BILL ANALYSIS Ó
AB 24
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Date of Hearing: April 20, 2015
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Anthony Rendon, Chair
AB 24
(Nazarian) - As Amended April 14, 2015
SUBJECT: Transportation network companies: public safety
requirements
SUMMARY: This bill requires charter-party carriers (CPC) and
Transportation Network Companies (TNC) to participate in the
Department of Motor Vehicles (DMV) Employer Pull Notice System
(EPN) and submit TNC drivers to a mandatory drug and alcohol
test. Specifically, this bill:
a)Prohibits the California Public Utilities Commission (CPUC)
from issuing or renewing a permit or certification to a CPC or
TNC unless the applicants, in addition to existing
requirements, participate in the DMV's EPN.
b)Requires TNCs to register any vehicle used in the
transportation of passengers for compensation with the CPUC.
c)Requires TNCs to display an identifying decal issued by the
CPUC on the vehicle.
d)Requires all CPCs and TNC to provide for a mandatory
controlled substance and alcohol testing certification
program.
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e)Specifies that drivers hired or initially retained by TNC on
or after January 1, 2016, are subject to mandatory drug and
alcohol testing prior to employment or retention. Drivers
hired or initially retained before January 1, 2016, are
required to complete a drug and alcohol test before January 1,
2017.
EXISTING LAW:
1)Establishes the "Passenger Charter-Party Carriers Act," which
directs the CPUC to issue permits or certificates to CPCs,
investigate complaints against carriers, and cancel, revoke,
or suspend permits and certificates for specific violations.
(Public Utilities Code §5387)
2)Defines "charter-party carrier of passengers" as every person
engaged in the transportation of persons by motor vehicle for
compensation, whether in common or contract carriage, over any
public highway in the state. (Public Utilities Code §5360)
3)Requires CPCs to operate on a prearranged basis. Further
defines "prearranged basis" to mean that the transportation of
the prospective passenger was arranged with the carrier by the
passenger, or a representative of the passenger, either by
written contract or telephone. (Public Utilities Code
§5360.5)
4)Defines a "transportation network company" to mean an
organization, including, but not limited to, a corporation, a
limited liability company, partnership, sole proprietor, or
any entity, operating in California that provides prearranged
transportation services for compensation using an
online-enabled application or platform to connect passengers
with drivers using a personal vehicle. (Public Utilities Code
§5431)
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5)Establishes the EPN, administered by the DMV, that provides
the employer of a driver who drives a specified type of
vehicle with a report showing the driver's current public
record and any subsequent convictions, driver's license
revocations, failures to appear, accidents, driver's license
suspensions, driver's license revocations, or any other
actions taken against the driving privilege. (Vehicle Code
§1808.1)
6)Requires employers of drivers of specified vehicles, such as
commercial truck drivers, school buses, farm labor vehicles,
tow trucks, youth buses, paratransit vehicles, ambulances,
vehicles that transport hazardous materials, to show EPN
reports during regular business hours upon the request of the
California Highway Patrol. (Vehicle Code §1808.1)
7)Requires employers of drivers of specified vehicles as
described above to obtain EPN reports from DMV at least every
12 months that is to be signed, dated, and maintained by the
employer. (Vehicle Code §1808.1)
FISCAL EFFECT: Unknown.
COMMENTS:
1)Author's Statement: "AB 24 ensures the public is safe, and
closes the gaps that currently exist when transporting people
for hire. All requirements ? currently apply to charter party
carriers thus; this bill ensures that these minimum
requirements also apply to TNCs. AB 24 sets minimum safety
standards that do not go beyond current regulations of
transportation companies while not overbearing an innovative
industry."
2)Background: California law regulates different modes of
passenger transportation for compensation including taxi
services, which are regulated by cities and/or counties; and
passenger stage companies (PSC) and CPCs, which are regulated
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by the CPUC. Beginning as early as 2009, a new model of
transportation service began springing up in cities across the
United States. Known as transportation network companies,
these companies allow patrons to prearrange transportation
services through an online application on their smartphone or
computer. Patrons would request a ride to a predetermined
location, and the application would connect them with a TNC
driver. Payment is processed through the application so that
no physical financial transaction occurs during the trip
itself between the patron and the driver. The TNC takes a
commission on each trip. The development of TNCs has made the
ability for passengers seeking transportation for compensation
more readily available to the general public.
