BILL ANALYSIS Ó
AB 2790
Page 1
Date of Hearing: April 12, 2016
ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS
Rudy Salas, Chair
AB 2790
(Nazarian) - As Amended March 18, 2016
NOTE: This bill is double-referred, and if passed by this
Committee, it will be referred to the Assembly Committee on
Transportation.
SUBJECT: Taxicab drivers: Taxicab Commission: state licensure
requirement.
SUMMARY: Establishes the Taxicab Commission (Commission) within
the Department of Consumer Affairs (DCA) to license and regulate
taxicab drivers.
EXISTING LAW:
1)Establishes the DCA within the Business, Consumer Services and
Housing Agency, which is comprised of 41 licensing boards,
bureaus, committees and commission, any other board, office or
officers subject to the DCA's jurisdiction. (Business and
Professions Code (BPC) Sections 100 and 101)
2)Specifies that the boards, bureaus, and commissions within the
DCA, are established for the purpose of ensuring that those
private businesses and professions deemed to engage in
activities which have potential impact upon the public health,
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safety, and welfare are adequately regulated in order to
protect the people of California; to that end, establish
minimum qualifications and levels of competency and license
persons desiring to engage in the occupations they regulate
upon determining that such persons possess the requisite
skills and qualifications necessary to provide safe and
effective services to the public, as specified. (BPC Section
101)
3)Specifies that if at the end of any fiscal year, an agency
within the DCA, as specified, has unencumbered funds in an
amount that equals or is more than the agency's operating
budget for the next two fiscal years, the agency must reduce
license or other fees, as specified. (BPC Section 128.5)
4)Authorizes any agency within the DCA to promulgate regulations
requiring licensees to include their license numbers in any
advertising, soliciting, or other presentments to the public,
as specified. (BPC Section 137)
5)Requires certain regulatory entities, under the DCA, to
require applicants to furnish a full set of fingerprints for
purposes of conducting criminal history record checks. (BPC
144)
6)Requires a board within the DCA to expedite and assist with,
the initial licensure process for an applicant who supplies
satisfactory evidence that he or she has served as an active
duty member of the Armed Forces of the United States and was
honorably discharged and permits the boards to adopt
regulations to administer the expedited process. (BPC Section
115.5)
7)States that any and all matters relating to employment,
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tenure, or discipline of employees of any board, agency or
commission is to be initiated by that board, agency or
commission, but before being referenced to the State Personnel
Board, should receive approval of the appointing authority.
(BPC Section 154)
8)Establishes, in the state treasury, the Professions and
Vocation Fund. (BPC Section 205)
9)Requires every city or county to protect the public health,
safety, and welfare by adopting an ordinance or resolution in
regard to taxicab transportation service rendered in vehicles
designed for carrying not more than eight persons, excluding
the driver, which is operated within the jurisdiction of the
city or county. (Government Code (GC) Section 53075.5(a))
10)Requires each city or county to provide, but is not limited
to, providing for the following: (GC Section 53075.5(b))
a) A policy for entry into the business of providing
taxicab transportation services, including, but not limited
to:
i) Employment, or an offer of employment, as a taxicab
driver in the jurisdiction, including compliance with a
mandatory controlled substance and alcohol testing
certification program;
ii) The driver's permit becomes void upon termination of
employment;
iii) The drivers permit states the name of the employer;
and,
iv) The employer notifies the city or county upon
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termination of employment.
b) The establishment or registration of rates for the
provision of taxicab transportation services;
c) A mandatory controlled substance and alcohol testing
certification program, as specified.
