84R22029 JTS-F

By: Paddie, Larson, Kuempel, H.B. No. 2440

Rodriguez of Bexar, Fletcher, et al.

Substitute the following for H.B. No. 2440:

By: Pickett C.S.H.B. No. 2440

A BILL TO BE ENTITLED

AN ACT

relating to transportation network companies; imposing and authorizing fees; requiring an occupational permit; authorizing a civil penalty.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle C, Title 14, Occupations Code, is amended by adding Chapter 2402 to read as follows:

CHAPTER 2402. TRANSPORTATION NETWORK COMPANIES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 2402.001. DEFINITIONS. In this chapter:

(1) "Board" means the board of the department.

(2) "Department" means the Texas Department of Motor Vehicles.

(3) "Digital network" means any online-enabled application, software, website, or system offered or used by a transportation network company that enables the prearrangement of a ride with a transportation network driver.

(4) "Personal vehicle" means a vehicle that is used by a transportation network driver and is:

(A) owned, leased, or otherwise authorized for use by the driver; and

(B) not a taxicab, limousine, or similar for-hire vehicle.

(5) "Transportation network company" means a corporation, partnership, sole proprietorship, or other entity operating in this state that uses a digital network to connect a transportation network rider to transportation network services provided by a transportation network driver. The term does not include an entity arranging nonemergency medical transportation under a contract with the state or a managed care organization for individuals qualifying for Medicaid or Medicare.

(6) "Transportation network driver" means an individual who:

(A) receives connections to potential transportation network riders and related services from a transportation network company in exchange for payment of a fee to the company; and

(B) uses a personal vehicle to offer or provide transportation network services to a transportation network rider on connection with the rider through a digital network controlled by the company in exchange for compensation or payment of a fee.

(7) "Transportation network rider" means an individual who uses a transportation network company's digital network to connect with a transportation network driver who provides transportation network services to the individual in the driver's personal vehicle between points chosen by the individual.

(8) "Transportation network services" means transportation provided by a transportation network driver to a transportation network rider, beginning at the time the driver accepts a ride requested by the rider through a digital network controlled by a transportation network company, continuing while the driver transports the rider, and ending at the time the last requesting rider departs from the driver's personal vehicle. The term does not include transportation provided using a taxicab, limousine, or other similar for-hire vehicle authorized to be licensed under Section 215.004, Local Government Code, or Section 22.081, Transportation Code.

Sec. 2402.002. NATURE OF TRANSPORTATION NETWORK COMPANIES, DRIVERS, AND VEHICLES. (a) Transportation network companies and transportation network drivers:

(1) are not common carriers, contract carriers, or motor carriers; and

(2) do not provide:

(A) taxicab, limousine, or similar for-hire service; or

(B) street hail service.

(b) A transportation network company:

(1) except as agreed by written contract:

(A) does not control, direct, or manage a transportation network driver who connects to the company's digital network; and

(B) does not own, control, operate, or manage personal vehicles used by transportation network drivers; and

(2) is not a taxicab company or for-hire vehicle owner.

Sec. 2402.003. CONTROLLING AUTHORITY. (a) Notwithstanding any other provision of law, transportation network companies and transportation network drivers are governed exclusively by this chapter and any rules adopted by the board under this chapter. Except as provided by Subsection (b) or (c), a municipality or other local entity may not:

(1) impose a tax on or require a license for a transportation network company or a transportation network driver; or

(2) subject a transportation network company or transportation network driver to the municipality's or other local entity's rate, entry, operational, or other requirements.

(b) This chapter does not supersede a municipal, county, or other local government regulation regarding transportation network services at an airport.

(c) This chapter does not prohibit a municipality from requiring by ordinance a transportation network company to access the electronic clearinghouse and subscription service under Section 411.0845, Government Code, for transportation network drivers.

Sec. 2402.004. DRIVER AS COMMERCIAL TRANSPORTATION COMPANY. A transportation network driver is a commercial transportation company for the purposes of Chapter 660, Government Code.

SUBCHAPTER B. PERMIT REQUIRED

Sec. 2402.051. PERMIT REQUIRED. (a) A person may not operate a transportation network company in this state without obtaining and maintaining a permit issued by the department.

(b) The department shall issue a permit to each applicant that meets the requirements of this chapter and pays the fee required by Section 2402.052.

Sec. 2402.052. FEE. (a) A transportation network company must pay a fee of $115,000 annually to the department to maintain a permit under this chapter.

(b) A fee collected by the department under this section shall be deposited to the credit of the Texas Department of Motor Vehicles fund.

