OLR Bill Analysis

sHB 7126

AN ACT CONCERNING MOTOR VEHICLES IN LIVERY SERVICE, TAXICABS AND TRANSPORTATION NETWORK COMPANIES.

SUMMARY

This bill (1) creates a new regulatory structure for transportation network companies (TNCs) (e.g., Uber and Lyft) and (2) modifies certain aspects of the current taxi and livery service regulatory structure, making it more similar to the structure the bill creates for TNCs.

Regarding TNCs, the bill does the following, among other things:

1. requires TNCs to annually register with the Department of Transportation (DOT) and pay a $5,000 nonrefundable fee;

2. requires TNCs to obtain background checks on people who apply to be TNC drivers and prohibits them from allowing a person to be a TNC driver under certain conditions (e.g., if the person was convicted of certain crimes);

3. establishes operating requirements for TNCs related to signage, driver identification, and fares, including limiting dynamic pricing in declared emergencies;

4. establishes insurance requirements for TNC drivers;

5. establishes requirements for TNCs related to nondiscrimination and accessibility for people with disabilities;

6. establishes requirements related to TNC drivers and impaired driving, including requiring TNCs to adopt a zero-tolerance drug and alcohol policy; and

7. requires TNCs to retain certain records and prohibits them from disclosing a rider's personally identifiable information.

Regarding taxis and livery vehicles, the bill does the following, among other things:

1. limits the extent to which DOT can regulate taxi fares and livery service rates;

2. prohibits taxis from using traditional taxi meters;

3. eliminates current taxi and livery service insurance requirements and subjects them to the bill's requirements for TNCs and TNC drivers, which may create gaps in coverage requirements;

4. allows taxi owners to register a vehicle they use as a taxi as a passenger motor vehicle (the effect of this change on the applicability and enforcement of laws that apply to registered taxis is unclear);

5. allows applicants for a taxi certificate of public convenience and necessity to have DOT or a third party conduct a national criminal records check, instead of the FBI; and

6. creates an exception to the prohibition on driving certain commercial vehicles without a public passenger endorsement in order to temporarily allow certain endorsement applicants to drive taxi and livery vehicles (see COMMENT).

Finally, the bill (1) requires DOT to study for-hire transportation for people with disabilities and (2) makes it a crime to operate unauthorized for-hire transportation.

EFFECTIVE DATE: January 1, 2018

1, 13 & 14 — DEFINITIONS

The bill defines a TNC as a company, including a corporation, partnership, trust, association, sole proprietorship, or similar organization, that (1) is operating in the state and (2) uses a digital network to connect TNC riders to TNC drivers. The definition does not include a taxicab owner, motor vehicle in livery service owner, or other for-hire transportation service owner. (Presumably, “owner” means a holder of a taxi certificate of public convenience and necessity or livery permit (CGS 13b-97 & -103).)

It defines “digital network” as any online-enabled technology application service, website, or system offered or used by a TNC to provide for a prearranged ride.

Under the bill, a TNC driver is anyone who (1) uses a digital network and a TNC vehicle to provide a prearranged ride and related services to a TNC rider and (2) is not a TNC employee. The bill defines a TNC vehicle as a passenger motor vehicle that is owned, leased, or otherwise used by a TNC driver while he or she is providing a prearranged ride. It does not include a taxi or livery vehicle, and the bill correspondingly excludes TNC vehicles from the definition of “taxicab” and “motor vehicle in livery service.”

The bill defines a TNC rider as anyone who uses a digital network to connect to a TNC driver and receives a prearranged ride. It defines “prearranged ride” as the transportation by a TNC driver of a TNC rider that (1) begins when the TNC driver accepts a request from the TNC rider through a digital network, (2) continues while the TNC driver transports the TNC rider, and (3) ends when the TNC rider exits the TNC vehicle. It does not include (1) any transportation by a taxi, livery vehicle, or other for-hire motor vehicle; (2) a shared expense carpool or vanpool; or (3) any other service in which a driver receives a fee that does not exceed the cost of providing the ride.

