BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
                              Senator Ben Hueso, Chair
                                2015 - 2016  Regular 

          Bill No:          AB 2763           Hearing Date:    6/27/2016
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          |Author:    |Gatto                                                |
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          |Version:   |4/18/2016    As Amended                              |
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          |Urgency:   |No                     |Fiscal:      |No              |
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          |Consultant:|Nidia Bautista                                       |
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          SUBJECT: Transportation network companies:  personal vehicles

            DIGEST:    This bill would define a personal vehicle as a  
          vehicle that is used by a participating driver to provide  
          prearranged transportation services for compensation, is owned,  
          leased, rented, or otherwise authorized for use for any period  
          of time by the participating driver, meets all inspection and  
          other safety requirements imposed by the California Public  
          Utilities Commission (CPUC), and is not a taxicab or a  
          limousine.

          ANALYSIS:
          
          Existing law:
          
          1)Establishes the "Passenger Charter-Party Carriers Act", which  
            directs the CPUC to regulate, require license or permit to  
            operate, require insurance and workers compensation, takes  
            appropriate enforcement action and other provisions related to  
            transportation charter-party carriers (CPCs).  (Public  
            Utilities Code §5351 et seq.)

          2)Defines transportation network company (TNC) as a type of CPC  
            that is an organization, including, but not limited to, a  
            corporation, limited liability company, partnership, sole  
            proprietor, or any other 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)








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          3)Requires specified liability insurance requirements for TNCs,  
            which requires the TNC insurance coverage to be the primary  
            insurance and in the amount of one million by for death,  
            personal injury, and property damage when a participating  
            driver accepts a ride request until the driver completes the  
            transaction and $50,000 for death and personal injury per  
            person, $100,000 for death and personal injury per incident  
            and $30,000 when the participating driver logs on to the TNC  
            online-enabled application until the driver accepts a ride.   
            (Public Utilities Code §5433)

          4)Provides that a participating TNC driver's personal automobile  
            insurance may not provide any coverage when the participating  
            driver logs on to the application until the driver logs off.   
            (Public Utilities Code §5434)

          5)States that an owner of a motor vehicle used in the  
            transportation of persons for compensation by a CPC of  
            passengers means the corporation or person who is registered  
            with the Department of Motor Vehicles (DMV) as the owner of  
            the vehicle, or who has a legal right to possession of the  
            vehicle pursuant to a lease or rental agreement.  (Public  
            Utilities Code §5362)

          6)States that an owner is a person having all incidents of  
            ownership, including the legal title of a vehicle whether or  
            not such person lends, rents, or creates a security interest  
            in the vehicle.  (Vehicle Code §460) 

          7)States a "legal owner" is a person holding security interest  
            in a vehicle under a lease, lease-sale, or rental-purchase  
            agreement which grants possession of the vehicle to the lessee  
            for a period of 30 consecutive days or more.  (Vehicle Code  
            §370)

          8)Defines a lessee as a person who leases, offers to lease, or  
            is offered the lease of a motor vehicle for a term exceeding  
            four months.  (Vehicle Code §371)

          This bill defines "personal vehicle" as a vehicle used by a  
          participating driver to provide prearranged transportation  
          services for compensation, that is owned, leased, rented, or  
          otherwise authorized for use for any period of time by the  
          participating driver; meets all inspection and other safety  
          requirements imposed by the CPUC; and is not a taxicab or  








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          limousine.

          Background

          TNC vehicle rental and leasing programs.  There is a growing  
          market of companies who provide participating TNC drivers with  
          vehicle leases and rentals. Some existing car rental companies  
          have established exclusive relationships with given TNCs and  
          offer car rental packages that are tailored for driving for a  
          TNC activity.  Under these programs, the rental/lease payment is  
          deducted from the driver's earnings.  These programs include one  
          offered in partnership with a car rental company for $210 per  
          week, plus $40 startup fee and additional fees.  Other  
          third-party rental and lease companies can connect participating  
          drivers to either TNC.  These vehicle rental and lease  
          arrangements range from months-long leases to an hourly rental  
          arrangement.  

          CPUC action.  In January, the CPUC proposed in its Phase II  
          decision related to TNCs define "personal vehicle" as it applies  
          to TNC operations may include a vehicle that is not registered  
          in the driver's name, or a vehicle pursuant to a lease agreement  
          and limited to the existing definitions in statute.  When the  
          item was heard for adoption in March, the commissioners engaged  
          in discussion regarding the proposed approach on defining a  
          personal vehicle with some commissioners expressing concerns  
          about ensuring the definition was adequate for purposes of  
          insurance, public safety and related matters.  In June, the  
          assigned commissioner issued a ruling inviting comments on the  
          concept of personal vehicles to assess how expansively the term  
          should be defined.  The ruling includes a series of questions  
          related to minimum time periods, insurance issues, safety  
          concerns, adequate procedures, etc.  As of the date of this  
          analysis, the ruling is open for comments with reply comments  
          due by July 11th.  However, the passage of this bill may  
          eliminate the need for the CPUC to conduct this investigation. 

