Legislature(2017 - 2018)SENATE FINANCE 532

02/13/2017 09:00 AM Senate FINANCE

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09:04:23 AM Start
09:05:16 AM SB9 || SB9
09:48:48 AM SB14 || SB14
10:51:04 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
SENATE BILL NO. 14                                                                                                            
     "An  Act relating  to transportation  network companies                                                                    
     and transportation network company drivers."                                                                               
9:48:48 AM                                                                                                                    
SENATOR MIA COSTELLO, SPONSOR, presented  the context of the                                                                    
bill.  She  stressed that  Alaska  was  in a  recession  and                                                                    
experiencing job losses.  She felt that it  was important to                                                                    
diversify  the  economy,  and pass  legislation  that  would                                                                    
create   jobs  for   individuals.   She   stated  that   the                                                                    
legislation  was transportation  services network  companies                                                                    
legislation  called   the  "Let's  Ride  Alaska   Act."  The                                                                    
companies   were  platforms   that  connected   riders  with                                                                    
drivers.  The bill  defined and  clarified that  the drivers                                                                    
were independent  contractors and exempted the  drivers from                                                                    
the  Workers Compensation  Act,  and  other individuals  who                                                                    
were   exempted  from   that  act.   She  shared   that  the                                                                    
legislature had surveyed Alaskans,  and 30 percent of people                                                                    
said that  they wanted  to diversify  the economy.  She felt                                                                    
that the bill  allowed for a job opportunity  for a stay-at-                                                                    
home mom or active duty military member.                                                                                        
9:52:16 AM                                                                                                                    
WESTON EILER, STAFF, SENATOR COSTELLO, explained the bill.                                                                      
10:01:22 AM                                                                                                                   
Mr. Eiler discussed the Sectional Analysis (copy on file):                                                                      
     Section  1. Describes  the legislative  intent for  the                                                                    
     Section 2. Amends AS 21.96  by adding a new section, AS                                                                    
     21.96.018, relating  to transportation  network company                                                                    
     insurance provisions. This  section allows insurers who                                                                    
     write  automobile insurance  in  the  state to  exclude                                                                    
     coverage  while a  driver is  logged  onto the  digital                                                                    
     network of a transportation  network company or while a                                                                    
     driver  provides a  prearranged ride.  However, nothing                                                                    
     in  the section  precludes  an  insurer from  providing                                                                    
     coverage  for the  personal  vehicle of  transportation                                                                    
     network company drier.                                                                                                     
     Section 3. Amends AS 23.30.230(a) to exclude                                                                               
     transportation network company drivers from the Alaska                                                                     
     Worker's Compensation Act.                                                                                                 
     Section 4. Amends AS 23.30.230(c) by adding the                                                                            
     definitions for "digital network," prearranged ride,"                                                                      
     and "transportation network company driver."                                                                               
     Section 5. Amends AS 28 by adding chapter 23, titled                                                                       
     "Transportation Network Companies and Driver."                                                                             
          AS  28.23.005. Provides  the DCCED  administer the                                                                    
          AS   28.23.010.   Provides   that   transportation                                                                    
          network company or driver is  not a common carrier                                                                    
          and may  not provide taxicab or  for-hire services                                                                    
          and that they  may not be required  to register as                                                                    
          a commercial or for-hire vehicle.                                                                                     
          AS  28.23.020.  Related   to  fares  collected  by                                                                    
          transportation network companies for services.                                                                        
          AS 28.23.030. Governs  identification required for                                                                    
          by transportation network vehicles and drivers.                                                                       
          AS 28.23.040. Requires electronic receipts.                                                                           
10:05:46 AM                                                                                                                   
Co-Chair  Hoffman wondered  how  the legislation  interfaced                                                                    
with communities  that regulated  cabs. Mr.  Eiler responded                                                                    
that  the  bill  would  set one  set  policy  for  rideshare                                                                    
drivers.  He explained  that many  of  the services  crossed                                                                    
municipalities. He remarked that  the platform could operate                                                                    
statewide, and provide clarity for  drivers that may move or                                                                    
travel around the state.                                                                                                        
Co-Chair  Hoffman surmised  that the  Uber driver  could not                                                                    
drop the  rider off in  a different municipality.  Mr. Eiler                                                                    
disagreed.  He stressed  that the  bill did  not impact  the                                                                    
municipality's authority to regulate taxicabs.                                                                                  
Co-Chair Hoffman  queried the parameters  of an  Uber driver                                                                    
