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, 88 entry, operational or common carrier requirements, other than those 89 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 121 company’s digital network but is not engaged in a prearranged ride, the 122 following insurance requirements apply: 123 124 (1) A driver or a transportation network company on the driver’s behalf shall 125 maintain a primary automobile insurance policy that: 126 127 (i) Recognizes that the driver is a transportation network company driver 128 and covers the driver’s provision of transportation network company 129 services while the driver is logged into the transportation network 130 company’s digital network; DRAFT Transportation Company Act (2014) 4 131 132 (ii) Meets at least the minimum coverage of at least fifty thousand dollars 133 ($50,000) to any one person in any one accident, one hundred 134 thousand dollars ($100,000) to all persons in any one accident, and 135 for property damage arising out of the use of the motor vehicle to a 136 limit, exclusive of interest and costs, of thirty thousand dollars 137 ($30,000) in any one accident; and 138 139 (iii) Is one of the following: 140 141 (a) Full-time coverage similar to the coverage required by 142 commission rules promulgated under Section 3 of this Act; 143 144 (b) An insurance rider to, or endorsement of, the drivers’ 145 personal automobile insurance policy required by the [insert 146 state statute]; or 147 148 (c) A corporate liability insurance policy purchased by the 149 transportation network company that provides primary 150 coverage for the period of time in which a driver is logged into 151 the digital network. 152 153 (C) If a transportation network company purchases an insurance policy under 154 Subsection (B) of this Section, it shall provide documentation to the commission 155 evidencing that the transportation network company has secured the policy. 156 157 (D) If the responsibility is placed on a driver to purchase insurance under Subsection 158 (B) of this Section, the transportation network company shall verify that the 159 driver has purchased an insurance policy. 160 161 (E) A driver’s personal automobile insurance policy that complies with [insert 162 automobile insurance policy regulations of the state] is sufficient to satisfy the 163 compulsory insurance requirements thereof. 164 165 (F) An insurance policy required by Subsection (A) or Subsection (B) of this Section: 166 167 (1) May be placed with an insurer licensed under in [insert state] or with a 168 surplus lines insurer authorized in [insert state]; and 169 170 (2) Need not separately satisfy the requirements of [insert automobile insurance 171 policy regulations of the state]. 172 173 (G) If more than one insurance policy provides valid and collectible coverage for a 174 loss arising out of an occurrence involving a motor vehicle operated by a driver, DRAFT Transportation Company Act (2014) 5 175 the responsibility for all the claim must be divided on a pro rata basis among all 176 of the applicable policies. This equal division of responsibility may only be 177 modified by the written agreement of all the insurers of the applicable policies 178 and the owners of those policies. 179 180 (H) In a claims coverage investigation, a transportation network company shall 181 cooperate with a liability insurer that also insures the driver’s transportation 182 network company vehicle, including the provision of relevant dates and times 183 during which an incident occurred that involved the driver while the driver was 184 logged into a transportation network company’s digital network. 185 186 Section 5. {Operational Requirements.} 187 188 (A) The following requirements apply to transportation network company drivers, as 189 defined by Section 2(G) of this Act: 190 191 (1) A driver shall not provide services unless a transportation network company 192 has matched the driver to a rider through a digital network. A driver shall 193 not solicit or accept the on-demand summoning of a ride, otherwise known 194 as a “street hail.” 195 196 (2) A transportation network company shall make available to prospective riders 197 and drivers the method by which the transportation network company 198 calculates fares or the applicable rates being charged and an option to 199 receive an estimated fare. 200 201 (3) Upon completion of a prearranged ride, a transportation network company 202 shall transmit to the rider an electronic receipt, either by electronic mail or 203 via text message, documenting: 204 205 (i) The point of origin and destination of the prearranged ride; 206 207 (ii) The total duration and distance of the prearranged ride; 208 209 (iii) The total fare paid, including the base fare and any additional charges 210 incurred for the distance traveled or duration of the prearranged ride; 211 and 212 213 (iv) The driver’s first name and telephone number. 214 215 (4) Before permitting a person to act as a driver on its digital network, a 216 transportation network company shall confirm that the person is at least 217 twenty-one years of age and possess: 218 DRAFT Transportation Company Act (2014) 6 219 (i) A valid driver’s license; 220 221 (ii) Proof of automobile insurance; 222 223 (iii) Proof of a (insert state) vehicle registration; and 224 225 (iv) Within ninety (90) days of the effective date of this Act and pursuant to 226 commission rules, proof that the person is medically fit to drive. 