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)
AB 2763 (Gatto) Page 2 of ?
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
AB 2763 (Gatto) Page 3 of ?
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
AB 2763 (Gatto) Page 4 of ?
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.
AB 2763 (Gatto) Page 5 of ?
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
AB 2763 (Gatto) Page 6 of ?
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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