Legislature(2009 - 2010)CAPITOL 17
03/23/2010 01:00 PM House TRANSPORTATION
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
SB 272-RENTAL CAR CHARGES CHAIR P. WILSON announced that the final order of business would be SENATE BILL NO. 272, "An Act relating to charges for rented motor vehicles, including cost recovery fees, and making a violation of the rented motor vehicle charge provisions an unfair trade practice." 2:25:54 PM EDRA MORLEDGE, Staff, Senator Charlie Huggins, Alaska State Legislature, paraphrased from the sponsor statement, as follows [original punctuation provided]: SB 272 is a technical bill that would allow rental car companies to do in Alaska what they already do in thirty other states. Alaska law is currently silent on the issue of separately-listed charges on rental car statements for the recovery of fees. This bill would require those fees to be listed separately and clearly identified on the rental car agreement. The industry standard is to turn over the rental car fleet every twelve months and to associate the costs of licensing the vehicles, concessions, and airport or facility-related costs with the vehicles themselves. In addition to government taxes and surcharges, rental car companies assess additional "cost recovery fees" to offset those costs. Consumers should be made aware, and be able to see the fees they are charged, on both the rental bill and in an online quote. This bill would provide full disclosure and transparency of "cost recovery fees" included in rental car agreements. In addition, this legislation would make violating the provision an unfair trade practice. 2:27:32 PM MS. MORLEDGE explained that the bill passed the other body without any opposition. The Department of Law supports the bill, as does the industry, she stated. 2:29:00 PM REPRESENTATIVE MUNOZ referred to the "Business Advisory" dated August 30, 2006 from the Department of Law and asked whether the bill is necessary. MS. MORLEDGE explained that the "Business Advisory" resulted because complaints arose that fees were being charged that may be in violation of the federal Consumer Protection Act. However, it came to the attention of the Department of Law that the state did not have any enforceable laws. 2:29:54 PM CHAIR P. WILSON passed the gavel to Representative Munoz. 2:30:15 PM SHANE SKINNER, Controller, Enterprise Rent-A-Car, explained that he represents Enterprise Rent-A-Car in Alaska and Washington State. He concurred that the current Alaska statute is silent and this bill would create clarity since it would require full disclosure of all taxes and fees. The bill would limit the fee amounts to the amounts paid to government entities, including rental taxes, airport fees, or license and registration fees. 2:31:13 PM REPRESENTATIVE GRUENBERG referred to Section 1, and related that the fees must be listed in the rental car agreement, which is a document people sign before "they take the keys to the car." He stated that if the intent is disclosure, that the fees should be clear in any advertising and quotes, not just be contained in the "fine print." MS. MORLEDGE agreed the intent is full disclosure, which includes when potential customers are perusing quotes and at the time that the car is being returned to the car rental agency. REPRESENTATIVE GRUENBERG suggested that it should be clear in the bill. He referred to page 2, line 1, which he suggested should read, "in the written car rental agreement" for better disclosure. He then referred to page 2, line 3, to "government tax, or government surcharge." He offered his belief that this language is broader than the sponsor's intent, since government taxes could include withholding or municipal property taxes. He related his understanding that the sponsor would like to limit the tax to certain types of taxes. MS. MORLEDGE agreed that is the sponsor's intent. 2:35:07 PM MR. SKINNER explained that the current statute allows car rental agencies to pass through property taxes or employment taxes but car rental companies do not currently assess those types of charges. Currently, a facility management charge (FMC) is assessed at the Anchorage airport, through an agreement with the concessionaire. He expressed concern that if the language is narrowed down that the effect may be to disrupt the agreement currently in place with the state. 2:36:06 PM REPRESENTATIVE GRUENBERG said he did not intend to do so. He did not want additional government charges to be passed through to customers. MS. MORLEDGE agreed that it is not the sponsor's intent to pass on superfluous taxes. She pointed out that the intent of the bill is to ensure that any taxes charged by a car rental company must be included in the quote and agreement so the consumer could make the choice. 2:37:31 PM REPRESENTATIVE GRUENBERG clarified his understanding that this is a disclosure bill and a car rental company could "do what it wanted to do" but must disclose the fees. MS. MORLEDGE answered yes. REPRESENTATIVE GRUENBERG wanted the bill to provide clarity as to whether companies are allowed to pass through a variety of taxes, including corporate income taxes and employee withholding taxes. He suggested that the sponsor should define government taxes or surcharges. MR. SKINNER reiterated that current Alaska statute provides "a blank check." The intent of SB 272 is to "tighten up" and create some foundation since no restrictions currently apply. 