STAND. COM. REP. NO. 94

Honolulu, Hawaii

RE:    S.B. No. 203

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii

Madam:

     Your Committee on Commerce and Consumer Protection, to which was referred S.B. No. 203 entitled:

"A BILL FOR AN ACT RELATING TO CONTRACTORS,"

begs leave to report as follows:

     The purpose of this measure is to require that the Regulated Industries Complaints Office (RICO) of the Department of Commerce and Consumer Affairs issue a citation and a cease and desist order when an investigator determines that a person is acting as a contractor without a valid license and to amend penalty amounts for violations. 

     Your Committee received testimony in support of this measure from Iron Workers Stabilization Fund and Hawaii Building Construction Trades Council, AFL-CIO; and Subcontractors Association of Hawaii.  Your Committee received testimony in opposition to this measure from the Department of Commerce and Consumer Affairs, Regulated Industries Complaints Office; General Contractors Association of Hawaii; and Building Industry Association-Hawaii.  

     Copies of written testimony are available for review on the Legislature's website.

     Under current law, RICO investigators have discretion to issue a citation, which includes a cease and desist order, to persons acting as contractors without the appropriate license or to pursue a remedy through a criminal or civil action in the circuit court.  According to testimony from RICO, a citation is not always an appropriate tool to enforce compliance.  A citation is designed to put an immediate stop to observed, ongoing activity; however, some violations are discovered "off-scene" such as during a review of documents.  Additionally, a citation, unlike a circuit court action, does not allow for additional remedies such as restitution to affected consumers.  Finally, current law already provides for fines to enforce compliance with licensing requirements.  The penalties contained in this measure are inconsistent with existing fines.

     Your Committee has adopted the recommendations of RICO to amend section 1 of this measure to allow an investigator to retain discretion to issue a citation, to clarify the cease and desist provision in a citation, and to increase the statutory penalties for violation of the contractor licensing requirements.  Your Committee has also amended the effective date of this measure to provide an opportunity for further discussion.

     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. 203, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 203, S.D. 1, and be referred to the Committee on Judiciary and Government Operations.

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

____________________________

ROSALYN H. BAKER, Chair