RD524 - Transportation Network Companies:  2016 Report

Executive Summary:
This report describes a number of outcomes and developments that followed the 2015 legislation authorizing transportation network companies (TNCs) such as Uber and Lyft to provide passenger transportation in Virginia. Specifically, the report presents information regarding the following:

• The number of vehicles registered for TNC use in Virginia. As of the end of Q1 FY17, the Department of Motor Vehicles (DMV) had registered 144,461 vehicles to provide TNC services. Just under half of these vehicles (48%) had Virginia license plates.

• Complaints received about TNCs and enforcement actions taken. As of the end of Q1 FY17, DMV had received 17 complaints from the public regarding TNC services, as compared to 25 complaints for all other types of carriers. Most complaints concerned vehicles not displaying decals and/or trade dress as required by law. DMV’s enforcement actions thus far have emphasized proactive outreach to educate TNCs and their drivers, and warnings to drivers found in violation of the law.

• Review of TNCs’ compliance with the law. In 2016 DMV undertook a review of TNCs’ compliance with several key requirements in the law. The review suggested that TNCs generally complied with most of those requirements, but there were some areas where the TNCs needed to take further action to ensure consistent compliance. These further actions included ensuring that all vehicles have a valid Virginia safety inspection, and that all TNC vehicle records include vehicle registration information.

• TNC services at airports. TNCs are currently operating at all major public airports in Virginia. Airport authorities have been active partners with DMV in enforcing both their own policies and the provisions of the TNC statutes. To DMV’s knowledge there currently is no prohibition against TNCs providing transportation to or from any public airport in Virginia.

• Recent developments in TNC insurance. At the time the 2015 legislation was enacted, all TNC drivers were insured under the TNCs’ fleet coverage; however, the TNC insurance laws were written so as to accommodate other options that might emerge in the insurance marketplace, such as personal auto policies that included coverage for some or all TNC operations. Although a number of insurers currently have such products pending, none are available at this time to consumers in Virginia.

• TNC Fees. DMV currently charges TNCs fees of $100,000 for an original certificate and $60,000 for annual renewal. These fees, along with a fee for each driver transcript requested by a TNC as part of the required background screening for drivers, generated $609,892 in FY16, less than half as much as DMV’s startup and regular operating expenses over the same period ($1,267,390). Nevertheless, the agency expects to recover its ongoing expenses in FY17, provided the number of certificated TNCs and the number of TNC partners remain constant. Virginia’s fees are substantially higher than those of most other states, and they may be creating a barrier to entry for competitors. The report therefore includes draft legislation that would give all TNCs two fee options, with the freedom to choose either one when applying for an original or renewal of a certificate: (1) pay the certificate fees of $100,000 and $60,000 that are already in statute; or (2) pay a $20 surcharge per record when purchasing a driver transcript, on top of the current transcript fee ($8).

• Use of rental vehicles. DMV gives rental companies the option of registering either all or part of their Virginia-plated fleet for TNC use. These vehicles are issued a special, orange-and-black license plate decal and a vehicle registration card that reflects that the vehicle is registered for TNC use.

• TNCs’ impact on highway safety. Data from 2014 through 2016 show a decline in alcohol-related crashes and fatalities in the Commonwealth, as well as a decline in the number of ignition interlock devices installed on vehicles. It is unclear, however, whether these declines are the result of TNCs beginning operations in Virginia or of education and enforcement efforts, or of both. A survey conducted between June and October 2016 by the Virginia Tech Center for Survey Research on behalf of DMV’s Highway Safety Office indicates strong public awareness of TNCs as an option for avoiding the hazards involved in drinking and driving. The survey also indicated that a good number of people are exercising that option.

• Impact on access to transportation by the mobility challenged. Thus far, DMV has not received any complaints about access to service by the disabled, but a representative of the Virginia Centers for Independent Living has reported mixed feedback from the disabled, with blind, deaf, and autistic individuals generally enthusiastic about TNCs, while the mobility impaired have been less impressed. The concerns of the mobility challenged include the small number of wheelchair accessible vehicles available, confusion when a TNC app directs riders to a service that does have appropriately equipped vehicles, and a perception that drivers’ response time is slower than it is for users without mobility impairments.

• Changes in the marketplace. Recent innovations in for-hire passenger transportation include the growth of limited-purpose TNCs (such as services providing child transportation), TNC ride reservation services offered by third parties, and transportation of property in personal vehicles, arranged online or with an app. In addition, the growth of TNCs has affected other types of carriers. TNCs may be contributing to the decline over the past two years in the number of taxi permits DMV has issued. TNC operations also have suggested possibilities for further reform, such as allowing other types of passenger carriers to use TNC-type window decals. These and other developments may be appropriate matters for further study, and possibly for legislative action.

The report concludes with three specific recommendations: (1) a change in the fees TNCs pay to operate in Virginia; (2) a continuing study of changes in the marketplace and other issues related to passenger transportation services; and (3) an end to DMV’s publication of quarterly implementation reports.