within a  community that regulated  the licenses.  Mr. Eiler                                                                    
responded  that the  taxicab regulations  and Uber  were two                                                                    
very different things.                                                                                                          
Co-Chair  Hoffman remarked  that many  communities regulated                                                                    
the number of licenses. He  wondered what would occur if the                                                                    
legislation were  passed. He asked  if an Uber  driver could                                                                    
operate  in a  community without  that community's  license.                                                                    
Mr. Eiler  replied in  the affirmative.  He stated  that the                                                                    
legislation  complemented the  possible reformation  in some                                                                    
communities for  taxicabs. He  stressed that  it would  be a                                                                    
different service  than a  taxicab. The  legislation related                                                                    
to connecting drivers with riders.                                                                                              
Co-Chair  MacKinnon  wondered  whether the  taxicab  drivers                                                                    
could drive for the network  providers. Mr. Eiler replied in                                                                    
the affirmative.                                                                                                                
Senator   von  Imhof   wondered   whether  the   legislation                                                                    
addressed taxicab  legislation. Mr.  Eiler replied  that the                                                                    
legislation did not address taxi regulations.                                                                                   
10:10:35 AM                                                                                                                   
Vice-Chair  Bishop queried  the implementation  and protocol                                                                    
for the zero-tolerance drug and  alcohol possible. Mr. Eiler                                                                    
replied that the language was  broad in the legislation, but                                                                    
deferred to the companies' stringent set of policies.                                                                           
Senator Micciche  surmised that a typical  Uber driver would                                                                    
have normal  insurance coverage for their  own vehicle, that                                                                    
the provider did  not need to carry under  the normal policy                                                                    
while logged  onto a  digital network.  He noted  that there                                                                    
was a separate  policy between driving alone  and carrying a                                                                    
passenger.  He wondered  whether the  more stringent  policy                                                                    
mirrored a taxicab requirement.  Mr. Eiler agreed to provide                                                                    
that  information.  He  agreed  that  there  were  different                                                                    
insurance  coverages throughout  the course  of a  rideshare                                                                    
Senator  Micciche  wanted  to  know  whether  the  insurance                                                                    
mirrored that of taxicabs.                                                                                                      
Senator  Dunleavy wondered  whether the  bill required  that                                                                    
transportation   network  companies   and  its   drivers  to                                                                    
purchase  commercial insurance.  Mr.  Eiler  replied in  the                                                                    
affirmative. He noted that there  was an exclusion provision                                                                    
was  there for  the  master policies  that  Uber, Lyft,  and                                                                    
other companies held.                                                                                                           
Senator  Dunleavy asked  whether  the legislation  protected                                                                    
lien holding institutions  in the event of  damages or loss.                                                                    
Mr. Eiler replied in the affirmative.                                                                                           
Co-Chair  MacKinnon remarked  that the  current conversation                                                                    
was not a debate, rather an attempt to understand the bill.                                                                     
Vice-Chair Bishop queried  the driver payback or  fee to the                                                                    
company. Mr. Eiler replied that  an Uber driver would pay 25                                                                    
cents for every dollar for using the service.                                                                                   
10:15:36 AM                                                                                                                   
KATHIE  WASSERMAN,  EXECUTIVE   DIRECTOR,  ALASKA  MUNICIPAL                                                                    
LEAGUE,  JUNEAU,  addressed  concern  with  Section  7.  She                                                                    
stated that  there was a  concern about  removing regulation                                                                    
from municipalities,  and only  be given  to the  state. She                                                                    
understood  that  there  would be  confusion  when  crossing                                                                    
jurisdictions, but  it could also  be confusing to  have two                                                                    
types of  transportation providers in the  municipality that                                                                    
were regulated  separately. She stated that  there had never                                                                    
been  a large  issue  related to  taxicabs crossing  between                                                                    
jurisdictions. She urged the committee  to remove Section 7.                                                                    
She  felt that  it  should  be a  local  control issue.  She                                                                    
remarked  that Section  10 of  the  Constitution gave  local                                                                    
control to municipalities.                                                                                                      
Co-Chair  MacKinnon   wondered  whether  the   mayors  would                                                                    
support  not having  a transportation  network  at all.  Ms.                                                                    
Wasserman replied that  she did not know the  answer to that                                                                    
Co-Chair  MacKinnon wondered  if there  was a  concern about                                                                    
low ridership  in the state  in its entirety.  Ms. Wasserman                                                                    
agreed to  address that issue  with the mayors. She  did not                                                                    
know how state regulation would increase ridership.                                                                             
