PA 17-140—sHB 7126

Insurance and Real Estate Committee

AN ACT REGULATING TRANSPORTATION NETWORK COMPANIES AND TAXICABS

SUMMARY: This act (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 (e.g., limousines) regulations.

Regarding TNCs, the act 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 certain individuals to be TNC drivers (e.g., individuals with certain criminal convictions);

3. establishes operating requirements for TNCs related to driver identification and signage, driver impairment, nondiscrimination, and fares, including dynamic pricing; and

4. establishes insurance requirements for TNCs and TNC drivers.

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

1. allows taxis to use applications (“apps”) on cell phones or other devices to calculate rates, subject to DOT standards;

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

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

Finally, the act 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.

EFFECTIVE DATE: October 1, 2017, except provisions regarding (1) TNC registration, TNC driver qualifications and requirements, TNC insurance, and taxi and livery regulations are effective January 1, 2018 and (2) the DOT study is effective July 1, 2018.

1 & 6-7 — DEFINITIONS

Table 1 lists the terms that the act defines that are relevant to its TNC provisions.

Table 1: Relevant Definitions

Term

Definition

Transportation network company (TNC)

A company, corporation, partnership, trust, association, sole proprietorship, or similar organization that operates in Connecticut and uses a digital network to connect TNC riders to TNC drivers to provide prearranged rides; it does not include a taxicab certificate holder or livery permit holder

Prearranged ride

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

Digital network

Any online-enabled application, website, or system offered or used by a TNC to enable the provision of prearranged rides

TNC driver

Anyone who (1) is not a TNC employee and (2) uses a TNC vehicle to provide a prearranged ride

TNC vehicle

A vehicle that (1) 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 and (2) has four doors, is no older than 12 model years, and is designed to transport eight passengers or fewer, including the driver; TNC vehicles are explicitly excluded from the definitions of “taxicab” and “motor vehicle in livery service”

TNC rider

An individual or individuals who use a digital network to connect to a TNC driver and receive a prearranged ride between points the individual or individuals choose

Potential TNC rider

An individual or individuals who use a digital network to request a prearranged ride but have not yet entered the TNC vehicle

2-5 — TRANSPORTATION NETWORK COMPANIES

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

Registration ( 2)

Beginning January 1, 2018, the act requires TNCs to annually register with DOT and pay a nonrefundable (1) $50,000 initial fee and (2) subsequent $5,000 annual renewal fees. (PA 17-203 lowers the initial registration fee to $5,000.) The registration form must be prescribed by the commissioner and 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 act's TNC requirements and any regulations DOT adopts to implement the act's provisions.

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

Revoking or Suspending a Registration. Under the act, the DOT 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 commissioner;

2. engaged in untruthful or misleading advertising;

3. engaged in unfair or deceptive business practices; or

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

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

Fine. Any TNC that operates in Connecticut without a valid registration or with a suspended registration is subject to a fine of up to $50,000.

TNC Driver Requirements ( 3 & 4)

Application and Background Check. Under the act, 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 background check on each applicant by doing one of the following:

1. conducting, or having a consumer reporting agency regulated under the federal Fair Credit Reporting Act conduct, a driving record check and 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 applicant's fingerprints to be submitted to the (a) FBI for a national criminal history records check and (b) State Police Bureau of Identification for a state criminal history records check.

Under the act, a TNC must conduct or arrange one of the above criminal history records checks at least once every three years after permitting a person to act as a TNC driver.

Disqualification. The act prohibits a TNC from allowing a person to act as a TNC driver on its network if he or she, in the three years before applying, (1) committed more than three moving violations; (2) committed one or more serious traffic violations (e.g., reckless driving); or (3) had his or her license suspended for refusing a chemical analysis (e.g., breathalyzer test).

TNCs are also prohibited from approving the driver 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 younger than age 19.

Under the act, a TNC driver must report to a TNC any violation, suspension, conviction, or other incident that would disqualify him or her under the above criteria 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.

No Commercial License or Registration Required. The act prohibits the Department of Motor Vehicles (DMV) commissioner from requiring TNC drivers to hold commercial driver's licenses or instruction permits or register a TNC vehicle as a commercial vehicle.

