Legislature(2017 - 2018)SENATE FINANCE 532

03/07/2017 09:00 AM Senate FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSSB 14(FIN) Out of Committee
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
SENATE BILL NO. 14                                                                                                            
     "An Act relating to transportation network companies                                                                       
     and transportation network company drivers."                                                                               
10:04:58 AM                                                                                                                   
Vice-Chair   Bishop  MOVED   to  ADOPT   proposed  committee                                                                    
substitute  for  SB  14, Work  Draft  30-LS0250\I  (Wallace,                                                                    
Co-Chair MacKinnon OBJECTED for discussion.                                                                                     
Co-Chair MacKinnon read the bill title.                                                                                         
Ms.  Lucky discussed  the Explanation  of  Changes (copy  on                                                                    
     Page  1, line  11  - Page  2, line  4:  New section  2:                                                                    
     enacts  §09.65.350 which  explicitly  asserts that  the                                                                    
     state  and   municipalities  are   not  liable   for  a                                                                    
     Transportation Network Company's  failure to follow the                                                                    
     law.  This  clarifies  the  sponsor's  intent  for  the                                                                    
     regulatory authority over this program.                                                                                    
Ms. Lucky noted that that  intent of the legislation was not                                                                    
to have  active regulation by  departments of the  state. If                                                                    
the transportation  network companies (TNCs) did  not follow                                                                    
the  law,  they  would  be  held  civilly  liable,  and  the                                                                    
recourse would  be a  civil suit. She  noted that  there had                                                                    
been some  confusion with the  previous version of  the bill                                                                    
as to  how much  regulation a department  would have  to do,                                                                    
which  had  led  to  a  large fiscal  note  discussed  at  a                                                                    
previous meeting.  Since the  bill was  last heard,  the co-                                                                    
chair's office had  been working with departments  to find a                                                                    
way to ensure  that the sponsor's intent  for regulation was                                                                    
met.  The  language that  was  agreed  upon was  to  provide                                                                    
Ms.  Lucky  continued  discussing  the  summary  of  changes                                                                    
document. She  explained that the state  did currently enjoy                                                                    
general  immunity, however  it was  thought that  having the                                                                    
explicit immunity  in statute would  make it clear  that the                                                                    
state departments  were not actively regulating  the TNCs by                                                                    
checking insurance certificates or law compliance.                                                                              
Ms. Lucky continued to discuss the changes:                                                                                     
     Page 7, lines 26-29: Rewords §28.23.050(i) for                                                                             
     Page 9, line 29: Rewords §28.23.110 to require adopted                                                                     
     policies regarding nondiscrimination and accessibility                                                                     
     to conform to existing state law.                                                                                          
     Page 12, line 2: New section 9: immediate effective                                                                        
     date. This required a conforming title change.                                                                             
Ms. Lucky  explained that  new language in  the CS  was more                                                                    
clear about how payment should  be applied in the event that                                                                    
there was a lien on a damaged car.                                                                                              
10:08:44 AM                                                                                                                   
Co-Chair MacKinnon  WITHDREW her  OBJECTION. There  being NO                                                                    
further  OBJECTION,   it  was  so  ordered.   The  Committee                                                                    
Substitute for SB 14(FIN) was ADOPTED.                                                                                          
Co-Chair  MacKinnon noted  that the  public hearing  for the                                                                    
bill was  opened and  closed on February  13, 2017;  and re-                                                                    
opened and closed on February 15, 2017.                                                                                         
Ms.  Lucky discussed  the  fiscal notes  for  the bill.  She                                                                    
explained  that when  the  bill was  moved  from the  Senate                                                                    
Labor  and  Commerce Committee,  there  had  been four  zero                                                                    
fiscal  notes:   two  from  the  Department   of  Labor  and                                                                    
Workforce  Development;  one  from  the  Division  of  Motor                                                                    
Vehicles  (DMV); and  one from  the Department  of Commerce,                                                                    
Community and  Economic Development, Division  of Insurance.                                                                    
She detailed that FN1 and  FN2 still applied. There had been                                                                    
questions about  the DMV language  in FN3.  After discussion                                                                    
with the department,  it had re-worded the  fiscal note. The                                                                    
new  fiscal note  from DMV  was  still a  zero fiscal  note.                                                                    
