BILL ANALYSIS                                                                                                                                                                                                    Ó



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          Date of Hearing:  April 20, 2015


                    ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE


                                Anthony Rendon, Chair


          AB 1360  
          (Ting) - As Amended April 14, 2015


          SUBJECT:  Charter-party carriers of passengers:  individual fare  
          exemption


          SUMMARY:  This bill would exempt ridesharing programs operated  
          by transportation network companies (TNC) that arrange rides  
          among multiple passengers who share the ride in whole or in  
          part, from transportation charges computed and assessed on  
          charter-party carriers.   Specifically, this bill:  


          a)Exempts a ridesharing program operated by a TNC that arranges  
            a ride on a prearranged route among multiple passengers who  
            share the ride, in whole or in part, from offering passengers  
            charges computed and assessed on a vehicle mileage or time of  
            use basis, or on a combination of the two. 
          b)Specifies that the exemption applies provided that:


             1)   The vehicle seats no more than seven persons, including  
               the driver, 
             2)   The driver is a participating driver, as defined, and 


             3)   The individual fare for each passenger is less than the  
               fare that would be charged for the same ride to a single  








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               passenger traveling alone. 


          EXISTING LAW:  


          1)The Passenger Charter-Party Carriers' Act generally requires  
            charges for the transportation to be offered or afforded by a  
            charter-party carrier to be computed and assessed on a vehicle  
            mileage or time of use basis, or on a combination therefor.   
            These charges may vary in accordance with the passenger  
            capacity of the vehicle, or the size of the group to be  
            transported.  (Public Utilities Code §5401) 

          2)Directs the California Public Utilities Commission (CPUC) to  
            issue permits or certificates to charter party carriers (CPC),  
            investigate complaints against carriers, and cancel, revoke,  
            or suspend permits and certificates for specific violations.   
            (Public Utilities Code §5387)

          3)Defines "charter-party carrier of passengers" as every person  
            engaged in the transportation of persons by motor vehicle for  
            compensation, whether in common or contract carriage, over any  
            public highway in the state.  (Public Utilities Code §5360)

          4)Defines a "transportation network company" to mean an  
            organization, including, but not limited to, a corporation,  
            limited liability company, partnership, sole proprietor, or  
            any 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.  (Public Utilities Code  
            §5431)
          5)Restricts charter-party carriers from directly, or through an  
            agent or otherwise, nor any broker, contract, agree, or  
            arrange to change, or demand or receive compensation, for the  
            transportation offered or afforded, be computed, charged or  
            assessed on an individual-fare basis.  (Public Utilities Code  
            §5401)








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          6)Exempts contractors who are compensated by parents of children  
            attending public, private, or parochial schools and except  
            operators.  (Public Utilities Code§ 5401)


          7)Exempts a round-trip sightseeing tour service conducted with  
            an authorized certificate or permit.  (Public Utilities Code  
            §5401)


          FISCAL EFFECT:  Unknown.


          COMMENTS:  



           1)Author's Statement:   "The primary cause of traffic congestion  
            originates from nearly 80% of commuters traveling to work  
            alone.  Traffic results in 5.5 billion hours of productivity  
            at a cost of $818 to the average commuter, with increased  
            congestion generating nearly 4 billion gallons of excess fuel  
            wasted and 56 billion pounds of greenhouse gasses.  This  
            contributes to California's transportation sector functioning  
            as the greatest source of pollution, accounting for 40% of the  
            state's greenhouse gas emissions.  TNC's such as Lyft, Uber,  
            and Sidecar have been extremely innovative in creating models  
            that empower consumers and allow more ease and access to  
            transportation alternatives.  They have recently started  
            services that allow riders with similar pick up locations and  
            destinations to share a driver and carpool for a decreased  
            fare.  Shared rides such as carpooling decrease traffic and  
            congestion, and ultimately cut pollution." 


