Legislature(2017 - 2018)BELTZ 105 (TSBldg)

02/09/2017 01:30 PM Senate LABOR & COMMERCE

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01:39:59 PM Start
01:40:14 PM SB14
02:26:42 PM Presentation: Administrative Order 281
03:33:36 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation: Administrative Order 281 Report TELECONFERENCED
- Boston Consulting Group
- Alaska Industrial Development & Export
- Alaska Energy Authority
Alaska Housing Finance Corporation
+ Bills Previously Heard/Scheduled: TELECONFERENCED
Moved CSSB 14(L&C) Out of Committee
-- Public Testimony --
             SB 14-TRANSPORTATION NETWORK COMPANIES                                                                         
1:40:14 PM                                                                                                                    
CHAIR COSTELLO announced the consideration  of SB 14 and noted it                                                               
is  the second  hearing. She  stated  the intent  is to  conclude                                                               
public testimony, adopt a committee  substitute (CS), and look to                                                               
the  will  of  the  committee.  She asked  if  anyone  wanted  to                                                               
1:41:15 PM                                                                                                                    
NANCY ALLRED,  Senior Counsel,  Uber, San  Francisco, California,                                                               
offered to answer questions related to SB 14.                                                                                   
1:41:38 PM                                                                                                                    
CHAIR COSTELLO closed public testimony.                                                                                         
1:41:50 PM                                                                                                                    
SENATOR  HUGHES moved  to adopt  the CS  for SB  14, labeled  30-                                                               
LS0250\U, as the working document.                                                                                              
CHAIR COSTELLO objected for discussion.                                                                                         
1:42:23 PM                                                                                                                    
WESTON EILER,  Staff, Senate Labor  & Commerce  Committee, Alaska                                                               
State Legislature, explained  the changes in version U  for SB 14                                                               
on behalf of the sponsor.  He said the committee substitute makes                                                               
several changes  after consultation with  stakeholders, insurance                                                               
companies, the  Department of Law,  Uber, Lift, and a  variety of                                                               
others.  Many of  the changes  are technical  and based  on model                                                               
language from the National Council of Insurance Legislators.                                                                    
He described the following changes:                                                                                             
Page 1,  line 13,  changing "offered"  to "afforded,"  and adding                                                               
the language  "notwithstanding any  requirement under  AS 28.20."                                                               
is added.                                                                                                                       
Page  2,  the  first  sentence  on lines  9-10  is  deleted,  and                                                               
language  is added  in the  new subsection  (b)(2)(A) and  (B) on                                                               
lines 17-22 of version U. It  reads: "may be construed to require                                                               
an insurer  to use specific policy  language or to refer  to this                                                               
section in order to exclude any  and all coverage for any loss or                                                               
injury that occurs while a driver  (A) is logged onto the digital                                                               
network of  a transportation network  company; or (B)  provides a                                                               
prearranged ride."                                                                                                              
Page  3,  line  10,  adds   the  language  "Insurers  potentially                                                               
providing  coverage"   and  deletes  "to  one   another  a  clear                                                               
description" and  adds "upon request  of any insurer  involved in                                                               
the claim, the applicable coverages".                                                                                           
Page  5,  line  1,  is  a  change made  at  the  request  of  the                                                               
Department  of   Law.  It  moves  the   regulation  of  rideshare                                                               
companies  under  the Department  of  Commerce  because they  are                                                               
technology companies, not transportation companies.                                                                             
Page 8, lines 12-17, provides certificate of insurance.                                                                         
Page 9,  line 8, [Sec  28.23.100. Transportation  network company                                                               
driver requirements] adds the language "or a third party,".                                                                     
1:47:11 PM                                                                                                                    
SENATOR STEVENS  asked Mr. Eiler  if he was referring  to version                                                               
U, adding that he was having trouble following the changes.                                                                     
MR. EILER  answered yes.  He continued to  say the  final changes                                                               
are in Sections 6 and 7 on  page 11. Section 6 amends AS 2910.200                                                               
by  adding  a  new  paragraph   (66).  It  reads,  "AS  29.35.148                                                               
(regulation  of  transportation  network companies  or  drivers).                                                               
Section   7   adds   a  new   Sec.   29.35.148.   Regulation   of                                                               
transportation network companies or drivers.                                                                                    
CHAIR COSTELLO asked Mr. Eiler to  go over the memo that provides                                                               
follow up  answers to questions  members posed during  a previous                                                               
1:49:55 PM                                                                                                                    
MR. EILER read the following questions and answers:                                                                             
     Senator Stevens:                                                                                                         
      What is the cause and effect of rideshare companies                                                                       
     entering a municipal transportation market?                                                                                
     A: four-month  pilot study  in Portland,  Oregon showed                                                                    
     that  despite  an  initial  decline   of  16%  in  taxi                                                                    
