BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 1422 Hearing Date: 7/14/2015
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|Author: |Cooper |
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|Version: |4/22/2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant|Randy Chinn |
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SUBJECT: Transportation network companies
DIGEST: This bill increases public safety by requiring
transportation network companies (TNCs) to participate in the
Department of Motor Vehicles' (DMV) pull notice program.
ANALYSIS:
Existing law establishes a pull notice program which requires
employers of drivers to obtain a report showing the drivers'
current driving record from the DMV, and to obtain an updated
report at least annually. An employer who, after receiving the
record, continues to employ a person against whom a
disqualifying action has been taken is guilty of a public
offense, punishable by up to six months in jail and a fine of up
to $1,000.
This bill requires TNCs to participate in the pull notice
program.
COMMENTS:
1)Purpose. According to the author, the pull notice program
helps businesses and government agencies ensure that unsafe
drivers are taken off the road quickly. But because the pull
notice program is limited to those businesses and agencies
operating under an employer-employee relationship, TNCs and
their drivers are not covered. The intent of this bill is for
TNCs and those who drive for them to participate in the DMV's
AB 1422 (Cooper) PageB of?
pull notice program. In effect, for purposes of the pull
notice program in Section 1808.1, the TNC is the employer and
the TNC drivers are the employees.
2)What's a pulled notice? The pull notice program provides
employers with their drivers' public driving record, which
includes any accidents, citations, and license suspensions.
An employer who receives a report on a driver whose license
has been suspended or revoked must discontinue employment.
This could happen because of a DUI or falling behind on child
support payments. In the case of the TNCs, this means that
the TNC would need to discontinue allowing the driver to
participate in their service. The purpose of this program is
to protect the public from the most unsafe drivers by
preventing them from carrying passengers.
3)The growing TNC industry. In California, the TNC business is
large and growing rapidly. A January 2015 report from
Uber<1>, the largest TNC, reports 20,000 active Uber drivers
in Los Angeles, 16,000 in the San Francisco area, and almost
5,000 each in San Diego and Orange County, up from zero in
July 2012. Some estimates put the total number of active TNC
drivers in the United States at 150,000. TNCs are
successfully competing with taxi cabs, limousines, and other
regulated transit operators.
4)An unlevel playing field. The different types of
transportation companies (e.g., TNCs, limousines, Super
Shuttles, taxis) are all regulated differently. Rates,
routes, insurance requirements, vehicle inspections, and
driver requirements vary. State law has begun to address the
biggest differences between TNCs and others, but there's
little dispute that big differences remain. In an ideal
world, companies would compete based on the differences in
their business models and competence, not on the differences
in how they are regulated.
5)Creating a level playing field slowly. The laws and
regulations governing the provision of transportation services
are many decades old. These laws and regulations have evolved
slowly, as evidenced by the arcane and complicated carrier
classifications. At least over the last several decades, the
---------------------------
<1>"An Analysis of the Labor Market for Uber's Driver-Partners
in the United States," by Jonathan V. Hall and Alan B. Kreuger;
January 22, 2015.
AB 1422 (Cooper) PageC of?
few new laws have focused on safety issues. The rapid growth
of TNCs has disrupted this relatively quiet corner of our
economy, changing the economics of transportation and
challenging the economic models of the traditional
transportation providers. This has upended the lives of many
people in the transportation industry, while at the same time
providing many benefits to transportation consumers.
Regulators are struggling to keep up with the rapidly evolving
transportation industry, a bit hamstrung by laws which never
anticipated the different ways that TNCs operate. In
September 2013, the California Public Utilities Commission
(CPUC), which has regulatory authority over much, though not
all, of the passenger transportation industry, issued its
first set of rules<2> intended to foster the growth of TNCs
without compromising public safety. These rules started the
process of establishing a level playing field so that all
transportation companies would have similar regulatory
obligations, allowing them to compete based on their business
models. Among the rules were requirements for obtaining an
operating permit from the CPUC, requiring criminal background
checks for drivers, establishing driver training programs,
implementing zero-tolerance policies on drugs and alcohol, and
minimum insurance requirements.
The CPUC has initiated a second phase of its investigation to
look more closely at the regulation of TNCs and the
traditional transportation companies, known as charter-party
carriers<3>. A set of issues has been proposed and comments
on the scope of those issues have been submitted; a decision
on the scope of issues is expected shortly. As the state's
regulatory agency over transportation matters, the CPUC is in
the best position to consider whether its current regulations
provide for a fair and competitive market. It can recommend
specific changes to law and, in some cases, can implement
changes to its own regulations to achieve the goal of a level
playing field.
6)Taking a step forward. This bill helps level the playing
field by making TNCs participate in the same pull notice
program as their competitors.
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<2> D.13-09-045; issued September 23, 2013.
<3> Assigned Commissioner and Administrative Law Judge's Ruling
Amending the Scoping Memo and Ruling for Phase II of Proceeding;
Rulemaking 12-12-011; April 28, 2015.
AB 1422 (Cooper) PageD of?
7)Casual driver exemption. Current law allows an exemption from
the pull notice program if the employer has employed the
driver less than 30 days during the previous six months. This
provides a bit of a loophole as a TNC driver could drive three
days per week, one each for, say, Uber, Lyft, and Sidecar, and
still be eligible for the casual driver exemption. The author
believes this is not a concern as the TNCs intend on screening
all of their drivers.
8)Clarifying amendment - While the intent of the bill is clear,
the language of the bill is not. The author will accept the
following language, which will ensure that the bill can be
implemented as intended:
Page 2, line 3
At the beginning of the sentence insert: Notwithstanding any
limitations contained in section 1808.1 of the Vehicle Code,
After "company" insert "is eligible to participate and"
1)Double-referred. This bill was heard by the Senate Energy,
Utilities and Communications Committee on June 30, 2015, and
approved 9-0.
Related Legislation:
AB 24 (Nazarian, 2015) - requires TNCs to participate in the
pull notice program and submit all drivers to a Department of
Justice criminal background check. This bill was held in the
Assembly Appropriations Committee.
AB 828 (Low, 2015) - exempts vehicles driven in connection with
TNCs from the obligation of registration as a commercial
vehicle. This bill was heard by the Senate Transportation and
Housing Committee on July 7, 2015 and approved 6-5. This bill is
pending in the Senate Rules Committee.
AB 1360 (Ting, 2015) - authorizes charter party carriers to
charge individual fares. This bill is pending in the Senate
Energy, Utilities and Communications Committee.
AB 612 (Nazarian, 2014) - required TNCs to participate in the
pull notice program and submit all drivers to a Department of
Justice criminal background check. This bill failed on
concurrence in the Assembly.
AB 1422 (Cooper) PageE of?
AB 2293 (Bonilla, Chapter 389, Statutes of 2014) - established
minimum insurance requirements on TNCs.
Assembly Votes:
Floor: 78-0
Appr: 17-0
Trans: 16-0
U&C: 14-0
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes
Local: Yes
POSITIONS: (Communicated to the committee before noon on
Wednesday,
July 8, 2015.)
SUPPORT:
Long Beach Police Officers Association
Los Angeles County Professional Peace Officers Association
Riverside Sheriff's Association
Sacramento County Deputy Sheriffs' Association
San Diego Regional Chamber of Commerce
San Francisco International Airport
Uber Technologies, Inc.
OPPOSITION:
Greater California Livery Association
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