HB 132-TRANSPORTATION NETWORK COMPANIES  4:01:00 PM CHAIR KITO announced that the final order of business would be HOUSE BILL NO. 132, "An Act relating to transportation network companies and transportation network company drivers." 4:01:26 PM REPRESENTATIVE WOOL, as prime sponsor, presented HB 132 and described the bill as timely after passing HB 108 out of committee today wherein the members agreed it is time to get onboard with the modernization of society. He explained that "ridesharing" is a platform used to obtain a ride somewhere through an application (app) on a smart phone and passengers hire private individuals to drive them from point A to point B. Other aspects of society have modernized due to digital technology, which includes: Airbnb is accessed through a smart phone and people pay the homeowner to stay in their home for a certain amount of time for a certain amount of money; Car2go parks cars in different areas and with the appropriate card a person is able to get into that car, drive it around, park it later, and not go to a typical car rental counter; traveling is conducted online; and ridesharing. Ridesharing companies can include: Uber, Lyft, Side Car Rentals, Car Rental at Geraldton (GET), and many more with different specialties. He pointed out that these drivers are independent contractors and do not receive worker benefits, similar to taxi cab drivers. Ridesharing is available in 49 states, 20,000 people in Alaska have the Uber app on their phone, and 60,000 people coming into Alaska last year attempted to open their app. 4:05:23 PM REPRESENTATIVE WOOL advised that the upside is that transportation network companies (TNCs) will help the economy, as follows: it will provide more income to people looking to supplement their income; it is one of the few jobs the military can be involved in during their off-time; it stimulates the economy especially in downtown areas; it is good for public safety because less people are driving under the influence; and people are more prone to go out and spend money. He described as follows: it is better service than conventional taxis and studies have shown that where ridesharing has come in, more people are taking rides and more areas are served because drivers tend to drive where they live; ridesharing is generally 50 percent less than conventional taxis; ridesharing is convenient and easy because the app is used rather than a phone call. He explained that combined with ridesharing are other products, such as a parent app wherein the parents enable their children to get a ride and the children can be tracked. 4:07:29 PM REPRESENTATIVE WOOL advised that carpooling is convenient with the ridesharing app because a person can opt to share the ride with another individual so both rates go down, and it is good for the elderly or disabled individuals who may not be able to handle money because it is set up on a person's individual phone and cash is not involved. The purpose of this is not in any manner to end taxi cabs, he stressed, having transportation network companies (TNCs) in an area will increase paid riders and it actually augments taxis cabs. Currently, he offered, many taxis cabs are adapting and using similar apps with the same technology as ridesharing, and possibly taxi cabs will specialize and perform certain types of rides. He added that taxi cabs can still be hailed which cannot happen with TNCs, and taxi cabs will always be needed. He described that TNCs are in every other state in the country, and this is part of the evolution of technology and modernization of society. 4:09:29 PM REPRESENTATIVE BIRCH commented that this legislation is well- timed and from a security standpoint, the traveler is able to see the driver, when they will be picked up, and so forth. Pushback in some circles has been the quality of the ride, security, and timeliness, he said. 4:10:17 PM REPRESENTATIVE KNOPP referred to the comment that TNCs existed in Anchorage, and asked why it was no longer available. He also asked why legislation is needed at the state level to allow TNCs. REPRESENTATIVE WOOL said he does not live in Anchorage and he read in the newspaper that [Uber] came in as a trial project with the Municipality of Anchorage, which has a regulated taxis cab system, and Anchorage tried it out as a pilot project. As far as the statewide legislation, he noted, there is statewide legislation in 38 states and Wyoming just passed the legislation a week or so ago. He opined that Washington State just passed a version on their Senate side and, hopefully, it is about to pass the legislature. He related that it is just too hard for the ridesharing companies to have different rules and regulations in every single municipality; therefore, a uniform system throughout the state was preferred. 4:12:26 PM LAURA STIDOLPH, Staff, Representative Adam Wool, Alaska State Legislature, advised that when Uber had the pilot program in Anchorage, it was operating without an exemption from the Alaska Workers' Compensation Act, and this legislation takes care of that issue. REPRESENTATIVE KNOPP asked if the issue at that time was whether TNC drivers were independent contractors or employees. MS. STIDOLPH answered yes, and she said this bill clarifies that they are independent contractors exempt from the Alaska Workers' Compensation Act, much like taxi cab drivers. 