     traffic,  combined   for-hire  Transportation  business                                                                    
     grew 40% after the introduction of rideshare services.                                                                     
     Senator Gardner:                                                                                                         
     What constitutes an Independent Contractor?                                                                                
     A: Alaska law does  not define "Independent Contractor"                                                                    
     in  statute. AS  23.20.230(a) provides  a list  of job-                                                                    
     types/occupations  that  are  exempt from  the  State's                                                                    
     Workers' Compensation program.                                                                                             
     Can Uber  drivers decline  passengers? What  are Uber's                                                                    
     policies for confirming insurance coverage?                                                                                
     A:  Yes   -  Please  see  attached   letter  from  Uber                                                                    
     regarding  their  verification  procedures  and  driver                                                                    
     protection policies.                                                                                                       
     Senator Hughes:                                                                                                          
     Can drivers display proof of insurance electronically?                                                                     
     A;  Yes  -  AS  28.22.019(a)  allows  for  Alaskans  to                                                                    
     display  proof  of  insurance on  a  mobile  electronic                                                                    
1:53:09 PM                                                                                                                    
CHAIR COSTELLO noted  Senator Gardner had questions  for the Uber                                                               
SENATOR GARDNER  asked if  Uber could  provide a  sample contract                                                               
and  an employee  handbook. She  also  asked how  large or  small                                                               
Uber's role is in purchasing cars for drivers.                                                                                  
1:55:16 PM                                                                                                                    
BRIAN  GEBHARDT,  Uber,  responded  that Uber  does  not  have  a                                                               
handbook, but  it does  have Uber  Community Guidelines  that lay                                                               
out  expectations for  both the  rider and  the driver.  He noted                                                               
there is also information available on the internet.                                                                            
To the second  question, he explained that Uber  does not provide                                                               
vehicles  for its  drivers. In  some places  there is  a separate                                                               
operating entity called Exchange  Leasing for driver partners. He                                                               
did not anticipate having an exchange program in Alaska.                                                                        
SENATOR  GARDNER  asked  for a  sample  contract  that  clarifies                                                               
whether the drivers are employees or independent contractors.                                                                   
1:57:37 PM                                                                                                                    
SENATOR GARDNER referred to a  letter the committee received from                                                               
Daniel  McHugh,  Senior  Vice President  of  Alaska  USA  Federal                                                               
Credit Union. She read:                                                                                                         
     Comp and Collision coverage works  hand in hand to help                                                                    
     repair and replace  one's car in the  event of physical                                                                    
     damage.  Personal   auto  insurance   carriers  exclude                                                                    
     carriers for Comp and Collision  when the automobile is                                                                    
     being  used for  ride  sharing  purposes. (TNC  driver)                                                                    
     Ridesharing Comp  and Collision insurance  is available                                                                    
     to some,  not all,  carriers in the  Lower 48,  only if                                                                    
     the   TNC  driver   elects   to   pay  the   additional                                                                    
     endorsement or rider.                                                                                                      
She asked if that issue is addressed in version U.                                                                              
MR. EILER said he  was sure it was. He said  they met with Alaska                                                               
USA and forwarded their language for inclusion in version U.                                                                    
1:59:25 PM                                                                                                                    
MEGAN  WALLACE,  Legislative  Council,   Division  of  Legal  and                                                               
Research  Services,   Legislative  Affairs  Agency,   pointed  to                                                               
language  on page  2, subsection  (b), line  9, "Nothing  in this                                                               
section  .... (3)  precludes an  insurer from  providing coverage                                                               
for  the personal  vehicle of  a  transportation network  company                                                               
driver if the insurer chooses  to provide coverage by contract or                                                               
She said  this allows insurance  companies to exclude  or endorse                                                               
2:01:18 PM                                                                                                                    
SENATOR GARDNER asked if the  language about Uber confirming that                                                               
drivers have appropriate coverage  includes the optional contract                                                               
or endorsement.                                                                                                                 
MS. WALLACE  replied the insurance  provision in Section  2 opens                                                               
it  up  for  private  insurers   to  either  exclude  or  provide                                                               
endorsements, but in Section 5,  pages 4 and 5, specifically line                                                               
line  22,   sets  the  coverage   requirement  for   drivers  and                                                               
transportation network  companies. The protection for  the riders                                                               
mandates  that the  driver or  the company  provide coverage.  On                                                               
page  6, subsection  (d), it  says if  the driver  does not  have                                                               