11)Authorizes each city or county to levy service charges, fees,
or assessments in an amount sufficient to pay for the costs of
carrying out an ordinance or resolution adopted in regard to
taxicab transportation services. (GC Section 53075.5(c))
12)Permits a transportation inspector, authorized by a local
government to cite any person for operating as a taxicab
without a valid certificate, license or permit, required by
any ordinance, to impound and retain possession of any vehicle
used in violation of the ordinance. (GC Section 53075.61)
13)Requires every taxicab transportation service to include the
number of its certificate, license, or permit in every written
or oral advertisement of the services it offers. (GC Section
53075.9)
14)Permits a city or county to adopt additional requirements for
a taxicab to operate in its jurisdiction. (GC Section
53075.5(c))
15)Requires the development of plan for the establishment and
operation of a proposed state board or new category of
licensed professional to be developed by the author or sponsor
of legislation, prior to consideration by the Legislature of
legislation creating a new state board or creating a new
category of licensed professional, as specified. (GC Section
9148.4)
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THIS BILL:
1)Adds the Commission under the jurisdiction of the DCA and adds
the Taxicab fund to the Professions and Vocations Fund,
beginning July 1, 2016 and requires the Commission to be
responsible for the licensure and regulation of the profession
of taxicab driving, and that regulation of the business of
providing taxicab transportation services remains under the
jurisdiction of cities, counties, and cities and counties, as
specified in Section 53075.5 of the GC.
2)Establishes the Taxicab Driver Act.
3)Defines "Commission" to mean the Taxicab Commission.
4)Defines "Department" to mean the Department of Consumer
Affairs.
5)Defines "taxicab" as a passenger vehicle designed for carrying
not more than eight persons, excluding the driver, and used to
carry passengers for hire, but does include a charter-party
carrier of passengers, as specified.
6)Specifies that the Commission is subject to review by the
appropriate policy committees of the Legislature, and repeals
the provisions of the Commission on January 1, 2022.
7)States that protection of the public is the highest priority
for the Commission in exercising it licensing, regulatory, and
disciplinary functions; whenever the protection of the public
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is inconsistent with other interests sought to be promoted,
the protection of the public is paramount.
8)Specifies that the Commission is comprised of nine members,
including five public members and four taxicab driver
licensees; the Governor appoints three public and four
licensee members and the Senate Committee on Rules and the
Speaker of the Assembly each appoint one public member.
9)Specifies that an initial licensee member of the Commission
may be a person applying for a license, but who currently
maintains a permit in good standing as a taxicab driver in at
least one city, county, or city and county, who meets
specified requirements and must have obtained his or her
license by an unspecified date.
10)Requires members of the Commission to be appointed for a term
of four years, except that initial members and two of the
licensee members must be appointed for an initial term of two
years; no member may serve longer than two consecutive years.
11)Authorizes the Commission to appoint an executive office (EO)
who is exempt from civil service, who is authorized to
exercise the powers and perform the duties delegated by the
Commission.
12)Specifies the EO is subject to approval of the director of
the DCA.
13)Authorizes the Commission to employ examiners, inspectors,
and other personnel necessary.
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14)States that is unlawful to drive a taxicab unless the driver
has been issued a license by the Commission.
15)Requires the Commission to issue a license to a person who
meets the following:
a) Has a valid California driver's license;
b) Participated in a pull-notice system, as specified, and
prohibits drivers with convictions for reckless driving,
driving under the influence, hit-and-run, or driving with a
suspended or revoked license from obtaining a license, but
an applicant may have a maximum of two points on his or her
driving record; and,
c) Participates in a mandatory controlled substance and
alcohol testing certification program, as adopted by the
Commission.
16)Authorizes a person to apply for a license on a form
developed by the Commission, and requires the person to pay an
unspecified application and initial licensing fee.
17)States that a license expires in three years and may be
renewed prior to the expiration if the licensee completes a
form developed by the Commission and demonstrates compliance
with a safe driving record, and pays an unspecified renewal
fee.
18)Requires all fees collected to be deposited in the Taxicab
fund and subject to appropriation by the Legislature.
19)States that any person who violates the provisions of the
Taxicab Act is guilty of a misdemeanor, punishable by a fine
not exceeding $1,000 or imprisonment in a county jail not
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exceeding six months or both.
20)States that the Taxicab Act does not prohibit a city, county,
or city and county from imposing more stringent requirements
on taxicab transportation services to the extent not
consistent with the Taxicab Act.
FISCAL EFFECT: Unknown. This bill is keyed fiscal by the
Legislative Counsel.
