BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 650|
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THIRD READING
Bill No: AB 650
Author: Low (D)
Amended: 8/19/16 in Senate
Vote: 21
PRIOR VOTES NOT RELEVANT
SENATE ENERGY, U. & C. COMMITTEE: 9-0, 6/13/16
AYES: Hueso, Morrell, Cannella, Gaines, Hertzberg, Hill, Lara,
Leyva, McGuire
NO VOTE RECORDED: Pavley, Wolk
SENATE TRANS. & HOUSING COMMITTEE: 9-0, 6/28/16
AYES: Beall, Cannella, Allen, Bates, Gaines, Galgiani,
Mendoza, Roth, Wieckowski
NO VOTE RECORDED: Leyva, McGuire
SENATE APPROPRIATIONS COMMITTEE: 5-0, 8/11/16
AYES: Lara, Beall, Hill, McGuire, Mendoza
NO VOTE RECORDED: Bates, Nielsen
SUBJECT: Public Utilities Commission: regulation of taxicabs
SOURCE: Taxi Paratransit Association of California
DIGEST: This bill enacts the Taxicab Transportation Services
Act and by January 1, 2018, largely transfers most regulatory
oversight of taxicab transportation services from local
governments to the California Public Utilities Commission
(CPUC), except taxicab transportation services originating in
the City and County of San Francisco which would continue to be
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locally regulated or curbside pickup permits in cities or
counties that choose to permit these taxi services. This bill
enacts various provisions relating to background checks,
insurance, vehicle inspections, requirements of taxicab drivers
and carriers, services for disabled population, enforcement, and
other matters, and make conforming changes to related
provisions.
Senate Floor Amendments of 8/19/16 delay implementation of the
taxicab permitting by six months, to January 1, 2018; delete the
requirement on taxicab drivers to adhere to a LiveScan
fingerprint Department of Justice criminal background check; and
make other clarifying changes.
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
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 companies. (Public
Utilities Code §5431)
3) 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)
4) Requires taxicabs to maintain proof of financial
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responsibility of at least $15,000 for each person injured or
killed, of at least $30,000 for the injury to, or the death
of, two or more persons in any one accident, and for damages
to property of $5,000 and obtaining a bond of a specified
amount. (Vehicle Code §16500)
This bill:
1) Establishes Taxicab Transportation Services Act and places
taxicabs under the regulatory authority of the CPUC.
Authorizes the CPUC to issue permits or renewals for
dispatched service, whether requested by phone or internet or
online-enabled application.
2) Exempts taxicab transportation services originating in the
City and County of San Francisco from most of the provisions
of this act.
3) Authorizes cities or counties that choose to oversee
curbside pickups to regulate these through the issues of
curbside operating permits, including the ability to limit
the number of vehicles permitted.
4) Prohibits cities or counties from instituting requirements,
fees or standards beyond those required by the CPUC and
limits cities and counties from charging more than $50 to
cover the regulatory costs related to the issuance of a
permit.
5) 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.
6) 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
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law, establishment of an inspection program in effect for its
motor vehicles, participation in the pull notice program,
establishment of a safety education and training program for
all drivers, establishment of a mandatory controlled
substance and alcohol testing certification program, and
others.
7) 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.
8) Authorizes the CPUC to suspend or revoke the carrier's
permit 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.
9) 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.
10)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.
11)Requires a taxicab carrier to file 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, with the CPUC.
12)Requires a taxicab carrier to operate a motor vehicle with
the CPUC required trade dress.
13)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.
14)Authorizes the CPUC to adopt rules requiring taxicab
carriers to disclose fares, fees, and other pricing
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structures for taxicabs.
15)Requires a taxicab carrier, in addition to the above
requirements, to:
a) Participate in the pull-notice system
b) Provide for a mandatory controlled substance and
alcohol testing certification program equivalent to that
required by the CPUC of transportation network companies
c) Ensure that taxi drivers meet specified criteria,
including: they are 18 years or older, have a Class C
driver's license.
d) 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.
e) 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.
16)Preempts most regulation of taxicab transportation services
by local agencies, except allows cities to choose to oversee
permitting of curbside pickups, and repeals a number of
sections of the Government Code that provide local agencies
specified authorities related to taxicab services, as
specified.
Background
Purpose. Passenger transportation had long been a
highly-regulated service provided by professional drivers with a
strong emphasis on driver and vehicle safety and regulated
prices. The recent emergence of transportation network
companies (TNCs), including Lyft and Uber, has flipped that
perspective. The public now seems comfortable with passenger
transportation as something nearly anyone can do. Drivers don't
need to be professional; they don't even need to own a car. This
puts the highly-regulated, professional taxi industry at a big
competitive disadvantage to their lightly regulated TNC
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competitors. This bill represents the response of the taxi
industry to that disadvantage.
