MINUTES OF THE

SENATE Committee on Transportation

 

Seventy-second Session

May 6, 2003

 

 

The Senate Committee on Transportation was called to order by Chairman Raymond C. Shaffer, at 1:39 p.m., on Tuesday, May 6, 2003, in Room 2149 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

 

COMMITTEE MEMBERS PRESENT:

 

Senator Raymond C. Shaffer, Chairman

Senator Dennis Nolan, Vice Chairman

Senator Mark Amodei

Senator Warren B. Hardy II

Senator Michael Schneider

Senator Terry Care

Senator Maggie Carlton

 

STAFF MEMBERS PRESENT:

 

Marsheilah Lyons, Committee Policy Analyst

Lee-Ann Keever, Committee Secretary

 

OTHERS PRESENT:

 

Bill Gregory, Lobbyist, Enterprise Rent-A-Car

Mark Tadder, Area Manager, Enterprise Rent-A-Car

Robert A. Ostrovsky, Lobbyist, The Hertz Corporation

 

Chairman Shaffer opened the hearing on Assembly Bill (A.B.) 522.

 

ASSEMBLY BILL 522 (1st Reprint): Revises provisions governing short-term leases of passenger cars. (BDR 43-1045)

 

Bill Gregory, Lobbyist, Enterprise Rent-A-Car, said the purpose of the bill was to define the word “collision,” contained in section 1, subsection 1, paragraph (a). The accepted definition of collision meant two vehicles colliding with each other. The definition did not cover situations where a vehicle might run into a tree or some other obstacle.

 

Mr. Gregory said the language had been changed to say no matter what a driver collided with, the incident would be considered a collision. Mr. Gregory said he worked with Farmers Insurance Group and American Automobile Association’s insurance companies on the language contained in the bill. Mr. Gregory said he wanted to amend the language and suggested changing the wording from “deliberate or negligent act or omission on the part of the lessee,” to “physical damage to the car up to and including its fair market value, regardless of the cause of the damage.”  Section 1, subsection 1, paragraph (b), which referred to a vehicle’s mechanical damage, would be left unchanged if the damage was accidental.

 

Mr. Gregory said leaving section 1, subsection 1, paragraph (b) unchanged protected individuals renting a vehicle and who did not cause deliberate mechanical damage to the vehicle. The provision also applied to drivers who were not negligent while driving a vehicle leased from a car rental agency.

 

Senator Care asked whether section 1, subsection 1, paragraph (b), subparagraph (3) would remain a part of Mr. Gregory’s proposed amendment. Mr. Gregory replied yes.

 

Senator Care asked whether the lessee would be responsible for damages to the interior of a vehicle he or she rented. Mr. Gregory replied damages to the interior of a vehicle would be considered negligence and the lessee would be responsible for all repairs. He said when a vehicle’s mechanical system malfunctioned through no fault of the renting party, the lessee would not be responsible for repairs.

 

Senator Care asked whether current car rental contracts specified the lessee would be responsible for all negligent acts resulting in damage to a rental vehicle. Mr. Gregory asked Mark Tadder, Area Manager, Enterprise Rent-A-Car, to answer the question. Mr. Tadder said lessees would be responsible for all negligent acts resulting in damage to a rental vehicle.

 

Senator Care said he was trying to make a distinction between ordinary wear and tear versus negligent damage to a vehicle. Senator Care asked whether a spilled milkshake would be considered a negligent act of damage to a rental vehicle. Mr. Tadder replied, “Yes.”

 

Mr. Gregory said the words “deliberate,” and “negligent” were put in the bill to protect consumers. A consumer would not be held responsible for an act which he or she did not cause.

 

Mr. Gregory referred to section 3, subsection 2, paragraph (e). He said when people rented cars, they told the rental agent they would not take the vehicle out of state, but sometimes did. The car rental company was then faced with the expense of retrieving the vehicle from wherever the lessee had left it. When a lessee paid cash for a car rental, the rental agency had no means by which to recover the additional expense incurred in retrieving the vehicle. Car rental contracts asked people whether they planned on taking the vehicle out of state. Should a person reply “no,” the car rental companies wanted a mechanism by which to hold the person responsible when the car was driven to another state.

 

Mr. Gregory said a person could rent a car in Nevada, drive around Lake Tahoe and not know that part of Lake Tahoe was situated in California. The bill was designed to protect those individuals.