           2)Background:   California law regulates different modes of  
            passenger transportation for compensation, including taxi  








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            services, which are regulated by cities and/or counties, and  
            CPCs and passenger stage companies (PSC), which are regulated  
            by the PUC.  Beginning as early as 2009, a new model of  
            transportation service began springing up in cities across the  
            United States.  Known as TNCs, these companies work by  
            allowing patrons to prearrange transportation services through  
            an online application on their smartphone or computer.   
            Patrons would request a ride to a predetermined location and  
            the application would connect them with a TNC driver.  Payment  
            is processed through the application so that no physical  
            financial transaction occurs during the trip itself between  
            the patron and the driver.  The TNC takes a commission on each  
            trip.  The development of TNCs has made the ability for  
            passengers seeking transportation for compensation more  
            readily available to the general public.  
          3)What are Passenger Carriers?   The CPUC is in charge of  
            regulating passenger carriers.  Passenger carriers include  
            services such as PSCs and CPCs.  PSCs are services that  
            provide transportation to the general public on an individual  
            fare basis, such as scheduled bus operators, which are buses  
            that operate on a fixed route and scheduled services, or  
            airport shuttles, which operate on an on-call door-to-door  
            share the ride service. 


            CPCs are services that charter a vehicle, on a prearranged  
            basis, for the exclusive use of an individual or group.   
            Charges are based on the mileage or time of use, or a  
            combination of both.  The CPUC does not regulate the level of  
            charges for CPCs.  Types of CPCs include limos, tour buses,  
            sightseeing services, and charter and party buses.  


            The CPUC requires CPCs to meet a number of requirements until  
            an operating permit or certificate is issued.  These  
            requirements include providing sufficient proof of financial  
            responsibility, maintain a preventative maintenance program  
            for all vehicles, possessing a safety education and training  
            program, and regularly checking the driving records of all  








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            persons operating vehicles used in transportation for  
            compensation. 


           4)What are Not Passenger Carriers?   Taxis are excluded from the  
            definition of CPCs and are regulated by cities or counties.   
            The key distinction between CPC rides and taxis is that CPC  
            rides must be prearranged, while taxis are allowed to pick up  
            passengers via street hails.   Other examples of  
            transportation services that are not considered charter party  
            carriers include:  transportation services licensed and  
            operating wholly within the limits of a single city or city  
            and county, transportation services contracted to transport  
            school pupils, publicly owned transit systems, passenger  
            vehicles carrying passengers on a noncommercial enterprise  
            basis, vehicles used exclusively to provide medical  
            transportation, among others. 
           5)What are Transportation Network Companies?   In September 2013,  
            a CPUC decision put TNCs under the purview of the CPUC,  
            allowing it to exercise and enforce regulatory and safety  
            requirements against TNCs.  The CPUC defined TNCs as an  
            "organization, including, but not limited to, a corporation,  
            limited liability company, partnership, sole proprietor, or  
            any 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."  The CPUC decision  
            requires TNCs to obtain a permit from the CPUC, conduct  
            criminal background checks of drivers, 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. 


            Subsequently, the legislature passed AB 2293 (Bonilla) Chapter  
            389, Statutes of 2014, which codified the CPUC's definition of  
            TNCs and imposed certain liability and other insurance  
            coverage for TNCs and their participating drivers.  The bill  








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            defines when personal and commercial auto insurance come into  
            effect, and at what levels, when the driver logs onto the  
            application until the driver accepts a ride request, and for  
            when a ride request is accepted until the passenger exits the  
            vehicle.  The bill sought to make a clear distinction between  
            when a vehicle is being used for TNC business activities and  
            must require commercial insurance, and when a vehicle is not  
            being used for TNC business activities at which time the  
            driver's personal auto insurance is in effect. 


           6)CPC Permits:   The CPUC authorizes six types of certificates  
            and permits for CPCs.  The CPUC authorizes three types of  
            transferable certificates:  Class A certificates allows  
            charter service between any point in the state, such as  
            roundtrip sightseeing service, Class B certificates allows  
            charter service between any point within a 125 miles of the  
            carrier's home terminal, Class C certificates transportation  
            services that apply to commercial balloon operations, and  
            commercial river rafting or skiing. 
            The CPUC also authorizes three types of nontransferable  
            permits.  These permits include: P permits which allows  
            charter services using only vehicles that can seat under 15  
            passengers, S permits which authorizes vehicles to provide  
            round-trip sightseeing services, and Z permits which  
            authorizes specialized services not offered to the general  
            public; namely, transportation incidental to another business,  
            transportation under contact with specific entities, and  
            transportation of agricultural works to and from farms.   


