OLR Bill Analysis

sHB 7126 (as amended by House "A")*

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 taxi and livery vehicle regulations to make them 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);

2. requires TNCs to obtain background checks on TNC drivers and prohibits them from allowing a person to be a TNC driver under certain conditions (e.g., if the person has certain criminal convictions);

3. establishes operating requirements for TNCs related to signage, driver identification, drug and alcohol policies, and fares, including dynamic pricing;

4. establishes insurance requirements and minimum coverage for TNC drivers; and

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

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

1. allows taxis to use cell phones or other devices with applications to calculate rates, subject to DOT standards;

2. requires DOT to adopt regulations (a) to allow taxis and livery vehicles to use tiered rates and offer discounts and (b) on taxi appearance, identification, and markings; and

3. allows "F" endorsement applicants to temporarily drive taxi or livery vehicles under certain conditions.

Finally, the bill requires (1) DOT to study for-hire accessible transportation for people with disabilities and (2) the state to remit to municipalities half of the collected fines related to certain for-hire transportation crimes.

*House Amendment “A" replaces the underlying bill, making the following changes, among other things: (1) moves up the date by which TNCs must register, increases the initial registration fee, and imposes conditions under which DOT can suspend or revoke a TNC permit; (2) imposes additional TNC driver requirements, including self-certification of TNC vehicle condition; (3) adds provisions regarding TNC insurance policy exclusions; (4) eliminates several provisions related to taxis, including insurance coverage modifications; (5) adds provisions remitting certain fines to towns; and (6) makes numerous minor and technical changes.

EFFECTIVE DATE: January 1, 2018, except provisions regarding (1) TNC definitions, TNC company requirements, and remitting certain taxi, livery, and household goods carrier violation fines to municipalities are effective October 1, 2017 and (2) the DOT accessible transportation study is effective July 1, 2018.

1, 6 & 7 — DEFINITIONS

The bill defines a TNC as a company, corporation, partnership, trust, association, sole proprietorship, or similar organization that operates in the state and uses a digital network to connect TNC riders to TNC drivers to provide prearranged rides. The definition does not include a taxicab certificate holder or livery permit holder.

The bill 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 last TNC rider exits the TNC vehicle. It defines “digital network” as any online-enabled application, website, or system offered or used by a TNC to enable the provision of prearranged rides.

Under the bill, a TNC driver is anyone who (1) uses a TNC vehicle to provide a prearranged ride and (2) is not a TNC employee. A TNC vehicle is a vehicle that is owned, leased, or otherwise used by a TNC driver while he or she is connected to a digital network or providing a prearranged ride. TNC vehicles must have four doors, be no older than 12 model years, and be designed to transport eight passengers or fewer, including the driver. The bill specifically excludes TNC vehicles from the definition of “taxicab” and “motor vehicle in livery service.”

The bill defines a (1) TNC rider as anyone who uses a digital network to connect to a TNC driver and receives a prearranged ride between points chosen by the rider and (2) potential TNC rider as anyone who uses a digital network to request a prearranged ride but who has not yet entered the TNC vehicle.

2-5 — TRANSPORTATION NETWORK COMPANIES

The bill establishes a regulatory structure for TNCs separate from that which applies to taxis and livery vehicles under current law.

Registration

Beginning January 1, 2018, the bill requires TNCs to annually register with DOT and pay a nonrefundable (1) $50,000 initial fee and then (2) $5,000 annual renewal fee. The registration form 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; and

4. information that demonstrates, to the DOT commissioner's satisfaction, that the TNC meets the bill's TNC requirements and any regulations DOT adopts to implement the bill's provisions.

Registered TNCs must file registration amendments to report to DOT any material changes in any information contained within the registration within 30 calendar days after they reasonably should know about the change

Revoking or Suspending Registration. Under the bill, the commissioner may suspend, revoke, or refuse to renew a TNC's registration if he determines the TNC has intentionally done the following:

1. misled, deceived, or defrauded the public or the DOT commissioner;

2. engaged in untruthful or misleading advertising;

3. engaged in unfair or deceptive business practices; or

4. violated any of the bill's TNC provisions or corresponding regulations.

