Transportation Network Company Act Exposed

The Transportation Network Company Act is a draft model policy considered by ALEC's Communications and Technology Task Force at the 2014 States and Nation Policy Summit on December 4, 2014. Due to incomplete information, it is not known if the bill passed in a vote by legislators and lobbyists at ALEC task force meetings, if ALEC sought to distance itself from the bill as the public increased scrutiny of its pay-to-play activities, or if key operative language from the bill has been introduced by an ALEC legislator in a state legislature in the ensuing period or became binding law. The bill language below is from a ALEC 35 day mailer, available here.

ALEC Bill Text

Summary

This Act requires transportation network companies to carry liability insurance, conduct background checks on transportation network company drivers, inspect transportation network company vehicles, and obtain a permit from the public utilities commission.

Model Policy

Section 1. {Short Title.}

This Act shall be known as the Transportation Network Company Act.

Section 2. {Definitions.}

For the purposes of this Act:

(A) “Transportation Network Company” means a corporation, partnership, sole proprietorship, or other entity that uses a digital network to connect riders to drivers for the purpose of providing transportation.

(1) A transportation network company does not provide taxi service, transportation service arranged through a transportation broker, ridesharing arrangements, or any transportation service over fixed routes at regular intervals.

(2) A transportation network company is not deemed to own, control, operate, or manage the personal vehicles used by transportation network company drivers.

(3) A transportation network company does not include a political subdivision or other entity exempted from federal income tax under section 115 of the federal “Internal Revenue Code of 1986” as amended.

(B) “Public Utilities Commission” or “Commission” means a governing body that regulates the rates and services of public utilities, including transportation utilities.

(C) “Contract carrier” means every person, other than a common carrier or a motor carrier of passengers, who, by special contract, directly or indirectly affords a means of passenger transportation over any public highway of this state; except that the term does not include a transportation network company.

(D) “Motor Carrier” means any person owning, controlling, operating, or managing any motor vehicle that provides transportation in intrastate commerce pursuant to this article, except that the term does not include a transportation network company.

(E) “Personal Vehicle” means a vehicle that is used by a transportation network company driver in connection with providing services for a transportation network company that meets the vehicle criteria set forth in this Act.

(F) “Prearranged Ride” means a period of time that begins when a driver accepts a requested ride through a digital network, continues while the driver transports the rider in a personal vehicle, and ends when the rider departs from the personal vehicle.

(G) “Transportation Network Company Driver” or “Driver” means an individual who uses his or her personal vehicle to provide services for riders matched through a transportation network company’s digital network. A driver need not be an employee of a transportation network company.

(H) “Transportation Network Company Rider” or “Rider” means a passenger in a personal vehicle for whom transport is provided, including:

(1) An individual who uses a transportation network company’s online application or digital network to connect with a driver to obtain services in the driver’s vehicle for the individual and anyone in the individual’s party; or

(2) Anyone for whom another individual uses a transportation network to connect a driver to obtain services in the driver’s vehicle.

(I) “Transportation Network Company Services” or “Services” means the provision of transportation by a driver to a rider with whom the driver is matched through a transportation network company.

(1) The term does not include services provided either directly by or under contract with a political subdivision or other entity exempt from federal income tax under section 115 of the federal “Internal Revenue Code of 1986,” as amended.

Section 3. {Regulatory Power of the Commission.}

(A) Notwithstanding any other provision of law, transportation network companies are governed exclusively by this Act.

(B) A transportation network company is not subject to the commission’s rate, entry, operational or common carrier requirements, other than those requirements expressly set forth in this Act.

(C) Transportation network companies are not common carriers, contract carriers, or motor carriers under this Act, but are declared to be affected with a public interest and are subject to regulation to the extent provided in this Act.

(D) The commission may promulgate rules consistent with this Act concerning administration, fees, and safety requirements, but may not add requirements concerning any issue already addressed in the Act.

(E) The commission may promulgate rules requiring evidence of financial responsibility and proof of the continued validity of the insurance policy, surety bond, or self-insurance, but shall not require a transportation network company to file a copy of the insurance policy.

