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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Moved Out of Committee
<Bill Hearing Canceled>
Moved CSHB 357(TRA) Out of Committee
Moved Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
                   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                                                               
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                                                               
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.                                                                      

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