4:13:15 PM REPRESENTATIVE KNOPP asked whether taxi cabs are regulated at the state or local level. MS. STIDOLPH replied that taxi cabs are municipally regulated in Anchorage and "they do have harder regulation there." She said that there is some regulation in Juneau and Fairbanks, but not as much as in Anchorage where there are medallions. A state policy rather than municipal policy is necessary because the new technology requires a clear set of rules that is not patch worked around the state. She explained that TNC drivers cross municipal borders from community to community and multiple municipal regulations could cause problems. REPRESENTATIVE KNOPP asked how to level the playing field, how would the committee allow municipalities to not regulate one travel group and regulate the other group. He said he likes the bill and would like to see TNCs here, but only on a level playing field. MS. STIDOLPH advised that Anchorage is de-regulating its taxi cab system in five years and this bill aims to state regulate. In a year or two, if municipalities are "having that much of a problem with TNCs then we can go back into statute and perhaps change it," she said. 4:15:22 PM REPRESENTATIVE JOSEPHSON surmised that part of the hope is to have a system that mirrors a taxi cab system, in the respect of not being an employee but rather self-employed. The Municipality of Anchorage, for example, requires that taxi cabs have a $100,000 per person bodily injury coverage, $300,000 aggregate, and $50,000 per occurrence. He referred to HB 132, page 6, lines 7-8, wherein "there is an opportunity where a person could be not on a prearranged ride but sort of in a position, I guess psychologically or physically, to take a prearranged ride." He asked whether the insurance rates, given that this is a form of commercial carry, shouldn't be somewhat higher than is indicated on page 6, lines 9-11. 4:16:43 PM REPRESENTATIVE WOOL opined that Representative Josephson was referring to the different periods of the status of a driver for a TNC, such as period 1, period 2, period 3. Period 1, he explained, means the driver has the app on their phone open and they can be in their car, parked in the parking lot, driving, or at their house. Period 2, he explained, is when someone requests a ride and the driver accepts the ride. At that point the coverage goes up to $1 million liability and $1 million insured/under-insured motorists, which is considerably higher than the requirement for a taxi cab in Alaska. Period 3, he explained, is when the passenger gets into the car and the car is still covered at the $1 million level. Any driver for a TNC company must have their own valid and verified insurance, and if the driver loses their insurance for some reason, they lose their driving privileges with the TNC. That being said, he commented, the TNC will provide, if needed, the state minimum requirement for all drivers in the State of Alaska. 4:19:25 PM REPRESENTATIVE JOSEPHSON asked why TNCs would purchase insurance for people who are not their employees. REPRESENTATIVE WOOL responded that the contracted drivers must purchase their own insurance, the TNCs have a policy above and beyond the driver's insurance, especially in periods 2-3. Drivers must meet the state insurance minimum but some may purchase in excess of that requirement, and insurance companies offer a product specifically for TNC drivers. He said that Ms. Stidolph received a letter from her insurance company inquiring as to whether she was a TNC driver, and if so, it would charge an extra of $5 - $8 per month. He opined that TNCs buy the insurance for extra protection in the event extra insurance is necessary. 4:20:48 PM REPRESENTATIVE JOSEPHSON commented that it is curious that TNCs would afford this benefits to someone they want to be detached from. He asked whether there are regulations in other states allowing the drivers to organize, and whether the TNCs have essentially tolerated that sort of regulation and worked consistent with the regulation. REPRESENTATIVE WOOL, in response to Representative Josephson's first question, advised that taxi cab companies also buy insurance for their independent contractor drivers. He opined that the City of Seattle passed an ordinance allowing drivers to organize and he does not believe they have yet organized. A sub-group of drivers in New York City, Uber Black for example, are employees of a separate company that uses the Uber platform so they may be organized in a different manner. Technically, he said, they are employees of a different company and are more professional drivers. 4:22:40 PM CHAIR KITO surmised that Uber Black is not your grandparent's Uber. REPRESENTATIVE WOOL agreed, and he said that only a small percentage of the drivers in Seattle actually want to organize. An issue about organizing these drivers is that many are part- time, and as far as all of the issues that go into organizing employees, such as sick time and vacation time, which is usually ascribed to full-time employment. He opined that there are not any organized TNC drivers, but representatives from the companies can validate his statement. 4:23:37 PM CHAIR KITO opened invited testimony and advised that public testimony would not be taken today. 