2-6 — TRANSPORTATION NETWORK COMPANIES

The bill establishes a regulatory structure for TNCs largely separate from that which applies to taxis and livery vehicles. In doing so, it states that (1) neither TNCs nor TNC drivers are common carriers, contract carriers, motor carriers, or taxi or livery services, and (2) the DOT and Department of Motor Vehicles (DMV) commissioners may not require TNC drivers to hold commercial driver's licenses or instruction permits or register a TNC vehicle as a commercial vehicle.

Registration

Beginning July 1, 2018, the bill requires TNCs to annually register with DOT and pay a nonrefundable $5,000 fee. The registration form, which the commissioner must prescribe, must include the following:

1. the TNC's name, address, and phone number;

2. if the company is registered out-of-state, the name, address, and phone number of the TNC's in-state agent for service of process;

3. the name, address, and phone number for the TNC's main contact for DOT;

4. information that demonstrates, to the DOT commissioner's satisfaction, that the TNC meets the bill's TNC requirements.

TNC Driver Requirements

Application and Background Check. Under the bill, before allowing a person to act as a TNC driver on its digital network, a TNC must require the person to submit an application that includes his or her name, address, age, driver's license number, driving record, and motor vehicle registration.

The TNC must also obtain a background check on the person by doing one of the following:

1. conducting, or having a third party consumer reporting agency regulated under the federal Fair Credit Reporting Act conduct, a local, state, and national criminal history check, including a search of local, state, and national sex offender registries or

2. arranging for the person's fingerprints to be submitted to the FBI for a national criminal record check.

Disqualification. The bill prohibits a TNC from allowing a person to act as a TNC driver on its network if he or she, in the three years prior to applying, has:

1. more than three moving violations;

2. one or more serious traffic violations; or

3. had his or her license suspended for refusing a chemical analysis (e.g., breathalyzer test).

Under the bill, a TNC must not employ anyone who:

1. has been convicted, in the seven years before applying, of driving under the influence, fraud, sexual assault, using a motor vehicle to commit a felony, acts of violence, or acts of terror;

2. is listed on the state's sex offender registry or the website maintained by the U.S. Department of Justice;

3. does not hold a valid (a) driver's license or (b) registration for each vehicle he or she plans to use as a TNC vehicle; or

4. is under age 19.

TNC Operating Requirements

Identification and Signage. Under the bill, a TNC must provide a potential TNC rider, through its digital network, with a picture of the TNC driver and license plate number of the TNC vehicle that will be used to provide the prearranged ride before the rider enters the TNC vehicle. While providing a prearranged ride, a TNC driver must display a consistent and distinctive removable logo, insignia, or emblem which must be (1) large enough to be read at least 50 feet away from the vehicle during daylight hours and (2) reflective, illuminated, or otherwise visible in the dark.

Fares and Dynamic Pricing. Under the bill, a TNC may charge a fare for a prearranged ride only if the TNC, through its digital network, (1) shows the potential TNC rider how the fare is calculated and (2) allows the potential rider to receive a fare estimate before a prearranged ride.

The bill restricts a TNC's use of dynamic pricing (i.e., offering prearranged rides at differing prices according to supply or demand). Specifically, it prohibits a TNC from increasing the price of a ride by more than two and one half times the usual price during any emergency declared by the governor or U.S. president. It also requires a TNC that implements dynamic pricing to do the following through its digital network:

1. notify potential TNC riders when dynamic pricing is in effect prior to the rider's request for a prearranged ride,,

2. include a feature that requires a potential TNC rider to confirm that he or she understands that dynamic pricing will be applied, and

3. provide a fare estimator that allows the potential TNC rider to estimate the ride's cost under dynamic pricing.

Receipts. The bill requires a TNC to provide a TNC rider on behalf of the TNC driver with an electronic receipt within a reasonable period of time after a prearranged ride. The receipt must include (1) the ride's origin, destination, duration, and distance and (2) an itemization of the total fare paid.

Street Hails. Under the bill, TNC drivers are prohibited from soliciting or accepting a trip that is not a prearranged ride (e.g., TNC drivers cannot accept street hails).

