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 testify. 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 hearing. 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 device. 1:53:09 PM CHAIR COSTELLO noted Senator Gardner had questions for the Uber representative. 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 endorsement." She said this allows insurance companies to exclude or endorse coverage. 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 them. 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 Committee.