There was a fiscal note  from the Division of Insurance that                                                                    
had  been  produced  too  late to  move  from  the  previous                                                                    
committee along with the bill -  FN4 was a zero fiscal note.                                                                    
She summarized  that previously published FN1,  FN2, and FN4                                                                    
would apply to  the bill; as well as a  new zero fiscal note                                                                    
from DMV that would replace FN3 that came with the bill.                                                                        
Ms. Lucky pointed  out that her office had  been in constant                                                                    
contact  with the  departments regarding  the bill,  and she                                                                    
had been assured  that the zero fiscal notes  all applied to                                                                    
the CS being considered.                                                                                                        
10:11:16 AM                                                                                                                   
SENATOR MIA  COSTELLO, SPONSOR,  had examined  the Committee                                                                    
Substitute for SB 14, and  had worked closely with committee                                                                    
staff on  the updates to  the fiscal notes. She  thought FN3                                                                    
had caused confusion in the  public, and was appreciative of                                                                    
multiple committee hearings for the bill.                                                                                       
WESTON EILER, STAFF,  SENATOR MIA COSTELLO, spoke  to a memo                                                                    
from  Senator   Costello  that  summarized   questions  from                                                                    
committee members after the first  hearing of the bill (copy                                                                    
on file). He commented that  many of the questions pertained                                                                    
to comparisons  with regard to  TNC drivers  or ride-shares.                                                                    
He had worked with the companies Lyft and Uber.                                                                                 
Mr.  Eiler addressed  a question  from  Senator Micciche  on                                                                    
page 2 of the memo:                                                                                                             
     Senator Micciche                                                                                                           
     Does the $1 million dollar insurance coverage in the                                                                       
     bill mirror the coverage taxi cabs carry for riders                                                                        
     and drivers?                                                                                                               
     The insurance  provisions of Senate Bill  14 exceed the                                                                    
     coverage  requirements  for  many  Alaskan  taxi  cabs.                                                                    
     While   local  laws   vary,  municipal   regulation  in                                                                    
     Anchorage, Fairbanks, and Juneau  all require taxi cabs                                                                    
     to carry the following coverage:                                                                                           
     $300,000 - aggregate injuries sustained in an accident                                                                     
     $100,000 - per personal injury                                                                                             
     $50,000 - property damage per occurrence                                                                                   
     Please see:                                                                                                                
     Anchorage - Municipal Code 11.20.100                                                                                       
     Fairbanks - Ch. 86, Article II, Division 2, Sec. 86-52                                                                     
     Juneau - 20 CBJAC 40.580                                                                                                   
Mr.  Eiler  discussed   Senator  Micciche's  question  about                                                                    
comparative insurance coverage of  TNC drivers and taxicabs.                                                                    
There  were  further questions  in  the  memo pertaining  to                                                                    
coverage  throughout the  course  of a  ride-share ride.  He                                                                    
informed that  TNCs provided  commercial insurance  from the                                                                    
moment  a driver  turned the  application on  to the  moment                                                                    
when  a  passenger  exited  a  rideshare  vehicle.  Coverage                                                                    
varied according  to the course  of the ride. Once  a driver                                                                    
had  been matched  with a  passenger, the  higher levels  of                                                                    
coverage were activated for the course of the ride.                                                                             
10:15:16 AM                                                                                                                   
Mr. Eiler  continued discussing insurance coverage  of ride-                                                                    
share  drivers. He  referred to  'Period 1,'  a circumstance                                                                    
under which a driver was driving  but not yet matched with a                                                                    
rider.  He  noted  that  a   driver  was  able  to  purchase                                                                    
additional insurance.                                                                                                           
Mr. Eiler addressed questions  pertaining to safety concerns                                                                    
and background checks.  He informed that both  Lyft and Uber                                                                    
adopted local  and national background checks,  did a social                                                                    
security  trace,  and   cross-referenced  the  national  sex                                                                    
offender registry. There was a  variety of jurisdictions and                                                                    
levels at which a background check was taken.                                                                                   
Mr. Eiler  referred to a  question by Senator  Dunleavy that                                                                    
was addressed in the memo:                                                                                                      
