BILL ANALYSIS                                                                                                                                                                                                    

                              Senator Jim Beall, Chair
                                2015 - 2016  Regular 

          Bill No:          AB 1360           Hearing Date:    6/16/2015
          |Author:   |Ting                                                  |
          |Version:  |5/13/2015                                             |
          |Urgency:  |No                     |Fiscal:      |No              |
          |Consultant|Randy Chinn                                           |
          |:         |                                                      |

          SUBJECT:  Charter-party carriers of passengers:  individual fare  

            DIGEST:  This bill allows transportation network companies to  
          charge individual fares, rather than a single group fare, when  
          providing carpool services.

          Existing law requires that fares charged by transportation  
          network companies (TNCs) and other similar transportation  
          companies be computed either on distance traveled or the amount  
          of time the vehicle is in use.

          This bill allows TNCs, when providing prearranged rides for  
          multiple passengers, to instead charge individual fares,  
          provided that the following are met:

          1)The vehicle seats no more than seven passengers, excluding the  
          2)The vehicle is not used to provide public transit services or  
            to carry passengers over a fixed route.
          3)The vehicle is not used to provide pupil transportation  
          4)The vehicle is not used to provide public paratransit  
          5)The individual fare is less than the fare that would be  
            charged for the same ride to a single passenger traveling  


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          1)Purpose. According to the author, current laws governing  
            services such as TNCs prevent them from charging passengers  
            individual fares for split rides.  This statute was written in  
            1961 and has not been updated since 1994, before the advent of  
            the technology utilized by TNCs, which can now allow consumers  
            to choose whether they want to share a ride for a reduced  
            cost.  With the advancement of the sharing economy, this  
            outdated statute needs to be updated in order to allow  
            flexibility for carpooling services that TNCs want to provide  
            and customers want to utilize, according to the author.  The  
            author further notes that the carpooling and ridesharing  
            fostered by this bill will help address California's traffic  
            congestion problems and reduce greenhouse gas emissions.

          2)Need for the bill. The California Public Utilities Commission  
            (CPUC) has regulatory authority over much of the  
            transportation industry, including TNCs.  (However, the CPUC  
            does not have regulatory authority over taxis.)  In September  
            2014, the CPUC notified a TNC that state law prohibited it  
            from offering a shared ride service where each individual was  
            charged a fixed price.  Until that law was changed, as this  
            bill proposes, the TNC could not offer such a service under  
            that fare structure.

          3)The growing TNC industry.  In California the TNC business is  
            large and growing rapidly.  A January 2015 report from  
            Uber<1>, the largest TNC, reports 20,000 active Uber drivers  
            in Los Angeles, 16,000 in the San Francisco area, and almost  
            5,000 each in San Diego and Orange County, up from zero in  
            July 2012.  TNCs are successfully competing with taxi cabs,  
            limousines, and other regulated transit operators.  

          4)An unlevel playing field.  The different types of  
            transportation companies (e.g., TNCs, limousines, Super  
            Shuttles, taxis) are all regulated differently.  Rates,  
            routes, insurance requirements, vehicle inspections, and  
            driver requirements vary.  State law has begun to address the  
            biggest differences between TNCs, but there's little dispute  
            that big differences remain.  In an ideal world, companies  

          <1> An Analysis of the Labor Market for Uber's Driver-Partners  
          in the United States, by Jonathan V. Hall and Alan B. Kreuger;  
          January 22, 2015.


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            would compete based on the differences in their business  
            models and competence, not on the differences in how they are  

          5)Creating a level playing field slowly.  The laws and  
            regulations governing the provision of transportation services  
            are many decades old.  These laws and regulations have evolved  
            slowly, as evidenced by the arcane and complicated carrier  
            classifications.  At least over the last several decades, the  
            few new laws have focused on safety issues.  The rapid growth  
            of TNCs has disrupted this relatively quiet corner of our  
            economy, changing the economics of transportation and  
            challenging the economic models of the traditional  
            transportation providers.  This has upended the lives of many  
            people in the transportation industry, while at the same time  
            providing many benefits to transportation consumers.

