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, 3/1/17). Co-Chair MacKinnon OBJECTED for discussion. Co-Chair MacKinnon read the bill title. Ms. Lucky discussed the Explanation of Changes (copy on file): 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 immunity. 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 clarity. 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 choice. 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 statutes. 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 RECONVENED 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 Fairbanks. 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 Uber. 10:29:54 AM AT EASE 10:31:27 AM RECONVENED 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 FN4(CED). 10:32:29 AM AT EASE 10:35:16 AM RECONVENED 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.