BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2051| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 2051 Author: O'Donnell (D) Amended: 8/2/16 in Senate Vote: 21 SENATE JUDICIARY COMMITTEE: 7-0, 6/28/16 AYES: Jackson, Moorlach, Anderson, Hertzberg, Leno, Monning, Wieckowski ASSEMBLY FLOOR: 78-0, 5/12/16 (Consent) - See last page for vote SUBJECT: Rental passenger vehicles SOURCE: Avis Budget Group Enterprise Hertz DIGEST: This bill recasts and reorganizes provisions of existing law governing contracts between rental car companies and their customers in connection with the rental of passenger vehicles. This bill also specifies that a rental company is not prohibited from obtaining, accessing, or using information from electronic surveillance technology for the sole purpose of determining the date and time a vehicle departs from and is returned to the rental company, the total mileage driven, and the fuel level of the returned vehicle. ANALYSIS: AB 2051 Page 2 Existing law: 1)Governs contracts between rental car companies and their customers in connection with the rental of passenger vehicles. 2)Defines a "Customer Facility Charge" (CFC) as any fee, including an alternative fee, required by an airport to be collected by a rental company from a renter for any of the following purposes: To finance, design, and construct consolidated airport car rental facilities; To finance, design, construct, and operate common-use transportation systems that move passengers between airport terminals and those consolidated car rental facilities, and acquire vehicles for use in that system; or To finance, design, and construct terminal modifications solely to accommodate and provide customer access to common-use transportation systems. (Civ. Code Sec. 1936(a)(6)(A).) 1)States that the aggregate amount of CFC revenue to be collected shall not exceed the reasonable costs, as determined by an independent audit paid for by the airport, to finance, design, and construct these facilities. Existing law requires, in the case of a transportation system, the audit to also consider the reasonable costs of providing the transit system or busing network. (Civ. Code Sec. 1936(a)(6)(B).) 2)Prohibits fees designated as a customer facility charge from being used to pay for terminal expansion, gate expansion, runway expansion, changes in hours of operation, or changes in the number of flights arriving or departing from the airport. (Civ. Code Sec. 1936(a)(6)(B).) 3)Specifies that the authorization for an airport, except for the Oakland International Airport, to impose a CFC shall become inoperative when the bonds used for financing are paid. AB 2051 Page 3 (Civ. Code Sec. 1936(a)(6)(C).) 4)Specifies that if a bond or other form of indebtedness is not used for financing, or the bond or other form of indebtedness used for financing has been paid, the Oakland International Airport may require the collection of a customer facility charge for a period of up to 10 years from the imposition of the charge. (Civ. Code Sec. 1936(a)(6)(D).) 5)Defines a "Vehicle Registration Fee" to mean any fee imposed pursuant to any provision of Chapter 6 (commencing with Section 9101) of Division 3 of the Vehicle Code." (Civ. Code Sec. 1936(a)(16).) 6)States that a rental company shall not use, access, or obtain any information relating to the renter's use of the rental vehicle that was obtained using electronic surveillance technology, except in specified circumstances. (Civ. Code Sec. 1936(n).) 7)States that the above subdivision does not prohibit a rental company from obtaining, accessing, or using information from electronic surveillance technology for the sole purpose of determining the date and time the vehicle is returned to the rental company, and the total mileage driven and the vehicle fuel level of the returned vehicle, as specified. (Civ. Code Sec. 1936(n)(6).) This bill: 1)Expands the definition of a "Vehicle Registration Fee" to include any fee imposed pursuant to any law that imposes a fee upon the registration of vehicles in this state. 2)Specifies that any person or entity other than a rental company, including a passenger carrier or a seller of travel services, that advertises a rental rate for a vehicle rental that includes additional mandatory charges must clearly disclose the existence and amount of the charges. This bill specifies that if a rental company provides the person or entity with rental rate and additional mandatory charges information, the rental car company is not responsible for the failure of that person or entity to comply with this AB 2051 Page 4 requirement. 3)Specifies that a rental company is not prohibited from obtaining, accessing, or using information from electronic surveillance technology for the sole purpose of determining the date and time the vehicle departs from and is returned to the rental company, and the total mileage driven and the vehicle fuel level of the returned vehicle, provided such information obtained or accessed from electronic surveillance technology is only used for this purpose. 4)Recasts and reorganizes provisions of existing law governing contracts between rental car companies and their customers in connection with the rental of passenger vehicles, and makes other technical and clarifying changes to existing law. Background In recent years, many airports have adopted the practice of locating rental car services in consolidated facilities that house all car rental companies in one location. Common-use transportation systems, including shuttle bus systems and automated trains, are often used to transport rental car customers to and from terminals and the consolidated rental car facility. These facilities and their associated transport systems are financed largely via CFCs collected from rental car patrons who choose to rent a vehicle from a company housed in the consolidated rental facility. The authority to collect CFCs began in California in 1999 when the Legislature passed and the Governor signed SB 1228 (Vasconcellos, Chapter 760, Statutes of 1999), which permitted San Jose International Airport to collect a customer facility charge of $10.15 per rental contract to finance and construct a consolidated rental car facility. In 2001, AB 491 (Frommer, Chapter 661, Statutes of 2001) authorized other public airports in California to collect a $10 fee per contract to finance, design, and construct consolidated rental car facilities. In 2007, SB 641 (Corbett, Chapter 44, Statutes of 2007) repealed the special authorization for San Jose International Airport and instead applied the more general provisions enacted by AB 491 to San Jose International Airport, thus permitting it to collect a $10 per contract CFC. AB 2051 Page 5 For approximately 10 years, the allowable CFC fee was set at $10 per rental contract, regardless