            Regulators are struggling to keep up with the rapidly evolving  
            transportation industry, a bit hamstrung by laws which never  
            anticipated the different ways that TNCs operate.  In  
            September 2013, the CPUC, which has regulatory authority over  
            much, though not all, of the passenger transportation  
            industry, issued its first set of rules<2> intended to foster  
            the growth of TNCs, without compromising public safety.  These  
            rules started the process of establishing a level playing  
            field so that all transportation companies would have similar  
            regulatory obligations, allowing them to compete based on  
            their business models.  Among the rules were requirements for  
            obtaining an operating permit from the CPUC, requiring  
            criminal background checks for drivers, establishing driver  
            training programs, implementing zero-tolerance policies on  
            drugs and alcohol, and minimum insurance requirements.  

            The CPUC has initiated a second phase of their investigation  
            to look more closely at the regulation of TNCs and the  
            traditional transportation companies, known as charter party  
            carriers<3>.  A set of issues has been proposed and comments  
            on the scope of those issues are due in June.  As the state's  
            expert agency over transportation matters, the CPUC is in the  
            best position to consider whether its current regulations  
            provide for a fair and competitive market.  It can recommend  
          <2> D.13-09-045; issued September 23, 2013.
          <3> Assigned Commissioner and Administrative Law Judge's Ruling  
          Amending the Scoping Memo and Ruling for Phase II of Proceeding;  
          Rulemaking 12-12-011; April 28, 2015.


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            specific changes to law and, in some cases, can implement  
            changes to its own regulations to achieve the goal of a level  
            playing field.  

          6)Good for one, good for all?  This bill limits the flexibility  
            to charge individual fares to TNCs; it does not allow other  
            charter-party carriers (e.g., limousines) that same  
            flexibility.  As there is no policy reason to limit the  
            flexibility to TNCs, the author and committee may wish to  
            consider broadening the flexibility in this bill to all  
            charter-party carriers.

          7)Technical Amendments 

                 On page 2, line 19, replace "rideshare program" with  
                 On page 3, line 2, delete "single" 
          1)Double-referral.  This bill has been double-referred to the  
            Senate Energy, Utilities and Communications Committee.

          Related Legislation:

          AB 828 (Low) - exempts vehicles operating in conjunction with  
          TNCs from the definition of commercial vehicle.  This bill is  
          pending in the Senate Transportation and Housing Committee.

          AB 1422 (Cooper) - requires transportation network companies to  
          participate in the Department of Motor Vehicles program for  
          notifying employers of the driving records of their drivers.   
          This bill is pending in the Senate Energy, Utilities and  
          Communications Committee.

          Assembly votes:

          U&C: 14-1
          FISCAL EFFECT:  Appropriation:  No    Fiscal Com.:  No    Local:  

            POSITIONS:  (Communicated to the committee before noon on  


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                          June 10, 2015.)

          Bay Area Council
          California League of Conservation Voters
          Circulate San Diego
          City of Los Angeles
          Clean Coalition
          Climate Resolve
          EDF/Coalition for Clean Air
          Environment California
          Internet Association
          Los Angeles Chamber of Commerce
          Metropolitan Transportation Commission
          Orange County Business Council
          Natural Resources Defense Council
          Planning and Conservation League
          San Francisco African American Chamber of Commerce
          San Francisco Chamber of Commerce
          San Francisco Transit Riders
          Silicon Valley Leadership Group
          Southern California Association of Governments
          Tech Net
          Valley Industry and Commerce Association


          Greater California Livery Association
          Los Angeles Taxi Workers Alliance
          Sacramento Taxi Cab Union
          San Francisco Taxi Workers Alliance
          San Jose Taxi Drivers Association
          United Taxi Workers of San Diego
          One individual


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