BILL ANALYSIS                                                                                                                                                                                                    Ó





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

          Bill No:          AB 650            Hearing Date:     6/13/2016
           ----------------------------------------------------------------- 
          |Author:    |Low                                                  |
          |-----------+-----------------------------------------------------|
          |Version:   |5/27/2016    As Amended                              |
           ----------------------------------------------------------------- 
           ------------------------------------------------------------------ 
          |Urgency:   |No                     |Fiscal:      |Yes             |
           ------------------------------------------------------------------ 
           ----------------------------------------------------------------- 
          |Consultant:|Nidia Bautista                                       |
          |           |                                                     |
           ----------------------------------------------------------------- 
          
          SUBJECT: Public Utilities Commission:  regulation of taxicabs

            DIGEST:   This bill would enact the Taxicab Transportation  
          Services Act and provide for the regulation of taxicab  
          transportation services by the California Public Utilities  
          Commission (CPUC) as a matter of statewide concern, except  
          taxicab transportation services originating in the City and  
          County of San Francisco and at the San Francisco International  
          Airport, which would continue to be locally regulated.  This  
          bill would enact various provisions relating to insurance,  
          vehicle inspections, monitoring of taxicab drivers, and other  
          matters and make conforming changes to other related provisions.

          ANALYSIS:
          
          Existing law:
          
          1)Provides that the CPUC may fix rates and establish rules for  
            the transportation of passengers and property by  
            transportation companies, prohibit discrimination, and award  
            reparation for the exaction of unreasonable, excessive, or  
            discriminatory charges. (Article XII, §4 of the California  
            Constitution)

          2)Establishes the CPUC's authority to regulate, require license  
            or permit to operate, require insurance and workers  
            compensation, take appropriate enforcement action and other  








          AB 650 (Low)                                        Page 2 of ?
          
            provisions related to passenger stage corporations. (Public  
            Utilities Code §1031, et seq.) and transportation  
            charter-party carriers of passengers (Public Utilities Code  
            §5351), including transportation network company (Public  
            Utilities Code §5431)

          3)Exempts from the CPUC regulatory oversight of charter-party  
            carriers of passengers provisions taxicab transportation  
            services which are licensed and regulated by a city or county,  
            by ordinance or resolution, rendered in vehicles designed for  
            carrying not more than eight persons excluding the driver.   
            (Public Utilities Code §5353)

          4)Requires every city or county to adopt an ordinance or  
            resolution to issue permits in regard to taxicab  
            transportation service provided in vehicles, designed for  
            carrying not more than nine people with the driver, which is  
            operated within the city or county.  Establishes minimum rules  
            for drivers, including testing for controlled substances.   
            (Government Code §53075.5) (Vehicle Code §21100)

          5)Authorizes a peace officer and local agency to take  
            enforcement actions regarding vehicles that are operated as  
            taxicabs without the required permits. (Government Code  
            §§§§§53075.6, 53075.6,  53075.7, 53075.8, 53075.9) (Public  
            Utilities Code §§§5411.5, 5412.2, 5413.5) (Vehicle Code  
            §21100.4)

          6)Requires taxicabs to maintain proof of financial  
            responsibility of at least 15 thousand for each person injured  
            or killed, of at least 30 thousand for the injury to, or the  
            death of, two or more persons in any one accident, and for  
            damages to property of five thousand and obtaining a bond of a  
            specified amount. (Vehicle Code §16500)

          7)Classifies certain actions related to existing Vehicle Code  
            requirements of taxicab activities as limited civil cases,  
            under specified conditions, including a limit of $25,000 in  
            damages. (Code of Civil Procedure Code §85)

          8)Requires specified signage requirements to be placed on all  
            taxicabs.  (Vehicle Code §§27900 and 27908)

          This bill:

          1)Establishes Taxicab Transportation Services Act and places  







          AB 650 (Low)                                        Page 3 of ?
          
            taxicabs under the regulatory authority of the CPUC.

          2)States the legislature finds and declares that regulation of  
            taxicab transportation services throughout the state  
            constitutes a statewide concern.

          3)Exempts taxicab transportation services originating in the  
            City and County of San Francisco or at the San Francisco  
            International Airport from most of the provisions of this act.

          4)Requires the CPUC to establish six regions, other than the  
            provisions for the City and County of San Francisco and San  
            Francisco Airport, for purposes of issuing operating permits  
            to taxicab carriers. 

