BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 828 Hearing Date: 6/16/2015
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|Author: |Low |
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|Version: |4/20/2015 |
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|Urgency: |No |Fiscal: |No |
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|Consultant|Randy Chinn |
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SUBJECT: Vehicles: transportation network companies
DIGEST: This bill excludes from the definition of "motor
vehicles" any motor vehicle operated in connection with a
transportation network company (TNC), under specified
conditions.
ANALYSIS:
Existing law defines a "commercial vehicle" as a motor vehicle
used for the transportation of persons for hire or the
transportation of property.
This bill excludes motor vehicles operated in connection with a
TNC from the definition of commercial vehicle provided that:
1)The vehicle is operated for passenger service only and is
limited to seven passengers excluding the driver;
2)The vehicle is operated exclusively by the person to whom the
vehicle is registered or insured;
3)The vehicle is not a paratransit vehicle;
4)The vehicle is not operated for public transit services; and
5)The vehicle is not operated for school bus services.
COMMENTS:
1)Purpose. In January 2015, the Department of Motor Vehicles
(DMV) announced that any passenger vehicle used for the
transportation of persons for compensation is a commercial
AB 828 (Low) PageB of?
vehicle. A week later, after some concern from TNCs, the DMV
retracted that announcement. This bill updates the definition
of a commercial vehicle to clarify that it does not include
vehicles used in connection with TNCs.
2)The growing TNC industry. In California, the TNC business is
large and growing rapidly. A January 2015 report from
Uber<1>, the largest TNC, reports 20,000 active Uber drivers
in Los Angeles, 16,000 in the San Francisco area, and almost
5,000 each in San Diego and Orange County, up from zero in
July 2012. Some estimates put the total number of active TNC
drivers in the United States at 150,000. TNCs are
successfully competing with taxi cabs, limousines, and other
regulated transit operators.
3)What this bill does. By exempting vehicles operated in
connection with TNCs - hereafter referred to as TNC vehicles
- from the definition of commercial vehicle, this bill simply
exempts those vehicles from having to obtain commercial
license plates. A commercial license plate is more costly
than a non-commercial plate. For cars weighing less than
3,000 pounds (e.g., Ford Focus), the additional cost is
$8/year; for cars weighing between 3,000 and 4,000 pounds
(e.g., Honda Accord), the additional cost is $24/year; and for
cars weighing between 4,000 and 5,000 pounds (e.g., Volvo XC
90 SUV), the additional cost is $80/year. The reason for
higher licensing costs for commercial vehicles is to
compensate for the additional wear on the roads caused by
these vehicles, which is why the cost increases as the vehicle
weight increases.
Commercial plates are easily distinguishable by law
enforcement from regular license plates. Knowing that a
vehicle is operating commercially can be helpful in the
investigation of an accident, as insurance requirements are
more substantial for vehicles which are used commercially.
The California Public Utilities Commission (CPUC) requires
that TNC vehicles carry additional insurance.
4)What else the bill does, potentially. According to
supporters, classifying a TNC vehicle as a commercial vehicle
may create additional problems with financing and insurance.
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<1> An Analysis of the Labor Market for Uber's Driver-Partners
in the United States, by Jonathan V. Hall and Alan B. Kreuger;
January 22, 2015.
AB 828 (Low) PageC of?
A vehicle that was originally financed as a personal vehicle
may be in technical violation of the financing agreement if
that vehicle becomes a commercial vehicle. The concern with
insurance potentially arises because the CPUC's recent
decision refers to TNC vehicles as personal vehicles, not
commercial vehicles. While these concerns have not yet been
raised by the financing and insurance industries, the
supporters are concerned that this risk will deter potential
new TNC drivers.
5)An unlevel playing field. The different types of
transportation companies (e.g., TNCs, limousines, Super
Shuttles, taxis) are all regulated differently. Rates,
routes, insurance requirements, vehicle inspections, and
driver requirements vary. State law has begun to address the
biggest differences between TNCs, but there's little dispute
that big differences remain. In an ideal world, companies
would compete based on the differences in their business
models and competence, not on the differences in how they are
regulated.
6)Creating a level playing field slowly. The laws and
regulations governing the provision of transportation services
are many decades old. These laws and regulations have evolved
slowly, as evidenced by the arcane and complicated carrier
classifications. At least over the last several decades, the
few new laws have focused on safety issues. The rapid growth
of TNCs has disrupted this relatively quiet corner of our
economy, changing the economics of transportation and
challenging the economic models of the traditional
transportation providers. This has upended the lives of many
people in the transportation industry, while at the same time
providing many benefits to transportation consumers.
Regulators are struggling to keep up with the rapidly evolving
transportation industry, a bit hamstrung by laws which never
anticipated the different ways that TNCs operate. In
September 2013, the CPUC, which has regulatory authority over
much, though not all, of the passenger transportation
industry, issued its first set of rules<2> intended to foster
the growth of TNCs, without compromising public safety. These
rules started the process of establishing a level playing
field so that all transportation companies would have similar
regulatory obligations, allowing them to compete based on
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<2> D.13-09-045; issued September 23, 2013.
AB 828 (Low) PageD of?
their business models. Among the rules were requirements for
obtaining an operating permit from the CPUC, requiring
criminal background checks for drivers, establishing driver
training programs, implementing zero-tolerance policies on
drugs and alcohol, and minimum insurance requirements.
The CPUC has initiated a second phase of its investigation to
look more closely at the regulation of TNCs and the
traditional transportation companies, known as charter-party
carriers<3>. A set of issues has been proposed and comments
on the scope of those issues are due in June. As the state's
expert agency over transportation matters, the CPUC is in the
best position to consider whether its current regulations
provide for a fair and competitive market. It can recommend
specific changes to law and, in some cases, can implement
changes to its own regulations to achieve the goal of a level
playing field. The author and committee may wish to consider
requiring the CPUC to report to the Legislature on the changes
to regulation and statute that will help achieve a level
playing field and foster innovation, including whether other
passenger vehicles being used by charter-party carriers should
also be considered non-commercial.
Related Legislation:
AB 1360 (Ting) - Allows transportation network companies more
flexibility in how they charge multiple riders. This bill is
pending in the Senate Transportation and Housing Committee.
AB 1422 (Cooper) - Requires transportation network companies to
participate in the Department of Motor Vehicles program for
notifying employers of the driving records of their drivers.
This bill is pending assignment in the Senate Energy, Utilities
and Communications Committee.
Assembly votes:
Floor: 71-1
Trans: 14-0
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local:
No
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<3> Assigned Commissioner and Administrative Law Judge's Ruling
Amending the Scoping Memo and Ruling for Phase II of Proceeding;
Rulemaking 12-12-011; April 28, 2015.
AB 828 (Low) PageE of?
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 10, 2015.)
SUPPORT:
Bay Area Council
Brea Chamber of Commerce
Clean Coalition
Internet Association
Los Angeles Area Chamber of Commerce
Lyft
Metropolitan Transportation Commission
Orange County Business Council
Orange County Supervisor Michelle Steel
Planning and Conservation League
San Francisco Chamber of Commerce
SPUR
Uber
OPPOSITION:
California Delivery Association
California Labor Federation
Greater California Livery Association
Los Angeles Taxi Workers Alliance
Sacramento Taxi Cab Union
San Francisco Taxi Workers Alliance
San Jose Taxi Drivers Association
United Taxi Workers of San Diego
Four individuals
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