Nondiscrimination and Accessibility for People with Disabilities. The bill requires a TNC to adopt, and notify all TNC drivers of, a policy that prohibits discrimination against TNC riders and potential riders on the basis of age, color, creed, intellectual or physical disability, national origin, race, religious belief or affiliation, sex, sexual orientation, gender identity, or ride destination. It also requires TNC drivers to comply with all applicable laws on nondiscrimination against TNC riders or potential riders.

It prohibits TNC drivers from charging an additional fee for providing prearranged rides to a person with physical disabilities because of the person's disabilities or related accommodations. Drivers must also comply with all applicable laws related to transporting service animals.

The bill requires TNCs to provide potential TNC riders with an opportunity to indicate that they need a wheelchair-accessible TNC vehicle. If the TNC cannot arrange such a ride, it must direct the potential rider to an alternative provider of wheelchair-accessible transportation, if available.

Zero-Tolerance Drug and Alcohol Policy. Under the bill, a TNC must implement a zero-tolerance policy on TNC drivers' use of drugs or alcohol while connected to a digital network or providing a prearranged ride. A TNC must provide notice of the policy on its website, including procedures for a TNC rider to report a TNC driver whom the rider reasonably suspects was under the influence of drugs or alcohol while providing a prearranged ride.

If a TNC receives a report that a TNC driver violated its zero-tolerance policy, it must suspend, as soon as possible, a driver's access to its digital network and investigate the incident. The driver must be suspended until the investigation is complete.

Fatigued or Impaired Driving. The bill requires TNCs to implement a policy that prohibits a TNC driver from providing prearranged rides when his or her driving ability is impaired by illness, fatigue, or any other condition likely to inhibit safe driving.

The bill prohibits (1) a TNC driver from transporting any TNC rider for more than 16 consecutive hours in a 24-hour period and (2) a TNC from requiring a TNC driver to do so. It is unclear whether this restriction applies to a single ride or the total amount of time a TNC driver provides rides in a 24-hour period.

Insurance Provisions

The bill requires TNC drivers to be covered by primary automobile insurance that (1) recognizes that the driver transports people for compensation and (2) meets the bill's minimum coverage requirements. This insurance requirement may be satisfied by one or more insurance policies maintained by a TNC, a TNC driver, or a combination of both. Under the bill, the insurance must be provided by (1) an insurer authorized to write auto insurance policies in the state or (2) a surplus lines insurer that has a credit rating of at least “A-“ from A.M. Best, “A” from Demotech, or a similar rating from another rating agency recognized by the Insurance Department.

Coverage Requirements. The bill requires different coverage requirements for different activities of a TNC driver. When a TNC driver is connected to a digital network but not providing a prearranged ride (“period one”), the insurance must provide sufficient coverage to satisfy a claim for damages (1) for personal injury to or death of one person of at least $50,000; (2) for personal injury to or death of more than one person due to one accident of at least $100,000; (3) for property damage of at least $25,000; and (4) by uninsured and underinsured motorists, as required under state law. By law, uninsured and underinsured motorist coverage must provide the same coverage minimums that are required for passenger motor vehicle insurance (i.e., for injury to or death of one person, at least $20,000; for injury to or death of more than one person due to any accident, at least $40,000; and for property damage, at least $10,000).

While a TNC driver is providing a prearranged ride (“period two”), the insurance must provide sufficient coverage to satisfy a claim for damages (1) for the personal injury to or death of one person, the personal injury to or death of more than one person due to any accident, and any property damage, at least $1 million and (2) by uninsured and underinsured motorists, as required under state law.

Under the bill, if a TNC driver's policy has lapsed or does not meet the bill's requirements, the TNC's policy must provide coverage beginning with the first dollar of the claim, and the insurer that provides the coverage must defend the claim. Coverage under a TNC's insurance policy cannot be contingent on a TNC driver's insurer processing or denying the claim.

The bill states that any policy that meets the bill's requirements also meets the general automobile insurance requirements under state law.

Proof of Coverage. The bill requires a TNC driver, whenever he or she is connected to the digital network or providing a prearranged ride, to carry a current automobile insurance card, which may be electronic. A TNC driver must, upon request of an investigating police officer or any person that was injured or had his or her property damaged by a TNC driver, (1) present his or her insurance card and (2) disclose whether he or she was connected to a digital network at the time of the accident or collision.

