RD481 - Transportation Network Companies in Virginia - December 2014

  • Published: 2014
  • Author: Department of Motor Vehicles
  • Enabling Authority: Letter Requests from the Senate and House Committees on Transportation

Executive Summary:
This report documents the research, analysis, findings and recommendations of a study of transportation network companies (TNCs) that was requested by the chairs of the Senate Transportation Committee and the House Transportation Committee and that was led by the Department of Motor Vehicles (DMV). TNCs, which include companies such as Uber, Lyft, and Sidecar, employ smart phones and related technology to connect riders with drivers who use their personal vehicles to transport passengers. (*1) The objective of DMV’s study was to determine whether current Virginia law regarding for-hire passenger carriers provided an adequate framework to ensure that TNCs would provide a safe and reliable service to the public, or whether the law needed to be amended.

In carrying out the study DMV undertook a comprehensive review and analysis of current Virginia law regarding taxicabs, limousines, and other types of passenger carriers. The agency also researched and analyzed the regulatory approaches other jurisdictions had taken to TNCs, particularly the states of California and Colorado and the cities of Seattle and Chicago. In addition, DMV’s study team met regularly with and solicited input from a broad range of stakeholders, including representatives from the TNCs; from the taxicab, limousine, and motorcoach industries (both owners and drivers); from the Virginia Municipal League, the Virginia Association of Counties, and several individual localities; from airport authorities; from the insurance industry and the State Corporation Commission’s Bureau of Insurance; from the Virginia State Police and local law enforcement; from advocates for the disabled; from trial lawyers; and from other affected state agencies, including the Department of Taxation, the Department of Aviation, and the Department of Rail and Public Transportation. As a result of all these efforts, DMV concluded that Virginia law should be amended to address a number of specific features of TNC operations that raised concerns about consumer protection and public safety.

Detailed recommendations are presented in the fifth chapter of this report, but in summary the highlights of the recommended regulatory framework are as follows:

• Licensing of TNCs. TNCs are to be licensed by DMV, provided they meet certain minimum standards, identical to the standards that apply under current law to other types of passenger carriers, that demonstrate the TNC’s fitness to operate and its compliance with the requirements for licensure (proof of insurance, payment of fees, appointment of agent for service of process, etc.).

• Screening of drivers. TNCs must ensure that all their drivers are at least 21 years old and are properly licensed to drive. TNCs must conduct comprehensive criminal background checks and driving record checks on every individual applying to work as a TNC driver, and at regular intervals after the individual has begun working as a TNC driver. The background checks must include checking the individual’s status in the Virginia’s Sex Offender and Crimes Against Minors Registry and the U.S. Department of Justice’s National Sex Offenders Public Website.

A criminal record that includes a conviction, guilty plea, or plea of nolo contendere to any violent crime (as defined in subsection C of § 17.1-805) will bar an individual from acting as a TNC driver. Anyone required to register as a sex offender will also be barred from operating as a TNC driver.

A driving history record that includes a conviction, guilty plea, or plea of nolo contendere to any of the following offenses in the preceding seven years will bar the individual from operating as a TNC driver:

• underage drinking and driving

• DUI

• operation of a motor vehicle after license revocation resulting from repeated DUI offenses

• any felony offense (beyond those classed as violent crimes)

In addition, a record of any of the following within the preceding three years will bar the individual from operating as a TNC driver:

• three or more moving violations

• refusal to submit to a chemical test to determine the alcohol or drug content of the person’s blood or breath

• reckless driving

• operating a motor vehicle with a suspended or revoked license

• escaping or eluding a law-enforcement officer

• Standards for vehicles. Only personal vehicles may be used, and they must meet the following standards:

• must be validly titled and registered either in Virginia or in another jurisdiction

• must have a current Virginia state safety inspection (even if not registered in Virginia)

• must have a maximum seating capacity of no more than seven persons, excluding the driver

• must be insured by a policy providing coverage for commercial use of the vehicle

• must be registered with DMV for TNC use

• must display both (a) an identification marker issued by DMV identifying the vehicle as registered for TNC use and (b) an identification marker issued by the TNC that clearly identifies the TNC with which the vehicle is associated

• Insurance. TNC drivers must be covered by a motor vehicle liability insurance policy that specifically covers liabilities arising from a driver’s use of a vehicle to provide TNC services. The liability coverage must meet the following minimums:

• From the moment a TNC driver accepts a ride request until the driver completes the transaction on the TNC’s platform or until the ride is complete, whichever is later, the insurance must provide at least $1 million in primary liability coverage. The policy must also provide the same amount in uninsured motorist and underinsured motorist coverage.

