BILL ANALYSIS Ó
AB 828
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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.
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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
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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
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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
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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
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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
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Analysis Prepared by:Manny Leon / TRANS. / (916) 319-2093