          5)Requires the CPUC to issue permits, or renewals that are  
            effective for three years, to entities to operate taxicab  
            transportation services if qualified and requires each permit  
            to specify the region in which the taxicab may operate, but  
            does not prohibit a taxicab carrier from holding permits in  
            multiple regions.

          6)Maintains the current requirement on taxicab services to  
            include the number of its permit every written, oral, or  
            electronic advertisement of the services it offers and  
            requires it complies with signing requirements in the Vehicle  
            Code. 

          7)Requires the CPUC to ensure all applicants meet specified  
            requirements prior to issuing a taxicab service permit to an  
            entity, including: ensuring the financial and organizational  
            capacity of the entity, compliance with the rules and  
            regulations of the Department of the California Highway Patrol  
            relating to safe operating vehicles, commitment to observe  
            hours of service regulations of state and federal law, an  
            inspection program in effect for its motor vehicles,  
            participation in the pull notice program, safety education and  
            training program for all drivers, provides a mandatory  
            controlled substance and alcohol testing certification  
            program, and others.

          8)Requires every taxicab carrier to furnish a list to the CPUC  
            of all motor vehicles used by the carrier in taxicab services  
            since the last inspection. 

          9)Authorizes the CPUC to suspend or revoke the carrier's permit  







          AB 650 (Low)                                        Page 4 of ?
          
            and/or impose a fine if the carrier's insurer informs the CPUC  
            that the carrier has failed to obtain insurance coverage for  
            any vehicle on the list.

          10)Requires the CPUC to investigate any entity that advertises  
            or holds itself as providing services that may be considered  
            to be taxicab transportation services without the required  
            permit and issue civil or criminal proceedings as warranted.

          11)Establishes grounds by which the CPUC may cancel, suspend, or  
            revoke a taxicab carrier permit, including conviction of a  
            misdemeanor or felony for specified actions, failure to  
            operate and perform reasonable service and other violations  
            and authorizes the CPUC levy a civil penalty of up to $7,500.

          12)Requires a taxicab carrier to make available for inspection  
            by the CPUC, upon request, a certificate of workers  
            compensation coverage, a consent to self-insure issued by the  
            Department of Industrial Relations or a statement under  
            penalty of perjury.

          13)Requires a taxicab carrier to operate a motor vehicle with  
            the CPUC required trade dress. 

          14)Requires any city or county to forward to the CPUC licensure  
            information for each taxicab transportation service licensee  
            within its jurisdiction by December 31, 2016.

          15)Requires the CPUC to require the taxicab carrier to procure  
            liability insurance capped at no more than $100,000 for death  
            and personal injury per person, $300,000 for death and  
            personal injury per incident, and $50,000 for property damage,  
            and provides that these requirements shall only apply to motor  
            vehicles while providing taxicab services.

          16)Prohibits a city, county, city and county, or any other local  
            agency to require insurance in a manner different from that  
            required by this article.

          17)Prohibits the CPUC from regulating fares or fees charged by  
            taxi cab carriers and the type of device used by taxicab  
            carriers to calculate fares, including global positioning  
            system metering as a form of calculating fares.

          18)Authorizes the CPUC to adopt rules requiring taxicab carriers  
            to disclose fares, fees, and other pricing structures for  







          AB 650 (Low)                                        Page 5 of ?
          
            taxicabs.

          19)Requires individuals who wish to be a driver providing  
            taxicab services to first obtain a taxicab driver permit from  
            the CPUC which shall be valid in any region and specifies  
            necessary requirements, including: 18 years or older, Class C  
            driver's license, passes a CPUC prescribed written exam, and  
            background check through the Department of Justice's live scan  
            system. 

          20)Requires a taxicab carrier to participate in the pull-notice  
            system, provide for a mandatory controlled substance and  
            alcohol testing certification program equivalent to that  
            required by the CPUC of transportation network companies.

          21)Prohibits a taxicab carrier from employing or contracting  
            drivers who have been convicted during the preceding seven  
            years of any offense relating to use, sale, possession, or  
            transportation of narcotics, any act involving violence, any  
            sexual offense, fraud, or felony offense, or offense involving  
            possession of a firearm, and other actions. 

          22)Requires taxicab carriers to inspect each of its motor  
            vehicles or have each vehicle inspected at a facility licensed  
            by the Bureau of Automotive Repair and requires the inspection  
            to cover 19 specified components of the vehicle.

          23)Preempts all other regulation of taxicab transportation  
            services subject, including those by local agencies.  
            Specifically, prohibits airports from imposing licensing,  
            insurance requirements, and a fee that is based on the gross  
            receipts of the taxicab carrier. 