• At all other times when a TNC driver is logged on to the TNC’s online-enabled application or platform, the TNC insurance must provide primary liability coverage of at least $50,000 per person/$100,000 per incident for bodily injury, and at least $30,000 per incident for property damage. In addition, the TNC must maintain insurance that provides excess coverage insuring the TNC and the driver for at least $200,000 per occurrence for any liability arising from the driver using a vehicle in connection with a TNC’s online-enabled application or platform.

Although the insurance requirements may be met with a commercial insurance policy, it may also be satisfied by a personal automobile insurance policy, amendment, or endorsement covering the use of a vehicle in connection with TNC operations, or by a combination of commercial and personal insurance policies.

• Other operating requirements. The following are some of the key additional requirements for TNC operations:

• The TNC must provide a credential to each driver, which may be displayed on the TNC’s mobile app, that includes information identifying the driver, the vehicle, and the TNC with which the driver is affiliated.

• Before a passenger enters a TNC driver’s vehicle, the TNC’s app must provide the passenger with the name and a photograph of the driver who will provide transportation and with the vehicle’s license plate number.

• At the end of the trip, the customer must be given an electronic receipt that includes the date and time of the trip, the fare charged, a map of the route taken, and information identifying the TNC, the driver, and the vehicle.

• A TNC must make available immediately upon request to authorized representatives of DMV, law enforcement agencies, and airport authorities information about individual trips arranged through the TNC, including information identifying the driver, vehicle, origin and destination points of the trip, and passenger pick-up and drop-off times.

• The TNC must disclose to passengers, via its app and website, information regarding its screening criteria for drivers, its zero-tolerance policy regarding drugs and alcohol, its method for calculating fares, its means of reporting driver misconduct, and other matters.

• The TNC must disclose to its drivers the nature and limits of its insurance coverage, the possible limits of the driver’s personal automobile insurance coverage with respect to TNC operations, and the possible concerns of lienholders regarding commercial use of a personal vehicle, among other things.

• TNCs and their drivers must provide services to the general public without discrimination on the basis of age, race, sex, disability, origin or destination of the trip, or on any other basis prohibited by law. Among other things, this means that they may not impose additional charges for providing services to persons with physical or mental disabilities because of those disabilities, and that they may not refuse passengers with service animals. DMV may deny, suspend or revoke the operating authority or levy civil penalties against a TNC for failure to comply with the Americans with Disabilities Act or the Virginians with Disabilities Act.

• A TNC may provide service on a prearranged basis only. Street hails are prohibited.

• TNC drivers may only accept riders through the TNC’s mobile app or digital platform. A TNC driver may not otherwise arrange or accept any fares for for-hire transportation services.

• TNCs may not conduct any operations on the property of or into any airport, unless such operations are authorized by the airport authority involved.

• Record keeping and reporting. DMV will have the authority to conduct periodic reviews of TNCs to confirm compliance with the above requirements. TNCs must therefore keep and maintain records necessary to demonstrate such compliance, including the results of criminal history and driving record reports on TNC drivers, proof of insurance, vehicle safety inspection records, and any other information DMV identifies as necessary to confirm compliance. For purposes of compliance review, such records must be kept and retained for three years in a manner that permits systematic retrieval. TNCs must also maintain records that may be needed by law enforcement authorities, including ride-specific data. Any of the information obtained by DMV, law enforcement, or airport officials will be considered privileged information and will not be subject to disclosure except to other law enforcement authorities as needed.

• Fees. Fees adequate to cover DMV’s costs of administering the laws regarding TNCs include (a) an annual per-vehicle fee of $50 for each vehicle that provides TNC services, (b) an initial TNC license fee of $70,000 to be paid by the TNC, and (c) an annual fee of $3,000 for renewal of the TNC’s license. It is recommended that this fee structure be reviewed one year after implementation to determine if costs are fully recovered or if these fees should be adjusted to achieve that objective.
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(*1) Some companies operating as TNCs also offer other services, such as Uber’s “Uber Black,” which brokers passenger transportation in professionally chauffeured commercial vehicles. Such services—which are discussed in sections 2.2 and 3.1 of this report—already fall within the scope of current Virginia law and thus lay outside the scope of the study.