Exclusions and Disclosures. The bill allows insurers to exclude from coverage under a private passenger insurance policy any loss or injury that occurs while a TNC driver is connected to a digital network or providing a prearranged ride.

A TNC must disclose the following to a person, in writing or electronically, before he or she may act as a TNC driver on its digital network:

1. the insurance coverage the TNC provides while TNC drivers are connected to the digital network and providing prearranged rides, including the types of coverage and any limits and

2. that a TNC driver's personal auto insurance policy might not cover the driver when he or she is connected to the digital network or providing a prearranged ride.

In a claims coverage investigation, the bill requires TNCs to immediately disclose, upon request, the exact times a TNC driver connected to and disconnected from a digital network in the 12 hours prior to and immediately following an accident to the following parties: (1) any person who was injured or had his or her property damaged by a TNC vehicle, (2) any insurer that provides passenger motor vehicle insurance to the TNC driver that excludes coverage during the time that a TNC driver is connected to a digital network or providing prearranged rides, or (3) the TNC driver. Insurers that write TNC policies must disclose the applicable coverage, exclusions, and limits to any other insurers involved in a claim upon request.

Right of Subrogation. The bill grants insurers that defend or indemnify claims against a TNC driver whom the insurer excluded under the policy the right to sue any other insurers that provided insurance to the TNC driver at the time of the loss to recover what they paid (i.e., “right of subrogation”).

TNC Record Retention

The bill requires TNCs to maintain (1) individual trip records for at least three years after the prearranged ride was provided and (2) TNC drivers' records for at least one year following the date the driver last accessed the digital network to provide a prearranged ride.

A TNC must also keep all records related to zero-tolerance policy enforcement, including any investigations, for at least three years from the receipt of the complaint.

Audit. The bill allows the DOT commissioner or his designee to audit a TNC's trip and driver records (except those related to the zero tolerance policy) up to twice a year. DOT must provide reasonable notice of any audit, and the audit must occur at the TNC's place of business or at an in-state location jointly selected by the TNC and DOT. DOT cannot require a TNC to disclose information tending to identify any TNC driver or rider.

Under the bill, information disclosed for purposes of or collected during the audit is confidential and DOT cannot disclose the information to a third party, except for law enforcement purposes or pursuant to a court order. The information and records are not subject to the Freedom of Information Act.

Personal Information Disclosure

The bill prohibits a TNC from disclosing any TNC rider's personally identifiable information unless doing so is permitted under the TNC's publicly-disclosed privacy policy, if any. If a disclosure is not covered by the policy, a TNC must obtain a TNC rider's consent before disclosing the information to a third party.

Regulations

The bill requires the DOT commissioner to adopt regulations to implement some of the bill's TNC provisions, including TNC registration, fares, record retention, nondiscrimination, and accessibility.

The bill also allows the commissioners of (1) DMV to adopt regulations related to TNC driver requirements, among other things, and (2) the Insurance Department to adopt regulations related to the bill's insurance provisions.

4-11 & 15 — TAXIS AND LIVERY VEHICLES

The bill modifies certain aspects of the current taxi and livery service regulatory structure, making it more similar to the structure the bill creates for TNCs.

Under current law, a “taxicab” (i.e., taxi) includes any motor vehicle operated upon any street or highway on call or on demand accepting or soliciting passengers indiscriminately for transportation for-hire between points along streets or highways as directed by the passenger.

The term “motor vehicle in livery service” (i.e., livery vehicle) includes motor vehicles used by an entity which represents itself to be in the business of transporting passengers for-hire, except, among other things, taxi cabs or motor buses.

Taxi and Livery Rates and Charges ( 6 & 9)

Current law allows DOT to prescribe reasonable rates and charges for taxis and livery vehicles. The bill limits the extent to which DOT can regulate taxi and livery charges.

Under DOT regulations, taxi certificate holders and livery permit holders must (1) file a schedule of rates and charges with DOT, which cannot be changed without DOT approval and (2) not charge more than the approved rates. The regulations also require (1) taxis to display a decal that lists the rates and (2) livery services to calculate rates from their headquarters (Conn. Agency Regs. 13b-96-37 & 16-325-7).

