BILL ANALYSIS Ó
AB 1360
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Date of Hearing: April 20, 2015
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Anthony Rendon, Chair
AB 1360
(Ting) - As Amended April 14, 2015
SUBJECT: Charter-party carriers of passengers: individual fare
exemption
SUMMARY: This bill would exempt ridesharing programs operated
by transportation network companies (TNC) that arrange rides
among multiple passengers who share the ride in whole or in
part, from transportation charges computed and assessed on
charter-party carriers. Specifically, this bill:
a)Exempts a ridesharing program operated by a TNC that arranges
a ride on a prearranged route among multiple passengers who
share the ride, in whole or in part, from offering passengers
charges computed and assessed on a vehicle mileage or time of
use basis, or on a combination of the two.
b)Specifies that the exemption applies provided that:
1) The vehicle seats no more than seven persons, including
the driver,
2) The driver is a participating driver, as defined, and
3) The individual fare for each passenger is less than the
fare that would be charged for the same ride to a single
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passenger traveling alone.
EXISTING LAW:
1)The Passenger Charter-Party Carriers' Act generally requires
charges for the transportation to be offered or afforded by a
charter-party carrier to be computed and assessed on a vehicle
mileage or time of use basis, or on a combination therefor.
These charges may vary in accordance with the passenger
capacity of the vehicle, or the size of the group to be
transported. (Public Utilities Code §5401)
2)Directs the California Public Utilities Commission (CPUC) to
issue permits or certificates to charter party carriers (CPC),
investigate complaints against carriers, and cancel, revoke,
or suspend permits and certificates for specific violations.
(Public Utilities Code §5387)
3)Defines "charter-party carrier of passengers" as every person
engaged in the transportation of persons by motor vehicle for
compensation, whether in common or contract carriage, over any
public highway in the state. (Public Utilities Code §5360)
4)Defines a "transportation network company" to mean an
organization, including, but not limited to, a corporation,
limited liability company, partnership, sole proprietor, or
any 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)
5)Restricts charter-party carriers from directly, or through an
agent or otherwise, nor any broker, contract, agree, or
arrange to change, or demand or receive compensation, for the
transportation offered or afforded, be computed, charged or
assessed on an individual-fare basis. (Public Utilities Code
§5401)
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6)Exempts contractors who are compensated by parents of children
attending public, private, or parochial schools and except
operators. (Public Utilities Code§ 5401)
7)Exempts a round-trip sightseeing tour service conducted with
an authorized certificate or permit. (Public Utilities Code
§5401)
FISCAL EFFECT: Unknown.
COMMENTS:
1)Author's Statement: "The primary cause of traffic congestion
originates from nearly 80% of commuters traveling to work
alone. Traffic results in 5.5 billion hours of productivity
at a cost of $818 to the average commuter, with increased
congestion generating nearly 4 billion gallons of excess fuel
wasted and 56 billion pounds of greenhouse gasses. This
contributes to California's transportation sector functioning
as the greatest source of pollution, accounting for 40% of the
state's greenhouse gas emissions. TNC's such as Lyft, Uber,
and Sidecar have been extremely innovative in creating models
that empower consumers and allow more ease and access to
transportation alternatives. They have recently started
services that allow riders with similar pick up locations and
destinations to share a driver and carpool for a decreased
fare. Shared rides such as carpooling decrease traffic and
congestion, and ultimately cut pollution."
2)Background: California law regulates different modes of
passenger transportation for compensation, including taxi
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services, which are regulated by cities and/or counties, and
CPCs and passenger stage companies (PSC), which are regulated
by the PUC. Beginning as early as 2009, a new model of
transportation service began springing up in cities across the
United States. Known as TNCs, these companies work by
allowing patrons to prearrange transportation services through
an online application on their smartphone or computer.
Patrons would request a ride to a predetermined location and
the application would connect them with a TNC driver. Payment
is processed through the application so that no physical
financial transaction occurs during the trip itself between
the patron and the driver. The TNC takes a commission on each
trip. The development of TNCs has made the ability for
passengers seeking transportation for compensation more
readily available to the general public.
3)What are Passenger Carriers? The CPUC is in charge of
regulating passenger carriers. Passenger carriers include
services such as PSCs and CPCs. PSCs are services that
provide transportation to the general public on an individual
fare basis, such as scheduled bus operators, which are buses
that operate on a fixed route and scheduled services, or
airport shuttles, which operate on an on-call door-to-door
share the ride service.
CPCs are services that charter a vehicle, on a prearranged
basis, for the exclusive use of an individual or group.
Charges are based on the mileage or time of use, or a
combination of both. The CPUC does not regulate the level of
charges for CPCs. Types of CPCs include limos, tour buses,
sightseeing services, and charter and party buses.
The CPUC requires CPCs to meet a number of requirements until
an operating permit or certificate is issued. These
requirements include providing sufficient proof of financial
responsibility, maintain a preventative maintenance program
for all vehicles, possessing a safety education and training
program, and regularly checking the driving records of all
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persons operating vehicles used in transportation for
compensation.