Vehicle Safety Certification. Before using a vehicle as a TNC vehicle, the act requires a driver to certify to a TNC that the following equipment is in good working condition:

1. foot brakes and emergency brakes;

2. steering mechanism;

3. windshield, rear window, and other glass;

4. windshield wipers;

5. headlights, tail lights, turn indicator lights, and brake lights;

6. front seat adjustment mechanism;

7. doors;

8. horn;

9. speedometer;

10. bumpers;

11. muffler and exhaust system;

12. tires, including tread depth;

13. interior and exterior rearview mirrors; and

14. seatbelts and air bags for the driver and passengers.

TNC drivers must recertify every two years, and a TNC must maintain certifications for at least three years.

Penalties. Under the act, 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 (see Table on Penalties). The act 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 (see below).

TNC Operating Requirements ( 3 & 4)

Identification and Signage. The act requires a TNC to provide, through its digital network, a potential TNC rider with a picture of the driver and the license plate number of the TNC vehicle that will be used to provide the prearranged ride. The TNC must do so after the potential rider submits a prearranged ride request and before he or she enters the vehicle. While providing a prearranged ride or connected to a digital network, a TNC driver must display a company-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 act, a TNC may charge a fare for a prearranged ride only if the company, 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 act restricts a TNC's use of dynamic pricing (i.e., offering prearranged rides at prices that differ according to ride demand and driver availability). Specifically, it prohibits a TNC from increasing the price of a ride by more than 2.5 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 riders when dynamic pricing is in effect before the request can be submitted,

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

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

Payment and Receipts. The act requires a TNC, on the driver's behalf, to provide an electronic receipt to a TNC rider 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 act, TNCs may not accept or solicit cash payments from TNC riders, and prearranged ride payments must be made through a digital network.

Street Hails. The act prohibits TNC drivers from soliciting or accepting a request for transportation that is not accepted through a digital network (e.g., drivers cannot accept street hails).

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

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

The act 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 at no extra charge.

Drug and Alcohol Policy. Under the act, a TNC must implement, and drivers must comply with, a policy that prohibits drivers from using, or being under the influence 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 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 driver violated its drug and alcohol policy, it must suspend, as soon as possible, the driver's access to its digital network and investigate the incident. The suspension must last until the investigation is complete. If the investigation confirms that the driver violated the policy, the TNC must permanently ban his or her access to the digital network.

Fatigued or Impaired Driving. The act requires TNCs to implement, and TNC drivers to comply with, a policy prohibiting a driver from providing prearranged rides when his or her driving ability is impaired by illness, fatigue, or any other condition likely to impede safe driving.

The act also prohibits a TNC driver from using a digital network or providing prearranged rides for more than 14 consecutive hours or more than 16 hours in a 24-hour period.

TNC Record Retention ( 3)

The act requires TNCs to maintain records concerning each (1) prearranged ride for at least three years after the ride was provided, (2) TNC driver for at least three years following the date he or she last accessed the digital network, and (3) TNC vehicle for at least three years after it was last used to provide a prearranged ride.

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 act allows the DOT commissioner or his designee to audit the records TNCs must maintain under the act. DOT may audit the records up to four times a year. The department 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 company and DOT.

The act prohibits DOT from requiring 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 act's TNC-related requirements and any corresponding regulations. Under the act, records obtained during an audit are generally confidential and not subject to the Freedom of Information Act (FOIA), but the 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 act'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.

The commissioner must provide written notice to the TNC before disclosing these records. He must also redact any information that FOIA exempts from disclosure (i.e., records listed in CGS 1-210(b)), including trade secrets and commercial and financial information, unless disclosure is expressly required under the above provisions.

Personal Information Disclosure ( 3)

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

Regulations ( 3)

The act allows the DOT commissioner to adopt regulations implementing the act's TNC provisions concerning, among other things, ride requests; vehicle decals; fares and receipts; dynamic pricing; nondiscrimination policies; wheelchair-accessible vehicle requests; records retention and confidentiality; DOT audits; TNC disclosure of personal information; limits on TNC drivers' hours; and prohibitions against taxis and livery vehicles from being used as TNCs.

Insurance Provisions ( 5)

The act requires TNC drivers to be covered by automobile insurance that (1) meets the act's minimum coverage requirements (see Table 2 below) and (2) recognizes that the driver is a TNC driver. (PA 17-203 requires that the policy (1) be primary and (2) recognize that the driver is a TNC driver or otherwise transports passengers for compensation.) 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 act, the insurance must be provided by (1) an insurer authorized to write auto insurance policies in Connecticut 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 act imposes coverage requirements that differ according to a TNC driver's activities, as shown in Table 2.