 

Senator Care asked whether section 3, subsection 2, paragraph (e) should have a provision which said, “… unless the parties contract to the contrary … .”  Senator Care asked whether the term “short-term lessor” referred to renting a car for a few days versus renting a car for a month or more. Mr. Gregory said a rental contract spelled out where the lessee could take a vehicle. Prior to renting a vehicle, the lessee had to inform the car rental agency where he or she would be taking the vehicle. Other states might impose additional fees which the car rental agency needed to collect; thus, the need to know where the car would be driven. Mr. Gregory said the provision addressed those individuals who said they would not take a rental car out of state, but did.

 

Mr. Gregory said the existing language in section 4, subsection 2, had been changed from “24-hour rental period” to “full or partial rental day.”  Many business-to-business rentals were conducted over a rental day, not a 24-hour period. Additionally, business-to-business rentals had certain contractual obligations best met by changing the wording.

 

Senator Carlton asked about the duration of a rental day. Mr. Gregory said the intent of the bill was to provide a definition of the phrase “rental day.” Not all car rental contracts would specify a rental day. The provision would apply primarily to business-to-business contracts. Insurance companies paid for rental days, not 24-hour periods. Senator Carlton asked whether the rental day could be applied to any person renting a vehicle. Mr. Gregory replied “yes,” adding the change would give car rental agencies the authority to offer consumers a choice between a rental day and a 24-hour period when renting a car. Mr. Gregory said he would be willing to insert a provision along the lines of “24‑hour rental period or rental day as specified in the rental contract.” A person could then request whichever time frame best suited his or her purposes, while an insurance company could request a rental or calendar day.

 

Senator Carlton said she was confused by the proposed change as she thought a rental day and a 24-hour period were one in the same. Mr. Tadder said the insurance industry standard is to avoid conflicts about the return time of rental vehicles. Insurance companies preferred to operate on a day-by-day basis. A leisure rental for a nonbusiness consumer is handled on a 24-hour period. Rental contracts stipulated which billing increment would be used.

 

Senator Carlton said the State overhauled the manner in which a State employee had to rent a vehicle for State business. Certain companies and agencies had to be used in accordance with the State’s contract.

 

Robert A. Ostrovsky, Lobbyist, The Hertz Corporation, stated he supported A.B. 522. He said the language in section 3, subsection 2, paragraph (e), mandates customers to inform a car rental agency where they would be driving a rental car.

 

Mr. Ostrovsky said The Hertz Corporation’s standard lease provides for a 24‑hour rental period with a grace period, which gives a lessee a grace period of an additional hour or two in which to return the vehicle. The rental contract states when a lessee keeps a vehicle for a certain number of hours over the designated return time, he or she will be charged for an additional day. The grace period varies from company to company. Mr. Ostrovsky said the State probably had a master contract with negotiated language for the rental cars used by State employees.

 

Mr. Ostrovsky reiterated he supported A.B. 522. He said he believed it cleaned up existing legislation and provided a clear relationship between lessee and lessor.

 

Senator Hardy said:

Mr. Chairman, I want to make, in an abundance of caution, a disclosure. Kevin Smith, who is here today representing Enterprise, is an active member of the association that employs me and is involved in our PAC committee. It doesn’t impact Enterprise any more than anybody else. I just wanted to make that disclosure.  Thanks.

 

Chairman Shaffer said Senator Hardy’s disclosure would be placed on the record.

 

SENATOR CARE MOVED TO AMEND AND DO PASS AS AMENDED A.B. 522.

 

SENATOR AMODEI SECONDED THE MOTION.

 

THE MOTION CARRIED UNANIMOUSLY.

 

*****

 

Chairman Shaffer said a conflict notice had been received concerning A.B. 444. The bill conflicted with a bill already at the Governor’s office. Due to the conflict, an amendment had been proposed. The committee members would consider the proposed amendment on Thursday, May 8, 2003.

 

ASSEMBLY BILL 444: Makes various changes relating to traffic laws. (BDR 43‑1098)

There being no further business, Chairman Shaffer adjourned the Senate Committee on Transportation at 1:58 p.m.

 

 

RESPECTFULLY SUBMITTED:

 

 

 

                                                           

Lee-Ann Keever,

Committee Secretary

 

 

APPROVED BY:

 

 

 

                                                                                         

Senator Raymond C. Shaffer, Chairman

 

 

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