     Please explain the difference between Uber Pool and                                                                        
     the standard Uber product.                                                                                                 
     Both  Uber  and  Lyft  offer  carpooling  options  that                                                                    
     riders can select through the  apps. This option allows                                                                    
     riders  to   match  with   another  heading   the  same                                                                    
     direction  and share  the trip  and the  cost. It's  an                                                                    
     optional  feature  riders can  elect  to  use at  their                                                                    
Mr.  Eiler continued  discussing ride  shares, and  spoke to                                                                    
the benefits  of carpooling  ride-shares. He  considered the                                                                    
structure of  the bill to  have a statewide  framework. Much                                                                    
of  the   carpooling  and  transit  could   cross  municipal                                                                    
boundaries.  In crossing  municipal  boundaries, ride  share                                                                    
cars did  what local taxis  could not, which  necessitated a                                                                    
statewide framework  for regulation.  He recalled  that over                                                                    
30  other   states  in  the  country   had  adopted  similar                                                                    
10:18:07 AM                                                                                                                   
Mr.  Eiler  noted  that  he  had  worked  with  stakeholders                                                                    
regarding protections for  lienholders, which were addressed                                                                    
on page  3 of the memo.  He noted there were  two provisions                                                                    
by which  lienholders were protected during  ride-shares. He                                                                    
furthered  that TNCs  were required  to inform  drivers that                                                                    
not  maintaining  physical  damage  insurance  coverage  may                                                                    
violate  the  contract  with the  vehicle's  lienholder.  He                                                                    
referred to  Section 28.23.05 (i),  which also  provided for                                                                    
how lienholders were  compensated in the event  of damage or                                                                    
loss to a vehicle.                                                                                                              
Mr. Eiler  stated that financial institutions  had a variety                                                                    
of  mechanisms   by  which  they  managed   risk;  including                                                                    
collateral  protection  insurance, which  covered  financial                                                                    
institutions  exposure to  loss for  incidental professional                                                                    
use  of   personal  vehicles.  He   used  the   examples  of                                                                    
individuals  using a  personal  vehicle  for small  business                                                                    
outings, such as  home health aides and  real estate agents.                                                                    
He  assured  that  there  was  existing  contract  law  that                                                                    
protected  lienholders as  the  new area  of technology  and                                                                    
commerce was developed.                                                                                                         
Senator  Micciche  asked  about the  insurance  levels,  and                                                                    
thought Mr. Eiler had mistakenly  combined three levels into                                                                    
two  levels. He  understood that  when the  app was  not on,                                                                    
drivers  were required  to have  the same  insurance as  any                                                                    
driver.  When a  TNC driver  was logged  in to  the app  and                                                                    
available to  receive transportation  requests, there  was a                                                                    
second  level of  insurance. He  thought there  was a  third                                                                    
level  of coverage  when the  driver was  engaged in  a pre-                                                                    
arranged ride.                                                                                                                  
Mr. Eiler  referred to an  insurance diagram (copy  on file)                                                                    
that defined  the three periods  of commerce. When  a driver                                                                    
had  accepted  a trip  and  was  in  period  2 and  3,  TNCs                                                                    
provided  primary  insurance  coverage  that  would  respond                                                                    
first in  the case  of an  accident. The  insurance coverage                                                                    
was $1 million in liability  and $1 million for uninsured or                                                                    
underinsured motorist  injury per  incident. He  stated that                                                                    
drivers should  be in contact  with banks or  lienholders to                                                                    
purchase additional  insurance for  period 1.  Throughout an                                                                    
entire  ride, there  was  not  a possibility  for  a gap  in                                                                    
coverage. Under SB 14, TNCs  were required to have insurance                                                                    
as a backstop.                                                                                                                  
Senator Micciche  thought the $1  million insurance  was not                                                                    
required  when   a  driver  was   available  to   receive  a                                                                    
transportation request;  but kicked  in when the  driver was                                                                    
engaged in a prearranged ride.                                                                                                  
Co-Chair MacKinnon asked if  Senator Costello was supportive                                                                    
of the changes in the Committee Substitute.                                                                                     
