BILL ANALYSIS Ó SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS Senator Ben Hueso, Chair 2015 - 2016 Regular Bill No: AB 650 Hearing Date: 6/13/2016 ----------------------------------------------------------------- |Author: |Low | |-----------+-----------------------------------------------------| |Version: |5/27/2016 As Amended | ----------------------------------------------------------------- ------------------------------------------------------------------ |Urgency: |No |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant:|Nidia Bautista | | | | ----------------------------------------------------------------- SUBJECT: Public Utilities Commission: regulation of taxicabs DIGEST: This bill would enact the Taxicab Transportation Services Act and provide for the regulation of taxicab transportation services by the California Public Utilities Commission (CPUC) as a matter of statewide concern, except taxicab transportation services originating in the City and County of San Francisco and at the San Francisco International Airport, which would continue to be locally regulated. This bill would enact various provisions relating to insurance, vehicle inspections, monitoring of taxicab drivers, and other matters and make conforming changes to other related provisions. ANALYSIS: Existing law: 1)Provides that the CPUC may fix rates and establish rules for the transportation of passengers and property by transportation companies, prohibit discrimination, and award reparation for the exaction of unreasonable, excessive, or discriminatory charges. (Article XII, §4 of the California Constitution) 2)Establishes the CPUC's authority to regulate, require license or permit to operate, require insurance and workers compensation, take appropriate enforcement action and other AB 650 (Low) Page 2 of ? provisions related to passenger stage corporations. (Public Utilities Code §1031, et seq.) and transportation charter-party carriers of passengers (Public Utilities Code §5351), including transportation network company (Public Utilities Code §5431) 3)Exempts from the CPUC regulatory oversight of charter-party carriers of passengers provisions taxicab transportation services which are licensed and regulated by a city or county, by ordinance or resolution, rendered in vehicles designed for carrying not more than eight persons excluding the driver. (Public Utilities Code §5353) 4)Requires every city or county to adopt an ordinance or resolution to issue permits in regard to taxicab transportation service provided in vehicles, designed for carrying not more than nine people with the driver, which is operated within the city or county. Establishes minimum rules for drivers, including testing for controlled substances. (Government Code §53075.5) (Vehicle Code §21100) 5)Authorizes a peace officer and local agency to take enforcement actions regarding vehicles that are operated as taxicabs without the required permits. (Government Code §§§§§53075.6, 53075.6, 53075.7, 53075.8, 53075.9) (Public Utilities Code §§§5411.5, 5412.2, 5413.5) (Vehicle Code §21100.4) 6)Requires taxicabs to maintain proof of financial responsibility of at least 15 thousand for each person injured or killed, of at least 30 thousand for the injury to, or the death of, two or more persons in any one accident, and for damages to property of five thousand and obtaining a bond of a specified amount. (Vehicle Code §16500) 7)Classifies certain actions related to existing Vehicle Code requirements of taxicab activities as limited civil cases, under specified conditions, including a limit of $25,000 in damages. (Code of Civil Procedure Code §85) 8)Requires specified signage requirements to be placed on all taxicabs. (Vehicle Code §§27900 and 27908) This bill: 1)Establishes Taxicab Transportation Services Act and places AB 650 (Low) Page 3 of ? taxicabs under the regulatory authority of the CPUC. 2)States the legislature finds and declares that regulation of taxicab transportation services throughout the state constitutes a statewide concern. 3)Exempts taxicab transportation services originating in the City and County of San Francisco or at the San Francisco International Airport from most of the provisions of this act. 4)Requires the CPUC to establish six regions, other than the provisions for the City and County of San Francisco and San Francisco Airport, for purposes of issuing operating permits to taxicab carriers. 5)Requires the CPUC to issue permits, or renewals that are effective for three years, to entities to operate taxicab transportation services if qualified and requires each permit to specify the region in which the taxicab may operate, but does not prohibit a taxicab carrier from holding permits in multiple regions. 6)Maintains the current requirement on taxicab services to include the number of its permit every written, oral, or electronic advertisement of the services it offers and requires it complies with signing requirements in the Vehicle Code. 7)Requires the CPUC to ensure all applicants meet specified requirements prior to issuing a taxicab service permit to an entity, including: ensuring the financial and organizational capacity of the entity, compliance with the rules and regulations of the Department of the California Highway Patrol relating to safe operating vehicles, commitment to observe hours of service regulations of state and federal law, an inspection program in effect for its motor vehicles, participation in the pull notice program, safety education and training program for all drivers, provides a mandatory controlled substance and alcohol testing certification program, and others. 8)Requires every taxicab carrier to furnish a list to the CPUC of all motor vehicles used by the carrier in taxicab services since the last inspection. 