Section 4. {Registration and Insurance Requirements.}

(A) A transportation network company shall file with the commission documentation evidencing that the transportation network company or the driver has secured primary liability insurance coverage for the driver for incidents involving the driver during a prearranged ride.

(1) Coverage for incidents involving a driver during a prearranged ride must be in the amount of at least one million dollars ($1,000,000) per occurrence.

(2) The insurance policy must provide coverage at all times the driver is engaged in a prearranged ride.

(3) Subsection (A) of this Section becomes effective ninety (90) days after the effective date of this Act.

(B) For the period of time when a driver is logged into a transportation network company’s digital network but is not engaged in a prearranged ride, the following insurance requirements apply:

(1) A driver or a transportation network company on the driver’s behalf shall maintain a primary automobile insurance policy that:

(i) Recognizes that the driver is a transportation network company driver and covers the driver’s provision of transportation network company services while the driver is logged into the transportation network company’s digital network;

(ii) Meets at least the minimum coverage of at least fifty thousand dollars ($50,000) to any one person in any one accident, one hundred thousand dollars ($100,000) to all persons in any one accident, and for property damage arising out of the use of the motor vehicle to a limit, exclusive of interest and costs, of thirty thousand dollars ($30,000) in any one accident; and

(iii) Is one of the following:

(a) Full-time coverage similar to the coverage required by commission rules promulgated under Section 3 of this Act;

(b) An insurance rider to, or endorsement of, the drivers’ personal automobile insurance policy required by the [insert state statute]; or

(c) A corporate liability insurance policy purchased by the transportation network company that provides primary coverage for the period of time in which a driver is logged into the digital network.

(C) If a transportation network company purchases an insurance policy under Subsection (B) of this Section, it shall provide documentation to the commission evidencing that the transportation network company has secured the policy.

(D) If the responsibility is placed on a driver to purchase insurance under Subsection (B) of this Section, the transportation network company shall verify that the driver has purchased an insurance policy.

(E) A driver’s personal automobile insurance policy that complies with [insert automobile insurance policy regulations of the state] is sufficient to satisfy the compulsory insurance requirements thereof.

(F) An insurance policy required by Subsection (A) or Subsection (B) of this Section:

(1) May be placed with an insurer licensed under in [insert state] or with a surplus lines insurer authorized in [insert state]; and

(2) Need not separately satisfy the requirements of [insert automobile insurance policy regulations of the state].

(G) If more than one insurance policy provides valid and collectible coverage for a loss arising out of an occurrence involving a motor vehicle operated by a driver, the responsibility for all the claim must be divided on a pro rata basis among all of the applicable policies. This equal division of responsibility may only be modified by the written agreement of all the insurers of the applicable policies and the owners of those policies.

(H) In a claims coverage investigation, a transportation network company shall cooperate with a liability insurer that also insures the driver’s transportation network company vehicle, including the provision of relevant dates and times during which an incident occurred that involved the driver while the driver was logged into a transportation network company’s digital network.

Section 5. {Operational Requirements.}

(A) The following requirements apply to transportation network company drivers, as defined by Section 2(G) of this Act:

(1) A driver shall not provide services unless a transportation network company has matched the driver to a rider through a digital network. A driver shall not solicit or accept the on-demand summoning of a ride, otherwise known as a “street hail.”

(2) A transportation network company shall make available to prospective riders and drivers the method by which the transportation network company calculates fares or the applicable rates being charged and an option to receive an estimated fare.

(3) Upon completion of a prearranged ride, a transportation network company shall transmit to the rider an electronic receipt, either by electronic mail or via text message, documenting:

(i) The point of origin and destination of the prearranged ride;

(ii) The total duration and distance of the prearranged ride;

(iii) The total fare paid, including the base fare and any additional charges incurred for the distance traveled or duration of the prearranged ride; and

(iv) The driver’s first name and telephone number.

(4) Before permitting a person to act as a driver on its digital network, a transportation network company shall confirm that the person is at least twenty-one years of age and possess:

(i) A valid driver’s license;

(ii) Proof of automobile insurance;

(iii) Proof of a (insert state) vehicle registration; and

(iv) Within ninety (90) days of the effective date of this Act and pursuant to commission rules, proof that the person is medically fit to drive.

