BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
                              Senator Jim Beall, Chair
                                2015 - 2016  Regular 

          Bill No:          AB 1360           Hearing Date:    6/30/2015
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          |Author:   |Ting                                                  |
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          |Version:  |5/13/2015                                             |
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          |Urgency:  |No                     |Fiscal:      |No              |
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          |Consultant|Randy Chinn                                           |
          |:         |                                                      |
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          SUBJECT:  Charter-party carriers of passengers:  individual fare  
          exemption


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

          ANALYSIS:
          
          Existing law requires that fares charged by 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  
            driver.
          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  
            services.
          4)The vehicle is not used to provide public paratransit  
            services.
          5)The individual fare is less than the fare that would be  
            charged for the same ride to a single passenger traveling  
            alone.









          AB 1360 (Ting)                                         PageB of?
          
          COMMENTS:

          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.

          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 is changed, as this bill proposes, the  
          TNC could not offer such a service under that fare structure.

          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.  

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

          ---------------------------
          <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.








          AB 1360 (Ting)                                         PageC of?
          

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

          ---------------------------
          <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.








          AB 1360 (Ting)                                         PageD of?
          
          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.  
           The author has agreed to accept amendments to broaden the bill  
          to apply to all charter-party carriers.

          Technical Amendments. 

           On page 2, line 19, replace "rideshare program" with "service"
           On page 3, line 2, delete "single" 
          
          Double-referred.  This bill has also been 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 this 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:

            Floor:    73-7
            P&CP:     11-0
            U&C:      14-1
          
          FISCAL EFFECT:  Appropriation:  No    Fiscal Com.:  No    Local:  
           No


            POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,
                          June 24, 2015.)
          
            SUPPORT:  

          Bay Area Council
          California League of Conservation Voters
          Circulate San Diego
          City of Los Angeles









          AB 1360 (Ting)                                         PageE of?
          
          Clean Coalition
          Climate Resolve
          EDF/Coalition for Clean Air
          Environment California
          Internet Association
          Los Angeles Chamber of Commerce
          Lyft
          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
          Sidecar
          Silicon Valley Leadership Group
          Southern California Association of Governments
          SPUR
          Tech Net
          Transform
          Uber
          Valley Industry and Commerce Association

          

          OPPOSITION:

          Airport Ground Transportation Association
          California Bus Association
          Greater California Livery Association
          San Francisco Taxi Workers Alliance
          SuperShuttle
          Taxicab Paratransit Association of California
          One individual


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