COMMENTS:
Purpose. This bill will establish the Commission for the
licensure and regulation of taxicab drivers while leaving the
regulation of taxicab businesses to the local regulatory
entities who are currently charged with regulation of both the
taxicab drivers and the businesses. This bill is author
sponsored. According to the author, "unlike other drivers and
professions, taxi cab drivers face overlapping licensure
requirements. Overall, [this bill] simplifies the licensure of
the taxicab profession, protects consumers and ensures a
competent and fair marketplace for taxicab professionals by
creating the [Commission], under the [DCA]."
Taxicab Regulation and Local Control. Under current law,
taxicab businesses and taxicab drivers are regulated through
various local ordinances. Each local jurisdiction can and does
create its own requirements for taxis to operate, unlike other
models of passenger carriers, who are regulated under one
statewide requirement, established by the Public Utilities
Commission (PUC). GC Section 53075.5 requires cities and
counties to protect the public health, safety, and welfare by
adopting an ordinance or resolution in regard to taxicab
transportation services. Each ordinance or resolution must
include a policy for entry into the business of providing
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taxicab services, the establishment or registration of rates,
and a mandatory controlled substance and alcohol testing
certification program.
Local jurisdictions may include additional requirements for
taxicab businesses and drivers, many of which do. The San
Francisco Municipal Transportation Agency requires taxicab
drivers to be a legal resident, maintain personal hygiene, be
free of disease, possess a current California driver's license,
be 21 years of age, speak, read and write the English language,
get fingerprinted, attend and complete a taxi school training
program, have an offer from a taxi company to drive and pay an
application fee, among others. In the City of Los Angeles, an
applicant for a taxicab driver license, must be sponsored by one
of LA City's franchised taxicab companies, provide a driving
history record, pass an examination, and pay a fee.
According to information obtained from the Senate Committee on
Energy, Utilities, and Communications and the Committee on
Transportation and Housing background paper for their February
17, 2016 joint informational oversight hearing, Ride-hailing
Disruption: Establishing a Level Playing Field in the
Transportation-for-hire Market, "Taxicab Service Unlike services
regulated and licensed by the [PUC], taxicab service in
California is regulated by cities and counties. Taxis are the
only transportation for-hire service explicitly allowed to pick
up passengers via a street hail. Taxicab owners, fleets, and
drivers are often subjected to extensive regulations,
particularly in large cities, and generally less extensive
regulations in mid-sized and smaller cities. Therefore, the
range of regulations varies across jurisdictions, including
among neighboring cities. In general, taxi fares are regulated.
Additionally, cities often cap the number of taxis to protect
against an oversupply that could result in excessive competition
that undermines public safety with unsafe vehicles, drivers, and
driving practices?The cities and counties restrict the number of
taxis by limiting the supply of permits, or medallions (named
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for the metal ornament affixed to the vehicle)."
Because cities regulate the number of taxis permitted in each
jurisdiction, the number of taxicab drivers may vary by
location. At this time, it is unknown how many taxicab drivers
will seek state-wide licensure. The Bureau of Labor Statistics
reports that there are just over 13,000 taxicab and chauffer
drivers in California.
This bill aims to create a statewide regulatory system for
taxicab drivers that would alleviate the need for local
governments to regulate the drivers, while still maintaining
control of the profession.
Department of Consumer Affairs. This bill would require the
Commission to be located within the DCA, which regulates 40
entities, including 25 boards, nine bureaus, three committees,
two programs, and one commission, which combined regulate more
than 250 business and professional categories. These entities
establish the minimum qualifications for licensure, issue
licenses, and investigate and discipline licensees. These
entities are primarily funded by licensing fees.
Each year, the Senate Committee on Business, Professions and
Economic Development and the Assembly Committee on Business and
Professions (Committees) conduct joint sunset oversight hearings
to review those regulatory entities under the DCA on a rotating
basis. The sunset review process itself provides a formal
opportunity and mechanism for the DCA, the Legislature, the
entities, and interested parties and stakeholders to discuss the
performance of the entities and make recommendations for
improvements.
