SENATE BILL REPORT

SB 5550

As of February 3, 2015

Title: An act relating to providers of commercial transportation services.

Brief Description: Regulating providers of commercial transportation services.

Sponsors: Senators Habib and Fain.

Brief History:

Committee Activity: Transportation: 2/02/15.

Staff: Kelly Simpson (786-7403)

Background: State law currently provides for the regulation of certain private transportation providers, such as aeroporters, limousines, for-hire vehicles, taxicabs, and charter and excursion buses. However, current law does not specifically provide for the regulation of what are commonly know as ridesharing companies, i.e. companies that use a digital network or software application to connect passengers to drivers for the purpose of providing a prearranged ride, often by use of the driver's personal vehicle.

Summary of Bill: The bill as referred to committee not considered.

Summary of Bill (Proposed Substitute): Transportation network companies (TNCs) are defined as businesses that use a digital network or software application to connect passengers to drivers for the purpose of providing a prearranged ride. A TNC driver is an individual who uses a personal vehicle to provide services for passengers matched through a TNC's digital network or software application. A driver need not be an employee of a TNC. TNC services are defined as all times the driver is logged into a transportation network company's digital network or software application, or until the passenger leaves the personal vehicle, whichever is later.

The Department of Licensing (DOL) must regulate TNCs, including as follows:

• TNCs must obtain a permit to operate from DOL – to be renewed annually;

• DOL must collect permit fees from the TNCs;

• DOL may cancel, revoke, or suspend TNCs’ permits for certain violations;

• DOL must collect quarterly reports from TNCs including certain data elements about the TNCs’ services; and

• DOL must spend fee revenues on regulation activities, including at a minimum making disbursements to local governments to cover enforcement costs.

Local governments are prohibited from adopting laws, rules, or ordinances that are in conflict with the act; however, local governments are entitled to enforcement funding from DOL.

TNCs must obtain a primary automobile insurance policy covering every personal vehicle used to provide TNC services, described as follows:

• Before a driver accepts a requested ride: $50,000 per person; $100,000 per accident; $30,000 for property damage; comprehensive and collision coverage; and underinsured motorist and personal injury protection coverage;

• After a driver accepts a requested ride: $100,000 per person; $1,000,000 per accident; $30,000 for property damage; comprehensive and collision coverage; and underinsured motorist and personal injury protection coverage; and

• After July 1, 2016, any insurance company may not deny a claim arising exclusively out of the personal use of the private vehicle solely on the basis that the insured, at other times, used the vehicle to provide TNC services.

TNCs must have vehicle safety inspections performed on an annual basis.

Before a person may act as a TNC driver, the person must undergo a criminal history record check every five years and a TNC must obtain and review the individual's driving record. Certain convictions and violations preclude the individual from becoming a TNC driver.

Generally, TNC drivers must provide services to the public in a nondiscriminatory manner, regardless of geographic location of the departure point or destination. A TNC or TNC driver may not refuse service or impose additional charges or conditions based on a passenger's race, religion, ethnicity, gender, sexual orientation, gender identity, or disability that could prevent customers from accessing transportation.

Personally identifiable information collected as part of the regulatory process is exempt from public disclosure under the Public Records Act.

Appropriation: None.

Fiscal Note: Requested on January 23, 2015.

[OFM requested ten-year cost projection pursuant to I-960.]

Committee/Commission/Task Force Created: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Staff Summary of Public Testimony: PRO: The bill should cover all private transportation providers, not just TNCs. The insurance community supports Senator Habib's efforts at working with stakeholders to improve the bill. The insurance industry needs a clear distinction in the bill between personal and commercial insurance coverage, depending on the activity being covered. The proposed substitute includes such clarity and is supported by the insurance industry. Specific clarity is provided in the proposed substitute as guidance to the courts. The bill attempts to accommodate innovative technology.

CON: Taxi groups participated in a year-long negotiation in King County to reach an agreement regarding the local regulation of TNCs. Agreement was reached on a local regulatory structure. The parties agreed not to ask the state for a new structure. This bill just carves out separate regulatory autonomy for one industry. TNCs have violated laws in other states. The taxi industry cannot support a separate but not equal system. Taxis follow existing rules regarding safety, insurance, Labor & Industries, and other requirements. Under this bill, TNCs would have less regulations than under current law. The bill does not create a level playing field. The insurance requirements in the bill are not available on the current insurance market. The bill provides an unfair advantage to big companies. Existing taxi regulations are more stringent than the TNC regulations under the bill. This bill is a move backward.

OTHER: TNC services have become very popular. The ridesharing industry supports reasonable regulations. Uber has expanded beyond Seattle to Spokane and Vancouver, and is looking at Olympia and Bellingham. Uber wants uniform regulations. Uber currently does background checks and driver record checks. The use of TNC services has shown to decrease incidents of DUI. Uber provides a very convenient service. Uber wants to make sure insurance coverage exists at all times the driver has the software application turned on. Uber doesn't agree with all the provisions in the proposed substitute, but does want to work with the sponsor to address concerns. The bill does require coverage not currently available on the market. Room exists for all companies to offer transportation services, and negotiating a solution is in everyone's interests. Change is not easy, but we need to adapt to new technologies. The Port of Seattle needs authority to regulate all private transportation at its facilities, and is happy to work with stakeholders to address that. The city of Seattle negotiated with interested parties and established a strong safe, accessible, and reliable service, but this bill would prohibit local governments from licensing TNCs and puts safety in the hands of large for-profit companies. The bill would undermine taxis and for-hire vehicles. Seattle supports local governments having on-street enforcement authority. Lyft has been in Seattle since 2013 and is seeing the regulations start to catch up with the industry. Lyft has concerns regarding insurance, fees, and reporting requirements.

Persons Testifying: PRO: Chris Van Dyk, Ride – Quality Ground Transportation Management Services LLC; Mel Sorensen, Property Casualty Insurers Assn. of America; Jean Leonard, WA Insurers, State Farm, National Assn. of Insurance Companies.

CON: Sheila Stickel; Dawn Gearhart, Aamar Khan, Western WA Taxi Cab Operators Assn.; Jim Kelly, United For Hire.

OTHER: Issayas Berhe, Selamawit Alula, Uber, Drivers; Brooke Steger, Uber, General Manager; Curtis Scott, Uber; Samatar Guled, Eastside For Hire; Abdul Yusuf, Q Ride; Clare Gallagher, Port of Seattle; Denise Movius, city of Seattle; Jim Justin, Lyft; Ethan Schaffer, citizen.