Before such enforcement actions, the TNC must be notified and given an opportunity for a hearing. The hearing must be held according to the Uniform Administrative Procedures Act. Any TNC whose registration has been suspended may apply to DOT for reinstatement after 90 days.

Fine. Any TNC that operates in the state without a valid registration or with a suspended registration must be fined up to $50,000.

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, date of birth, driver's license number, and motor vehicle registration.

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

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

2. arranging for the person's fingerprints to be submitted to the FBI for a national criminal history records check and to the State Police Bureau of Identification for a state criminal history records check.

Under the bill, a TNC must run or arrange for one of the above checks to be done at least once every three years after permitting a person to act as a TNC driver.

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) committed more than three moving violations; (2) committed one or more serious traffic violations; or (3) had his or her license suspended for refusing a chemical analysis (e.g., breathalyzer test).

TNCs are also prohibited from approving the application of anyone who:

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

2. is included on the state sex offender registry or National Sex Offender Public Website;

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.

No Commercial License or Registration Required. Under the bill, the Department of Motor Vehicles (DMV) commissioner may not require TNC drivers to hold commercial driver's licenses or instruction permits or register a TNC vehicle as a commercial vehicle.

Self-Reporting of Disqualifying Occurrences. Under the bill, a TNC driver must report to a TNC any violation, suspension, conviction, or other incident that would disqualify him or her under the criteria above within 24 hours of the incident. A TNC that receives such a report or becomes aware of such an incident must prohibit the person from acting as a TNC driver until he or she meets the above qualifications.

Vehicle Safety Certification. Before using a vehicle as a TNC vehicle, the bill requires a TNC driver to certify to a TNC that the following equipment is in good working condition: foot brakes; emergency brakes; steering mechanism; windshield; rear window and other glass; windshield wipers; headlights; tail lights; turn indicator lights; brake lights; front seat adjustment mechanism; doors; horn; speedometer; bumpers; muffler and exhaust system; condition of tires, including tread depth; interior and exterior rearview mirrors; seat safety belts; and air bags for driver and passengers. TNC drivers must recertify every two years, and a TNC must maintain certifications for at least three years.

Penalties. Under the bill, any person who holds himself or herself out to be a TNC driver without being authorized by a TNC to use its digital network is guilty of a class B misdemeanor. (Class B misdemeanors are punishable by a fine of up to $1,000, up to six months in prison, or both.)

The bill requires the state to remit, to the municipality that issued a summons for such a violation, 50% of the fines it collects from the violation. Each clerk of the Superior Court or the Chief Court Administrator, or any other official the administrator designates, must certify to the comptroller, by the 30th of January, April, July, and October, the amount due for the previous quarter to the towns it serves.

TNC Operating Requirements

Identification and Signage. After a potential TNC rider submits a prearranged ride request, the bill requires a TNC to provide the 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 or connected to a digital network, a TNC driver must display a TNC-issued removable decal, 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 the fare or how the fare is calculated and the rates being charged 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 demand for prearranged rides and availability of TNC riders). Specifically, it prohibits a TNC from increasing the price of a ride by more than two and one half times the usual price during a disaster emergency or transportation emergency declaration by the governor or an emergency declaration by the 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 before the request can be submitted,

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

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

Payment and 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.

Under the bill, TNCs may not accept or solicit cash payments from TNC riders, and prearranged ride payments must be made through a digital network.

Street Hails. Under the bill, TNC drivers are prohibited from soliciting or accepting a request for transportation that is not accepted through a digital network (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, potential riders, and TNC drivers on the basis of age, color, creed, destination, intellectual or physical disability, national origin, race, sex, sexual orientation, or gender identity. 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 and accommodate them with no extra charge.

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.

Drug and Alcohol Policy. Under the bill, a TNC must implement a policy that prohibits TNC drivers from using, or being under the influence of, drugs or alcohol while connected to a digital network or providing a prearranged ride, and a TNC driver must comply with the policy. 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 drug and alcohol 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. If the investigation confirms that the driver violated the policy, the TNC must permanently ban the driver's access to the digital network.