227 228 (5) A driver shall not offer transportation network company services for more 229 than sixteen (16) cumulative hours or provide prearranged rides for more 230 than twelve (12) cumulative hours in a calendar day. 231 232 (6) A transportation network company shall implement an intoxicating 233 substance policy for drivers that disallows any amount of intoxication of the 234 driver while providing services. The transportation network company shall 235 include on its website and mobile device application software a notice 236 concerning the transportation network company’s intoxicating substance 237 policy. 238 239 (7) Before permitting an individual to act as a driver on its digital network, a 240 transportation network company shall obtain and review a driving history 241 report for the individual. 242 243 (8) An individual with the following moving violations shall not serve as a driver: 244 245 (i) More than three moving violations in the three (3) year period preceding 246 the individual’s application to serve as a driver; or 247 248 (ii) A major moving violation in the three (3) year period preceding the 249 individual’s application to serve as a driver, whether committed in 250 this state, another state, or the United States. 251 252 (9) A transportation network company or a third party shall retain true and 253 accurate results of the driving history report for each driver that provides 254 services for the transportation network company for at least three (3) years. 255 256 (10)Before a person is permitted to act as a driver through use of a 257 transportation network company’s digital network, the person shall obtain a 258 criminal history record check and provide a copy of the criminal history 259 record check to the transportation network company. 260 DRAFT Transportation Company Act (2014) 7 261 (i) A driver shall obtain a criminal history record check in accordance with 262 Subsection (A) (10) of this Section every five (5) years while serving as 263 a driver. 264 265 (ii) A transportation network company or a third party shall retain true and 266 accurate results of the criminal history record check for each driver 267 that provides services for the transportation network company for at 268 least five (5) years after the criminal history record check was 269 conducted. 270 271 (11)A person who has been convicted of or pled guilty or nolo contendere to 272 driving under the influence of drugs or alcohol in the previous seven (7) 273 years before applying to become a driver shall not serve as a driver. 274 275 (12)If the criminal history record check reveals that the person has ever been 276 convicted of or pled guilty or nolo contendere to any of the following felony 277 offenses, the person shall not serve as a driver: 278 279 (i) An offense against property; 280 281 (ii) An offense involving unlawful sexual behavior; 282 283 (iii) A crime of violence; 284 285 (13)A person who has, within the immediately preceding five years, been 286 convicted of or pled guilty or nolo contendere to a felony shall not serve as a 287 driver. 288 289 (B) The following requirements apply to personal vehicles, as defined by Section 2(E) of 290 this Act: 291 292 (1) A transportation network company shall conduct or have certified mechanic 293 conduct a safety inspection of a prospective driver’s vehicle before it is 294 approved for use as a personal vehicle and shall have periodic inspections of 295 personal vehicles conducted thereafter, at intervals of at least one (1) 296 inspection per year. A safety inspection shall include an inspection of: 297 298 (i) Foot brakes; 299 300 (ii) Emergency brakes; 301 302 (iii) Steering mechanism; 303 304 (iv) Windshield; DRAFT Transportation Company Act (2014) 8 305 306 (v) Rear window and other glass; 307 308 (vi) Windshield wipers; 309 310 (vii) Headlights; 311 312 (viii) Tail lights, 313 314 (ix) Turn indicator lights; 315 316 (x) Stop lights; 317 318 (xi) Front seat adjustment mechanism; 319 320 (xii)The opening, closing, and locking capability of the doors; 321 322 (xiii) Horn; 323 324 (xiv) Speedometer; 325 326 (xv)Bumpers; 327 328 (xvi) Muffler and exhaust system; 329 330 (xvii) Tire conditions, including tread depth; 331 332 (xviii) Interior and exterior rear-view mirrors; and 333 334 (xix) Safety belts 335 336 (2) A personal vehicle must: 337 338 (i) Have at least four (4) doors; and 339 340 (ii) Be designed to carry no more than eight (8) passengers, including the 341 driver. 342 343 (3) A transportation network company or a third party shall retain true and 344 accurate inspection records for at least fourteen (14) months after an 345 inspection was conducted for each personal vehicle used by a driver. 346 DRAFT Transportation Company Act (2014) 9 347 (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. 350 351 Section 6. {Disclosure Requirements.} 352 353 (A) A transportation network company shall make the following disclosures to a 354 prospective driver in the prospective driver’s terms of service: 355 356 (1) “While operating on the transportation network company’s digital network, 357 your personal automobile insurance policy might not afford liability 358 coverage, depending on the policy’s terms.” 359 360 (2) “If the vehicle that you plan to use to provide transportation network 361 company services for our transportation network company has a lien against 362 it, you must notify the lienholder that you will be using the vehicle for 363 transportation services that may violate the terms of your contract with the 364 lienholder.” 365 366 (B) The disclosure set forth in Subsection (A) of this Section must be placed 367 prominently in the prospective driver’s written terms of service, and the 368 prospective driver must acknowledge the terms of service electronically or by 369 signature. 370 371 (C) A transportation network company shall make available to a rider a customer 372 support telephone number on its digital network or website for rider inquiries. 