This has been the traditional forum for the legislature to
respond to concerns about unfairness, redundancy, or
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inefficiency in the licensing process for various regulatory
entities. As is standard with other entities regulated by the
DCA, the commission would be subject to the sunset review
process, providing the Legislature with the opportunity to
review the performance of the commission. The provisions of
this bill are scheduled to be repealed on January 1, 2022,
unless the Legislature seeks to continue the operations of the
commission.
Other Vehicle Transportation Service Providers. California law
regulates different modes of passenger transportation for
compensation, in addition to taxi services, which are regulated
at the local level; there are charter-party carriers and
passenger stage corporations, and transportation network
companies (TNCs). TNC's are defined as 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, as specified in the Public Utilities Code (PUC) Section
5431(a). The license to operate ride-hailing services has been
provided at the state level by the PUC whereas taxis are
permitted exclusively by individual local cities and counties.
This bill will not require those entities which are currently
regulated under the jurisdiction of the PUC to obtain licensure
under the Commission; this bill will only apply to individuals
who wish to drive taxicabs.
Occupational Licensing. The issue of occupational licensing and
its impacts on the ability to enter the labor market and
mobility within have been raised at both the state and federal
level. Currently, The Little Hoover Commission, which is a
statutorily created independent agency that conducts research
studies about state government operations, is currently in the
process of conducting a study on occupational licensing. The
study will partly explore the impact of occupational licensing
on upward mobility for various groups, as well as the effect of
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licensing regulations on consumers and the economy. The Little
Hoover Commission's study will have a broad policy perspective,
and will not place emphasis on licensing testing, education, and
other requirements for specific professions.
Federal Occupational Licensing Report. In addition, the White
House released a report in July of 2015, titled, Occupational
Licensing: A Framework for Policymakers. According to that
report's executive summary, the report addresses "the growth of
licensing over the past several decades, its costs and benefits,
and its impacts on workers and work arrangements. The report
recommends several best practices to ensure that licensing
protects consumers without placing unnecessary restrictions on
employment, innovation, or access to important goods and
services." This bill would create a state-based licensure
program for taxicab drivers, through a newly established
commission. Although, this bill is creating a new state-wide
framework of licensure for taxicab drivers, the current
requirements in this bill do not appear to be more burdensome
than the permit requirements placed upon taxicab drivers through
various local ordinances. However, the author's aim is to seek
a consistent licensing or permit scheme for taxicab drivers
across the state (with no variances in each district); as
currently drafted this bill specifies that the regulation of the
business of providing taxicab transportation services will still
be at the discretion of the local authorities as specified in
the GC. Further, it does not exempt drivers licensed by a city
or county. This could result in duplicative licensing
requirements at the state and local level, contrary to the
author's intent.
Sunrise Review Process. The Legislature uses a Sunrise process
for the purpose of assessing requests for new or increased
occupational regulation, pursuant to GC Section 9148.4 and
policy committee rules. The process includes a questionnaire and
a set of evaluative scales to be completed by the group
supporting regulation. The questionnaire is an objective tool
for collecting and analyzing information needed to arrive at
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accurate, informed, and publicly supportable decisions regarding
the merits of regulatory proposals.
This process accomplishes the following: (1) places the burden
of showing the necessity for new regulations on the requesting
groups; (2) allows the systematic collection of opinions both
pro and con; and, (3) documents the criteria used to decide upon
new regulatory proposals. This helps to ensure that regulatory
mechanisms are imposed only when proven to be the most effective
way of protecting the public health, safety and welfare.
Central to the Sunrise process was the creation of nine Sunrise
criteria developed to provide a framework for evaluating the
need for regulation. These criteria are:
1)Unregulated practice of the occupation in question will harm
or endanger the public health, safety or welfare.
2)Existing protections available to the consumer are
insufficient.
3)No alternatives to regulation will adequately protect the
public.
4)Regulation will alleviate existing problems.
5)Practitioners operate independently, making decisions of
consequence.
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6)The functions and tasks of the occupation are clearly defined.
7)The occupation is clearly distinguishable from other
occupations that are already regulated.
8)The occupation requires knowledge, skills and abilities that
are both teachable and testable.
9)The economic impact of regulation is justified.