3)What are Passenger Carriers? The CPUC is in charge of
regulating passenger carriers. Passenger carriers include
services such as PSCs and CPCs. PSCs are services that
provide transportation to the general public on an individual
fare basis, such as scheduled bus operators, which are buses
that operate on a fixed route and scheduled services, or
airport shuttles, which operate on an on-call door-to-door
share the ride service.
CPCs are services that charter a vehicle on a prearranged
basis for the exclusive use of an individual or group.
Charges are based on the mileage or time of use, or a
combination of both. The CPUC does not regulate the level of
charges for CPCs. Types of CPCs include limos, tour buses,
sightseeing services, and charter and party buses.
The CPUC requires CPCs to meet a number of requirements until
an operating permit or certificate is issued. These
requirements include providing sufficient proof of financial
responsibility, maintain a preventative maintenance program
for all vehicles, possessing a safety education and training
program, and regularly checking the driving records of all
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persons operating vehicles used in transportation for
compensation.
4)What are Transportation Network Companies? In September 2013,
a CPUC decision put TNCs under the purview of the CPUC,
allowing it to exercise and enforce regulatory and safety
requirements against TNCs. The CPUC defined TNCs as an
"organization, including, but not limited to, a corporation,
limited liability company, partnership, sole proprietor, or
any entity, operating in California that provides prearranged
transportation services for compensation using an
online-enabled application or platform to connect passengers
with drivers using a personal vehicle." The CPUC decision
requires TNCs to obtain a permit from the CPUC, conduct
criminal background checks of drivers, establish a driver
training program, implement a zero-tolerance policy on drugs
and alcohol, conduct vehicle inspections, and obtain
authorization from airports before conducting any operations
on or into airport property.
Subsequently, the legislature passed AB 2293 (Bonilla) Chapter
389, Statutes of 2014, which codified the CPUC's definition of
TNCS and imposed certain liability and other insurance
coverage for TNCs and their participating drivers. The bill
defines when personal and commercial auto insurance come into
effect, and at what levels, when the driver logs onto the
application until the driver accepts a ride request, and for
when a ride request is accepted until the passenger exits the
vehicle. The bill sought to make a clear distinction between
when a vehicle is being used for TNC business activities and
must require commercial insurance, and when a vehicle is not
being used for TNC business activities at which time the
driver's personal auto insurance is in effect.
5)DMV EPN: The DMV EPN was created as a means for employers and
regulatory agencies to ensure driver safety through the
ongoing review of driver records. The system is designed to
generate a report of a driver's record and electronically send
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the report to the employer under specific circumstances such
as, upon enrollment of a driver, annually from the date of
employment, or whenever a driver commits certain moving
violations. Most commercial drivers, including drivers
transporting property, passengers, and household goods are
required to participate in the EPN.
Specific types of CPC drivers are required to be enrolled in
the EPN so that employers may receive automatic notice of an
adverse entry or action on a driver's driving record.
However, current law limits enrollment in the EPN to
employees. Although TNCs are required to check each driver's
driving record prior to allowing a driver on the TNC platform,
and quarterly thereafter, the DMV does not permit TNCs with
nonemployees from enrolling in EPN. This bill would prohibit
the CPUC from issuing or renewing a permit or certification to
a CPC or TNC unless the applicant participates in the DMV's
EPN.
6)Alcohol and Controlled Substance Policies: Currently the CPUC
requires CPCs to implement a zero-tolerance alcohol and
controlled substance use policy, as well as requiring drivers
to undergo mandatory and periodic alcohol and controlled
substance testing. The CPUC's September 2013 regulations also
required TNCs to implement a zero tolerance policy and to
suspend a driver promptly after a zero tolerance complaint is
filed. However, the CPUC's regulations toward TNCs did not
require TNC drivers to undergo mandatory and periodic alcohol
and controlled substance testing like other CPCs. This bill
would require TNCs to provide for a mandatory controlled
substance and alcohol testing certification program and
require its drivers to undergo a mandatory drug and alcohol
testing prior to employment or retention for drivers hired or
initially retained on or after January 1, 2016. TNC drivers
hired or initially retained prior to January 1, 2016, would be
required to undergo testing before January 1, 2017.