coverage  the  transportation  network company's  Insurance  must                                                               
provide it.                                                                                                                     
2:04:09 PM                                                                                                                    
SENATOR  STEVENS asked  when  the  driver is  plugged  in to  the                                                               
digital network.                                                                                                                
MR. EILER deferred to Uber to answer.                                                                                           
2:04:53 PM                                                                                                                    
MR. GEBHARDT explained  that drivers are considered  logged in to                                                               
the  app  when they  have  opened  the application  and  declared                                                               
themselves  available. From  an  insurance  perspective, that  is                                                               
when Period I starts.                                                                                                           
2:05:45 PM                                                                                                                    
At ease                                                                                                                         
2:06:12 PM                                                                                                                    
CHAIR COSTELLO  reconvened the committee. She  noted Mr. Gebhardt                                                               
would address Senator Stevens' question  about when the insurance                                                               
kicks in.                                                                                                                       
MR. GEBHARDT clarified  that Period I starts when  drivers log in                                                               
to the platform  and make themselves available  to provide rides.                                                               
Once the  request has been accepted  by the driver and  he or she                                                               
is enroute  to pick up the  driver, Period II begins.  Period III                                                               
begins  when the  ride  starts, after  the  passenger enters  the                                                               
vehicle. After  the trip concludes,  it is  back to Period  I. He                                                               
referred to a handout for further details.                                                                                      
MS. ALLRED  added that the drivers  have a separate app  and when                                                               
they choose to go online, insurance coverage begins.                                                                            
CHAIR  COSTELLO requested  that  Ms. Allred  state the  insurance                                                               
that is provided to drivers in each period.                                                                                     
MS. ALLRED  explained that Period  I provides  primary automobile                                                               
insurance  of about  $50,000 for  one person  for bodily  injury,                                                               
$100,000 for  all people,  and $25,000  for property  damage. For                                                               
Periods  II  and  III,  there  is  primary  automobile  liability                                                               
coverage  of $1  million.  The National  Conference of  Insurance                                                               
Legislation (NCOIL) has adopted this as model legislation.                                                                      
2:08:55 PM                                                                                                                    
SENATOR MEYER  referred to page  7, line 19,  "In the event  of a                                                               
loss  involving a  personal  vehicle used  in  connection with  a                                                               
transportation  network company  and if  the personal  vehicle is                                                               
subject to a  lien, the insurance carrier  for the transportation                                                               
network  company  shall  pay  a  claim  covered  under  collision                                                               
physical  damage   coverage  or  comprehensive   physical  damage                                                               
coverage directly to the business  repairing the personal vehicle                                                               
or jointly to  the owner of the personal vehicle  and the primary                                                               
lienholder  on  the  covered  personal  vehicle."  He  questioned                                                               
whether the  payment should just go  to the lien holder  who owns                                                               
the vehicle.                                                                                                                    
CHAIR COSTELLO clarified  that it says, "of  the personal vehicle                                                               
and the primary lien holder."                                                                                                   
SENATOR  MEYER  said he  understood  that  the insurance  company                                                               
would pay both the owner of the vehicle and the lien holder.                                                                    
CHAIR COSTELLO asked for clarification.                                                                                         
MS. WALLACE responded that the  provision requires that the check                                                               
or money to pay for the  collision repair is either sent directly                                                               
to the  repair shop  or in  a check  to the  lien holder  and the                                                               
owner jointly  to be issued  to whoever repairs the  vehicle. She                                                               
recalled that was part of the model language.                                                                                   
2:11:27 PM                                                                                                                    
At ease                                                                                                                         
2:12:30 PM                                                                                                                    
CHAIR COSTELLO brought the meeting back to order.                                                                               
SENATOR MEYER  noted if the check  is made out jointly  it should                                                               
be ok.                                                                                                                          
He  referred to  Section 7,  line 19,  that says  "transportation                                                               
network drivers is reserved to the  state" and line 20 which says                                                               
that  "a  municipality may  not  enact  or enforce  an  ordinance                                                               
regulating  transportation  network companies  or  transportation                                                               
network  drivers."  He  said  he   understands  the  need  for  a                                                               
consistent, statewide law. He asked  if Anchorage has weighed in,                                                               