(5) A driver shall not offer transportation network company services for more than sixteen (16) cumulative hours or provide prearranged rides for more than twelve (12) cumulative hours in a calendar day.

(6) A transportation network company shall implement an intoxicating substance policy for drivers that disallows any amount of intoxication of the driver while providing services. The transportation network company shall include on its website and mobile device application software a notice concerning the transportation network company’s intoxicating substance policy.

(7) Before permitting an individual to act as a driver on its digital network, a transportation network company shall obtain and review a driving history report for the individual.

(8) An individual with the following moving violations shall not serve as a driver:

(i) More than three moving violations in the three (3) year period preceding the individual’s application to serve as a driver; or

(ii) A major moving violation in the three (3) year period preceding the individual’s application to serve as a driver, whether committed in this state, another state, or the United States.

(9) A transportation network company or a third party shall retain true and accurate results of the driving history report for each driver that provides services for the transportation network company for at least three (3) years.

(10) Before a person is permitted to act as a driver through use of a transportation network company’s digital network, the person shall obtain a criminal history record check and provide a copy of the criminal history record check to the transportation network company.

(i) A driver shall obtain a criminal history record check in accordance with Subsection (A) (10) of this Section every five (5) years while serving as a driver.

(ii) A transportation network company or a third party shall retain true and accurate results of the criminal history record check for each driver that provides services for the transportation network company for at least five (5) years after the criminal history record check was conducted.

(11) A person who has been convicted of or pled guilty or nolo contendere to driving under the influence of drugs or alcohol in the previous seven (7) years before applying to become a driver shall not serve as a driver.

(12) If the criminal history record check reveals that the person has ever been convicted of or pled guilty or nolo contendere to any of the following felony offenses, the person shall not serve as a driver:

(i) An offense against property;

(ii) An offense involving unlawful sexual behavior;

(iii) A crime of violence;

(13) A person who has, within the immediately preceding five years, been convicted of or pled guilty or nolo contendere to a felony shall not serve as a driver.

(B) The following requirements apply to personal vehicles, as defined by Section 2(E) of this Act:

(1) A transportation network company shall conduct or have certified mechanic conduct a safety inspection of a prospective driver’s vehicle before it is approved for use as a personal vehicle and shall have periodic inspections of personal vehicles conducted thereafter, at intervals of at least one (1) inspection per year. A safety inspection shall include an inspection of:

(i) Foot brakes;

(ii) Emergency brakes;

(iii) Steering mechanism;

(iv) Windshield;

(v) Rear window and other glass;

(vi) Windshield wipers;

(vii) Headlights;

(viii) Tail lights,

(ix) Turn indicator lights;

(x) Stop lights;

(xi) Front seat adjustment mechanism;

(xii)The opening, closing, and locking capability of the doors;

(xiii) Horn;

(xiv) Speedometer;

(xv)Bumpers;

(xvi) Muffler and exhaust system;

(xvii) Tire conditions, including tread depth;

(xviii) Interior and exterior rear-view mirrors; and

(xix) Safety belts

(2) A personal vehicle must:

(i) Have at least four (4) doors; and

(ii) Be designed to carry no more than eight (8) passengers, including the driver.

(3) A transportation network company or a third party shall retain true and accurate inspection records for at least fourteen (14) months after an inspection was conducted for each personal vehicle used by a driver.

(4) Each transportation network company shall require that each personal

348 vehicle providing transportation network company services display an 349 exterior marking that identifies the personal vehicle as a vehicle for hire.

Section 6. {Disclosure Requirements.}

(A) A transportation network company shall make the following disclosures to a prospective driver in the prospective driver’s terms of service:

(1) “While operating on the transportation network company’s digital network, your personal automobile insurance policy might not afford liability coverage, depending on the policy’s terms.”

(2) “If the vehicle that you plan to use to provide transportation network company services for our transportation network company has a lien against it, you must notify the lienholder that you will be using the vehicle for transportation services that may violate the terms of your contract with the lienholder.”

