BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 828 (Low) - Vehicles: transportation services
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|Version: June 30, 2016 |Policy Vote: T. & H. 6-5, E., |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 1, 2016 |Consultant: Mark McKenzie |
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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
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-----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
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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
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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
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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.
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