Sec. 2402.053. PERMIT APPLICATION. (a) An application for a transportation network company permit must be on a form prescribed by the department. The application must include information that meets the requirements of this chapter and information the board by rule determines is necessary to determine the applicant's qualifications to adequately serve the public.

(b) The applicant shall notify the department of any material change in the information included in an application not later than the 10th calendar day after the date the change occurs. The department shall prescribe a form for the disclosure of material changes.

Sec. 2402.054. TERM; RENEWAL. (a) A permit issued under this chapter is valid for two years. The department shall prescribe the form and requirements necessary to apply for a renewal of a permit.

(b) The department shall notify each person holding a permit under this chapter of the date of permit expiration and the amount of the fee required for permit renewal. The department shall send the notice not later than the 30th day before the date of the permit expiration.

SUBCHAPTER C. OPERATION OF TRANSPORTATION NETWORK COMPANIES

Sec. 2402.101. AGENT. A transportation network company shall maintain an agent for service of process in this state.

Sec. 2402.102. FARES. A transportation network company charging a fare for its services shall:

(1) disclose to transportation network riders the fare calculation method within the company's software application service or on the company's Internet website; and

(2) before a transportation network rider enters the transportation network driver's personal vehicle, provide the rider with:

(A) the applicable rates being charged for the service; and

(B) the option to receive an estimated fare.

Sec. 2402.103. IDENTIFICATION OF VEHICLES AND DRIVERS. The transportation network company's software application or Internet website must display, before a transportation network rider enters the transportation network driver's personal vehicle:

(1) a picture of the transportation network driver; and

(2) the vehicle's license plate number.

Sec. 2402.104. ELECTRONIC RECEIPT. Within a reasonable period of time following the completion of a trip, a transportation network company shall transmit an electronic receipt to the transportation network rider that lists:

(1) the origin and destination of the trip;

(2) the total time and distance of the trip; and

(3) an itemization of the total fare paid, if any.

Sec. 2402.105. INSURANCE. Insurance requirements for transportation network companies and transportation network drivers are governed by Chapter 1954, Insurance Code.

Sec. 2402.106. ZERO-TOLERANCE POLICY FOR DRUG OR ALCOHOL USE. (a) A transportation network company shall:

(1) implement a zero-tolerance policy that prohibits a transportation network driver from using or being under the influence of drugs or alcohol when the driver:

(A) is providing transportation network services; or

(B) is logged on to the transportation network company's digital network but is not providing transportation network services; and

(2) post on its Internet website:

(A) notice of the policy; and

(B) procedures to report a complaint about a driver with whom a transportation network rider was matched and who the rider reasonably suspects was using or was under the influence of drugs or alcohol during the course of the trip.

(b) On receipt of a complaint alleging a violation of the zero-tolerance policy, the transportation network company shall:

(1) conduct an investigation into the reported incident; and

(2) immediately suspend the transportation network driver's access to the company's digital network for the duration of the investigation.

(c) The transportation network company shall maintain records relevant to a complaint for a period of at least two years after the date the complaint is received.

Sec. 2402.107. DRIVER REQUIREMENTS. (a) Before allowing an individual to act as a transportation network driver on its digital network, a transportation network company shall:

(1) require the individual to submit an application to the company, which must include information regarding the individual's address, age, driver's license, driving history, motor vehicle registration, motor vehicle liability insurance, and other information required by the company;

(2) conduct, or have a third party conduct, a local and national criminal background check for each individual that includes the use of:

(A) a commercial multistate and multijurisdiction criminal records locator with primary source validation; and

(B) the national sex offender registry database maintained by the United States Department of Justice or successor agency; and

(3) obtain and review the individual's driving record.

(b) The transportation network company may not permit to act as a transportation network driver on its digital network an individual who:

(1) has been convicted of:

(A) more than three offenses classified by the Department of Public Safety as moving violations in the preceding three-year period; or

(B) one of the following offenses in the preceding three-year period:

(i) evading arrest or detention under Section 38.04, Penal Code;

(ii) reckless driving under Section 545.401, Transportation Code;

(iii) driving without a valid driver's license under Section 521.025, Transportation Code; or

(iv) driving with an invalid driver's license under Section 521.457, Transportation Code;

(2) has been convicted, in the preceding seven-year period, of driving while intoxicated under Section 49.04 or 49.045, Penal Code;

(3) has been convicted at any time of:

(A) fraud;

(B) a sexual offense;

(C) use of a motor vehicle to commit:

(i) a felony;

(ii) a crime involving property damage;

(iii) theft;

(iv) an act of violence; or

(v) an offense of making a terroristic threat; or

(D) an offense listed in Section 3g(a)(1), Article 42.12, Code of Criminal Procedure;

(4) is a match in the national sex offender registry database;

(5) does not possess a valid driver's license;

(6) does not possess proof of registration or financial responsibility for the motor vehicle used to provide transportation network services; or

(7) is younger than 19 years of age.

