finally, if the relief provided in this measure causes a shortfall in airport revenues, it shall be drawn from unrestricted surplus funds, which shall not continue past June 30, 2006, the date on which most contract terms end. Your Committee on Conference finds that this language is important to address concerns raised by the FAA.

As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of S.B. No. 44, S.D. 2, H.D. 2, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S.B. No. 44, S.D. 2, H.D. 2, C.D. 1.