           7)Transportation Network Companies & Charter Party Carriers:    
            Although TNCs do not neatly fall into the conventional  
            definition of either taxis or limousines, the CPUC does  
            believe that TNCS are currently providing passenger's  
            transportation for compensation, and reasonably concludes that  
            TNCs are charter party passenger carriers, therefore, falling  
            under the CPUC's existing jurisdiction over these services. 
            Because the CPUC considers TNCs as a form of CPC under its  








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            regulatory purview, a company who wishes to operate as a TNC  
            must apply for a TNC subclass of a CPC - P permit.  These CPC  
            - P permits are only granted to companies utilizing smartphone  
            technology application that facilitate transportation  
            passengers in the drivers' personal vehicle.  TNCs are not  
            permitted to own vehicles used in their operations or own  
            fleets of vehicles.  However, there is no limit to the number  
            of drivers a TNC can have under one permit.  Individual TNC  
            drivers do not have to apply for their own CPC permit, but  
            would need to complete the TNCs process to be enrolled as a  
            driver under a TNC. 


           8)Vehicle Requirements for TNCs:   The CPUC only allows TNCs to  
            use street legal coupes, sedans, or light-duty vehicles,  
            including vans, minivans, SUVs, pickup trucks, as well as  
            hatchbacks and convertibles.  TNC vehicles must not be  
            significantly modified from factory specifications.  TNCs are  
            allowed to operate vehicles with a seating capacity of up to  
            seven passengers, including the driver, if they have a $1  
            million commercial liability insurance on file.  They are  
            allowed to operate a vehicle with a seating capacity of up to  
            ten passengers, including the driver, if they carry a $1.5  
            million commercial liability insurance on file.  TNCs are not  
            allowed to operate vehicles with a seating capacity of more  
            than 10 passengers, including the driver, which is legally  
            defined as a bus. 
             The author may wish to consider an amendment to further  
            clarify that TNCs may not use vehicles to provide transit  
            service or to carry passengers over a fixed route, provide  
            school pupil transportation services, and provide public  
            paratransit services. 


          9)Exemptions:   Current law provides two types of exemptions from  
            the prohibition against CPC vehicles from charging  
            individual-fares.  These exemptions include, school buses who  
            are contacted and compensated by parents of children attending  
            public, private or parochial schools, and certified operators  








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            of roundtrip sightseeing tour services. 
            This bill would include a rideshare program operated by a TNC  
            to this list of exemptions, provided that the individual fare  
            for each passenger is less than the fare that would be charged  
            for the same ride to a single passenger traveling alone.  The  
            distinction between the current list of exemptions and TNCs is  
            the fact that for school buses and sightseeing tour services,  
            the stop locations are dictated by the driver or the company  
            in advance.  Whereas for TNCs, the passenger dictates the stop  
            locations, which can change each time a TNC driver picks up a  
            new patron. 


           10)CPUC Letter to TNCs:   In September 2014, the CPUC sent  
            letters to the three major TNCs, Uber, Lyft, and Sidecar,  
            regarding their intent to add carpooling service to their  
            transportation service.  The CPUC stated that this model is in  
            violation of existing law that prohibits CPCs from calculating  
            charges on an individual-fare basis.  The CPUC found that CPCs  
            "cannot change an individual fare when carrying multiple  
            person in a vehicle, and therefore, a person chartering a  
            [CPC] vehicle must have exclusive use of the vehicle."
           11)TNCs and Carpooling:  As the number of TNC drivers continue to  
            increase, offering carpooling services may be beneficial for  
            patrons because it allows them to share and reduce the cost of  
            a single ride for each passenger because TNC fares for the  
            most part are dictated by the demand during a specific time or  
            location.  TNC carpooling services may also have the added  
            benefit of reducing the number of vehicles on the road.   
            However, if this service serves to provide an additional  
            incentive for more drivers to join TNCs, it is unclear whether  
            or not carpooling will have the desired effects of reducing  
            emissions as it might have the contrary effect of adding more  
            TNC drivers on the road who otherwise would not be driving,  
            instead of reducing the number of drivers on the road. 