Under the bill, DOT can only regulate taxi and livery fares that are not calculated on a dynamic pricing basis (i.e., pricing that changes according to the level of supply and demand). If demand for taxi or livery services is high, and the owner or operator elects to implement dynamic pricing, the owner or operator must provide notice through the owner's or operator's website or software application. The notice must include (1) the fare calculation method and (2) an option to receive an estimated fare before the passenger or prospective passenger incurs any costs for the services.

Unlike TNCs, (which by definition use a digital network to receive requests for rides and therefore generally know the number of available drivers and potential riders at a given time), taxi and livery vehicles (1) receive requests in several ways (e.g., by phone or street hail or at a taxi stand) and (2) do not necessarily use internet software applications (“apps”). It is therefore unclear (1) who would determine what constitutes periods of high demand for taxi and livery services and (2) how they would do so. It also does not appear that the bill requires taxi or livery vehicles to notify passengers who request rides through means other than a website or app that dynamic pricing is in effect or allow them the opportunity to receive an estimated fare.

As with TNCs, the bill limits how much a taxi or livery service owner or operator may increase fares during a declared emergency to two and one half times the usual fare.

Taxi Fare Calculation Equipment. Current DOT regulations require taxis to have a functioning taxi meter with which to calculate fares (Conn. Agency Regs. 13b-96-38). The bill instead allows DOT to prescribe adequate equipment for taxis including the use of mobile telephones and internet software applications, but it may not prescribe traditional taxi meters. Presumably this prohibits taxis from using traditional taxi meters.

Certificate Holder Background Checks ( 7)

By law, any person, association, limited liability company, or corporation that wishes to operate a taxi company must obtain a certificate of public convenience and necessity from DOT. Before granting a certificate, DOT must certify that an applicant is suitable to operate a taxi service by, among other things, (1) requesting a state criminal history records check from the State Police Bureau of Identification and (2) arranging for the fingerprints of any applicant to be submitted to the FBI for a national criminal records check. The bill allows DOT, instead of submitting an applicant's fingerprints to the FBI, to conduct, or have a third party accredited under the federal Fair Credit Report Act conduct, a local, state, and national criminal history records check, including a search of state and national sexual offender registry databases.

By law, DOT may charge a fee for the national criminal records check that is equal to the FBI fee. It is unclear whether DOT can charge for a background check by a third party.

Registering Taxis as Passenger Motor Vehicles ( 8)

Under current law, any vehicle operated under a taxi certificate is considered a taxi and must be registered as such with DMV. The bill appears to allow vehicles operated under a taxi certificate to be registered as either a taxi or a passenger motor vehicle. This appears to create a system where whether a vehicle is a taxi depends on how it is being used at the moment, regardless of how it is registered.

Given this change, it is unclear (1) whether taxi laws and regulations that apply to vehicles registered as taxis also apply to vehicles registered as passenger motor vehicles but used as taxis (e.g., inspection requirements) and (2) if those laws and regulations do apply, how DOT and DMV will enforce them on vehicles used as taxis but registered as passenger vehicles.

Taxicab Identification. By law, registered taxicabs must (1) have a permanently attached rooftop light and (2) indicate, in three-inch permanently-affixed type, the taxi company's phone number. Under the bill, the rooftop light does not have to be permanently attached for taxis or passenger motor vehicles used as taxis. For vehicles registered as taxis, the phone number may also be temporary. (It is unclear whether a passenger motor vehicle used as a taxi needs to have the company's phone number displayed on the vehicle, temporarily or otherwise.)

Taxi and Livery Vehicle Insurance ( 4, 5 & 10)

Current law sets insurance coverage requirements for taxis and livery vehicles as follows:

1. $50,000 for injury to or death of one person;

2. $100,000 to $300,000, depending on the passenger capacity of the vehicle, for the injury to or death of more than one person in any accident; and

3. $10,000 for property damage.