considering the taxicab industry has been in place for so long.                                                                 
SENATOR GARDNER  said she tried  to obtain that  information, but                                                               
was unsuccessful.                                                                                                               
2:14:03 PM                                                                                                                    
SENATOR GARDNER  looked at the  sectional summary for  version U,                                                               
specifically  AS  28.23.010,   "Provides  that  a  transportation                                                               
network company  or driver is  not a  common carrier and  may not                                                               
provide taxicab  or for-hire services."  She said that  area gets                                                               
to the  core of the  bill because common carriers  are regulated,                                                               
whereas transportation network companies  are not. She summarized                                                               
that  the  bill  removes  TNCs as  common  carriers  and  removes                                                               
Workers Compensation from TNCs                                                                                                  
MR. EILER  responded that  currently there  is no  definition for                                                               
independent  contractors  in statute.  He  noted  that there  are                                                               
additional distinctions between the two transportation modes.                                                                   
2:15:59 PM                                                                                                                    
SENATOR HUGHES  pointed out in  the legislative  intent language,                                                               
the   wording  "ensure   the  safety,   reliability,  and   cost-                                                               
effectiveness of  rides" on  page 1, line  7. She  suggested that                                                               
the  legislature cannot  guarantee the  safety, reliability,  and                                                               
cost-effectiveness of  rides, but  instead, could  help encourage                                                               
and  promote them.  She  emphasized that  it  does not  guarantee                                                               
2:17:00 PM                                                                                                                    
SENATOR  STEVENS  commented  that insurance  is  complicated.  He                                                               
asked  if  taxis can  carry  less  insurance  when they  are  not                                                               
carrying  passengers.  He  also  asked what  level  of  insurance                                                               
drivers are on when they've ended  a trip and what the process is                                                               
for changing the level of insurance.                                                                                            
2:18:16 PM                                                                                                                    
MR. EILER explained that the  process is done through a computing                                                               
platform.  When  the  driver  is  signed  in  he/she  is  on  the                                                               
insurance. His understanding  is that after a  trip is completed,                                                               
the driver is  back under Period I indicating  they are available                                                               
or they can switch off line.                                                                                                    
SENATOR STEVENS  asked if the  driver could  end the ride  and go                                                               
off the app and then sign in again if he/she was flagged down.                                                                  
MR. EILER  clarified that  Uber drivers  cannot be  flagged down.                                                               
All transactions are done through the app.                                                                                      
SENATOR  STEVENS commented  on  the advantage  of  being able  to                                                               
switch  levels   of  insurance  coverage.   He  asked   the  Uber                                                               
representative to address his question.                                                                                         
2:20:34 PM                                                                                                                    
MR. GEBHARDT  clarified that  in Period I  drivers are  logged in                                                               
and once  they completed the ride  and Period III ends,  they are                                                               
back to Period I coverage.                                                                                                      
2:21:22 PM                                                                                                                    
SENATOR HUGHES commented that taxicabs  are identifiable and Uber                                                               
cars are  not. She wondered if  a person could ever  flag an Uber                                                               
car down.                                                                                                                       
MR.  GEBHARDT said  there  should  not be  any  markings on  Uber                                                               
vehicles. The rider and driver partner by app.                                                                                  
2:22:31 PM                                                                                                                    
SENATOR HUGHES  moved to  report the  CS for  SB 14,  labeled 30-                                                               
LS0250\U,  from  committee  with individual  recommendations  and                                                               
attached zero fiscal notes.                                                                                                     
SENATOR GARDNER  objected. She said  she hasn't had time  to read                                                               
and understand the  committee substitute. She said  she likes the                                                               
idea of Uber  and many Alaskans want it, but  she is reluctant to                                                               
step  into  the dispute  between  taxicabs  and Uber  and  choose                                                               
between  two  business models.  She  removed  her objection,  and                                                               
added that  it doesn't mean  that she  would support the  bill on                                                               
the Senate floor.                                                                                                               
2:24:03 PM                                                                                                                    
CHAIR  COSTELLO  stated  that  without  further  objection,  CSSB
14(L&C) is  reported from  the Senate  Labor &  Commerce Standing                                                               

Document Name Date/Time Subjects
CS SB 14 (L&C) - Ver. U.pdf SL&C 2/9/2017 1:30:00 PM
SB 14
2017.02.09 - SB 14 Response to Senators' Questions.pdf SL&C 2/9/2017 1:30:00 PM
SB 14
2017.02.09 - Uber Response to Senators Questions.pdf SL&C 2/9/2017 1:30:00 PM
2017.02.09 - SB 14 - PBOT Study.pdf SL&C 2/9/2017 1:30:00 PM
SB 14
2017.02.09 - Boston Consulting Group AO 281 Presentation.pdf SL&C 2/9/2017 1:30:00 PM
Admin. Order 281.PDF SL&C 2/9/2017 1:30:00 PM
2016.08.10 - Alaska Dispatch News - AO 281 Press Story.pdf SL&C 2/9/2017 1:30:00 PM