           12)Suggested Amendments:  









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            5401. (c) A rideshare program operated by a transportation  
            network company subject to this chapter that arranges a ride  
            on a prearranged route among multiple passengers who share the  
            ride in whole or in part, provided that (1) the vehicle seats  
            no more than seven persons, including the driver, (2) the  
            driver is a participating driver as defined in subdivision (b)  
            of Section 5431,  (3) the vehicle is not used to provide public  
            transit services or to carry passengers over a fixed route,  
            (4) the vehicle is not used to provide school pupil  
            transportation services, (5) the vehicle is not used to  
            provide public paratransit services,  and  (3)   (4)  the  
            individual fare for each passenger is less than the fare that  
            would be charged for the same ride to a single passenger  
            traveling alone.
             
          13)Arguments in Support:   According to the Internet Association,  
            "this measure is squarely in line with well-established  
            California public policy that broadly encourages carpooling to  
            reduce traffic congestion and air pollution.  AB 1360 also  
            furthers California's commitment to the environment on other  
            fronts, such as by enhancing our State's greenhouse gas  
            reduction efforts.  Consumers also benefit from greater  
            transportation options.  Multiple passenger ride sharing  
            services provide greater affordability and flexibility for  
            consumers."
           14)Arguments in Opposition:   According to the California  
            Teamsters Public Affairs Council, "under current law, when a  
            person engages a 'charter party carrier,' they rent the entire  
            vehicle for a set period for a single, undivided cost. If  
            rates splitting is allowed, ? the transportation agreement  
            effectively ceases to be a charter and patrons are charged an  
            individual rate.  Thus, unlike a 'common carrier,' such as a  
            public transit operator, they will be able to serve the public  
            but be able to get away with rate discrimination, geographical  
            discrimination, and constantly changing costs of service." 


           15)Related Legislation:  








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            AB 24 (Nazarian) 2015:  This bill would require charter-party  
            carriers and transportation network companies to participate  
            in the Department of Motor Vehicles Employer Pull Notice  
            System and submit all drivers to a Department of Justice  
            criminal background check.   


            AB 828 (Low) 2015:  This bill would exclude from the  
            definition of "commercial vehicle," for purposes of the  
            Vehicle Code, any motor vehicle operated in connection with a  
            transportation network company.


            AB 1422 (Cooper) 2015:  Authorizes TNCs to participate in the  
            Department of Motor Vehicle Employer Pull Notice System. 


           16)Prior Legislation: 
             AB 612 (Nazarian) 2014:  Requires charter party carriers to  
            participate in the Department of Motor Vehicles Employer Pull  
            Notice system and submit all drivers to a Department of  
            Justice criminal background check.  Held in Assembly Committee  
            on Transportation.


            AB 2293 (Bonilla) 2014:  Establishes guidelines for insurance  
            coverage for Transportation Network Companies to ensure  
            personal and financial safety of consumers.  Chaptered by the  
            Secretary of State - Chapter 389, Statutes of 2014. 


           17)Double Referred:   This bill is double referred to the  
            Assembly Committee on Privacy and Consumer Protection.
          REGISTERED SUPPORT / OPPOSITION:











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          Support


          The Internet Association (Co-Sponsor) 


          TechNet (Co-Sponsor) 


          Bay Area Council 


          Clean Coalition 


          Coalition for Clean Air 


          Environment California 


          Environmental Defense Fund 


          Orange County Business Council 


          Planning & Conservation League 


          San Francisco Planning and Urban Research Association (SPUR) 


          TransForm 


          Uber Technologies, Inc.









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          Valley Industry & Commerce Association 




          Opposition


          California Conference Board of the Amalgamated Transit Union 


          California Conference of Machinists (IAM) 


          California State Council of the Service Employees International  
          Union (SEIU) 


          California Teamsters Public Affairs Council (ATU) 


          San Francisco Taxi Workers Alliance 




          Analysis Prepared by:Edmond Cheung / U. & C. / (916) 319-2083



















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