10:18:53 AM                                                                                                                   
MITCHEL   MATTHEWS,   SENIOR    OPERATIONS   MANAGER,   UBER                                                                    
NORTHWEST, JUNEAU,  spoke in support of  the legislation. He                                                                    
stated  that over  20,000 Alaskans  had downloaded  the Uber                                                                    
app, and  over 60,000 people  had opened the app  looking to                                                                    
connect with a ride in  Alaska. He felt that the legislation                                                                    
provided the appropriate number  of safeguards for consumers                                                                    
while  allowing  for  a   predictable,  clear,  and  concise                                                                    
operational   environment  for   drivers   and  riders.   He                                                                    
described  the  Uber  service,   which  provided  a  digital                                                                    
network to connect riders with drivers.                                                                                         
10:24:37 AM                                                                                                                   
Co-Chair   Hoffman  queried   the   implementation  of   the                                                                    
businesses  in  rural  areas  of  the  state.  Mr.  Matthews                                                                    
wondered if Co-Chair Hoffman was referring to a driver.                                                                         
Co-Chair  Hoffman  asked  how the  company  would  start  in                                                                    
Unalaska.  Mr. Matthews  stated  that he  did  not know  the                                                                    
licensing  requirements   for  an  individual   business  in                                                                    
Co-Chair Hoffman  wondered how  an Uber company  would start                                                                    
in the  state. Mr.  Matthews replied  that the  bill allowed                                                                    
for  Uber to  operate  in  the state.  He  explained that  a                                                                    
driver would download the app and operate from there.                                                                           
Co-Chair Hoffman  wondered how the structure  was started in                                                                    
a community.                                                                                                                    
10:26:26 AM                                                                                                                   
AT EASE                                                                                                                         
10:27:23 AM                                                                                                                   
10:27:31 AM                                                                                                                   
Mr. Matthews  shared that  Uber was  a digital  platform, so                                                                    
the  driver was  responsible  for setting  up their  company                                                                    
within the community.                                                                                                           
Senator Dunleavy queried  the classifications of individuals                                                                    
who  would be  prohibited  from the  platform. Mr.  Matthews                                                                    
responded that driver  must submit their full  name, date of                                                                    
birth,  social  security  number,  valid  driver's  license,                                                                    
valid vehicle  registration, and insurance.  Those documents                                                                    
were verified  for validity.  The individuals  were screened                                                                    
using   a  social   security  trace   and  a   comprehensive                                                                    
background check for offenses  related to alcohol. He stated                                                                    
that there was  also an evaluation against  the National Sex                                                                    
Offender registry,  and those individuals would  be excluded                                                                    
from operating on the app.                                                                                                      
Senator  von  Imhof  asked  whether  there  was  a  periodic                                                                    
background  check. Mr.  Matthews replied  that the  internal                                                                    
process involved an annual background  check. He stated that                                                                    
the compliance  at Uber depended  on the  various expiration                                                                    
dates on the documents.                                                                                                         
Vice-Chair  Bishop asked  for  more  information about  drug                                                                    
testing. He wondered whether there  was random drug testing.                                                                    
Mr. Matthews replied  that Uber did not do  drug testing. He                                                                    
explained that a rider might  notify Uber about a suspicious                                                                    
driver, and then Uber would investigate that complaint.                                                                         
Senator Dunleavy wondered whether  the background checks had                                                                    
been "tightened" since September 2016.                                                                                          
10:31:15 AM                                                                                                                   
LISA  TSE,   UBER  TECHNOLOGY   INC.,  SAN   FRANCISCO  (via                                                                    
teleconference), introduced herself.                                                                                            
Senator  Dunleavy   wondered  whether  the  issues   in  San                                                                    
Francisco  and   Los  Angeles   had  been   addressed  since                                                                    
September 2016. Ms. Tse replied  that California had changed                                                                    
its background check requirements.                                                                                              
Ms.  Tse  restated that  in  September  2016 the  California                                                                    
legislature   had  adopted   new   legislation  related   to                                                                    
background   checks.  The   bill  confirmed   that  criminal                                                                    
background  checks  conducted  by commercial  services  were                                                                    
permissible.  It  also  modified some  of  the  adjudication                                                                    
criteria. She stated  that, as of January 1,  2017, Uber had                                                                    
implemented processes in California to ensure compliance.                                                                       
Senator Dunleavy  surmised that the  issue of those  who had                                                                    
