STAND. COM. REP. NO. 2414

Honolulu, Hawaii

RE:    S.B. No. 2683

       S.D. 1

Honorable Ronald D. Kouchi

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2016

State of Hawaii

Sir:

     Your Committees on Transportation and Energy and Commerce, Consumer Protection, and Health, to which was referred S.B. No. 2683 entitled:

"A BILL FOR AN ACT RELATING TO MOTOR VEHICLE RENTAL INDUSTRY,"

beg leave to report as follows:

     The purpose and intent of this measure is to allow lessors of rental motor vehicles to pass on to lessees a vehicle license recovery fee.

     Your Committees received testimony in support of this measure from The Hertz Corporation, Enterprise Holdings LLC, and Avis Budget Group.  Your Committees received testimony in opposition to this measure from the Department of Commerce and Consumer Affairs.

     Your Committees find that existing law permits rental car companies to recover from rental car customers certain mandatory government fees, for the purpose of making a vehicle road-ready.  However, the prorated formula is calculated over a period of three hundred sixty-five days, which results in a significant portion of the fees going unrecovered.  This is partially because rental cars are rented significantly less than one hundred percent of the time.

     Your Committees further find that other states, including California, have enacted laws that allow rental car companies to pass on to consumers an amount closer to the full recovery of mandatory government fees.

     Your Committees have amended this measure by:

     (1)  Removing language expanding the category of fees that can be recovered;

     (2)  Removing the addition of a definition of "vehicle license recovery fee" from statute;

     (3)  Reducing the pro rata apportionment of the vehicle license and registration fee and weight taxes that may be passed on from 1/365th to 1/300th of the annual fees and taxes;

     (4)  Requiring the motor vehicle rental industry to report to the Legislature prior to the 2019 Regular Session concerning the effect of this measure on the average vehicle license recovery fee charged to each customer on each motor vehicle rental, the profit margin of each motor vehicle rental, and the actual time in service of each motor vehicle rental;

     (5)  Inserting an effective date of July 22, 2022, to encourage further discussion; and

     (6)  Inserting a three-year sunset.

     As affirmed by the records of votes of the members of your Committees on Transportation and Energy and Commerce, Consumer Protection, and Health that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 2683, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 2683, S.D. 1, and be referred to your Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committees on Transportation and Energy and Commerce, Consumer Protection, and Health,

________________________________ ROSALYN H. BAKER, Chair

________________________________ LORRAINE R. INOUYE, Chair