          24)Repeals  a number of sections of the Government Code that  
            provide local agencies specified authorities related to  
            taxicab services, including: 

               a)     Section 53075.5 of the Government Code that provides  
                 authority for cities and counties to establish policy for  
                 entry into taxicab transportation service, including  
                 employment as a taxicab driver, establishment of rates,  
                 mandatory drug and alcohol testing, and other  
                 authorities.

               b)     Section 53075.6 of the Government Code that provides  
                 law enforcement authority to impound vehicles operating  







          AB 650 (Low)                                        Page 6 of ?
          
                 as taxicabs without the proper certificate; repeals  
                 Section 53075.61 of the Government Code which provides  
                 local transportation inspectors authority to impound a  
                 vehicle operating without the proper permit or license.

               c)     Section 53075.7 of the Government Code which  
                 requires a local agency to investigate a business that  
                 advertises or operates a taxicab transportation service  
                 upon receipt of a complaint. 

               d)     Section 53075.8 of the Government Code which  
                 authorizes a local agency to seek the termination of the  
                 telephone service for a taxicab transportation service  
                 which has operated in violation of the local agency's  
                 ordinance related to taxicab service.

               e)     Section 53075.9 of the Government Code which  
                 requires every taxicab transportation service to include  
                 the number of its certificate, license, or permit in  
                 every written or oral advertisement of the service it  
                 offers and authorizes a local agency to impose a fine of  
                 not more than $5,000 for each violation.

               f)     Section 830.7 of the Penal Code to remove reference  
                 to authority of local agency transportation inspectors to  
                 enforce taxicab license violations.

               g)     Makes clarifying amendments to remove references to  
                 local authority of taxi cab licensing, including in  
                 Sections 5353, 5411.5, 5412.2 and 5413.5 of the Public  
                 Utilities Code. 

          25)Establishes the Legislature finds and declares that  
            regulation of taxicab transportation services throughout the  
            state constitutes a matter of statewide concern. 

          Background

          Since its inception in 1911 (then as the Railroad Commission),  
          the CPUC has regulated private companies and individuals that  
          own, operate, control or manage transportation of people and  
          property.  However, taxicabs have been regulated by local cities  
          or counties for most of the CPUC's one hundred year history.  
          Currently, the CPUC's remaining authority is limited to non-rail  
          passenger carriers and household goods movers.  Under state law,  
          the CPUC is required to license carriers, and investigate and  







          AB 650 (Low)                                        Page 7 of ?
          
          enforce safety and consumer protection laws for the following  
          surface transportation carriers:

                 Passenger Stage Corporations (PSCs) - for-hire carriers  
               transporting passengers over public highways on an  
               individual-fare basis.  Examples include: airport shuttles.

                 Transportation Charter-Party Carriers (TCPs) - operate  
               under the direction and control of their chartering party  
               that arranges the transportation, on a prearranged basis.   
               Examples include tour buses, limousines, and transportation  
               network companies, including Uber, Lyft, and Sidecar.

                 Private Carriers of Passengers (PCPs) - includes  
               not-for-hire motor carrier transporting passengers in buses  
               (vehicles seating 10 or more) that are required to obtain a  
               "CA number" from CHP. 

                 Household Goods Carriers - includes for-hire moving  
               companies. 

          The rapid growth of a new transportation for-hire service, known  
          as transportation network companies (TNCs), have dramatically  
          disrupted the existing transportation for-hire market, including  
          reducing taxicab use in many cities.  The development of the  
          TNCs has made the ability for passengers seeking transportation  
          for compensation more readily available to the general public,  
          but also raised questions about the fairness of the existing  
          regulations between the services with taxicabs experiencing many  
          regulatory requirements as compared to competitors in  
          transportation network companies which have many fewer  
          requirements.  Some have argued to level the playing field, TNCs  
          services should be regulated at the local level, not by the  
          CPUC. 

          Taxicabs. An essential distinction of a taxicab from other  
          transportation services is the ability to have the service  
          hailed from the street. However, the bill does not include this  
          activity in the definition included in the bill. The author and  
          committee may wish to amend this bill to include the ability to  
          hail a vehicle from the street as part of the definition of a  
          taxicab. 

