BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session AB 828 (Low) - Vehicles: transportation services ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: June 30, 2016 |Policy Vote: T. & H. 6-5, E., | | | U., & C. 6-4 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: August 1, 2016 |Consultant: Mark McKenzie | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: AB 828 would exclude a motor vehicle operated in connection with a transportation network company (TNC) from the definition of "commercial vehicle" for vehicle registration purposes, including the payment of weight fees, until January 1, 2018, if certain conditions are satisfied. The bill would also require the California Public Utilities Commission (CPUC) to conduct an investigation on the existing statutes and regulations relating to for-hire passenger transportation services, as specified, and report conclusions and recommendations to the Legislature by January 1, 2017. Fiscal Impact: CPUC estimates costs could be as high as $509,000 annually for two years to conduct a specified public proceeding. (Public Utilities Commission Transportation Reimbursement Account) AB 828 (Low) Page 1 of ? -----see staff comments----- Unknown foregone weight fee revenues, potentially in excess of $10 million in 2017, to the extent that TNC vehicles would otherwise be registered as commercial vehicles subject to weight fees. Actual costs would depend upon the overall number of vehicles, the mix of vehicle types, and their corresponding gross weights. (State Highway Account. Weight fees are currently used to pay off transportation debt, thereby offsetting General Fund expenditures) -----see staff comments----- Minor and absorbable costs to the Department of Motor Vehicles (DMV) to consult with the CPUC on its investigation related to for-hire passenger transportation services. (Motor Vehicle Account) Background: Existing law 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. Existing law requires a vehicle to be registered as a passenger or commercial vehicle based on how the vehicle is used and/or designed, but also requires commercial registration for all pickup trucks, regardless of whether they are used for commercial activities. A person registering a passenger vehicle with DMV must pay registration fees, vehicle license fees, and any applicable locally-imposed county or district fees. A person registering a commercial vehicle must also 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. 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 differ from passenger vehicle license plates so that law enforcement can easily identify commercially-operating vehicles. Existing law grants the CPUC the authority to supervise and regulate charter-party carrier of passengers, which includes licensing, safety, and insurance requirements, as well as enforcement actions. Taxicabs are excluded from the definition of charter-party carrier and are instead regulated at the local level by cities and counties. Existing law defines a TNC as a type of charter-party carrier that is a specified organization AB 828 (Low) Page 2 of ? or 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. Existing law also imposes specified insurance requirements on TNCs and their drivers. The CPUC issued a decision in 2013 requiring TNCs to obtain a permit to operate from the CPUC, 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. The CPUC has continued to examine and modify TNC regulations, issuing a Phase II decision in June of this year, and announcing the initiation of a Phase III investigation to explore further changes and clarifications. 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 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, but has not offered further guidance to date. Proposed Law: AB 828 would place a temporary moratorium on requiring TNC vehicles to register as commercial vehicles. Specifically, until January 1, 2018, this bill would exclude vehicles operated in connection with a TNC from the definition of commercial vehicle if it satisfies all of the following conditions: It is operated exclusively by the person to whom it is registered or insured. It is not a paratransit vehicle. It is not operated for public transit services. It is not operated for school bus services. AB 828 (Low) Page 3 of ? The bill would also require the CPUC to conduct an investigation to consider whether existing statutes and regulations relating to for-hire passenger services serve the public interest, encourage innovation, and create a fair and competitive transportation market among companies that provide regulated transportation services, including taxi services, TNCs, other charter-party carriers of passengers, and passenger stages. The CPUC must consult with other specified entities responsible for regulation of transportation services as it deems necessary, and submit a report of its conclusions and recommendations to the Legislature by January 1, 2017. Staff Comments: Commercial registration fees vary depending on the gross weight of the vehicle (GVW). For example: $8 annual fee for a vehicle with a GVW of less than 3000 pounds (Ford Focus). $24 annual fee for a vehicle with a GVW of 3000-4000 pounds (Honda Accord). $80 annual fee for a vehicle with a GVW of 4000-5000 pounds (Lincoln Continental or Toyota Highlander). $154 annual fee for a vehicle with a GVW of 5000-6000 pounds (Chevy Tahoe or Suburban). The number of vehicles operated in connection with a TNC is currently unknown, but could be as high as 200,000 to 300,000, according estimates in the Senate Energy and Utilities Committee analysis of this bill, and those provided by DMV. This bill would exempt TNC vehicles from commercial registration requirements and payment of weight fees until January 1, 2018. To the extent these vehicles currently meet the definition of a commercial vehicle and would otherwise be required to pay weight fees, this bill could result in foregone revenues in 2017 of over $2 million, and potentially over $10 million. The actual amount would depend on the total number of TNC vehicles, the mix of vehicle types, and their corresponding GVWs. Staff notes that there is currently no way for DMV to identify whether a passenger vehicle will be operated in connection with a TNC at the time of registration, unless the owner self certifies that the vehicle will be used for the transportation of persons for hire. AB 828 (Low) Page 4 of ? CPUC indicates that the requirement to conduct the specified investigation would impose costs of up to $508,837 for 4 PY of staff time (two analysts, one legal counsel, and one administrative law judge) to conduct a proceeding. CPUC further estimates that the proceeding could take up to two years, including public comment, responses, and resolution of any investigation appeals. While the investigation is likely to require the two full PY of analyst staff time, it is unclear whether the proceeding would require a fully dedicated PY of Counsel and Judge staff time for the investigation. Recommended Amendments: The bill currently requires the CPUC to complete the specified investigation on the existing statutes and regulations relating to for-hire transportation services by January 1, 2017, which is the same day that the bill would take effect. Furthermore, the CPUC indicates it may require two years for a proceeding of this nature. The due date for the report to the Legislature should be adjusted accordingly. -- END --