BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2051|
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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:
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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.
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(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
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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.
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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
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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
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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
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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
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