4:23:53 PM ANNABEL CHANG, Director of Public Policy, Lyft, offered support for the legislation and explained that the Lyft ridesharing app technology connects people with efficient and safe rides by downloading, and registering the app on a person's smart phone, and requesting a ride with the tap of a button. She said that Lyft utilizes technology to provide consumers with new levels of transparency and accountability. Every Lyft ride is tracked via GPS, she explained, and once the app is open, passengers are provided with the driver's picture, user ratings of the driver, the license plate, make and model of the vehicle, and passengers can track the car; the drivers receive a photo and the name of their passenger. She remarked that there is a function in the app where an ETA can be sent to the passenger, and the passenger can send an ETA to their family or colleagues in a business meeting. Payments through Lyft are entirely digital, thereby enhancing security; every passenger automatically receives a digital receipt with the information of their driver, and no cash changes hands. Subsequently, she said, every passenger and driver have, the opportunity to rate each other, and after every ride there is instantaneous feedback. Lyft is more than simply a ridesharing app because it offers unique and flexible economic opportunities, such that, in 2016 drivers on the Lyft platform earned $1.5 billion and over $150 million in tips, and Lyft passengers increased their consumer spending by $750 million in one year. Currently, 39 states across the nation have passed comprehensive statewide legislation to regulate Lyft in a safe and robust manner, almost identical to HB 132. Lyft hopes that Alaska will join that effort and requests the committee's support for HB 132, she said. 4:27:49 PM MITCHEL MATTHEWS, Senior Northwest Operations Manager, Uber Technologies, offered support for the legislation and the opportunity to return its flagship product back to Alaska. He explained that over 20,000 Alaskans currently have the Uber app downloaded on their smart phone, and in 2016, 60,000 individuals opened that app seeking a ride using the Uber platform, be it tourists, residents, or visitors to the state. This legislation provides appropriate safeguards for consumers and a clear, precise, and predictable operational framework for transport network company (TNC) drivers and riders across the State of Alaska. The legislation contains an insurance model that has been adopted in essentially the same form in over 40 states, and that language has the support of the largest property and casualty insurance trade groups in the United States. Further, he said, this bill provides a clear framework to ensure public safety because it creates a certainty to conduct business without the need to navigate a patchwork of local regulations that may differ from city to city. It further enhances access to transportation in and around rural communities as well as creating new small businesses and an income stream for families and individuals, he said. 4:29:23 PM MR. MATTHEWS explained that residents in the Matanuska-Susitna Valley who commute and travel from Anchorage would benefit from the bill's clear and concise framework. Uber riders request a ride with the touch of a button and after a trip match is made between the rider and driver, the name, photograph, license plate and contact details, which are anonymized, are shared between each individual. During the ride a rider may share their location and trip with their family members, thereby, providing an enhanced safety feature, and there is an accountability component wherein each rider and driver rate each other through the app with direct feedback. Independent contractors value the flexibly of Uber's model, and he said that over 80 percent of the drivers drive less than 10 hours per week because it allows drivers to work when they want for as long as they want, drivers can work with competitors, and drivers can drive in the area of their choice. He explained that Uber's driver verification process includes an extensive screening process for each applicant via a third-party approved by the National Association of Background Check Screeners. The screening process includes: social security numbers; driving records; personal information - full name, date of birth, social security number, valid driver's license, bank account information, vehicle registration; and Uber does not allow anyone on the National Sex Offender Public Website maintained by the United States Department of Justice to drive for the company. 4:31:31 PM REPRESENTATIVE SULLIVAN-LEONARD asked whether a ridesharing driver would be required to sign up through the City and Borough of Juneau (CBJ) for a business license, background check, and drug testing, and further asked whether the drivers would be applicable for a sales tax application. MR. MATTHEWS responded that the legislation itself provides background check language and requirements so when an individual signs up to drive with Uber, Lyft, or others, the third-party the TNC works with would be responsible for conducting that background check and adjudicating the information. He advised that drivers are independent business owners and a business license for Juneau, for example, would be the state business license where they register their intent to operate in Juneau, or a CBJ business license would be theirs to obtain. REPRESENTATIVE SULLIVAN-LEONARD surmised that the drivers would have to follow the rules as to sales tax, collections, and payment to the CJB. MR. MATTHEWS opined that the bill sponsor is crafting