Fact check: Do California lawmakers always support Uber and Lyft?
A California car displaying the symbols for Uber, Lyft, and Sidecar. (via Wikimedia Commons)
The ride-hailing services Uber and Lyft are having a big impact on the passenger-carrier-for-hire business in California. The total number of taxicab trips in Los Angeles declined by almost 30 percent during the two years following the services’ arrival in the city in 2013, according to data from the Los Angeles Department of Transportation. “In San Francisco, the corporate home of both Uber and Lyft, the number of trips taken per taxi dropped by more than two-thirds over a two-year period,” the Los Angeles Times reported in April.[1]
As Uber and Lyft have grown in popularity, state agencies and the legislature have worked on the question of how to regulate them. In September 2013, the California Public Utilities Commission (CPUC) created a new legal category—“transportation network companies” (TNCs)—to distinguish the ride-hailing services from the long-established passenger-carrier-for-hire businesses, such as taxicab and limousine companies.[2] The following year, the first bills to regulate TNCs were introduced in the state legislature.[3]
State Senate Transportation Committee Chairman Ben Hueso (D-San Diego) is critical of the approach to regulating TNCs taken by the Democratic-controlled legislature and Gov. Jerry Brown, a fellow Democrat. Hueso, whose brothers own the largest taxicab company in San Diego, gave voice to his frustrations during a June 14 committee hearing on AB 828, a bill that would exempt the cars of TNC drivers from the regulations on commercial vehicles in the state vehicle code until 2018.[4] “There isn’t a bill in support of [Uber and Lyft] that this governor won’t sign,” Huseso said. "And there isn’t a bill that this Legislature won’t support.”[5]
Is Hueso correct in his characterization of the bills passed by the legislature and signed by the governor?
There have been 18 bills introduced in the legislature since 2014 focusing in whole or in part on TNCs, and so far, three have passed and been signed into law by Gov. Brown.
The first created insurance regulations for TNC drivers and was publicly supported by both Uber and Lyft.[6] The second streamlined how the records of TNC drivers are made available to the state Department of Motor Vehicles. The third allowed state employees to be reimbursed for the cost of trips in TNC vehicles.
Background: TNCs and the state of California
Uber and Lyft, the only TNCs operating statewide in California, were both founded in San Francisco. Uber started offering its services in that city in 2010, and Lyft was founded two years later.[7][8] A third TNC that operated statewide, Sidecar, was also founded in 2012, but it went out of business in 2015.[9]
The CPUC was the first state agency to assert regulatory authority over the companies. In December 2012, it opened a rules-making process for “New Online Enabled Transportation Services.”[10] By that time, the CPUC had issued cease and desist orders to Uber, Lyft, and Sidecar for operating passenger-carrier services without the proper permits.[11][12] The three companies maintained that the permits were unnecessary since they provided a service that was different from traditional passenger-carrier services, such as taxicab companies. All three companies continued operating, and in March 2013, the companies and CPUC reached an agreement to suspend any enforcement actions against the companies until the rules-making process was complete.[10]
In September 2013, the CPUC concluded its process and created a new definition for the companies, classifying them as transportation network companies. According to the CPUC, a TNC is “an organization whether a corporation, partnership, sole proprietor, or other form, operating in California that provides prearranged transportation services for compensation using an online-enabled application (app) or platform to connect passengers with drivers using their personal vehicles.”[10]
Along with that definition, the CPUC also issued the first set of regulations for TNCs. The companies were required to obtain a license from the CPUC. In order to do so, the companies were required to have a minimum of $1 million in commercial liability insurance coverage for each driver while the driver was working. The companies were also required to institute driver training programs, adopt “zero tolerance” policies on drug and alcohol use for drivers, and conduct criminal background checks on drivers.[10]
TNCs and the California legislature
There have been 18 bills introduced in the California legislature aiming to establish regulations for TNCs. Three of the bills have passed and been signed into law. Six bills are pending in committees, and one was held in committee without a vote until the deadline for a vote in this session passed.[13] Two have been voted down, and four other bills “died” without a vote. (A bill introduced in the first year of a legislative session and not voted on prior to December 31 “dies” if it is not reintroduced by January 31 the following year.)[14] One bill was introduced, but no further action was taken. Another bill was withdrawn by its author.
