BILL ANALYSIS Ó
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Ben Hueso, Chair
2015 - 2016 Regular
Bill No: AB 1360 Hearing Date: 7/13/2015
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|Author: |Ting |
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|Version: |7/2/2015 As Amended |
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|Urgency: |No |Fiscal: |No |
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|Consultant:|Nidia Bautista |
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SUBJECT: Charter-party carriers of passengers: individual fare
exemption
DIGEST: This bill allows charter-party carriers of
passengers, including transportation network companies, to
charge individual fares, rather than a single group fare when
providing carpool services.
ANALYSIS:
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 therefore.
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,
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)
AB 1360 (Ting) Page 2 of ?
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 offering the
transportation computed, charged or assessed on an
individual-fare basis. (Public Utilities Code §5401)
6)Exempts contractors from the prohibition to assess individual
fares 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 from the prohibition to
assess individual fares. (Public Utilities Code §5401)
This bill:
1)Exempts charter-party carriers, including transportation
network companies (TNCs), that prearranges a ride among
multiple passengers who share the ride in whole or in part,
from the prohibition to charge individual fares, provided that
all the requirement are met:
a. The vehicle seats no more than seven passengers,
excluding the driver.
b. The driver is a participating driver of a TNC.
c. The vehicle is not used to provide public transit
services or to carry passengers over a fixed route.
d. The vehicle is not used to provide pupil
transportation services.
e. The individual fare is less than the fare that would
be charged for the same ride to a traveling alone.
2)States that this subdivision does not change the insurance
requirements established for a TNC and any participating
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driver.
Background
California law regulates different modes of passenger
transportation for compensation, including taxi services, which
are regulated by cities and counties, and charter-party carriers
and passenger stage companies which are regulated by the CPUC.
Beginning as early as 2009, a new model of transportation
services began springing up in cities across the United States.
Now known as TNCs, these original companies, including UberCab,
allowed 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 the TNCs has made the ability for passengers
seeking transportation for compensation more readily available
to the general public.
Passenger carriers. The CPUC is in charge of regulating
passenger carriers. Passenger carriers include services, such as
passenger stage corporations and charter-party carriers.
Passenger stage corporations 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.
Charter-party carriers 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 charter-party carriers. Types of charter-party
carriers include limousines, tour buses, sightseeing services,
and charter and party buses.
The CPUC requires charter-party carriers to meet a number of
requirements before an operating permit or certificate is
issued. For example, the CPUC requires sufficient proof of
financial responsibility, a preventative maintenance program for
all vehicles, a safety education and training program, and
regular checks of the driving records of all persons operating
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vehicles used in transportation for compensation.
Taxis and other transportation. Taxis are excluded from the
definition of charter-party carriers and are regulated by cities
or counties. The key distinction between charter-party carrier
rides and taxis is that charter-party carrier rides must be
prearranged, while taxis are allowed to pick up passengers via
street hails. In addition to taxis, other 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 students, publicly owned
transit systems, passenger vehicles carrying passengers on a
noncommercial enterprise basis, vehicles used exclusively to
provide medical transportation, and others.
Cease and desist orders ignored. Back in June 2010,
then-UberCab was utilizing its application platform to help
prearrange rides for patrons of CPUC licensed charter-party
carriers, particularly limousines and towncars. However, as a
new service that didn't fit very well within the existing
regulatory framework - not a taxi not a charter-party carrier -
the CPUC and San Francisco Metropolitan Transportation Authority
issued a "cease-and-desist" order against Uber. The order
directed Uber to stop advertising and cease its operations until
it had acquired a valid permit to operate from the CPUC.