bypassed  the background  checks at  LAX was  addressed. Ms.                                                                    
Tse replied that  she was not familiar with  that issue, and                                                                    
agreed to provide further information.                                                                                          
Senator Dunleavy  stressed that the  issue was in  the news,                                                                    
so  he wanted  to know  what had  changed in  the background                                                                    
checks protocol.                                                                                                                
10:33:56 AM                                                                                                                   
ANNABEL   CHANG,   DIRECTOR,   PUBLIC  POLICY,   LYFT   (via                                                                    
teleconference), spoke  in support  of the  legislation. She                                                                    
stated the  number one  priority at Lyft  was the  safety of                                                                    
its  users.  She  stated that  Lyft  had  national  criminal                                                                    
background  checks,  a  motor   vehicle  record  check,  and                                                                    
nineteen-point vehicle inspection.  She stated Lyft provided                                                                    
consumers    with   new    levels   of    transparency   and                                                                    
accountability. She shared that  every Lyft ride was tracked                                                                    
via GPS;  and passengers  could see  a driver  picture, user                                                                    
rating of the  driver, license plate, and make  and model of                                                                    
the vehicle. The  drivers also received a photo  and name of                                                                    
the  passenger. She  stated that  the app  allowed to  share                                                                    
real time  route information with  others, providing  for an                                                                    
additional level of security.                                                                                                   
Co-Chair MacKinnon CLOSED public testimony.                                                                                     
10:38:04 AM                                                                                                                   
Vice-Chair Bishop discussed the fiscal notes.                                                                                   
Co-Chair MacKinnon  surmised that there was  only an initial                                                                    
request for insurance.                                                                                                          
Vice-Chair Bishop continued to discuss the fiscal notes.                                                                        
Vice-Chair Bishop  requested a "scrub" of  the vehicle pool,                                                                    
computers, office panels, and furniture.                                                                                        
Co-Chair   MacKinnon   wondered   whether  there   was   new                                                                    
requirements in other states for a network system.                                                                              
10:44:39 AM                                                                                                                   
ANNA  LATHAM,   DEPUTY  DIRECTOR,  DIVISION   OF  INSURANCE,                                                                    
DEPARTMENT OF COMMERCE,  COMMUNITY AND ECONOMIC DEVELOPMENT,                                                                    
JUNEAU, explained  that prior  to the  committee substitute,                                                                    
the division  had submitted a  zero fiscal note.  She stated                                                                    
that  the  new  version  would  put  administration  of  the                                                                    
legislation under the Department  of Commerce, Community and                                                                    
Economic  Development  (DCCED),   which  would  require  the                                                                    
creation  of   two  new  positions.  She   stated  that  the                                                                    
legislation  prohibited municipalities  from regulation,  so                                                                    
the regulation would be solely on the state.                                                                                    
Senator Dunleavy surmised that there  would be a cost to the                                                                    
state. Ms. Latham replied in the affirmative.                                                                                   
Senator Dunleavy  wondered whether the cost  would be offset                                                                    
by fees collected by the  companies. Ms. Latham replied that                                                                    
the reason  for general  fund and  not receipts  was because                                                                    
there   was   not  a   mechanism   to   collect  funds   for                                                                    
administration of the program.                                                                                                  
Co-Chair MacKinnon  announced that she planned  to recommend                                                                    
zeroing the fiscal note.                                                                                                        
Senator Micciche wondered how Uber made its revenue.                                                                            
Co-Chair MacKinnon stated that Uber  made 25 percent of each                                                                    
dollar against the driver's revenue.                                                                                            
Senator Micciche  felt that the  cost would be  handled like                                                                    
any other license in the state.                                                                                                 
10:48:01 AM                                                                                                                   
Senator Dunleavy  wondered whether  there could  be multiple                                                                    
passengers in  one ride. Mr.  Matthews responded  that there                                                                    
were opportunities  to connect individuals who  may not know                                                                    
each other through the route of a trip.                                                                                         
Senator  Dunleavy asked  whether  individual passengers  may                                                                    
not   know  each   other.  Mr.   Matthews  replied   in  the                                                                    
Co-Chair Hoffman surmised that  the parent companies did not                                                                    
operate in Alaska. Co-Chair MacKinnon agreed.                                                                                   
Co-Chair Hoffman expressed concern  that that the 25 percent                                                                    
of the revenue would be leaving the state.                                                                                      
Co-Chair MacKinnon discussed committee business.                                                                                
Co-Chair MacKinnon wished a happy  birthday to her grandson,                                                                    
SB  14  was   HEARD  and  HELD  in   committee  for  further