| Bills to regulate transportation network companies introduced in the California legislature. (click show to open) | |||
|---|---|---|---|
| Bill | Date Introduced | Status | Impact on TNCs |
| AB 2224[15] | February 20, 2014 | Dead | Mandated that TNCs have $1 million in commercial liability insurance for drivers |
| AB 2293[16] | February 21, 2014 | Passed | Created new insurance standards for TNCs |
| AB 24[17] | December 1, 2014 | Dead | Mandated a controlled substance and alcohol testing program for TNC drivers, including pre-employment testing |
| AB 229[18] | February 4, 2015 | Passed | Allows state employees to be reimbursed for using a TNC |
| SB 215[19] | February 12, 2015 | Pending in Assembly Appropriations Committee | As part of a general reorganization of the California Public Utilities Commission, responsibility for regulating TNCs would be transferred from the CPUC to the Department of Motor Vehicles |
| SB 372[20] | February 24, 2015 | Dead | Extended to TNCs the prohibition on passenger-carrier companies hiring or continuing to employ any driver who is required to register as a sex offender |
| AB 828[4] | February 26, 2015 | Pending in Senate Appropriations Committee | Exempts cars of TNC drivers from the regulations for commercial vehicles in the state vehicle code until January 2018; also mandates a study of existing statutes and regulations regarding TNCs |
| AB 886[21] | February 26, 2015 | Dead | Prohibited TNCs from disclosing "personally identifiable information" about passengers, unless the passenger has given explicit consent for the company to do so |
| AB 1289[22] | February 27, 2015 | Pending in Senate Appropriations Committee | Mandated that TNCs conduct comprehensive criminal background checks; also prohibited employment of drivers convicted of violent crimes, sexual offenses, certain property crimes, or driving under the influence of drugs/alcohol within the last seven years |
| AB 1360[23] | February 27, 2015 | Pending in Senate Energy, Utilities and Communications Committee | Exempts TNCs from prohibition on setting fares on a per-passenger basis |
| AB 1422[24] | February 27, 2015 | Passed | Allows the DMV to check computerized records of TNC drivers instead of requiring TNCs to submit printed versions of those records |
| AB 1727[25] | January 28, 2016 | Withdrawn | Allowed independent contractors who receive work through online platforms to organize and negotiate with the companies that host the platforms |
| SB 1035[26] | February 12, 2016 | Failed* | Mandated the creation of a fixed rate system for passenger fares and created penalties for charging "unreasonable, excessive or discriminatory" fares |
| SB 1405[27] | February 19, 2016 | Pending in Senate Appropriations Committee | Allows TNCs to receive "zero emissions" tax credits if a driver's car qualifies |
| AB 2603[28] | February 19, 2016 | Held in Assembly Utilities and Commerce Committee without a vote | Mandates the creation of a system to register and resolve complaints regarding TNCs |
| AB 2687[29] | February 19, 2016 | Pending in Senate Appropriations Committee | Makes it a unlawful to operate a motor vehicle for hire with a blood alcohol content of 0.04 percent or higher |
| AB 2777[30] | February 19, 2016 | Failed** | Mandated criminal background checks—including fingerprint checks—against federal and state databases for drivers employed by TNCs |
| AB 2857[31] | February 19, 2016 | Introduced | Would "declare the intent of the Legislature to enact legislation that promotes public safety and accountability for transportation network companies utilizing peer–to–peer mobile services to deliver commodities such as food or clothing" |
| *SB 1035 failed to receive the necessary number of votes to pass in the Senate Transportation and Housing Committee. The final vote on April 20, 2016, was 5 ayes, 3 noes. **AB 2777 was defeated in a floor vote in the Assembly on June 2, 2016. The vote was 23 ayes, 34 noes. | |||
Both Uber and Lyft actively lobby the legislature. In May, the Los Angeles Times reported that Uber and Lyft had spent a combined total of almost $900,000 on lobbying during the current legislative session.[32] According to the Times, Uber ranked in the top 3 percent of organizations in terms of lobbyist spending in Sacramento in 2015, spending more than major corporations such as Wal-Mart, Bank of America, and Wells Fargo.[33]
Bills to regulate TNCs that have passed
The first bills to regulate TNCs dealt with auto insurance requirements. AB 2224 was introduced on February 20, 2014, and AB 2293 was introduced the next day.