9)Authorizes the CPUC to suspend or revoke the carrier's permit AB 650 (Low) Page 4 of ? and/or impose a fine if the carrier's insurer informs the CPUC that the carrier has failed to obtain insurance coverage for any vehicle on the list. 10)Requires the CPUC to investigate any entity that advertises or holds itself as providing services that may be considered to be taxicab transportation services without the required permit and issue civil or criminal proceedings as warranted. 11)Establishes grounds by which the CPUC may cancel, suspend, or revoke a taxicab carrier permit, including conviction of a misdemeanor or felony for specified actions, failure to operate and perform reasonable service and other violations and authorizes the CPUC levy a civil penalty of up to $7,500. 12)Requires a taxicab carrier to make available for inspection by the CPUC, upon request, a certificate of workers compensation coverage, a consent to self-insure issued by the Department of Industrial Relations or a statement under penalty of perjury. 13)Requires a taxicab carrier to operate a motor vehicle with the CPUC required trade dress. 14)Requires any city or county to forward to the CPUC licensure information for each taxicab transportation service licensee within its jurisdiction by December 31, 2016. 15)Requires the CPUC to require the taxicab carrier to procure liability insurance capped at no more than $100,000 for death and personal injury per person, $300,000 for death and personal injury per incident, and $50,000 for property damage, and provides that these requirements shall only apply to motor vehicles while providing taxicab services. 16)Prohibits a city, county, city and county, or any other local agency to require insurance in a manner different from that required by this article. 17)Prohibits the CPUC from regulating fares or fees charged by taxi cab carriers and the type of device used by taxicab carriers to calculate fares, including global positioning system metering as a form of calculating fares. 18)Authorizes the CPUC to adopt rules requiring taxicab carriers to disclose fares, fees, and other pricing structures for AB 650 (Low) Page 5 of ? taxicabs. 19)Requires individuals who wish to be a driver providing taxicab services to first obtain a taxicab driver permit from the CPUC which shall be valid in any region and specifies necessary requirements, including: 18 years or older, Class C driver's license, passes a CPUC prescribed written exam, and background check through the Department of Justice's live scan system. 20)Requires a taxicab carrier to participate in the pull-notice system, provide for a mandatory controlled substance and alcohol testing certification program equivalent to that required by the CPUC of transportation network companies. 21)Prohibits a taxicab carrier from employing or contracting drivers who have been convicted during the preceding seven years of any offense relating to use, sale, possession, or transportation of narcotics, any act involving violence, any sexual offense, fraud, or felony offense, or offense involving possession of a firearm, and other actions. 22)Requires taxicab carriers to inspect each of its motor vehicles or have each vehicle inspected at a facility licensed by the Bureau of Automotive Repair and requires the inspection to cover 19 specified components of the vehicle. 23)Preempts all other regulation of taxicab transportation services subject, including those by local agencies. Specifically, prohibits airports from imposing licensing, insurance requirements, and a fee that is based on the gross receipts of the taxicab carrier. 24)Repeals a number of sections of the Government Code that provide local agencies specified authorities related to taxicab services, including: a) Section 53075.5 of the Government Code that provides authority for cities and counties to establish policy for entry into taxicab transportation service, including employment as a taxicab driver, establishment of rates, mandatory drug and alcohol testing, and other authorities. b) Section 53075.6 of the Government Code that provides law enforcement authority to impound vehicles operating AB 650 (Low) Page 6 of ? as taxicabs without the proper certificate; repeals Section 53075.61 of the Government Code which provides local transportation inspectors authority to impound a vehicle operating without the proper permit or license. c) Section 53075.7 of the Government Code which requires a local agency to investigate a business that advertises or operates a taxicab transportation service upon receipt of a complaint. d) Section 53075.8 of the Government Code which authorizes a local agency to seek the termination of the telephone service for a taxicab transportation service which has operated in violation of the local agency's ordinance related to taxicab service. e) Section 53075.9 of the Government Code which requires every taxicab transportation service to include the number of its certificate, license, or permit in every written or oral advertisement of the service it offers and authorizes a local agency to impose a fine of not more than $5,000 for each violation. f) Section 830.7 of the Penal Code to remove reference to authority of local agency transportation inspectors to enforce taxicab license violations. g) Makes clarifying amendments to remove references to local authority of taxi cab licensing, including in Sections 5353, 5411.5, 5412.2 and 5413.5 of the Public Utilities Code. 25)Establishes the Legislature finds and declares that regulation of taxicab transportation services throughout the state constitutes a matter of statewide concern. Background Since its inception in 1911 (then as the Railroad Commission), the CPUC has regulated private companies and individuals that own, operate, control or manage transportation of people and property. However, taxicabs have been regulated by local cities or counties for most of the CPUC's one hundred year history. Currently, the CPUC's remaining authority is limited to non-rail passenger carriers and household goods movers. Under state law, the CPUC is required to license carriers, and