BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 828 Hearing Date: 7/7/2015
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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:
Author's Statement. According to the author, TNCs are at the
cutting edge of transportation innovation. The convenience of
TNCs has led to many more people using them, which cuts down on
AB 828 (Low) PageB of?
traffic and emissions from cars. Exempting TNC drivers from the
commercial vehicle registration process encourages the expansion
of TNCs, which reduces vehicle trips, total vehicle miles driven
and the carbon emissions that contribute to climate change.
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
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.
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.
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
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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.
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Utilities Commission (CPUC) requires that TNC vehicles carry
additional insurance.
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. 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.
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.
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
AB 828 (Low) PageD of?
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 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 have been submitted; a decision on the scope of
issues is expected shortly. As the state's regulatory 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.
If it looks like a duck ? There is no question that TNC
drivers, like drivers of taxis, limos, and shuttles, do it to
make money; they are "commercial" by definition. So it is hard
to see how a full-time TNC driver should be treated any
differently than a full-time taxi driver or full-time limousine
driver; they do the same work and perform the same service.
The argument for exempting vehicles used by TNC drivers from the
definition of a commercial vehicle is that many of the drivers
are part-time, driving their personal cars infrequently just to
pick up a few dollars. The January 2015 Uber report cited above
notes that 55% of their drivers drive 15 hours/week or less.
Given this, it may be reasonable to limit the exemption from the
commercial vehicle definition for part-time drivers, just as it
is reasonable not to regulate the lemonade stand on the corner.
Some may question whether a part-time exemption can be enforced.
But this can be dealt with just like any other commercial
vehicle. If that individual's vehicle happens to be a part of
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<2> D.13-09-045; issued September 23, 2013.
<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?
any law enforcement inquiry, say because of an accident or
driving infraction, the investigating officer can inquire about
the status of the vehicle. While this may not be perfect, it is
at least a concrete step towards establishing a level playing
field. The author and committee may wish to consider exempting
TNC drivers whose vehicles are driven 10 hours or less per week
in connection with any TNC from the definition of commercial
vehicle.
Double referred. The Rules Committee has requested this bill if
it passes out of this committee.
Related Legislation:
AB 1360 (Ting) - allows transportation network companies more
flexibility in how they charge multiple riders. This bill is
pending in the Senate Energy, Utilities and Communications
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 in the Senate Transportation and Housing
Committee.
AB 2293 (Bonilla, Chapter 389, Statutes of 2014) - requires
specified levels of insurance coverage for TNCs and their
drivers.
Assembly votes:
Floor: 71-1
Trans: 14-0
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local:
No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
July 1, 2015.)
SUPPORT:
Bay Area Council
Brea Chamber of Commerce
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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
Westward Liberty
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
Numerous individuals
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