2:39:23 PM REPRESENTATIVE T. WILSON related her understanding that this bill is not telling a car rental company how to run its company. MS. MORLEDGE answered that is correct. REPRESENTATIVE T. WILSON summarized that SB 272 would require a car rental company to disclose any charges to enable consumers the ability to compare the car rental fees to another company's fees. Thus, the consumer would have the information to make an informed decision on the rental vehicle's cost. REPRESENTATIVE PETERSEN offered his belief that this bill is good idea for consumers. He related an anecdotal experience he had trying to figure out the car rental costs. He offered that Alaska has a tourism industry and his desire that it should be easy for consumers to decipher the taxes and fees charged. 2:40:50 PM REPRESENTATIVE GRUENBERG referred to page 2, line 22, to the term "inspection" and he asked whether that term referred to annual emission inspections, brake inspections, or what type of inspection this would encompass. MR. SKINNER related that the language in this bill or a close variation of it was passed in 18 states. Some states have initial inspection costs to put a vehicle on the road and that is the intent of this provision. MR. SKINNER, in response to Representative Gruenberg, clarified that all fees are limited to what is paid to the government authority. Thus, the consumer can go on-line to see the extreme variations and this bill would disclose fees so the variations in fees are not profit centers for companies. REPRESENTATIVE GRUENBERG clarified that the inspection does not refer to lubrication or brake inspections. MR. SKINNER explained that this provision refers to government- mandated inspections. Thus, the provision would allow the car rental company to recoup fees and taxes it pays the government. REPRESENTATIVE GRUENBERG suggested the language be clarified to refer to government mandated inspections. MS. MORLEDGE referred to page 2, line 22, and explained that "inspection" refers to the "licensing cost" listed in line 21. She referred to AS 45.45.460, which is the section that defines vehicle licensing costs. REPRESENTATIVE GRUENBERG related his understanding that some types of inspections are required in the business by the government and that is what is meant by licensing cost. He stated that provision is clearer to him. REPRESENTATIVE GRUENBERG suggested that at least one definition could be eliminated from the bill. He offered that if the agreements were called rental motor vehicle agreements, that "car" would not need to be defined as "motor vehicle." He pointed out that consumers may rent trucks. MS. MORLEDGE offered her belief that the reason the "car rental fees" was used is because it is the most common term and would apply to the broader term, that car would apply to all motor vehicles. 2:46:19 PM REPRESENTATIVE GRUENBERG offered that this bill will be read as a "consumer protection" bill. The current language could be confusing for consumers and he hoped to make it "user friendly." He suggested that someone renting a motorcycle could interpret the language and may not think he/she was gaining the protections in the bill. He asked if "car" could be changed to "motor vehicle." MS. MORLEDGE answered that she did not think the sponsor would object to the type of improvements and "clean up" language that Representative Gruenberg is suggesting. She offered her belief that the sponsor would like to move the bill along, noting the bill has another committee of referral. 2:47:25 PM REPRESENTATIVE MUNOZ asked whether Representative Gruenberg would work with the sponsor if the bill moved from committee. REPRESENTATIVE GRUENBERG agreed to do so. 2:48:32 PM REPRESENTATIVE T. WILSON offered work to improve the bill in the next committee of referral in the House Labor and Commerce Standing Committee. 2:48:51 PM REPRESENTATIVE MUNOZ, after first determining no one else wished to testify, closed public testimony on SB 272. REPRESENTATIVE T. WILSON moved to report SB 272 out of committee with individual recommendations and the accompanying fiscal notes. REPRESENTATIVE GRUENBERG objected. 2:49:45 PM REPRESENTATIVE GRUENBERG explained that the statutes have percentages, perhaps ceilings, but the bill does not contain any ceiling or guidance for consumers. He wondered if some kind of ceiling, perhaps geographic, could be added. Otherwise, the marketplace is allowed to freely roam, he stated. MS. MORLEDGE answered that a ceiling is not listed on the cost recovery fees since those fees are mandated by the government and varies between governments. Some of the fees are under local control so they are not state-mandated fees. REPRESENTATIVE GRUENBERG suggested that Arizona is allowing for reimbursement of the licensing fees. He surmised that other states are going beyond just disclosure. 2:52:44 PM MS. MORLEDGE referred to Hawaii and reported that car rental companies do not charge the licensing fees. The fees are not capped because the bill contains a good faith estimate clause under AS 45.45.460. That section explains how those fees are to be calculated. She commented that Ed Sniffen, DOL, was "comfortable with that." She explained that if an issue arose, Mr. Sniffen believes that this bill would give him "the teeth" to deal with the issue. 2:53:34 PM REPRESENTATIVE GRUENBERG stated he was satisfied. He removed his objection. There being no further objection, SB 272 was reported from the House Transportation Standing Committee.