          Removing entry caps.  Currently, many cities manage the number  
          of taxicab permits that are distributed within their  
          jurisdiction.  The local cities and counties often manage the  







          AB 650 (Low)                                        Page 8 of ?
          
          supply of taxicabs in order to mitigate against the failures of  
          market oversupply which has in the past led to driver  
          confrontations, poor service and undermined public safety.  On  
          the other hand, TNCs receive licenses at the CPUC with no  
          restriction on the number of vehicles and drivers they can place  
          on the roads and no limitations to operate in a given city or  
          county.  This bill would largely mimic the current licensing of  
          TNCs and remove all entry caps on taxicabs to enter the market.   
          This bill proposes to establish six regions, in addition to one  
          for the City and County of San Francisco.  However, the  
          licensing would be handled by the CPUC and there with be no  
          limits on the number of vehicles that can be permitted within a  
          given region.  Unless the local regions are overseeing the  
          licensing, there doesn't seem to be any reason to maintain the  
          proposed regions as currently drafted.  The author and committee  
          may wish to amend this bill to remove the references to the six  
          regions. 

          Taxicab service - statewide concern?  This bill declares that  
          taxicab service is of statewide concern and preempts local  
          agencies from adopting regulations on taxicab service.  However,  
          this bill also exempts taxicab service originating in the City  
          and County of San Francisco and San Francisco Airport from CPUC  
          regulations, and preserves local authority.  San Francisco  
          maintains the only medallion system for taxicab service in the  
          state, whereby a medallion is owned as property with the ability  
          to lease the service to other drivers.  Due to the issues  
          related to handling property rights and values, although not  
          ideal, it seems reasonable that San Francisco merits this  
          proposed separate treatment.  In order to provide consistency in  
          language and action, the author and committee may wish to amend  
          this bill to remove references to taxicab service being of  
          statewide concern and prohibitions on San Francisco's ability to  
          adopt its own insurance requirements, or airports to impose  
          their own fee structures. 

          Is the CPUC the right agency?  The sponsors of this bill attempt  
          to level the playing field among the competing transportation  
          for-hire services, by shifting regulatory licensing and  
          enforcement from local cities and counties to the CPUC. In light  
          of the many areas of oversight the CPUC oversees - electric and  
          natural gas investor-owned utilities, telephone services, water  
          agencies, and others - and the identified shortcomings of the  
          agency's existing oversight of the transportation for-hire  
          program, as noted in a recent State Auditor's report, the  
          question must be raised whether the CPUC is the appropriate  







          AB 650 (Low)                                        Page 9 of ?
          
          agency to also handle taxicab services. Unfortunately, these are  
          all compelling reasons to not include taxicab services under the  
          regulatory umbrella of the CPUC.  However, a compelling reason  
          to include taxicab services may be to better align the existing  
          transportation for-hire services and better respond to the lack  
          of fairness. Additionally, the CPUC has constitutional power to  
          fix rates.  This bill proposes to prohibit the CPUC from  
          exercising this power.  The author and committee may wish to  
          amend this bill to remove the prohibition on the CPUC's ability  
          to regulate fares or fees. 

          CPUC enforcement. The work to license, enforce and ensure safety  
          of transportation for hire services regulated by the CPUC is  
          done through the CPUC's Transportation Enforcement Bureau (TEB)  
          with approximately 45 authorized staff positions. The CPUC is  
          responsible for issuing operating permits and certificates  
          (operating authority) to qualified applicants for authority to  
          operate as passenger stage corporations, charter-party carriers  
          of passengers, and household goods carriers, and for denying,  
          suspending and revoking operating authorities of such carriers  
          that fail to meet statutory and regulatory requirements. This  
          work is performed by the Transportation License Section, the  
          Transportation and Enforcement Section. The 45 authorized staff  
          positions in TEB are spread evenly between licensing (14 staff),  
          enforcement section-north (15 staff) and enforcement  
          section-south (15 staff).

          Type of Carrier                              No. Permitted        
                  
               Charter-party carriers of passengers8,942
               Private carrier of passengers           1,310
               Household goods carriers                1,077
               Passenger stage corporations               262

          Among the powers of the CPUC, the agency has the ability to  
          inspect books and records, access a carrier's property and issue  
          telephone disconnects for violations related to advertising  
          unlicensed services. However, many of these powers are currently  
          missing from this bill. The author and committee may wish to  
          amend this bill to ensure these powers also apply to CPUC  
          regulation of taxicab services. 