investigate and AB 650 (Low) Page 7 of ? enforce safety and consumer protection laws for the following surface transportation carriers: Passenger Stage Corporations (PSCs) - for-hire carriers transporting passengers over public highways on an individual-fare basis. Examples include: airport shuttles. Transportation Charter-Party Carriers (TCPs) - operate under the direction and control of their chartering party that arranges the transportation, on a prearranged basis. Examples include tour buses, limousines, and transportation network companies, including Uber, Lyft, and Sidecar. Private Carriers of Passengers (PCPs) - includes not-for-hire motor carrier transporting passengers in buses (vehicles seating 10 or more) that are required to obtain a "CA number" from CHP. Household Goods Carriers - includes for-hire moving companies. The rapid growth of a new transportation for-hire service, known as transportation network companies (TNCs), have dramatically disrupted the existing transportation for-hire market, including reducing taxicab use in many cities. The development of the TNCs has made the ability for passengers seeking transportation for compensation more readily available to the general public, but also raised questions about the fairness of the existing regulations between the services with taxicabs experiencing many regulatory requirements as compared to competitors in transportation network companies which have many fewer requirements. Some have argued to level the playing field, TNCs services should be regulated at the local level, not by the CPUC. Taxicabs. An essential distinction of a taxicab from other transportation services is the ability to have the service hailed from the street. However, the bill does not include this activity in the definition included in the bill. The author and committee may wish to amend this bill to include the ability to hail a vehicle from the street as part of the definition of a taxicab. Removing entry caps. Currently, many cities manage the number of taxicab permits that are distributed within their jurisdiction. The local cities and counties often manage the AB 650 (Low) Page 8 of ? supply of taxicabs in order to mitigate against the failures of market oversupply which has in the past led to driver confrontations, poor service and undermined public safety. On the other hand, TNCs receive licenses at the CPUC with no restriction on the number of vehicles and drivers they can place on the roads and no limitations to operate in a given city or county. This bill would largely mimic the current licensing of TNCs and remove all entry caps on taxicabs to enter the market. This bill proposes to establish six regions, in addition to one for the City and County of San Francisco. However, the licensing would be handled by the CPUC and there with be no limits on the number of vehicles that can be permitted within a given region. Unless the local regions are overseeing the licensing, there doesn't seem to be any reason to maintain the proposed regions as currently drafted. The author and committee may wish to amend this bill to remove the references to the six regions. Taxicab service - statewide concern? This bill declares that taxicab service is of statewide concern and preempts local agencies from adopting regulations on taxicab service. However, this bill also exempts taxicab service originating in the City and County of San Francisco and San Francisco Airport from CPUC regulations, and preserves local authority. San Francisco maintains the only medallion system for taxicab service in the state, whereby a medallion is owned as property with the ability to lease the service to other drivers. Due to the issues related to handling property rights and values, although not ideal, it seems reasonable that San Francisco merits this proposed separate treatment. In order to provide consistency in language and action, the author and committee may wish to amend this bill to remove references to taxicab service being of statewide concern and prohibitions on San Francisco's ability to adopt its own insurance requirements, or airports to impose their own fee structures. Is the CPUC the right agency? The sponsors of this bill attempt to level the playing field among the competing transportation for-hire services, by shifting regulatory licensing and enforcement from local cities and counties to the CPUC. In light of the many areas of oversight the CPUC oversees - electric and natural gas investor-owned utilities, telephone services, water agencies, and others - and the identified shortcomings of the agency's existing oversight of the transportation for-hire program, as noted in a recent State Auditor's report, the question must be raised whether the CPUC is the appropriate AB 650 (Low) Page 9 of ? agency to also handle taxicab services. Unfortunately, these are all compelling reasons to not include taxicab services under the regulatory umbrella of the CPUC. However, a compelling reason to include taxicab services may be to better align the existing transportation for-hire services and better respond to the lack of fairness. Additionally, the CPUC has constitutional power to fix rates. This bill proposes to prohibit the CPUC from exercising this power. The author and committee may wish to amend this bill to remove the prohibition on the CPUC's ability to regulate fares or fees. CPUC enforcement. The work to license, enforce and ensure safety of transportation for hire services regulated by the CPUC is done through the CPUC's Transportation Enforcement Bureau (TEB) with approximately 45 authorized staff positions. The CPUC is responsible for issuing operating permits and certificates (operating authority) to qualified applicants for authority to operate as passenger stage corporations, charter-party carriers of passengers, and household goods carriers, and for denying, suspending and revoking operating authorities of such carriers that fail to meet statutory and