          Economic opportunity or exploitation?  By providing access to  
          vehicles through leases and rental arrangements for qualified  
          participating drivers, someone who may not own a vehicle, or own  
          a vehicle that does not meet the requirements of the TNC, has  
          the opportunity to become a participating driver and earn income  
          as a driver.  The car rental companies with contractual  
          arrangements with TNCs would bear responsibility to maintain the  
          vehicles and provide the CPUC-required 19-point Bureau of  








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          Automotive Repair vehicle inspection.  Since state law prohibits  
          a car from being rented for longer than 30 days, it may be that  
          the car rental company may do a better job at maintaining the  
          vehicle inspection schedule for their vehicles than it would be  
          for someone driving their own car.  However, in the case of a  
          long-term lease, the individual would bear the responsibility  
          for the vehicle inspection.  Since insurance requirements for  
          TNCs are established in statute, all vehicles conducting TNC  
          operations would be subject to these requirements, regardless if  
          the vehicle is rented, leased or owned.  While there are some  
          potential pluses with short-term car rentals and leases,  
          participating drivers would bear the risk of paying for a car  
          rental or lease for TNC activity that may not produce enough  
          income to offset the costs.  The driver's profitability will  
          depend on how many rides they provide and how much they make on  
          each ride.  The price of some of the rental arrangements  
          contracted with TNCs currently in the market include:   
          approximately $200 per week car rental fee, $250 refundable  
          deposit, $43 non-refundable startup fee, and other fees.  The  
          price of a car lease arrangement includes approximately $150 per  
          week fee, $250 security deposit and requires a 3 year contract.   
          These costs are not insignificant upwards of $1,000 plus per  
          month.

          Clarifying amendments.  In order to ensure the vehicles this  
          bill references are not buses and larger vehicles.  The author  
          and committee may wish to amend this bill to ensure vehicles the  
          provisions of this bill only apply to vehicles of eight persons  
          or less, including the driver. Consistent with existing law, the  
          author and committee may wish to amend this bill to ensure  
          rented vehicles may not be rented for a term that exceeds 30  
          days.

          Prior/Related Legislation
          
          AB 828 (Low, 2016) would exclude motor vehicles operating in  
          connection with a TNC from the requirement to register as a  
          commercial vehicle.  The bill is in the Senate Committee on  
          Appropriations waiting to be considered. 

          AB 1360 (Ting, 2015) would allow CPCs of passengers, including  
          TNCs, to charge individual fares, rather than a single group  
          fare when providing carpool services.  The bill is scheduled to  
          be heard by this committee on June 27, 2016.









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          AB 1422 (Cooper, Chapter 791, Statutes of 2015) required TNCs to  
          participate in the DMV employer pull-notice system to regularly  
          check the driving records of a participating driver.

          AB 2293 (Bonilla, Chapter 389, Statutes of 2014) established  
          guidelines for insurance coverage for TNCs to ensure personal  
          and financial safety of consumers. 

          SB 1035 (Hueso, 2016) would have instituted a number of public  
          safety and consumer protection requirements on TNCs.  The bill  
          failed passage in the Senate Committee on Transportation.

          FISCAL EFFECT:                 Appropriation:  No    Fiscal  
          Com.:             No           Local:          No


            SUPPORT:  

          Bay Area Council
          California Chamber of Commerce
          California League of Conservation Voters
          Circulate San Diego
          City of Beverly Hills
          Electric Vehicle Charging Association
          Enterprise Holdings
          Evercar
          Greenbelt Alliance
          Lyft
          Planning and Conservation League
          SPUR
          San Diego Regional Chamber of Commerce
          Silicon Valley Leadership Group
          TechNet
          The Internet Association
          TransForm
          Uber Technologies, Inc.
          Volta

          OPPOSITION:

          California Teamsters Public Affairs Council, unless amended
          Oklahoma Limousine Association
          San Francisco Taxi Workers Alliance
          Four Individuals









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          ARGUMENTS IN SUPPORT:    In support of this bill, Uber states:  
          AB 2763 is an important step in ensuring access to the economic  
          opportunities provided by TNCs.  It recognizes that more and  
          more people are unable to afford or are deciding to forgo  
          car-ownership, but that these individuals should not be  
          precluded from becoming driver-partners with a TNC.
          
          ARGUMENTS IN OPPOSITION:    In opposing the language of this  
          bill, the Teamsters are concerned that "absent adding basic  
          consumer protections for the drivers, this would legitimize a  
          practice that can be very exploitive of drivers.  Long lease  
          periods with very high lease payments can tie a person into one  
          of these jobs with little hope of economic mobility, especially  
          if the promised income doesn't pan out."
          
          
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