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 ----------------------------------------------------------------- |Author: |Cooper | |----------+------------------------------------------------------| |Version: |4/22/2015 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Randy Chinn | |: | | ----------------------------------------------------------------- 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. --------------------------- <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 -- END --