BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      AB 24


                                                                    Page  1





          Date of Hearing:  April 27, 2015


                        ASSEMBLY COMMITTEE ON TRANSPORTATION


                                 Jim Frazier, Chair


          AB 24  
          (Nazarian) - As Amended April 22, 2015


          SUBJECT:  Transportation network companies:  public safety  
          requirements


          SUMMARY:  Requires charter-party carriers (CPC) and  
          Transportation Network Companies (TNC) to participate in the  
          Department of Motor Vehicle's (DMV) Employer Pull Notice System  
          (EPN) and submit TNC drivers to a mandatory drug and alcohol  
          test.  Specifically, this bill:


          1)Prohibits the California Public Utilities Commission (PUC)  
            from issuing or renewing a permit or certification to a CPC or  
            TNC unless the applicant, in addition to existing  
            requirements, participates in the DMV's EPN.
          2)Requires TNCs to provide a mandatory controlled substance and  
            alcohol testing certification program.


          3)Requires TNCs to register any vehicle used in the  
            transportation of passengers for compensation with the PUC.


          4)Requires TNC vehicles to display a distinctive identifying  
            symbol as prescribed by PUC.









                                                                      AB 24


                                                                    Page  2






          5)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 PUC to issue permits or certificates to CPCs,  
            investigate complaints against carriers, and cancel, revoke,  
            or suspend permits and certificates for specific violations.

          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. 

          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.   

          4)Defines transportation network company as an organization,  
            including, but not limited to, a corporation, limited  
            liability company, partnership, sole proprietor or any other  
            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. 
          5)Requires DMV to establish and administer EPN, which provides  
            the employer of a driver who operates a specified type of  
            vehicle with a report showing the driver's current public  
            record and any subsequent convictions, driver's license  








                                                                      AB 24


                                                                    Page  3





            revocations, failures to appear, accidents, driver's license  
            suspensions, driver's license revocations, or any other  
            actions taken against the driving privilege.

          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. 

          7)Requires employers of drivers of specified vehicles as  
            described above to obtain EPN reports from DMV at least every  
            12 months, as specified. 

          FISCAL EFFECT:  Unknown 





          COMMENTS:  Existing law requires PUC to regulate various  
          transportation services, including CPCs.  CPCs perform various  
          types of transportation services including, but not limited to,  
          a limousine with seating capacity up to eight passengers, a bus  
          providing prearranged services with capacity up to 15  
          passengers, or buses providing round-trip sightseeing trips.  In  
          order to obtain an operating permit or certificate from PUC,  
          CPCs must meet a number of requirements including providing  
          sufficient proof of financial responsibility, maintaining a  
          preventative maintenance program for all vehicles, possessing a  
          safety education and training program, and regularly checking  
          the driving records of all persons operating vehicles used in  
          transportation for compensation.  

          Approximately five years ago, a new model of transportation  
          service began to take place in cities across the United States.   
          Known as TNCs, these companies allow patrons to prearrange  
          transportation services through an online application on their  








                                                                      AB 24


                                                                    Page  4





          smartphone or computer.  Patrons request a ride to a  
          predetermined location, and the application connects 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.  Under this model  
          drivers are considered independent contractors and TNCs take a  
          commission on each trip. 

          In a September 2013 decision, PUC began regulating TNCs by  
          creating a distinct new category of CPCs.  PUC tailored specific  
          new rules in response to the introduction of this new technology  
          into an existing industry.  The decision requires TNCs to obtain  
          a permit from the PUC, conduct criminal background checks on  
          drivers, check driver's records, 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. PUC is currently in the process of rolling out the  
          second phase of the September 2013 decision which will include  
          an evaluation of the original set of regulations and also  
          consider any modifications to existing regulations relative to  
          other CPC categories.   



          AB 24 is the author's second attempt to remedy inconsistent  
          requirements between TNCs and other categories of CPCs.   
          Specifically, AB 24 requires all CPCs, including TNCs, to  
          participate in the EPN system and requires TNCs to administer  
          mandatory alcohol and controlled substance testing.  AB 24 also  
          requires TNC vehicles to display a distinctive identifying  
          symbol as prescribed by PUC and for TNCs to register any vehicle  
          used by its driver's to transport passengers for compensation  
          with PUC.      