(B) The disclosure set forth in Subsection (A) of this Section must be placed prominently in the prospective driver’s written terms of service, and the prospective driver must acknowledge the terms of service electronically or by signature.

(C) A transportation network company shall make available to a rider a customer support telephone number on its digital network or website for rider inquiries.

(D) If a transportation network company customer or other passenger in the transportation network company customer’s party files a complaint with the commission against a transportation network company or driver, the commission may inspect the transportation network company’s records as reasonably necessary to investigate and resolve the complaint.

(E) A transportation network company shall provide services to the public in a nondiscriminatory manner once the driver and rider have been matched through the digital network.

(1) A driver shall not refuse to transport a passenger unless:

(i) The passenger is acting in an unlawful, disorderly, or endangering manner;

(ii) The passenger is unable to care for himself or herself and is not in the charge of a responsible companion; or

(iii) The driver has already committed to providing a ride for another rider.

(2) A transportation network company shall not impose additional charges for providing services to persons with physical or mental disabilities because of those disabilities.

(3) A driver shall permit a service animal to accompany a rider on a prearranged ride.

(F) Within ten (10) days of receiving a complaint about a driver’s alleged violation of subsection (G) of this Section, the commission shall report the complaint to the transportation network company for which the driver provides services.

(G) A driver shall immediately report to the transportation network company any refusal to transport a passenger pursuant to Subsection (G)(1) of this Section, and the transportation network company shall annually report all such refusals to the commission in a form and manner determined by the commission.

(H) A transportation network company is not liable for a driver’s violation of subsection (G) of this Section unless the driver’s violation has been previously reported to the transportation network company in writing, and the transportation network company has failed to reasonably address the alleged violation.

(1) The commission shall afford a transportation network company the same due process rights afforded transportation providers in defending against civil penalties assessed by the commission.

(2) The commission may assess a civil penalty up to five hundred fifty dollars ($550) under this subsection (J).

Section 7. {Conversion to Transportation Network Company.}

(A) Any taxicab company or shuttle company authorized by the commission may convert to a transportation network company model or may set up a subsidiary or affiliate transportation network company.

(B) In converting to a transportation network company model or setting up a transportation network company subsidiary or affiliate, a taxicab company or shuttle company authorized by the commission may completely or partially suspend its certificate of public convenience and necessity issued. During the period of suspension of its certificate of public convenience and necessity, a taxicab company, shuttle company, or a subsidiary or affiliate of a company or shuttle company is exempt from taxi or shuttle standards, the standards concerning the regulation of rates and charges, and any commissioned rules regarding common carriers.

Section 6. {Permit Required for Transportation Network Companies.}

(A) A person shall not operate a transportation network company in [insert state here] without first having obtained a permit from the commission.

(B) The commission shall issue a permit to each transportation network company that meets the requirements of this Act and pays an annual permit fee to the commission as determined by the commission for its reasonable cost of regulating transportation network companies divided by the number of transportation network companies operating in the state. The commission may adjust the annual permit fee by rule to cover the commission’s direct and indirect costs associated with implementing this Act.

(C) The commission shall determine the form and manner of application for a transportation network company permit.

(D) The commission may take action against a transportation network company, including issuing an order to cease and desist and suspending, revoking, altering, or amending a permit issued to the transportation network company.

(E) The commission shall not assess a penalty against a driver.

(F) The commission may deny an application under this Act or refuse to renew the permit of a transportation network company based on a determination that the transportation network company has not satisfied a civil penalty arising out of an administrative or enforcement action brought by the commission.

Section 7. {Transportation Network Company Fund.}

(A) The commission shall transmit all fees collected pursuant to this Act to the state treasurer, who shall credit the fees to the transportation network company fund, which is hereby created in the state treasury. The moneys in the fund are continuously appropriated to the commission for the purposes set forth in this Act. All interest earned from the investment of moneys in the fund is credited to the fund. Any moneys not expended at the end of the fiscal year remain in the fund and do not revert to the general fund or any other fund.

Section 8 . {Repealer Clause.}

Section 9. {Severability Clause.}

Section 10. {Effective Date.}