4)What are Not Passenger Carriers? Taxis are excluded from the
definition of CPCs and are regulated by cities or counties.
The key distinction between CPC rides and taxis is that CPC
rides must be prearranged, while taxis are allowed to pick up
passengers via street hails. Other examples of
transportation services that are not considered charter party
carriers include: transportation services licensed and
operating wholly within the limits of a single city or city
and county, transportation services contracted to transport
school pupils, publicly owned transit systems, passenger
vehicles carrying passengers on a noncommercial enterprise
basis, vehicles used exclusively to provide medical
transportation, among others.
5)What are Transportation Network Companies? In September 2013,
a CPUC decision put TNCs under the purview of the CPUC,
allowing it to exercise and enforce regulatory and safety
requirements against TNCs. The CPUC defined TNCs as an
"organization, including, but not limited to, a corporation,
limited liability company, partnership, sole proprietor, or
any 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." The CPUC decision
requires TNCs to obtain a permit from the CPUC, conduct
criminal background checks of drivers, establish a driver
training program, implement a zero-tolerance policy on drugs
and alcohol, conduct vehicle inspections, and obtain
authorization from airports before conducting any operations
on or into airport property.
Subsequently, the legislature passed AB 2293 (Bonilla) Chapter
389, Statutes of 2014, which codified the CPUC's definition of
TNCs and imposed certain liability and other insurance
coverage for TNCs and their participating drivers. The bill
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defines when personal and commercial auto insurance come into
effect, and at what levels, when the driver logs onto the
application until the driver accepts a ride request, and for
when a ride request is accepted until the passenger exits the
vehicle. The bill sought to make a clear distinction between
when a vehicle is being used for TNC business activities and
must require commercial insurance, and when a vehicle is not
being used for TNC business activities at which time the
driver's personal auto insurance is in effect.
6)CPC Permits: The CPUC authorizes six types of certificates
and permits for CPCs. The CPUC authorizes three types of
transferable certificates: Class A certificates allows
charter service between any point in the state, such as
roundtrip sightseeing service, Class B certificates allows
charter service between any point within a 125 miles of the
carrier's home terminal, Class C certificates transportation
services that apply to commercial balloon operations, and
commercial river rafting or skiing.
The CPUC also authorizes three types of nontransferable
permits. These permits include: P permits which allows
charter services using only vehicles that can seat under 15
passengers, S permits which authorizes vehicles to provide
round-trip sightseeing services, and Z permits which
authorizes specialized services not offered to the general
public; namely, transportation incidental to another business,
transportation under contact with specific entities, and
transportation of agricultural works to and from farms.
7)Transportation Network Companies & Charter Party Carriers:
Although TNCs do not neatly fall into the conventional
definition of either taxis or limousines, the CPUC does
believe that TNCS are currently providing passenger's
transportation for compensation, and reasonably concludes that
TNCs are charter party passenger carriers, therefore, falling
under the CPUC's existing jurisdiction over these services.
Because the CPUC considers TNCs as a form of CPC under its
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regulatory purview, a company who wishes to operate as a TNC
must apply for a TNC subclass of a CPC - P permit. These CPC
- P permits are only granted to companies utilizing smartphone
technology application that facilitate transportation
passengers in the drivers' personal vehicle. TNCs are not
permitted to own vehicles used in their operations or own
fleets of vehicles. However, there is no limit to the number
of drivers a TNC can have under one permit. Individual TNC
drivers do not have to apply for their own CPC permit, but
would need to complete the TNCs process to be enrolled as a
driver under a TNC.
8)Vehicle Requirements for TNCs: The CPUC only allows TNCs to
use street legal coupes, sedans, or light-duty vehicles,
including vans, minivans, SUVs, pickup trucks, as well as
hatchbacks and convertibles. TNC vehicles must not be
significantly modified from factory specifications. TNCs are
allowed to operate vehicles with a seating capacity of up to
seven passengers, including the driver, if they have a $1
million commercial liability insurance on file. They are
allowed to operate a vehicle with a seating capacity of up to
ten passengers, including the driver, if they carry a $1.5
million commercial liability insurance on file. TNCs are not
allowed to operate vehicles with a seating capacity of more
than 10 passengers, including the driver, which is legally
defined as a bus.
The author may wish to consider an amendment to further
clarify that TNCs may not use vehicles to provide transit
service or to carry passengers over a fixed route, provide
school pupil transportation services, and provide public
paratransit services.
9)Exemptions: Current law provides two types of exemptions from
the prohibition against CPC vehicles from charging
individual-fares. These exemptions include, school buses who
are contacted and compensated by parents of children attending
public, private or parochial schools, and certified operators
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of roundtrip sightseeing tour services.