Senator Costello answered in the affirmative.                                                                                   
Co-Chair  MacKinnon noted  that  there were  representatives                                                                    
from  other companies  available  to  answer questions.  She                                                                    
wanted to hear comments from operators.                                                                                         
10:23:34 AM                                                                                                                   
ANNABEL  CHANG, LYFT,  SAN  FRANCISCO (via  teleconference),                                                                    
testified in support of the CS that was adopted.                                                                                
10:24:19 AM                                                                                                                   
MITCHEL  MATTHEWS,   UBER,  SEATTLE   (via  teleconference),                                                                    
testified in support of the Committee Substitute.                                                                               
10:24:47 AM                                                                                                                   
AT EASE                                                                                                                         
10:25:16 AM                                                                                                                   
Senator  Olson  noted  that the  committee  had  heard  from                                                                    
sizable metropolitan  carriers. He  wondered if  the service                                                                    
would   be  available   in  areas   outside  Anchorage   and                                                                    
Senator Costello  relayed that Co-Chair Hoffman  had asked a                                                                    
similar  question  in a  previous  meeting.  She thought  an                                                                    
individual interested  in being  a driver  could participate                                                                    
as an  independent contractor  if they had  a car,  a phone,                                                                    
and  passed a  background check.  As  soon as  the bill  was                                                                    
signed  in to  law, Alaska  would  be joining  the other  49                                                                    
states  in offering  the opportunity  to potential  drivers.                                                                    
She reiterated that the bill had a statewide approach.                                                                          
Senator  Olson  asked  if Senator  Costello  had  heard  any                                                                    
testimony supporting the bill.                                                                                                  
Senator  Costello   stated  that  the  bill   represented  a                                                                    
paradigm shift  that looked  to the  future. She  thought it                                                                    
was  an  innovative  approach  to  providing  transportation                                                                    
options. She  shared that there  was opposition to  the bill                                                                    
from  the  taxi  industry.  She  referred  to  studies  that                                                                    
demonstrated  that  jobs  had   expanded  and  the  pool  of                                                                    
individuals  using  transportation  had expanded.  She  knew                                                                    
that no  other jurisdiction had  resulted in a  taxi company                                                                    
going  bankrupt. She  thought  people were  using a  greater                                                                    
variety of transportation options.                                                                                              
Co-Chair MacKinnon recalled that  someone had testified that                                                                    
there  were   60,000  individuals  within  the   state  that                                                                    
possessed apps that  could access services such  as Lyft and                                                                    
10:29:54 AM                                                                                                                   
AT EASE                                                                                                                         
10:31:27 AM                                                                                                                   
Co-Chair  MacKinnon  stated  that  SB 14  had  been  in  the                                                                    
committee  for  three weeks,  and  there  had been  multiple                                                                    
public hearings.  She asked the  committee if there  was any                                                                    
further questions or concerns related to the bill.                                                                              
Vice-Chair  Bishop  MOVED  to report  CSSB  14(FIN)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
CSSB  14(FIN)  was  REPORTED  out   of  committee  with  "no                                                                    
recommendation" and  with one  new zero  fiscal note  by the                                                                    
Department   of   Administration;   and   three   previously                                                                    
published  zero   fiscal  notes:  FN1(LWF),   FN2(LWF),  and                                                                    
10:32:29 AM                                                                                                                   
AT EASE                                                                                                                         
10:35:16 AM                                                                                                                   
Co-Chair MacKinnon discussed the  schedule for the following                                                                    
day,  which   included  three   bills  that   concerned  the                                                                    
Permanent Fund and  use of the Permanent  Fund earnings. She                                                                    
asked that  the members  provide any  amendments as  soon as                                                                    
possible.  She noted  that the  committee  would consider  a                                                                    
comparison of how each bill functioned.                                                                                         

Document Name Date/Time Subjects
HB 80 work draft version R.pdf SFIN 3/7/2017 9:00:00 AM
HB 80
HB 80 Explaination of Changes FIN version R.pdf SFIN 3/7/2017 9:00:00 AM
HB 80
SB 14 work draft version I.pdf SFIN 3/7/2017 9:00:00 AM
SB 14
SB 14 Summary work draft version I.pdf SFIN 3/7/2017 9:00:00 AM
SB 14
SB 14 Response to Senators' Questions.pdf SFIN 3/7/2017 9:00:00 AM
SB 14