Sunrise Questionnaire for Taxicab Driver Regulations. According
to information provided in the sunrise questionnaire, the author
reported, "for decades there has been significant public demand
for regulation. An unregulated taxi industry is harmful to
everyone including consumers, drivers and operation companies.
The need for regulation dates back to the 1930s. During the
Great Depression, people flooded the taxicab market at the
absence of stable jobs. These drivers were largely unlicensed.
As a result, American cities quickly enacted laws to address
safety, liability and driver rights issues. Fast forward 40
years, in the 1970s, cities decided to reduce regulation for the
taxicab industry. Local governments in cities across the country
enabled open-entry and removed regulations on fares, licensing
and accessibility requirements. However, deregulation is these
cities proved to be a failure for many reasons. In just of
matter of years, almost every city re-regulated its taxi market
because:
Prices for taxi riders increased.
Vehicle quality decreased.
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Fares became confusing and unpredictable to passengers.
Taxi riders in low-density areas were neglected and access to
24/7 transportation became difficult.
Taxi riders became prone to price inflation and exploitation.
Drivers struggled to make a living wage due to an increase of
new drivers and an abundance of supply vs. rider demand.
Driver quality decreased.
Accidents increased due to an increase of inexperienced,
unlicensed (and sometimes untrained) drivers on the road.
Operators struggled to fund business operations and maintain
top quality standards because of increased competition and
decreased revenue.
Traffic in high-density areas increased due to an influx of
cars on the road and more "
cruising" activity.
Air quality decreased.
To ensure that the public is safe, cities have long-implemented
basic standards for drivers and the industry."
POLICY ISSUES FOR CONSIDERATION:
This bill seeks to create a new regulatory entity under the DCA
for taxicab drivers. Although the author explains the need for
a new licensure program is to ensure a consistent, statewide
regulatory framework for the taxicab drivers in California, as
currently drafted, there are several policy and implementation
issues associated with the provisions of this bill.
1)Is DCA the appropriate entity to regulate this industry? As
noted above, the DCA houses numerous licensing entities.
Although the DCA is well suited to administer a regulatory
program, given that statewide regulation of most other
passenger transportation systems is currently vested within
the PUC, should the statewide regulatory framework for
licensing taxicab drivers be placed under a separate entity?
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2)Does the profession of being a taxicab driver meet the
threshold for statewide licensure and regulation (the
potential for serious injury or death, or severe financial
harm)? When considering the establishment of a new licensure
category, the standard for those seeking licensure is whether
the unregulated profession poses a serious threat to the
public health and safety, or can cause severe financial harm.
Otherwise, licensure merely for the sake of licensure can
create an unnecessary barrier to entry into the profession.
In the past, some professional licensing boards have had a
tendency to be driven by the interests of the profession,
rather than the public interest, and the sunset review process
was developed as a check against this tendency, and to
periodically re-evaluate the need for licensure in the first
place for every profession. At this time, it is unclear
whether an additional licensing scheme for taxicab drivers is
necessary for consumer protection.
3)Local Control. This bill aims to create a
statewide-regulatory framework for the regulation of taxicab
drivers, while maintaining local control for the businesses.
However, as currently drafted, this bill continues local
government's authority to regulate the business of providing
taxicab transportation services pursuant to GC Section 53075.5
which may include overlapping provisions for local
jurisdictions to regulate both the professional (the driver)
and the taxicab business. Further, it may even add additional
state-level requirements if localities choose not to accept
the state license.
4)Licensure Requirements. As currently drafted, this bill
authorizes the commission to hire examiners, inspectors, or
other personnel necessary to carry out the duties of the
commission; however, this bill does not contain an examination
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component or any specified requirements for licensure,
including education or other pre-requisites other than a
driving record with no more than two points, and a clean
criminal history report.
5)Commission vs. Board vs. Bureau? Although there may not be a
significant difference between a commission and a board under
the DCA in terms of operations, they are both structured as
semi-autonomous bodies, have rulemaking authority, are
comprised of an appointed membership, and are regulated under
the DCA; however, commissions are less common under the DCA,
as the more common regulatory structure is the board or bureau
model. At present, the DCA only has one commission, the
Athletic Commission, which is currently comprised of only
public member appointees. Bureaus under the DCA are comprised
of an advisory body appointed by the bureau chief rather than
a statutorily mandated appointing authority such as the
Governor, the Speaker of the Assembly or the Senate Speaker
Pro Tempore. Given that the Commission would have four
professional members, a board may be more appropriate.