          DMV's EPN was established as a voluntary program in 1983 to  
          provide employers and regulatory agencies with a means of  
          providing driver safety through the ongoing review of driver  








                                                                      AB 24


                                                                    Page  5





          records.  By 1998, the EPN system had expanded to require  
          participation by most commercial drivers, including drivers  
          transporting property, passengers, and household goods.  The  
          current EPN system is designed to automatically generate a  
          report of a driver's record and electronically send the report  
          to the employer under specific circumstances including: upon  
          enrollment of a driver, annually from the date of employment, or  
          whenever a driver commits certain moving violations (e.g.  
          accidents, driving under the influence, suspended driver's  
          license).  Presently, approximately 1.6 million commercial  
          drivers are enrolled in the EPN system and while specific types  
          of CPC drivers are currently required to be enrolled in EPN, due  
          to their status as independent contractors, TNC drivers are not  
          subject to the same requirement.  AB 24 will expand the EPN  
          system by clarifying that all CPC drivers, including TNC  
          drivers, are required to enroll in EPN. 


          Additionally PUC currently requires certain categories of 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.  PUC's  
          September 2013 decision required TNCs to implement a zero  
          tolerance policy and to suspend a driver promptly after a zero  
          tolerance complaint is filed.  However, PUC's regulations toward  
          TNCs did not require TNC drivers to undergo mandatory and  
          periodic alcohol and controlled substance testing like other  
          CPCs.  AB 24 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. 

          The author notes, "overall, AB 24 ensures the public is safe and  
          closes the gaps that currently exist when transporting people  
          for hire.  AB 24 sets minimum safety standards that do not go  
          beyond current regulations of transportation companies while not  








                                                                      AB 24


                                                                    Page  6





          overbearing an innovative industry."  

          Writing in support, the California Labor Federation asserts "AB  
          24 will level the playing field for all transportation companies  
          regulated by the PUC regardless of the technology used to book  
          the service.  AB 24 sets reasonable standards to ensure public  
          safety and a fair market for transportation services." 

          In opposition, Lyft writes "AB 24 continues to ignore the PUCs  
          extensive work designing an appropriate regulatory system for  
          TNCs by rejecting it entirely and imposing unnecessary drug  
          testing, additional burdensome vehicle registration requirements  
          and a Department of Motor Vehicle Pull Notice requirement that  
          will hinder Californians from participating in the sharing  
          economy." 
           
          Double-referred:  This bill passed out of the Assembly Utilities  
          and Commerce Committee on April 20, 2015, with a 8-2 vote.  


          Related legislation: AB 828 (Low) excludes from the definition  
          of "commercial vehicle," motor vehicles operated in connection  
          with a TNC if specific conditions are met.  AB 828 is scheduled  
          to be heard by this committee on April 27, 2015.  


          AB 1422 (Cooper) requires TNCs to participate in DMV's EPN.  AB  
          1422 passed out of the Assembly Utilities and Commerce Committee  
          on April 20, 2015 with a 14-0 vote, and is scheduled to be heard  
          by this committee on April 27, 2015.    


          Previous legislation:  AB 612 (Nazarian) of 2014, required CPCs,  
          including TNCs, to participate in DMV's EPN and submit all  
          drivers to a Department of Justice criminal background check.   
          AB 612 was held in this committee.  


          REGISTERED SUPPORT / OPPOSITION:








                                                                      AB 24


                                                                    Page  7









          Support


          California Airports Council 


          California Association of Highway Patrolmen 


          California Labor Federation 


          California Conference of Machinists 


          California Conference Board of the Amalgamated Transit Union 


          San Francisco Taxi Workers Alliance


          Teamsters 




          Opposition


          California State Lodge, Fraternal Order of Police 


          Lyft 










                                                                      AB 24


                                                                    Page  8





          Long Beach Police Officers Association


          Los Angeles County Professional Peace Officers Association 


          Orange County Business Council 


          Riverside Sheriffs' Association


          Sacramento County Deputy Sheriffs' Association


          Santa Ana Police Officers Association 


          The Greenlining Institute 


          Uber Technologies Inc. 







          Analysis Prepared by:Manny Leon / TRANS. / (916) 319-2093

















                                                                      AB 24


                                                                    Page  9