regulatory requirements. This work is performed by the Transportation License Section, the Transportation and Enforcement Section. The 45 authorized staff positions in TEB are spread evenly between licensing (14 staff), enforcement section-north (15 staff) and enforcement section-south (15 staff). Type of Carrier No. Permitted Charter-party carriers of passengers8,942 Private carrier of passengers 1,310 Household goods carriers 1,077 Passenger stage corporations 262 Among the powers of the CPUC, the agency has the ability to inspect books and records, access a carrier's property and issue telephone disconnects for violations related to advertising unlicensed services. However, many of these powers are currently missing from this bill. The author and committee may wish to amend this bill to ensure these powers also apply to CPUC regulation of taxicab services. However, the agency has been challenged to adequately enforce the many carriers operating in the state, including the over one hundred thousand TNCs vehicles on California's streets and roads. After a scathing State Auditor's review of the agency's AB 650 (Low) Page 10 of ? transportation program, the legislature passed legislation to authorize local law enforcement to work with the agency on enforcement of buses and limousines, SB 541 (Hill, Chapter 718, Statutes of 2015). The author and committee may wish to amend this bill to include taxicab services among the services that locals are authorized to take enforcement action on and require the CPUC to issue general orders of its regulations of taxicabs which are a necessary tool for law enforcement. Accessibility services. It is unclear how accessibility services for the disabled population would be addressed. Taxicab services often provide services to disabled residents, including the non-foldable wheelchair assistance. This bill is currently silent on the issue of these existing services, whether by contract agreements or as vehicle and driver requirements. The author may wish to amend this bill to ensure accessibility services are addressed. Addressing additional local needs. The League of Cities raises concerns about the timing of the bill and the need for cities to transfer licensure information to the CPUC in under such a quick timeframe. The author may wish to amend this bill to provide more time for carriers, cities/counties and the CPUC to prepare appropriately for a successful transition. Additionally, local cities and counties are tasked with managing traffic on their city streets and roads. Yet, CPUC licensing decisions and data information is not available to local cities. The author may wish to require the CPUC to address data sharing with local agencies. Other issues. This bill merits further amendments to address a number of areas that may have been overlooked or need clarification: Insurance requirements - need to include carrier commercial liability coverage which augments the requirements in this bill for drivers. Ensure the driver requirements in Article 7 are shifted to carrier requirements of their drivers. Vehicle inspection - remove the option to conduct self-inspections. Airports - remove the prohibitions on airports to impose fees and other requirements. Double Referral. Should this bill be approved by this AB 650 (Low) Page 11 of ? committee, it will be re-referred to the Senate Committee on Transportation and Housing for its consideration. Prior/Related Legislation SB 541 (Hill, Chapter 718, Statutes of 2015) proposed a suite of requirements of the CPUC in an effort to strengthen the agency's overall program and enforcement of for-hire transportation carriers. The bill also expanded enforcement authority to other peace officers in addition to the California Highway Patrol for bus and limousine licensing activities. FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes SUPPORT: Taxi Paratransit Association of California (Source) American Cab CityWide Fiesta Taxi Silicon Valley Cab Company, Inc. Yellow Cab of Los Angeles Yellow Checker and Cab Company, Inc. 17 Individuals OPPOSITION: California Regional Council Taxi Workers Alliance (AFL-CIO) USA Cab LTD An Individual ARGUMENTS IN SUPPORT: According to the author, "California's current taxi regulation process is antiquated and extremely onerous. Taxis are the only for-hire transportation model that is fully regulated at the local level, while other for-hire transportation models have one set of statewide requirements governing their operation. This disparity places taxis at a severe competitive disadvantage. The laws and regulations governing the provision of transportation services are many decades old and have evolved slowly. As with many new technologies, the rapid growth of TNCs has created a disruption in the taxi's archaic model of transportation. While this change has created many benefits to transportation customers, it has AB 650 (Low) Page 12 of ? also created an unfair disadvantage for taxis to compete in the market. In order to compete in the changing for-hire transportation ecosystem, taxis should be regulated by one statewide set of standards because the current system restricts competition by setting different, more onerous rules for taxis." ARGUMENTS IN OPPOSITION: The Taxi Workers Alliance argues "it would be a grave mistake to place taxi regulation in the hands of the CPUC, an agency that doesn't want it and even more importantly lacks the resources to assume it? the rest of the bill aims to gut all standards in the taxi industry, including insurance, metered fare, inspections and airport requirements. Such deregulation of the industry will create a race to the bottom to the detriment of the public as well as taxi drivers." They argue that taxi regulation should be moved over to the county level which would eliminate the need for permits for each city but not ignore legitimate local concerns. They also state that the insurance requirements are inadequate and unclear. -- END --