Under current law, vehicles operating under a livery permit must carry insurance with coverage for the injury to or death of passengers or damage to property of at least (1) $1.5 million dollars for vehicles that seat 14 or fewer passengers and (2) $5 million for vehicles that seat 15 or more passengers. This requirement corresponds to the requirement in federal law for interstate livery vehicles (49 C.F.R. 387.33).

The bill repeals these requirements and subjects taxi and livery owners and operators to the same requirements and provisions that apply to TNCs and TNC drivers (see “Insurance Provisions” above). Minimum coverage required under these provisions is generally (1) higher than what is required for taxis under current law, but (2) lower than what is currently required for livery vehicles.

The coverage requirements that apply to TNC drivers during period one apply to taxi and livery drivers while they are connected to an internet software application, which the bill does not define, but not currently transporting a passenger. The coverage requirements that apply to TNCs during period two apply to taxi and livery drivers when they are transporting a passenger.

Because the bill repeals current taxi and livery insurance coverage requirements, it is unclear what requirements, if any, apply to vehicles when they are operating as taxi or livery vehicles but not currently transporting a passenger. Although period one coverage minimums apply when taxi and livery drivers are connected to an app, neither the bill nor current law requires taxis and livery vehicles to be connected to an app at all times while they are available to transport passengers for hire.

Temporarily Driving without “F” Endorsement ( 11)

By law, in order to drive a taxi or livery vehicle, a person must hold (1) the proper class of license for the vehicle he or she intends to operate and (2) the applicable public passenger endorsement (i.e., an “F” endorsement for taxi and livery vehicles).

The law also prohibits anyone from driving a commercial motor vehicle used for passenger transportation without a commercial driver's license and a public passenger endorsement. The bill adds an exception to this requirement, stating that a person who has submitted an application for an endorsement to operate a taxi or livery vehicle may drive such a commercial vehicle for 90 days as long as (1) DMV has not denied the application and (1) the person carries the application while he or she is driving a taxi cab or livery vehicle (see COMMENT).

12 — DOT STUDY ON ACCESSIBLE TRANSPORTATION

The bill requires DOT to study a number of different policies related to the accessibility of transportation services for people with disabilities. Specifically, DOT must:

1. identify the most suitable way to fund and implement a pilot program to promote services offered by taxis, livery vehicles, and TNCs that are accessible to people with disabilities;

2. examine the viability and impact of a per-trip surcharge on taxi, livery, and TNC services to fund such pilot program;

3. examine ways to reimburse or provide incentives to taxi, livery, and TNC drivers for costs associated with purchasing or converting vehicles to wheelchair-accessible vehicles; and

4. examine ways to provide compensation incentives to taxi, livery, and TNC drivers who give sufficient time to help people with physical disabilities board their vehicles.

DOT may consult with any experts within the study's scope, including (1) UConn faculty members; (2) representatives of the Disability Rights Education and Defense Fund, American Association of People with Disabilities, and National Council of Independent Living; and (3) taxi drivers and owners, livery vehicle drivers and owners, and TNCs and TNC drivers.

DOT must submit to the Transportation Committee a (1) preliminary report by August 1, 2018 and (2) final report, including recommendations for legislation to implement the pilot program, by January 1, 2019.

16 — PENALTIES

The bill makes it a class A misdemeanor, punishable by up to one year imprisonment, up to a $2,000 fine, or both, to provide unauthorized for-hire transportation that exceeds the cost of the transportation. Under current law, anyone who provides taxi or livery services without proper authorization faces civil penalties (e.g., fines ranging from $500 to $2,000).

The bill also makes providing TNC services without being a TNC driver or without being connected to a digital network a class A misdemeanor.

COMMENT

Conflicting Provisions on Taxi and Livery Endorsement Requirements

The bill creates an exception to the prohibition on operating a commercial vehicle for passenger transportation in order to allow a person who has applied for a taxi or livery vehicle endorsement to temporarily drive for 90 days before final DMV approval. However, it retains a provision that prohibits a person from driving a taxi or livery vehicle without obtaining the proper public passenger license endorsement.

COMMITTEE ACTION

Insurance and Real Estate Committee

Joint Favorable Substitute

Yea

18

Nay

3

(03/15/2017)