AB 2224 followed the standard set by the CPUC and required TNCs to have $1 million in commercial liability insurance coverage for their drivers. The bill was opposed by both Uber and Lyft. It was referred to the Assembly Committee on Utilities and Commerce, but was never brought up for a vote.[15]
AB 2293 was enacted. The insurance requirements in the statute vary according to the status of the driver. The company is required to have commercial liability coverage as soon as the driver signs onto the company’s online platform to begin working, but the company is not required to provide $1 million in coverage until the driver accepts a ride assignment. That level of coverage must continue until the passenger exits the vehicle.[16]
When AB 2293 was first introduced, it required TNCs to provide up to $750,000 in insurance coverage when a driver was between ride assignments but still signed on to the company’s online platform. Uber and Lyft objected to that level of coverage, and after negotiations with the legislature and the Brown administration, that amount was lowered to $180,000 in coverage, although an additional $200,000 in coverage could be required if the coverage provided by the driver’s personal auto insurance policy contains insufficient liability coverage.[34][6]
The Senate passed AB 2293 on August 27, 2014, 30-4, and the Assembly passed it unanimously the following day. Gov. Brown signed the bill into law on September 17, 2014.[16]
The next TNC bill to be passed was AB 1422, which allowed TNCs to maintain computerized driver’s records for the DMV rather than present paper copies of driver’s records in response to DMV inquiries. Other passenger-carrier-for-hire services already had access to this so-called “pull-notice” system. The bill passed the Senate on August 27, 2015, with the support of all 39 senators voting. It passed the Assembly four days later, 80-0.[24]
The third bill to pass the legislature was AB 229, which allowed state employees to be reimbursed for using TNCs. The Senate voted 25-11 to approve the bill on September 10, 2015. The next day it passed the Assembly, 74-3.[18]
Gov. Brown signed both AB 1422 and AB 229 on October 11, 2015.[24][18]
Gov. Brown did not issue any statements when signing the three bills. The only bill impacting TNCs that Brown publicly commented on is SB 215, which is currently before the Assembly Committee on Appropriations.[19] The bill would reorganize the CPUC and as part of the reorganization would transfer responsibility for regulating TNCs and other passenger-carriers-for-hire from the CPUC to the DMV.[35] On June 27, Brown declared his support for the bill, but his statement did not address the section of the bill impacting TNCs.[36]
Conclusion
Uber and Lyft have become popular alternatives to taxicabs and other traditional passenger-carrier-for-hire services in California, and this has led to legislative action to regulate transportation network companies. State Senate Transportation Committee Chairman Ben Hueso has been critical of how his colleagues in the legislature and Gov. Jerry Brown have approached that regulation. “There isn’t a bill in support of [Uber and Lyft] that this governor won’t sign. And there isn’t a bill that this Legislature won’t support,” Hueso said.
Eighteen bills with the regulation of TNCs as either their primary purpose or among their purposes have been introduced in the California Legislature. Three of those bills have passed—an insurance bill supported by Uber and Lyft; a bill streamlining a bureaucratic process for the companies; and a bill allowing state employees to be reimbursed for using a TNC. All three bills were signed into law by Gov. Brown.
See also
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Sources and Notes
- ↑ Los Angeles Times, “Uber and Lyft have devastated L.A.’s taxi industry, city records show,” April 14, 2016
- ↑ KPCC, “Update: California becomes first state to regulate ride-sharing,” September 19, 2013
- ↑ There have also been efforts to regulate TNCs at the municipal level in California since 2010.
