BILL ANALYSIS                                                                                                                                                                                                    



          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 --