However, even under threat of penalties (at $1,000 per day) and
potential prison time, UberCab continued to operate. In 2012,
Sidecar and Lyft were launched as new app based prearranged
transportation services, except that these companies used
individuals who weren't licensed with the CPUC, drove their
personal vehicles, and operated on a donations basis. About a
month after Lyft was launched, on September 2012, the CPUC
issued "cease-and-desist" orders against Sidecar and Lyft. Once
again, the companies remained on the road operating their
services. In the spring of 2013, Uber transformed its business
model to compete with the Lyft and SideCar. In the face of
protest from its existing Uber Black drivers who drove CPUC
licensed vehicles, Uber expanded to Uber-X, allowing non-CPUC
licensed individuals to drive their personal vehicles to
transport passengers using the Uber platform. In late 2012,
both Lyft and SideCar would abandon the donations-based fees and
move to a minimum fee approach.
CPUC takes a different tack. In December 2012, after its "cease
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and desist" orders had largely been ignored by the TNCs, the
CPUC announced it would open a formal proceeding to evaluate
services like Lyft, SideCar and Uber. By January 2013, about
one month later, the CPUC announced it had reached an agreement
with Uber whereby Uber would continue to operate as the CPUC
underwent its proceeding. The CPUC would also drop its $20,000
penalty against Uber. In September 2013, the CPUC formally
announced it would recognize these app-based transportations
services as a new category of charter-party carriers,
transportation network companies. The CPUC required each TNC
(not each driver) to register with the CPUC, require criminal
background checks of all its drivers, and specified insurance
requirements. The CPUC also acknowledged it would open a second
phase to consider effects on limousines and other charter party
carriers and the need to update transportation rules, including
any direction from the legislature.
Locals issue cease and desist orders. 2014 was marked by
growing tensions between local governments, including airports,
and TNCs. First, the City of San Francisco cracked down on
unauthorized entry into airports by TNCs. In June, the City of
Los Angeles Department of Transportation issued cease and desist
orders against Lyft and SideCar. In the fall of 2014, both San
Francisco and Los Angeles County District Attorneys sent letters
to the TNCs, Uber, Lyft and Sidecar, claiming they are operating
illegally and warning them that legal action could follow if
they don't make major changes. The DA's offices had conducted a
joint investigation and found a number of practices that violate
California law. The CPUC also issued letters to the TNCs, based
on the investigations and claims of local airports, which
expressed "personal disappointment" by then- CPUC President
Peevey regarding the violations by TNCs and stipulated the
CPUC's ability to revoke permits.
Legislature adopts new insurance requirements. 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 defines when personal and
commercial auto insurance requirements 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 exists the vehicle. The CPUC
subsequently strengthened its insurance requirements in-line
with the requirements of AB 2293. The CPUC established 28 rules
AB 1360 (Ting) Page 6 of ?
and regulations, including requiring a minimum of $1 million
per-incident, primary commercial insurance coverage, for
incidents involving TNC vehicles and drivers in transit to or
during a TNC trip. The rules also provide for personal auto
insurance requirements when the app is off or open for a match.
More of the same? In September of 2014, the CPUC sent letters
to Uber regarding Uber's advertisement and news reports about a
new service, Uber Pool, that allows for fare splitting. The
CPUC warned Uber that such activity would require a different
type of permit to provide service under a different model. The
CPUC further stated that such a business plan is prohibited
under California law, citing Public Utilities Code Section 5401,
the section TNCs are now looking to change in AB 1360.
Employee or Independent Contractor? The question about whether
TNC drivers are employees or independent contractors has become
a growing debate in recent years. Most recently, the California
Labor Commission ruled that a former Uber driver was, in fact,
an employee and ordered Uber to pay over $4,000 for expenses
incurred while driving. As employees, Uber drivers in the state
would qualify for minimum wage, overtime, and worker's
compensation. Uber has maintained that its drivers are
independent contractors. The Ruling became public when Uber
filed an appeal in a state court on June 16th. Uber's appeal is
one of several cases currently up for consideration in the
courts that could decide whether TNC drivers are employees or
independent contractors. Two other cases - O'Connor, et al., v.
Uber Technologies, Inc. et al. (Case No. C-13-3826 EMC) and
Cotter, et al., v. Uber Technologies, Inc. et al. (Case No.