- ↑ 4.0 4.1 California Legislative Information, “AB 828,” accessed July 12, 2016
- ↑ Los Angeles Times, “The fight within the California Democratic Party over Uber and Lyft,” June 30, 2016
- ↑ 6.0 6.1 The San Diego Union-Tribune, “Gov. signs controversial ridesharing bill,” September 17, 2014
- ↑ Uber Newsroom, “Uber’s Founding,” December 22, 2010
- ↑ TechCrunch, “Lyft’s Focus On Community And The Story Behind The Pink Mustache,” September 17, 2012
- ↑ Bloomberg, “Sidecar Squeezed Out by Uber and Lyft, Will Shut Down,” December 29, 2015
- ↑ 10.0 10.1 10.2 10.3 Public Utilities Commission of the State of California, “Decision adopting rules and regulations to protect public safety while allowing new entrants to the transportation industry,” September 23, 2013
- ↑ TechCrunch, “UberCab Ordered to Cease And Desist,” October 24, 2010
- ↑ Public Utilities Commission of the State of California, “Notice to Cease and Desist,” August 15, 2012
- ↑ The deadline for voting on bills in policy committees in the Assembly this session was July 1. California State Assembly, “Legislative deadlines,” accessed July 21, 2016
- ↑ California Legislative Information, “Joint rule of the Senate and the Assemby,” accessed July 12, 2016
- ↑ 15.0 15.1 California Legislative Information, “AB 2224,” accessed July 12, 2016
- ↑ 16.0 16.1 16.2 California Legislative Information, “AB 2293,” accessed July 12, 2016
- ↑ California Legislative Information, “AB 24,” accessed July 12, 2016
- ↑ 18.0 18.1 18.2 California Legislative Information, “AB 229,” accessed July 12, 2016
- ↑ 19.0 19.1 California Legislative Information, “SB 215,” accessed July 12, 2016
- ↑ California Legislative Information, “SB 372,” accessed July 12, 2016
- ↑ California Legislative Information, “AB 886,” accessed July 12, 2016
- ↑ California Legislative Information, “AB 1289,” accessed July 12, 2016
- ↑ California Legislative Information, “AB 1360,” accessed July 12, 2016
- ↑ 24.0 24.1 24.2 California Legislative Information, “AB 1422,” accessed July 12, 2016
- ↑ California Legislative Information, “SB 1727,” accessed July 12, 2016
- ↑ California Legislative Information, “SB 1035,” accessed July 12, 2016
- ↑ California Legislative Information, “SB 1405,” accessed July 12, 2016
- ↑ California Legislative Information, “AB 2603,” accessed July 12, 2016
- ↑ California Legislative Information, “AB 2687,” accessed July 12, 2016
- ↑ California Legislative Information, “AB 2777,” accessed July 12, 2016
- ↑ California Legislative Information, “AB 2777,” accessed July 12, 2016
- ↑ Los Angeles Times, “Uber and Lyft are winning at the state Capitol--here’s why,” May 7, 2016
- ↑ Los Angeles Times, “Facing regulatory roadblocks, Uber ramps up its lobbying in California,” July 26, 2015
- ↑ The Mercury News, “New Uber, Lyft, Sidecar insurance rules signed into law by Gov. Jerry Brown,” September 17, 2014
- ↑ The DMV's one attempt to regulate TNCs began on January 5, 2015, when it issued a statement saying TNC drivers were required to have commercial license plates on their vehicles. The DMV reversed itself two weeks later, saying that its action was premature and that the issue required further study before any action would be taken. Los Angeles Times, “California DMV retracts memo requiring commercial plates for Uber, Lyft,” January 23, 2015
- ↑ Office of Governor Edmund G. Brown, Jr., “Governor Brown, Legislators announce sweeping reforms to California Public Utilities Commision,” June 27, 2016
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