373 374 (D) If a transportation network company customer or other passenger in the 375 transportation network company customer’s party files a complaint with the 376 commission against a transportation network company or driver, the 377 commission may inspect the transportation network company’s records as 378 reasonably necessary to investigate and resolve the complaint. 379 380 (E) A transportation network company shall provide services to the public in a 381 nondiscriminatory manner once the driver and rider have been matched through 382 the digital network. 383 384 (1) A driver shall not refuse to transport a passenger unless: 385 386 (i) The passenger is acting in an unlawful, disorderly, or endangering 387 manner; 388 389 (ii) The passenger is unable to care for himself or herself and is not in the 390 charge of a responsible companion; or DRAFT Transportation Company Act (2014) 10 391 392 (iii) The driver has already committed to providing a ride for another rider. 393 394 (2) A transportation network company shall not impose additional charges for 395 providing services to persons with physical or mental disabilities because of 396 those disabilities. 397 398 (3) A driver shall permit a service animal to accompany a rider on a prearranged 399 ride. 400 401 (F) Within ten (10) days of receiving a complaint about a driver’s alleged violation of 402 subsection (G) of this Section, the commission shall report the complaint to the 403 transportation network company for which the driver provides services. 404 405 (G) A driver shall immediately report to the transportation network company any 406 refusal to transport a passenger pursuant to Subsection (G)(1) of this Section, 407 and the transportation network company shall annually report all such refusals 408 to the commission in a form and manner determined by the commission. 409 410 (H) A transportation network company is not liable for a driver’s violation of 411 subsection (G) of this Section unless the driver’s violation has been previously 412 reported to the transportation network company in writing, and the 413 transportation network company has failed to reasonably address the alleged 414 violation. 415 416 (1) The commission shall afford a transportation network company the same 417 due process rights afforded transportation providers in defending against 418 civil penalties assessed by the commission. 419 420 (2) The commission may assess a civil penalty up to five hundred fifty dollars 421 ($550) under this subsection (J). 422 423 Section 7. {Conversion to Transportation Network Company.} 424 425 (A) Any taxicab company or shuttle company authorized by the commission may 426 convert to a transportation network company model or may set up a subsidiary 427 or affiliate transportation network company. 428 429 (B) In converting to a transportation network company model or setting up a 430 transportation network company subsidiary or affiliate, a taxicab company or 431 shuttle company authorized by the commission may completely or partially 432 suspend its certificate of public convenience and necessity issued. During the 433 period of suspension of its certificate of public convenience and necessity, a 434 taxicab company, shuttle company, or a subsidiary or affiliate of a company or DRAFT Transportation Company Act (2014) 11 435 shuttle company is exempt from taxi or shuttle standards, the standards 436 concerning the regulation of rates and charges, and any commissioned rules 437 regarding common carriers. 438 439 Section 6. {Permit Required for Transportation Network Companies.} 440 441 (A) A person shall not operate a transportation network company in [insert state 442 here] without first having obtained a permit from the commission. 443 444 (B) The commission shall issue a permit to each transportation network company 445 that meets the requirements of this Act and pays an annual permit fee to the 446 commission as determined by the commission for its reasonable cost of 447 regulating transportation network companies divided by the number of 448 transportation network companies operating in the state. The commission may 449 adjust the annual permit fee by rule to cover the commission’s direct and 450 indirect costs associated with implementing this Act. 451 452 (C) The commission shall determine the form and manner of application for a 453 transportation network company permit. 454 455 (D) The commission may take action against a transportation network company, 456 including issuing an order to cease and desist and suspending, revoking, altering, 457 or amending a permit issued to the transportation network company. 458 459 (E) The commission shall not assess a penalty against a driver. 460 461 (F) The commission may deny an application under this Act or refuse to renew the 462 permit of a transportation network company based on a determination that the 463 transportation network company has not satisfied a civil penalty arising out of an 464 administrative or enforcement action brought by the commission. 465 466 Section 7. {Transportation Network Company Fund.} 467 468 (A) The commission shall transmit all fees collected pursuant to this Act to the state 469 treasurer, who shall credit the fees to the transportation network company fund, 470 which is hereby created in the state treasury. The moneys in the fund are 471 continuously appropriated to the commission for the purposes set forth in this 472 Act. All interest earned from the investment of moneys in the fund is credited to 473 the fund. Any moneys not expended at the end of the fiscal year remain in the 474 fund and do not revert to the general fund or any other fund. 475 476 Section 8 . {Repealer Clause.} 477 478 Section 9. {Severability Clause.} DRAFT Transportation Company Act (2014) 12 479 480 Section 10. {Effective Date.}