Table 2: TNC Insurance Coverage Requirements

Driver Activity

Coverage Requirements

Driver is connected to a digital network and available to receive prearranged ride requests but is not providing a prearranged ride

At least $50,000 for personal injury to or death of one person

At least $100,000 for personal injury to or death of more than one person due to one accident

At least $25,000 for property damage

Uninsured and underinsured motorist coverage as required by state law

Driver is providing a prearranged ride

At least $1 million, per accident, for personal injury, death, and any property damage

Uninsured and underinsured motorist coverage as required by state law

Under the act, if a TNC driver's policy has lapsed or does not meet the act'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 driver's insurer processing or denying the claim first.

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

Exclusions. The act 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. They may exclude, among other things, 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 act specifies that it does not (1) require insurers to use specific policy language or refer to the act 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 act, an insurer that excludes coverage as described above has no duty to defend or indemnify a claim against a TNC driver that is expressly excluded in an insurance policy. The act grants insurers that defend or indemnify claims against such a driver 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. (PA 17-203 eliminates this provision.)

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 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, using the vehicle without physical damage coverage may violate the contract terms with the lienholder.

In a claims coverage investigation, the act requires TNCs to immediately disclose, on request from a directly involved party or the TNC driver's insurance company, the exact times the driver connected to and disconnected from a digital network in the 12 hours before and immediately after an accident. Insurers that write TNC policies must disclose, on request by any other insurance company providing coverage, the applicable coverage; exclusions; and limits.

4 & 8-10 — REMITTING CERTAIN FINES TO MUNICIPALITIES

The act 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, see Table on Penalties);

2. holding oneself out as a livery vehicle operator without a livery permit (class B misdemeanor);

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); and

4. holding oneself out to be a TNC driver without being authorized by a TNC to use its digital network (see “Penalties” above).

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.

The act 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 act modifies certain aspects of the current taxi and livery service regulatory structure and specifically excludes TNCs from this structure. By law, a “taxicab” includes any motor vehicle operated on 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 that represents itself to be in the business of transporting passengers for-hire, except, among other things, taxis or motor buses.

Taxi and Livery Regulations (11)

Taxi Fare Calculation Equipment. Current DOT regulations require taxis to have a functioning taxi meter with which to calculate fares (Conn. Agencies Regs. 13b-96-38). The act 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 app or access to a website used to calculate rates and charges. It also requires, rather than allows, the commissioner to adopt regulations on taxi operation and equipment.

Rates and Charges. Prior law authorized DOT to prescribe reasonable rates and charges for taxis and to adopt regulations establishing fares and service. The act (1) mandates, rather than allows, the adoption of these regulations and (2) requires that the regulations also 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 app and (2) in the taxi in a location visible to the passenger.

Under current DOT regulations, taxi certificate holders and livery permit holders must file a schedule of rates and charges with DOT, which cannot be changed without DOT approval, and cannot charge more than these approved rates. The regulations also require taxis to display a decal that lists the rates and livery services to calculate rates from their headquarters (Conn. Agencies 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. (PA 17-203 eliminates a requirement that rooftop lights and other taxi markings be permanently affixed to a taxi.)

Public Passenger Endorsements (12)

Temporarily Driving without an “F” Endorsement. By law, in order to drive a taxi or livery vehicle, a person must hold the (1) proper class of license for the vehicle he or she intends to operate and (2) applicable public passenger endorsement (i.e., an “F” endorsement for taxi and livery vehicles).

Under the act, 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, on 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 have their backgrounds checked. However, prior law required such a check only for school transportation-related endorsements. The act codifies the requirement that all public passenger endorsement applicants be fingerprinted and have their backgrounds checked.

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

The act 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 act requires DOT to study how to implement and fund a service level from taxis and TNCs for people with disabilities that is equivalent to the service level 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 service level;

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

3. establishing an accessibility program fund to hold any surcharge revenue and disburse it to TNCs and taxis to (a) reimburse them for the costs of converting or purchasing vehicles to provide fully wheelchair accessible rides (i.e., with a ramp or lift) 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.

BACKGROUND

Related Act

PA 17-203 lowers the initial TNC registration fee, modifies several of this act's insurance provisions, and allows taxi rooftop lights and markings to be removable instead of permanent.