6)Enforcement Provisions. As currently drafted it is unclear
what qualifies as unprofessional conduct for taxicab drivers.
This bill does not specify activities which would violate the
profession of taxicab driving other than driving a taxicab
without a license issued by the commission. This bill does
not specify the certain acts which would lead to a suspension,
revocation, or the cause for probationary terms on a license.
If there are no acts which would constitute a violation of the
taxicab driver act once licensed, it raises the question about
the necessity of establishing a statewide regulatory body.
IMPLEMENTATION ISSUES:
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In addition to the policy concerns raised above, there are a
number of implementation issues with the establishment of the
commission as currently drafted including the implementation
date, a need for fingerprints, establishing a funding source,
licensure requirements, member composition, and the
establishment of the fees for licensure, among others. In order
to address the implementation issues, the author may wish to
consider the following:
1)Among other things, this bill would require the Commission to
be operational on January 1, 2017 and would require taxicab
drivers to be licensed in order to drive a taxicab on the same
date. As drafted this bill does not provide a sufficient
timeframe to establish a licensure program.
2)In order to obtain a local permit or license to drive a
taxicab, most cities or counties require a taxicab driver to
comply with fingerprint and background check requirements. As
drafted, this bill does not have a fingerprint requirement.
In order to enhance consumer safety and ensure taxicab drivers
do not have criminal records which may be substantially
related to the qualifications, functions and duties of a
taxicab driver, a background check may be necessary.
3)As drafted, this bill does not provide a funding mechanism for
the establishment of the Commission. A funding system may be
necessary to implement the functions.
4)This bill, according to the author, "simplifies the licensure
of taxicab profession"; however, as currently drafted, this
bill requires a statewide licensure scheme for taxicab
drivers, including a mandatory substance and alcohol testing
certification program, while still requiring local
jurisdictions to include in their ordinance a policy for entry
into the business of providing taxicab services including a
mandatory controlled substance and alcohol testing
certification program. Potentially, this bill could lead to
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double regulation of taxicab drivers, whereby drivers would be
required to meet licensure requirements at both the state and
local level. Although this bill includes a provision that
states nothing in the taxicab driver act shall be construed to
prohibit a city, county, or city and county from imposing more
stringent requirements on taxicab transportation services to
the extend not inconsistent with the act, clarification may be
necessary.
5)This bill establishes a new regulatory authority under the
DCA; however, as currently drafted, this bill does not provide
the commission with the authority to establish regulations
necessary to carry out its provisions.
6)This bill specifies that a person may apply for licensure on a
form developed by the commission, and pay an unspecified
application fee. Also, the bill requires a person who has
been issued an initial license to pay a license fee to the
commission in an unspecified amount. And, this bill specifies
that a license is valid for three years, but can be renewed if
the licensee completes a form and complies with the licensure
requirements and pays a fee. However, this bill does not
include a process for the commission to develop the
appropriate fee.
In addition to the numerous policy and implementation issues,
the need for statewide licensure as specified in this bill,
opposed to the current local regulatory model is not clear.
However, given GC Section states the need for cities and
counties to "protect the public health, safety, and welfare"
regarding taxicab transportation services, an in-depth analysis
of the current regulatory system pertaining to taxicab drivers
is warranted. Instead of establishing a new regulatory
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framework based on existing licensure requirements, the
Committee may wish to request the author instead require the
California Research Bureau to conduct an independent necessity
and feasibility study for the statewide regulation of taxicab
drivers.
AMENDMENT:
Delete the current contents of the bill and insert: On or
before September 1, 2017, the California Research Bureau shall
conduct a study on the necessity and feasibility of licensure
for taxicab drivers.
REGISTERED SUPPORT:
None on file.
REGISTERED OPPOSITION:
None on file.
Analysis Prepared by:Elissa Silva / B. & P. / (916) 319-3301
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