language with respect to sales tax. 4:33:29 PM CHAIR KITO requested Mr. Matthews to describe the vehicle inspection requirements for a driver, and how the requirements might be accomplished in an area without a mechanic, for example. MR. MATTHEWS answered that Uber requires a 19-point vehicle inspection to ensure that the vehicles are mechanically able to provide a service, and "we would review it again. In areas of Alaska, as takes place in areas of Montana, Uber may require individuals signing up to take photographs or videos of their vehicles, Uber would then have the photographs and videos reviewed by an individual who would ensure that the vehicle does meet the requirements to drive and pass an inspection. The statewide framework is important, he described, because it allows a person who signs up in a community without a mechanic the opportunity to drive. 4:34:49 PM REPRESENTATIVE JOSEPHSON surmised that the TNCs have a means in other jurisdictions to pay a sales tax. MR. MATTHEWS related that in some jurisdictions there would be no taxes levied against the TNC, and a state sales tax exists in other areas of the state. He deferred to the bill sponsor for clarity. REPRESENTATIVE JOSEPHSON asked what percentage of people screened for background checks that are rejected. MR. MATTHEWS advised that he does not have data on that issue. The requirements listed in the bill, he explained, are the requirements people would be adjudicated against, the determining factor as to whether a person could drive on the Uber platform. REPRESENTATIVE JOSEPHSON referred to personal insurance policies and the insurance policies provided by the TNC, and asked whether both policies would cover an accident. He further asked which insurance policy would take priority. MR. MATHEWS deferred to Jared Eber. 4:36:45 PM JARED EBER, Attorney, Uber Technologies, explained that individual drivers purchase specific insurance through carriers offering a ridesharing product, and in addition, TNCs are required to have their own insurance as well. The driver's specific ridesharing insurance policy would respond first, and Uber's insurance policy would respond on top of that for any additional amounts the driver's specific ridesharing insurance would not cover, he explained. The TNCs coverage would be primary in the event the driver's insurance did not provide coverage, he said, and would start at dollar one. 4:38:27 PM REPRESENTATIVE KNOPP noted that the drivers would be independent contractors and would go to the Division of Licensing for business licenses, and asked how many applications Representative Wool expected to be submitted. REPRESENTATIVE WOOL said he was unaware of the projection for the number of TNC drivers, but there were 80 drivers in the pilot program in Anchorage. REPRESENTATIVE KNOPP offered that the Division of Licensing would be substantially busy with the licensing of these independent contractors. He then reiterated concern regarding little to no local control, and asked whether, when complaints are filed, the person would most likely call the local police or someone at the state level. He asked how the complaints would be addressed, especially when the local municipalities do not have authority to regulate and yet get stuck handling some of the complaint calls. REPRESENTATIVE WOOL answered that there had not yet been a discussion regarding an abundance of complaints. He referred to the local control issue and said that Anchorage has a medallion system which will expire. He commented that he was unsure whether the Anchorage control system was working well and that he assumed those working with the control system possibly would prefer to be out of the taxi cab business. REPRESENTATIVE KNOPP explained that he was just putting his thoughts out there for future conversations. He referred to the Kenai Peninsula Borough's sales tax and commented that the Kenai Peninsula Borough "does not do business licensing," but the drivers would still be required to register and collect a sales tax as independent contractors. He said that he assumed under this bill there is no exemption. REPRESENTATIVE WOOL related that the language is currently being crafted incorporating local municipal sales tax in a form that the driver will pay to the municipality. 4:41:50 PM REPRESENTATIVE BIRCH offered his understanding that if there is a complaint with a driver or any issue, it is loaded up immediately and is shared to whoever is handling that ride distribution. He opined that it is a two-way street and if a passenger is overly drunk, the driver has protections in that "they can basically measure up the potential cab ride as well." 4:42:46 PM REPRESENTATIVE WOOL explained that the rating is mandatory and before a person's next ride, they have to rate [the last ride]. He said that the ratings and comments are taken seriously for the driver and the passenger, and if someone receives bad ratings "they take them off the system" for drivers and passengers. REPRESENTATIVE BIRCH surmised that from a business standpoint, there is always accountability through the business model. REPRESENTATIVE WOOL agreed, and he said that he was unaware how often complaints go to the local or state government level, as mostly they are handled internally. 4:44:18 PM CHAIR KITO commented that society will see an adaptation for any of these types of new technologies coming forward. [HB 132 was held over.]