of the duration of the car rental. In 2010, the Legislature revised the CFC fee structure in response to feedback from the airports that the existing $10 per contract fee was inadequate to fund some proposed consolidated rental car facilities. SB 1192 (Oropeza, Chapter 642, Statutes of 2010) permitted airports to impose a CFC calculated on an alternative basis, which, under current law, allows up to $6 per day for a maximum of five days per rental contract to be collected. The new CFC fee structure allows an airport to increase its daily CFC according to a statutory schedule which would permit the collection of up to $45 over the length of a rental contract by January 1, 2017. SB 1192 also expanded the range of uses for which CFC revenue could be spent, including purchasing vehicles for a common-use transport system that would shuttle passengers between the consolidated rental facility and the airport terminals, and for terminal modifications undertaken to provide access to a common-use transport system. In order to protect customers and ensure that the CFC charged by an airport was appropriately and necessarily spent on consolidated rental facilities and associated common-use transport systems, SB 1192 also imposed an audit requirement, directing airports to complete independent audits of CFC funded projects prior to the initial charge of a CFC, prior to any increase in the CFC, and every three years after its initial collection or any increase. SB 1192 initially required the State Controller's Office to review these audits, but SB 1006 (Senate Budget and Fiscal Review Committee, Chapter 32, Statutes of 2012) eliminated this requirement. SB 1006, a Budget Trailer Bill, also struck language in existing law that set out guidelines regarding the scope of a CFC audit and the standards for determining whether an airport's chosen CFC rate was necessary and justified based on how the funds were being spent. Under existing law, CFC revenue is generally used to pay back bonds issued for the construction of combined rental facilities, certain terminal modifications, and the construction and operation of common-use transportation systems. Existing law states that upon repayment of these bonds, the authority to collect a CFC is eliminated. This bill recasts and reorganizes existing law pertaining to contracts between rental car AB 2051 Page 6 companies and their customers in connection with the rental of a passenger vehicle, and makes technical and clarifying changes to existing law throughout these provisions. Comments The author writes: Civil Code section 1936, which governs rental car transactions, was originally put into place in 1988. In the past 28 years, changes to the statute have resulted in duplicative code sections and in some instances, conflicting terms and definitions. This has led to several implementation and interpretation issues. State statute also does not reflect the technological and consumer convenience advancements made in today's market. AB 2051 includes much needed statute modernization and also provides rental car companies the ability to better serve and protect its consumers by cleaning up outdated requirements, granting the use of GPS in limited circumstances and providing a clearer comprehension of the requirements placed on the industry. Related/Prior Legislation AB 675 (Alejo, Chapter 333, Statutes of 2015) authorized a rental company, when quoting a rental rate, to separately state the rental rate, additional mandatory charges, if any, and a mileage charge, if any, that a renter must pay to hire or lease the vehicle for the period of time to which the rental rate applies. The bill defined "additional mandatory charges" to mean any separately stated charges that the rental car company requires the renter to pay to hire or lease the vehicle for the period of time to which the rental rate applies, which are imposed by a governmental entity and specifically relate to the operation of a rental car business, including, but not limited to, a CFC, airport concession fee, tourism commission assessment, vehicle license recovery fee, or other government imposed taxes or fees. AB 1981 (Brown, Chapter 417, Statutes of 2014) removed the manufacturer's suggested retail price as one of the criteria for determining the rate of a damage waiver sold by a rental company, and instead set the rate of damage waivers according to AB 2051 Page 7 the vehicle's classification using criteria set by the 2014 Association of Car Rental Industry Systems Standards for North America. The bill increased the maximum rate of the damage waiver to $11 per rental day for vehicles designated as an "economy car," "compact car," or another term denoting the two smallest categories of vehicles described by the standards. The bill increased the maximum rate of the damage waiver to $17 per rental day for vehicles in the next three body-size categories of vehicles designated in the standards, except as specified. AB 2747 (Committee on Judiciary, Chapter 913, Statutes of 2014), the Assembly Committee on Judiciary's Omnibus Bill, extended until January 1, 2020, a sunset provision pertaining to a requirement for rental companies to accept service of a summons and complaint against a renter who resides out of this country for an accident or collision resulting from the operation of the rental vehicle in this state, as provided. AB 359 (Holden, Chapter 549, Statutes of 2013) provided guidelines regarding the scope of a CFC audit, and required audits to be posted on an airport's Internet Web site. The bill removed the requirement that an airport conduct an audit every three years after the initial collection of the CFC, and instead required an airport to conduct an audit every three years after the initial collection of the CFC only if the charge is used for the purpose of operating a common-use transportation system or to acquire vehicles for use in such a system. SB 1006 (Committee on Budget, Chapter 32, Statutes of 2012) See Background. SB 1192 (Oropeza, Chapter 642, Statutes of 2010) See Background. SB 641 (Corbett, Chapter 44, Statutes of 2007) See Background. AB 491 (Frommer, Chapter 661, Statutes of 2001) See Background. SB 1228 (Vasconcellos, Chapter 760, Statutes of 1999) See Background. FISCAL EFFECT: Appropriation: No Fiscal Com.:NoLocal: No AB 2051 Page 8 SUPPORT: (Verified8/3/16) Avis Budget Group (co-source) Enterprise (co-source) Hertz (co-source) City of Los Angeles OPPOSITION: (Verified8/3/16) None received ASSEMBLY FLOOR: 78-0, 5/12/16 AYES: Achadjian, Alejo, Travis Allen, Arambula, Atkins, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden, Irwin, Jones, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Rendon NO VOTE RECORDED: Burke, Jones-Sawyer Prepared by:Tobias Halvarson / JUD. / (916) 651-4113 8/3/16 18:56:54 **** END ****