Fatigued or Impaired Driving. The bill requires TNCs to implement, and TNC drivers to comply with, 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 also prohibits a TNC driver from using a digital network or providing prearranged rides for more than 14 consecutive hours or 16 hours in a 24 hour period.

Insurance Provisions

The bill requires TNC drivers to be covered by automobile insurance that (1) recognizes that the driver is a TNC driver 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 or an “A” or similar rating from another rating agency approved 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 and available to receive prearranged ride requests but is 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 minimum coverage that is 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 personal injury, death, 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 first.

Proof of Coverage. The bill requires (1) a TNC driver, whenever he or she is connected to the digital network or providing a prearranged ride, to carry proof of insurance coverage that satisfies the bill's requirements and (2) a TNC that provides coverage to a driver to provide the driver with such proof. In the event of an accident, a TNC driver must disclose directly to interested parties, insurance companies, and investigating police officers (1) his or her insurance card and (2), upon request, whether he or she was connected to a digital network at the time of the accident or collision.

Exclusions. The bill allows insurers to exclude from coverage under an automobile insurance policy any loss or injury that occurs while a TNC driver is (1) connected to a digital network and available to receive requests for prearranged rides or (2) providing a prearranged ride. Exclusions may include liability coverage for bodily injury, death, or property damage; personal injury protection; uninsured and underinsured motorist coverage; medical payments coverage; collision physical damage coverage; or comprehensive physical damage coverage. The bill specifies that it does not (1) require insurers to use specific policy language or to reference the bill to exclude such coverage, as long as they clearly and conspicuously disclose the exclusions or (2) invalidate or limit any for-hire transportation exclusions contained in an automobile insurance policy, including policies used or approved for use in the state before January 1, 2018.

Under the bill, an insurer that excludes such coverage has no duty to defend or indemnify a claim against a TNC driver that is expressly excluded in a insurance policy. 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”). If there is disagreement between a TNC driver's insurer and a TNC insurer over which company must defend a claim, the TNC's insurer has the duty to defend the claim.

Disclosures. 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 or providing prearranged rides, including the types of coverage and any limits;

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; and

3. that if the TNC driver's vehicle has a lien on it, the use of the vehicle without physical damage coverage may violate the contract terms with the lienholder.

In a claims coverage investigation, the bill requires TNCs to immediately disclose, upon request from a directly involved party or the TNC driver's insurance company, 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. Insurers that write TNC policies must disclose, upon request by any other insurance company providing coverage, the applicable coverage, exclusions, and limits to any other insurers involved in a claim.

TNC Record Retention

The bill requires TNCs to maintain (1) prearranged ride records for at least three years after the ride was provided, (2) TNC drivers' records for at least three years following the date the driver last accessed the digital network to provide a prearranged ride, and (3) TNC vehicles' records for at least three years after the vehicles were last used to provide prearranged rides.

A TNC must also keep all records related to drug and alcohol 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 the records TNCs must maintain under the bill up to four times a year. DOT must provide reasonable written 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 that identifies or would tend to identify any TNC driver or rider, unless the rider's or driver's identity is needed to resolve a complaint or investigate an audit finding to ensure compliance with the bill's TNC-related requirements and any corresponding regulations.

Under the bill, records obtained during an audit are generally confidential and not subject to the Freedom of Information Act (FOIA). However, the DOT commissioner may disclose such records under the following circumstances:

1. to law enforcement for law enforcement purposes, as long as they are disclosed in cooperation with the TNC;

2. to any state or federal agency for any action taken by the DOT commissioner to enforce the bill's TNC requirements or corresponding regulations;

3. at the request of a state or federal agency conducting an audit or investigation under their legal authority, as long as the DOT commissioner gives the TNC the opportunity to object and propose an alternative means of cooperating with disclosure; or

4. pursuant to a court order.

If the commissioner discloses these records, he must provide written notice to the TNC before disclosing its records and redact any information that is not required to be disclosed under FOIA, including trade secret and commercial and financial information.

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.