CPUC oversight of transportation. 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. An essential distinction of a
taxicab from other transportation services is the ability to
have the service hailed from the street. Currently, the CPUC's
remaining authority over on-the-road transportation services is
limited to non-rail for-hire passenger carriers and household
goods movers. Under state law, the CPUC is required to license
carriers, and investigate and enforce safety and consumer
protection laws for the following surface transportation
carriers: passenger stage corporations (PSCs), such as airport
shuttles; transportation charter-party carriers (TCPs) such as
tour buses, limousines, and TNCs, (including Uber, Lyft);
private carriers of passengers (PCPs) such as church buses; and
household goods carriers - moving truck companies.
Regulatory authority. By transferring regulatory responsibility
for taxis from cities and counties to the CPUC, this bill
significantly alters the regulatory oversight of taxi services.
Local government regulation often requires a taxi company to be
permitted in each city or county and be subject to
city/county-specific rules, in some cities that includes
restricting the number of taxis that can operate. Under this
bill, the taxi company applies for a statewide license from the
CPUC, which gives the taxi company the authority to pick up and
drop off dispatched requested services anywhere. This bill
exempts services originating in San Francisco and also allows
local governments that choose so to oversee permits for curbside
pickups. Absent these exceptions, this bill results in a single
license fee, background check, and set of rules for taxi
carriers. Another benefit of state jurisdiction is that the
CPUC will now have all forms of for-hire passenger
transportation under its purview. Theoretically, this will give
the CPUC the perspective to ensure regulatory fairness and
competitive outcomes that benefit passengers. However, as was
shared earlier this year at an oversight hearing of this
committee, experts warned on the importance of a fingerprint
criminal background check for street hails to ensure public
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safety. This bill would prohibit fingerprint criminal background
checks and, thus, undermine public safety.
San Francisco - an island. This bill exempts taxicab service
originating in the City and County of San Francisco 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, while not ideal,
it seems reasonable that San Francisco merits this proposed
separate treatment.
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
supply of taxicabs in order to mitigate against the failures of
market oversupply which in previous efforts to deregulate taxi
service have resulted in 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
largely mimics the current licensing of TNCs for dispatched
service, a request that is phoned or requested via internet
application. However, cities that choose to can continue to
oversee permitting of curbside pickups, including establishing
entry caps on taxicabs to enter the market. However, no local
government would be able to regulate other permitting functions
overseen by the CPUC or charge more than $50 for these permits.
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
agency to also handle taxicab services. Unfortunately, these are
all compelling reasons to not include taxicab services under the
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regulatory umbrella of the CPUC. However, an argument for
including taxicab services may be to better align the existing
transportation for-hire services and better respond to the lack
of regulatory fairness among the services.
Sort of the same but still different. While this bill starts to
level the regulatory playing field between taxis and TNCs,
important differences remain. TNCs serve customers with smart
phones, good credit, and high rankings from drivers. From a
financial perspective, these are the best customers. Customers
without credit, without a smart phone, or who have been ranked
poorly can only be served by taxis.
Handcuffing local cities/counties. This bill prevents local
cities and counties from instituting rules beyond those adopted
by the CPUC. While such action may be beneficial to leveling the
playing field for carriers, such handcuffing could jeopardize
public safety by prohibiting locals from taking necessary
action, including increasing fees to cover their costs,
instituting the expert recommended criminal background checks,
or placing necessary rules to address local needs appropriately.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: Yes
According to the Senate Appropriations Committee:
One-time costs of approximately $200,000 (Transportation
Reimbursement Account) to the CPUC for information technology
updates.
Ongoing costs of approximately $2.8 million annually
(Transportation Reimbursement Account) for staff to implement
the program. Some or all of these costs will be offset by
permit application fees.
Unknown increase in penalty and application fee revenue.
SUPPORT: (Verified8/12/16)
Taxi Paratransit Association of California (source)
American Cab
CityWide
Fiesta Taxi
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Silicon Valley Cab Company, Inc.
Yellow Cab of Los Angeles
Yellow Checker Cab Company, Inc.
17 Individuals
OPPOSITION: (Verified8/12/16)
California Regional Council Taxi Workers Alliance (AFL-CIO)
League of California Cities
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
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 League of Cities in opposing
this bill states "the regulation of taxis has been a municipal
affair for nearly a century, yet the emergence of new business
models has challenged the traditional structure of for-hire
transportation services and regulations? this measure [AB 650]
strips their [cities] authority and reverses their
advancements." They raise a number of concerns, many of which
the author has attempted to address in recent amendments.
However, it is unclear if the issues have been addressed to the
satisfaction of the League.
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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. 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 transferred
to the county level which would eliminate the need for permits
for each city but not ignore legitimate local concerns.
ASSEMBLY FLOOR: 80-0, 5/14/15
AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,
Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,
Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,
Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina
Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,
Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,
Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,
Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,
Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen,
Patterson, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez,
Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting,
Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins
Prepared by:Nidia Bautista / E., U., & C. / (916) 651-4107
8/22/16 20:38:08
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