BILL ANALYSIS                                                                                                                                                                                                    



                                                                     AB 828


                                                                    Page  1





          Date of Hearing:  April 27, 2015


                        ASSEMBLY COMMITTEE ON TRANSPORTATION


                                 Jim Frazier, Chair


          AB 828  
          (Low) - As Amended April 20, 2015


          SUBJECT:  Vehicles:  transportation network companies


          SUMMARY:  Excludes motor vehicles operating in connection with a  
          transportation network company (TNC) from being required to  
          register as a commercial vehicle if certain conditions are met.   



          EXISTING LAW:  





          1)Defines a commercial vehicle as a motor vehicle used or  
            maintained for the transportation of persons for hire,  
            compensation, or profit or designed, used, or maintained  
            primarily for the transportation of property. 

          2)Specifies that passenger vehicles and house cars, as defined,  
            that are not used for the transportation of persons for hire,  
            compensation, or profit are not commercial vehicles.  
            Additionally specifies a vanpool vehicle is not a commercial  
            vehicle. 









                                                                     AB 828


                                                                    Page  2





          3)Defines passenger vehicle as any motor vehicle, other than a  
            motortruck, truck tractor, or a bus, as defined, and used or  
            maintained for the transportation of persons.  

          4)Establishes the "Passenger Charter-Party Carriers Act," which  
            directs the state Public Utilities Commission (PUC) to issue  
            permits or certificates to carriers, investigate complaints  
            against carriers, and cancel, revoke, or suspend permits and  
            certificates for specific violations.  

          5)Defines charter-party carrier of passengers (CPC) 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 and includes  
            any person, corporation, or other entity engaged in the  
            provision of a hired driver service when a rented motor  
            vehicle is being operated by a hired driver.  

          6)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.  



          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  








                                                                     AB 828


                                                                    Page  3





          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  
          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, the PUC began regulating TNCs by  
          creating a distinct new category of CPCs.  The 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.   

          On January 5, 2015, DMV issued an advisory memo due to a number  
          of dealers and customers seeking clarification on how to  
          register a vehicle that would be used to provide TNC services.  
          These inquiries were derived from purchasers buying new vehicles  








                                                                     AB 828


                                                                    Page  4





          through financing programs offered by TNCs.  The memo stated  
          that "any passenger vehicle used or maintained for the  
          transportation of persons for hire, compensation, or profit is a  
          commercial vehicle.  Even occasional use of a vehicle in this  
          manner requires the vehicle to be registered commercially."  DMV  
          ultimately retracted the advisory memo clarifying that further  
          analysis is warranted.  



          Existing law requires a vehicle to be registered as a passenger  
          or commercial vehicle based on how the vehicle is used and/or  
          designed.  Registration for a passenger vehicle typically  
          includes several vehicle-related fees including registration  
          fees, vehicle licensing fees, and locally imposed  
          county/district fees (e.g. vehicle abatement, air quality,  
          Service Authority for Freeway Emergencies).  Vehicles registered  
          as commercial are required to pay an additional fee based on the  
          weight of the vehicle which is generally assessed based on the  
          gross vehicle weight and number of axles.  Overall, the weight  
          fee is designed to offset the additional wear and tear that a  
          commercial vehicle causes on the state's roads and highways.   
          Additionally, commercial license plates defer from passenger  
          vehicle license plates in order to ensure law enforcement has  
          the ability to easily identify commercially operating vehicles.   
            





          The author introduced AB 828 in response to DMV's advisory memo.  
           Advocates claim that commercial registration requirements are  
          outdated and do not adequately address new services provided  
          through advancements in technology.  Respectively, AB 828  
          attempts to develop an exclusion for TNC drivers using their  
          passenger vehicles while ensuring that other types of commercial  
          vehicles continue to be subject to commercial registration  
          requirements.  The author notes, "TNCs are the cutting edge of  








                                                                     AB 828


                                                                    Page  5





          transportation innovation and are a large part of the rapidly  
          increasing "sharing" economy model.  With the convenience of  
          TNCs many more people are starting to use them which cuts down  
          on traffic and emissions from cars.  Many TNC drivers are  
          part-time or occasional drivers, working an average of 22.69  
          hours per month, driving to supplement their income.  To that  
          end, mandating TNC drivers to register their personal vehicle as  
          a commercial vehicle needlessly increases business costs and  
          curtails growth and innovation." 





          Related legislation: AB 24 (Nazarian) requires CPCs and TNCs to  
          participate in EPN and requires TNCs to submit their drivers to  
          mandatory drug and alcohol testing.  AB 24 passed out of the  
          Assembly Utilities and Commerce Committee on April 20, 2015,  
          with an 8-2 vote and 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.  


          REGISTERED SUPPORT / OPPOSITION:




          Support


          Bay Area Council 










                                                                     AB 828


                                                                    Page  6





          Clean Coalition 


          Los Angeles Area Chamber of Commerce 


          Lyft


          Orange County Business Council 


          Planning and Conservation League 


          San Francisco African American Chamber of Commerce 


          SPUR 


          The Internet Association 


          Valley Industry and Commerce Association


          Uber Technologies Inc. 




          Opposition 


          California Labor Federation


          San Francisco Taxi Workers Alliance 








                                                                     AB 828


                                                                    Page  7












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