          However, the agency has been challenged to adequately enforce  
          the many carriers operating in the state, including the over one  
          hundred thousand TNCs vehicles on California's streets and  
          roads. After a scathing State Auditor's review of the agency's  







          AB 650 (Low)                                        Page 10 of ?
          
          transportation program, the legislature passed legislation to  
          authorize local law enforcement to work with the agency on  
          enforcement of buses and limousines, SB 541 (Hill, Chapter 718,  
          Statutes of 2015).  The author and committee may wish to amend  
          this bill to include taxicab services among the services that  
          locals are authorized to take enforcement action on and require  
          the CPUC to issue general orders of its regulations of taxicabs  
          which are a necessary tool for law enforcement.

          Accessibility services.  It is unclear how accessibility  
          services for the disabled population would be addressed. Taxicab  
          services often provide services to disabled residents, including  
          the non-foldable wheelchair assistance. This bill is currently  
          silent on the issue of these existing services, whether by  
          contract agreements or as vehicle and driver requirements. The  
          author may wish to amend this bill to ensure accessibility  
          services are addressed.

          Addressing additional local needs. The League of Cities raises  
          concerns about the timing of the bill and the need for cities to  
          transfer licensure information to the CPUC in under such a quick  
          timeframe. The author may wish to amend this bill to provide  
          more time for carriers, cities/counties and the CPUC to prepare  
          appropriately for a successful transition. Additionally, local  
          cities and counties are tasked with managing traffic on their  
          city streets and roads. Yet, CPUC licensing decisions and data  
          information is not available to local cities. The author may  
                             wish to require the CPUC to address data sharing with local  
          agencies. 

          Other issues. This bill merits further amendments to address a  
          number of areas that may have been overlooked or need  
          clarification:
                 Insurance requirements - need to include carrier  
               commercial liability coverage which augments the  
               requirements in this bill for drivers.
                 Ensure the driver requirements in Article 7 are shifted  
               to carrier requirements of their drivers.
                 Vehicle inspection - remove the option to conduct  
               self-inspections.
                 Airports - remove the prohibitions on airports to impose  
               fees and other requirements.



          Double Referral.  Should this bill be approved by this  







          AB 650 (Low)                                        Page 11 of ?
          
          committee, it will be re-referred to the Senate Committee on  
          Transportation and Housing for its consideration.

          Prior/Related Legislation
          
            SB 541 (Hill, Chapter 718, Statutes of 2015) proposed a suite of  
          requirements of the CPUC in an effort to strengthen the agency's  
          overall program and enforcement of for-hire transportation  
          carriers.  The bill also expanded enforcement authority to other  
          peace officers in addition to the California Highway Patrol for  
          bus and limousine licensing activities. 

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


            SUPPORT:  

          Taxi Paratransit Association of California (Source)
          American Cab
          CityWide
          Fiesta Taxi
          Silicon Valley Cab Company, Inc.
          Yellow Cab of Los Angeles
          Yellow Checker and Cab Company, Inc.
          17 Individuals

          OPPOSITION:

          California Regional Council Taxi Workers Alliance (AFL-CIO)
          USA Cab LTD
          An Individual


          ARGUMENTS IN SUPPORT:    According to the author, "California's  
          current taxi regulation process is antiquated and extremely  
          onerous. Taxis are the only for-hire transportation model that  
          is fully regulated at the local level, while other for-hire  
          transportation models have one set of statewide requirements  
          governing their operation. This disparity places taxis at a  
          severe competitive disadvantage. The laws and regulations  
          governing the provision of transportation services are many  
          decades old and have evolved slowly. As with many new  
          technologies, the rapid growth of TNCs has created a disruption  
          in the taxi's archaic model of transportation. While this change  
          has created many benefits to transportation customers, it has  







          AB 650 (Low)                                        Page 12 of ?
          
          also created an unfair disadvantage for taxis to compete in the  
          market. In order to compete in the changing for-hire  
          transportation ecosystem, taxis should be regulated by one  
          statewide set of standards because the current system restricts  
          competition by setting different, more onerous rules for taxis."
          
          ARGUMENTS IN OPPOSITION:   The Taxi Workers Alliance argues "it  
          would be a grave mistake to place taxi regulation in the hands  
          of the CPUC, an agency that doesn't want it and even more  
          importantly lacks the resources to assume it? the rest of the  
          bill aims to gut all standards in the taxi industry, including  
          insurance, metered fare, inspections and airport requirements.  
          Such deregulation of the industry will create a race to the  
          bottom to the detriment of the public as well as taxi drivers."   
          They argue that taxi regulation should be moved over to the  
          county level which would eliminate the need for permits for each  
          city but not ignore legitimate local concerns. They also state  
          that the insurance requirements are inadequate and unclear. 
          
          

                                      -- END --