This bill would include a rideshare program operated by a TNC
to this list of exemptions, provided that the individual fare
for each passenger is less than the fare that would be charged
for the same ride to a single passenger traveling alone. The
distinction between the current list of exemptions and TNCs is
the fact that for school buses and sightseeing tour services,
the stop locations are dictated by the driver or the company
in advance. Whereas for TNCs, the passenger dictates the stop
locations, which can change each time a TNC driver picks up a
new patron.
10)CPUC Letter to TNCs: In September 2014, the CPUC sent
letters to the three major TNCs, Uber, Lyft, and Sidecar,
regarding their intent to add carpooling service to their
transportation service. The CPUC stated that this model is in
violation of existing law that prohibits CPCs from calculating
charges on an individual-fare basis. The CPUC found that CPCs
"cannot change an individual fare when carrying multiple
person in a vehicle, and therefore, a person chartering a
[CPC] vehicle must have exclusive use of the vehicle."
11)TNCs and Carpooling: As the number of TNC drivers continue to
increase, offering carpooling services may be beneficial for
patrons because it allows them to share and reduce the cost of
a single ride for each passenger because TNC fares for the
most part are dictated by the demand during a specific time or
location. TNC carpooling services may also have the added
benefit of reducing the number of vehicles on the road.
However, if this service serves to provide an additional
incentive for more drivers to join TNCs, it is unclear whether
or not carpooling will have the desired effects of reducing
emissions as it might have the contrary effect of adding more
TNC drivers on the road who otherwise would not be driving,
instead of reducing the number of drivers on the road.
12)Suggested Amendments:
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5401. (c) A rideshare program operated by a transportation
network company subject to this chapter that arranges a ride
on a prearranged route among multiple passengers who share the
ride in whole or in part, provided that (1) the vehicle seats
no more than seven persons, including the driver, (2) the
driver is a participating driver as defined in subdivision (b)
of Section 5431, (3) the vehicle is not used to provide public
transit services or to carry passengers over a fixed route,
(4) the vehicle is not used to provide school pupil
transportation services, (5) the vehicle is not used to
provide public paratransit services, and (3) (4) the
individual fare for each passenger is less than the fare that
would be charged for the same ride to a single passenger
traveling alone.
13)Arguments in Support: According to the Internet Association,
"this measure is squarely in line with well-established
California public policy that broadly encourages carpooling to
reduce traffic congestion and air pollution. AB 1360 also
furthers California's commitment to the environment on other
fronts, such as by enhancing our State's greenhouse gas
reduction efforts. Consumers also benefit from greater
transportation options. Multiple passenger ride sharing
services provide greater affordability and flexibility for
consumers."
14)Arguments in Opposition: According to the California
Teamsters Public Affairs Council, "under current law, when a
person engages a 'charter party carrier,' they rent the entire
vehicle for a set period for a single, undivided cost. If
rates splitting is allowed, ? the transportation agreement
effectively ceases to be a charter and patrons are charged an
individual rate. Thus, unlike a 'common carrier,' such as a
public transit operator, they will be able to serve the public
but be able to get away with rate discrimination, geographical
discrimination, and constantly changing costs of service."
15)Related Legislation:
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AB 24 (Nazarian) 2015: This bill would require charter-party
carriers and transportation network companies to participate
in the Department of Motor Vehicles Employer Pull Notice
System and submit all drivers to a Department of Justice
criminal background check.
AB 828 (Low) 2015: This bill would exclude from the
definition of "commercial vehicle," for purposes of the
Vehicle Code, any motor vehicle operated in connection with a
transportation network company.
AB 1422 (Cooper) 2015: Authorizes TNCs to participate in the
Department of Motor Vehicle Employer Pull Notice System.
16)Prior Legislation:
AB 612 (Nazarian) 2014: Requires charter party carriers to
participate in the Department of Motor Vehicles Employer Pull
Notice system and submit all drivers to a Department of
Justice criminal background check. Held in Assembly Committee
on Transportation.
AB 2293 (Bonilla) 2014: Establishes guidelines for insurance
coverage for Transportation Network Companies to ensure
personal and financial safety of consumers. Chaptered by the
Secretary of State - Chapter 389, Statutes of 2014.
17)Double Referred: This bill is double referred to the
Assembly Committee on Privacy and Consumer Protection.
REGISTERED SUPPORT / OPPOSITION:
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Support
The Internet Association (Co-Sponsor)
TechNet (Co-Sponsor)
Bay Area Council
Clean Coalition
Coalition for Clean Air
Environment California
Environmental Defense Fund
Orange County Business Council
Planning & Conservation League
San Francisco Planning and Urban Research Association (SPUR)
TransForm
Uber Technologies, Inc.
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Valley Industry & Commerce Association
Opposition
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists (IAM)
California State Council of the Service Employees International
Union (SEIU)
California Teamsters Public Affairs Council (ATU)
San Francisco Taxi Workers Alliance
Analysis Prepared by:Edmond Cheung / U. & C. / (916) 319-2083
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