Regulations

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

8-10 — REMITTING CERTAIN FINES TO MUNICIPALITIES

The bill requires the state to remit 50% of the fines it collects for the following crimes to the municipality that issued the summons:

1. operating a taxi or advertising taxicab services without a taxi certificate, or allowing an unauthorized person to operate a taxi the certificate holder controls (class A misdemeanor, punishable by a fine of up to $2,000, one year in prison, or both);

2. holding oneself out as a livery vehicle operator without a livery permit (class B misdemeanor, punishable by a fine of up to $1,000, six months in prison, or both); and

3. holding oneself out as a household goods carrier without a certificate and with the intent to obtain a benefit or to injure or defraud another (class B misdemeanor).

Each Superior Court clerk or the chief court administrator, or any other official the administrator designates, must certify to the comptroller, by the 30th of January, April, July, and October, the amount due for the previous quarter to the towns it serves.

It also removes language specifying that holding oneself out to be a livery vehicle operator with the intent to injure or defraud another is a class B misdemeanor.

3, 11 & 12 — 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.

By 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, taxis or motor buses.

Taxi and Livery Regulations

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 standards for taxi fare calculation equipment, including taxi meters or a cell phone or electronic device with an online-enabled application or access to a website used to calculate rates and charges.

Rates and Charges. Current law allows DOT to prescribe reasonable rates and charges for taxis and livery vehicles. Under the bill, DOT must adopt regulations to allow taxis to charge fares at tiered rates (i.e., separate premium and non-premium rates based on time periods, events, or dates) and to offer discounts or promotions for the convenience, protection, and safety of passengers and the public. The regulations must require any taxi owner or operator who uses tiered rates to post the rates (1) on its website and online-enabled application and (2) in the taxi in a location visible to the passenger.

Under current 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).

Markings. By October 1, 2018, DOT must submit regulations on taxi appearance, identification, and markings to the Regulation Review Committee.

Public Passenger Endorsements

Temporarily Driving without an “F” Endorsement. 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).

Under the bill, a taxi certificate holder or livery permit holder who is seeking to employ a person who has applied for an "F" endorsement may, under certain conditions, allow the person to drive a taxi or livery vehicle, for up to 90 days after the application's date, before DMV approves the application.

To do so, a certificate or permit holder must confirm that the person meets the requirements to hold an "F" endorsement under DMV regulations by (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 records check on the person, including a search of state and national sex offender registries and (2) reviewing the person's official DMV driving record that is dated no more than seven days before the review. If approved by the certificate or permit holder, a person must carry and present, upon request, a copy of his or her application and background check while driving a taxi or livery vehicle.

Codifying Regulations. Under current DMV regulations, all applicants for public passenger license endorsements, such as endorsements to drive a motor bus, service bus, or taxi or livery vehicle, must be fingerprinted and background checked. However, current statute only requires such a check for school transportation-related endorsements. This bill codifies the requirement that all public passenger endorsement applicants be fingerprinted and background checked.

Using Taxis or Livery Vehicles as TNC Vehicles ( 3 (i))

The bill prohibits taxi certificate holders and livery permit holders from using or allowing someone to use a taxi or livery vehicle as a TNC vehicle.

13 — DOT STUDY ON ACCESSIBLE TRANSPORTATION

The bill requires DOT to study how to implement and fund a level of service from taxis and TNCs to people with disabilities that is equivalent to the level of service provided to the general public. Specifically, DOT must examine and develop recommendations regarding:

1. the viability of a per-trip surcharge on taxi, livery, and TNC services to fund the level of service;

2. assuring equivalent taxi and TNC service for people with disabilities with regard to response times, fares, geographic areas of service, and hours and days of service;

3. establishing an accessibility program fund to hold any surcharge revenue and disbursing it to TNCs and taxis to (a) reimburse them for the costs of converting or purchasing vehicles to provide fully wheelchair accessible rides and (b) compensate taxi and TNC drivers who allot the time necessary to assist people with boarding the accessible vehicles; and

4. initiating the use of prearranged rides for assembling and managing a comprehensive transportation system for people with disabilities within the Medicaid population that provides an option for transportation to medical facilities.

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 its findings and recommendations to the Transportation Committee by January 1, 2019.

COMMITTEE ACTION

Insurance and Real Estate Committee

Joint Favorable Substitute

Yea

18

Nay

3

(03/15/2017)