7)Registration and Identifying Decal: The CPUC's General Order
157-D requires specific CPCs to properly display certain
information on the vehicle, including the name of the carrier
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and vehicle number, its permit number, and commission-issued
decal. This bill further require TNC vehicles to display a
decal with an identifying symbol issued by the CPUC.
The author may wish to consider an amendment to clarify that
it intends to require TNCs to display a distinctive
identifying symbol, pursuant to Public Utilities Code 5385,
instead of a decal pursuant to Public Utilities Code 5385.5,
which applies to limousines.
Furthermore, because the CPUC considers TNCs as a form of CPC
under its regulatory purview, a company who wishes to operate
as a TNC must apply for a TNC subclass of a CPC - P permit.
These CPC - P permits are only granted to companies utilizing
smartphone technology application that facilitates
transportation passengers in the drivers' personal vehicle.
TNCs are not permitted to own vehicles used in their
operations or own fleets of vehicles. However, there is no
limit to the number of drivers a TNC can have under one
permit. Individual TNC drivers do not have to apply for their
own CPC permit, but would need to complete the TNC's process
to be enrolled as a driver under a TNC. This bill would
require TNCs to register any vehicle used by its drivers in
the transportation of passengers for compensation with the
CPUC.
8) Suggested Amendments:
5444. (a) A transportation network company shall do all of the
following:
(1) Participate in a pull-notice system pursuant to Section
1808.1 of the Vehicle Code to regularly check the driving
records of all participating drivers.
(2) Provide for a mandatory controlled substance and alcohol
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testing certification program as adopted by the commission
pursuant to Section 1032.1.
(3) Register any vehicle used in the transportation of
passengers for compensation with the commission and display on
the vehicle a suitable decal with an identifying symbol issued
by the commission an identifying symbol as prescribed by the
commission pursuant to Public Utilities Code 5385 .
(b) Drivers hired or initially retained by a transportation
network company on or after January 1, 2016, shall be subject
to mandatory drug and alcohol testing prior to employment or
retention. Drivers hired or initially retained before January
1, 2016, shall complete a drug and alcohol test before January
1, 2017.
9)Related Legislation:
AB 828 (Low) 2015: This bill would exclude from the
definition of "commercial vehicle," for purposes of the
Vehicle Code, any motor vehicle operated in connection with a
transportation network company.
AB 1360 (Ting) 2015: This bill would exempt a rideshare
program operated by a transportation network company that
arranges a ride among multiple passengers who share the ride
in whole or in part from computing transportation charges
based on a vehicle mileage or time of use, provided that the
fare for each passenger is less than the fare that would be
charged to a single passenger traveling alone.
AB 1422 (Cooper) 2015: This bill authorizes transportation
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network companies to participate in the Department of Motor
Vehicle Employer Pull Notice System.
10)Prior Legislation:
AB 612 (Nazarian) 2014: Requires charter-party carriers to
participate in the Department of Motor Vehicles Employer Pull
Notice system and submit all drivers to a Department of
Justice criminal background check. Held in the Assembly
Committee on Transportation.
AB 2293 (Bonilla) 2014: Establishes guidelines for insurance
coverage for Transportation Network Companies to ensure
personal and financial safety of consumers. Chaptered by the
Secretary of State - Chapter 389, Statutes of 2014.
11)Double Referred: This bill is double referred to the
Assembly Committee on Transportation.
REGISTERED SUPPORT / OPPOSITION:
Support
California Airports Council
California Association of Highway Patrolmen
California Bus Association
California Conference Board of the Amalgamated Transit Union
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California Conference of Machinists
California Labor Federation
California Teamsters Public Affairs Council
Consumer Attorneys of California
Greater California Livery Association
San Francisco Taxi Workers Alliance
San Jose Silicon Valley Chamber of Commerce
Opposition
CALinnovates
Central City Association
The Greenlining Institute
The Internet Association
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Lyft
Orange County Business Council
TechNet
Uber Technologies, Inc.
Analysis Prepared by:Edmond Cheung / U. & C. / (916) 319-2083