STAND. COM. REP. NO. 412

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  S.B. No. 1513
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committees on Commerce and Consumer Protection and
Economic Development, to which was referred S.B. No. 1513
entitled: 

     "A BILL FOR AN ACT RELATING TO CHARTER TOUR OPERATORS,"

beg leave to report as follows:

     The purpose of this measure is to protect consumers from
risk of financial loss caused by making advance purchases for
charter tours.

     The Department of Commerce and Consumer Affairs (DCCA)
presented testimony supporting the measure's intent, but
expressed concerns about the burdensome nature of the application
and monitoring requirements and the disparate treatment accorded
existing charter tour operators and new applicants.  Boyd Gaming
presented testimony in support of the measure.
 
     Your Committees find that although current law requires
travel agents to maintain a client trust account, there is no
mechanism for detecting non-compliance with this requirement.
Moreover, public concern was raised when one tour operator left
hundreds of consumers, who paid in advance for tours, with little
or no recourse after the tour operator filed bankruptcy.  This
measure offers a solution by providing greater regulatory
oversight of certain charter tour operators.

     This measure proposes to regulate any person who offers or
sells travel tours by requiring: licensing; scheduled financial

 
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performance audits; maintenance of accounting books; minimum
asset reserves; the reporting and filing of certain information;
and, penalties for violations of the law.

     After careful consideration of the testimony presented, your
Committees have amended this measure by requiring:

     (1)  Travel tour operators to register as a travel agency in
          lieu of establishing a separate licensing program;

     (2)  Travel tour operators to maintain a separate client
          trust account;

     (3)  A bond or irrevocable letter of credit if the travel
          tour operator sells more than six tours a year;

     (4)  The filing of quarterly reports prepared by an
          independent CPA to show compliance; and

     (5)  The travel tour operator to bear the costs for any
          necessary audits.

     Your Committees have also amended this measure by permitting
the DCCA to issue citations, impose fines, and issue cease and
desist orders for noncompliance with laws proposed by this
measure, as amended.

     Your Committees believe that these amendments provide
sufficient regulatory oversight without imposing any unnecessary
or burdensome regulations on charter tour operators.

     As affirmed by the records of votes of the members of your
Committees on Commerce and Consumer Protection and Economic
Development that are attached to this report, your Committees are
in accord with the intent and purpose of S.B. No. 1513, as
amended herein, and recommend that it pass Second Reading in the
form attached hereto as S.B. No. 1513, S.D. 1, and be referred to
the Committee on Ways and Means.


 
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                                   STAND. COM. REP. NO. 412
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                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Commerce and
                                   Consumer Protection and
                                   Economic Development,



____________________________       ______________________________
LORRAINE R. INOUYE, Chair          BRIAN KANNO, Co-Chair



                                   ______________________________
                                   BRIAN T. TANIGUCHI, Co-Chair

 
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