13-cv-04065-VC) - are both to be heard in the U.S. District
Court in San Francisco. Both lawsuits were filed by drivers who
claim that, although the TNCs classify them as independent
contractors, they are actually employees and are therefore owed
certain benefits, reimbursements, and protections. The drivers
are seeking class action status in both cases.
The bill was incorrectly amended by the Senate Committee
onTransportation and Housing. Per the Senate Committee on
Transportation and Housing, the author and committee may wish to
consider striking line 26 (B) on page 2, otherwise the exemption
will only apply to TNC charter-party carriers, not charter-party
carriers more broadly.
Prior/Related Legislation
AB 1360 (Ting) Page 7 of ?
AB 828 (Low, 2015) exempts vehicles operating in conjunction
with TNCs from the definition of commercial vehicle. The bill
is pending in the Senate Rules Committee.
AB 1422 (Cooper, 2015) requires TNCs to participate in the
Department of Motor Vehicles program for notifying employers of
the driving records of their drivers. This bill will be
considered on July 14th in the Senate Committee on
Transportation and Housing.
AB 612 (Nazarian, 2014) would have required charter-party
carriers to participate in the Department of Motor Vehicles
Employer Pull Notice system and to submit all drivers to a
Department of Justice criminal background check. AB 612 was
held in the Assembly Committee on Transportation.
AB 2293 (Bonilla, Chapter 389, Statutes of 2014) established
guidelines for insurance coverage for TNCs to ensure personal
and financial safety of consumers.
FISCAL EFFECT: Appropriation: No Fiscal
Com.: No Local: No
PRIOR VOTES:
Senate Transportation and Housing Committee (11-0)
Assembly Floor (73-0)
Assembly Privacy and Consumer Protection Committee(11-0)
Assembly Utilities and Commerce Committee (14-0)
SUPPORT:
Internet Association (source)
TechNet (source)
Bay Area Council
California League of Conservation Voters
Circulate San Diego
City of Los Angeles
Clean Coalition
Climate Resolve
Coalition for Clean Air
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Environment California
Environmental Defense Fund
Greenbelt Alliance
Los Angeles Area Chamber of Commerce
Lyft, Inc.
Metropolitan Transportation Commission
Natural Resources Defense Council
Orange County Business Council
Planning and Conservation League
SF Transit Riders
San Francisco African American Chamber of Commerce
Sidecar
Silicon Valley Leadership Group
Southern California Association of Governments
TransForm
Uber Technologies, Inc.
Valley Industry & Commerce Association
OPPOSITION:
Greater California Livery Association
Los Angeles Taxi Workers Alliance
Sacramento Taxi Cab Union
San Francisco Taxi Workers Alliance AFL-CIO
San Jose Taxi Drivers Association
United Taxi Workers of San Diego
ARGUMENTS IN SUPPORT: The author's office states: "currently,
laws governing charter party services such as TNC's prevent them
from charging passengers individual fares for split rides. This
statute was written in 1961 with the intent to protect consumers
from being forced to share limousine and taxi services with
other individuals. It has not been updated since 1994, before
the advent of the technology utilized by TNC's, which can now
allow consumers to choose whether they want to share a ride for
a reduced costs. With the advancement of the sharing economy,
this outdated statute needs to be updated in order to allow
flexibility for opt-in carpooling services that TNCs want to
provide and consumers want to utilize."
ARGUMENTS IN OPPOSITION: The San Francisco Taxi Workers
Alliance (SFTWA) AFL-CIO opposes this bill stating that "AB 1360
allows TNCs to encroach upon public transit, school buses, taxis
and other forms of transit that serve the public as a whole. It
would extend and perpetuate TNCs failure to provide adequate
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service to the disabled community. Fare-splitting is currently
illegal in California, but Uber and Lyft show no concern about
that. Passage of AB 1360 would once more sanction and reward
their unlawful behavior, and encourage ore of the same."
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