Sec. 2402.108. VEHICLE SAFETY AND EMISSIONS. A transportation network company shall require that each motor vehicle that a transportation network driver will use to provide transportation network services meets the requirements of Chapter 548, Transportation Code.

Sec. 2402.109. NO STREET HAILS. A transportation network driver may accept only rides booked through a transportation network company's digital network or software application service and may not solicit or accept street hails.

Sec. 2402.110. NO CASH TRIPS. The transportation network company shall prohibit solicitation or acceptance of cash payments from transportation network riders and notify transportation network drivers of the prohibition. A transportation network driver may not solicit or accept cash payments from riders. Payment for transportation network services may be made only electronically using the transportation network company's digital network or software application.

Sec. 2402.111. NO DISCRIMINATION; ACCESSIBILITY. (a) A transportation network company shall adopt policies concerning nondiscrimination that comply with state and federal law.

(b) A transportation network driver shall follow all policies concerning nondiscrimination and accessibility that comply with state and federal law.

(c) A transportation network driver shall comply with all applicable laws relating to accommodation of service animals.

(d) A transportation network company may not impose additional charges for providing services to persons with physical disabilities because of those disabilities.

(e) A transportation network company shall provide transportation network riders an opportunity to indicate whether they require a wheelchair-accessible vehicle. If a transportation network company is unable to arrange wheelchair-accessible transportation network service, the company shall direct the rider to an alternate provider of wheelchair-accessible service, if available.

(f) A transportation network driver may not discriminate in the provision of transportation network services based on the geographic location of a departure point or destination, except that a driver may refuse a request for a ride that is farther than 30 miles between the departure point and the destination.

Sec. 2402.112. ACCESSIBLE TRANSPORTATION; SURCHARGE. (a) The department may impose a fee, not to exceed $10,000 annually, on transportation network companies, taxicab companies, and limousine and other for-hire vehicle companies that do not provide wheelchair-accessible service and remit the fees to the comptroller for deposit in a trust fund outside the state treasury to be held by the comptroller and administered by the department to provide grants to transportation network companies, taxicab companies, and limousine and other for-hire vehicle companies that provide wheelchair-accessible service.

(b) A grant distributed under Subsection (a):

(1) may be in an amount not to exceed $15,000; and

(2) may be distributed only to a company that meets a minimum level of service as determined by board rule.

(c) The department shall implement a program in conjunction with any transportation network company operating in Austin on September 1, 2015, that desires to participate to conduct a pilot project to offer services to persons with disabilities.

(d) Not later than January 1, 2017, the department, in conjunction with any transportation network company that participated in the pilot project, shall report to the public and the legislature on the findings of the program implemented under Subsection (c) regarding:

(1) the average fares for providing the services;

(2) costs incurred in providing the services;

(3) the average response time for providing the services; and

(4) other information useful to the legislature in developing public policy related to transportation network companies.

Sec. 2402.113. RECORDS. A transportation network company shall maintain:

(1) individual trip records for at least one year after the date the trip was provided; and

(2) transportation network driver records at least until the first anniversary of the date on which a transportation network driver's activation on the company's digital network has ended.

Sec. 2402.114. PERSONALLY IDENTIFIABLE INFORMATION. (a) A transportation network company may not disclose a transportation network rider's personally identifiable information to a third party unless:

(1) the rider consents to the disclosure;

(2) disclosure is required by a legal obligation; or

(3) disclosure is required to:

(A) protect or defend the terms of use of the service; or

(B) investigate violations of those terms.

(b) In addition to the disclosures authorized under Subsection (a), a transportation network company may share a transportation network rider's name or telephone number with the transportation network driver providing transportation network services to the rider to facilitate correct identification of the rider by the transportation network driver or to facilitate communication between the rider and the transportation network driver.

SUBCHAPTER D. ENFORCEMENT

Sec. 2402.151. RECORD AUDITS. (a) The department may audit the records of a transportation network company in connection with the performance of its duties under this chapter through:

(1) investigations of specific alleged violations; or

(2) a random sample of the transportation network company's records related to transportation network drivers.

(b) A transportation network company whose place of business is located outside of this state may choose to make records available at a location outside of this state if:

(1) the company and the department agree on the location; and

(2) the company agrees to reimburse the department for:

(A) necessary travel expenses; and

(B) a per diem as set by the state for each day that an inspection or investigation related to the records is conducted.

(c) Records maintained by a transportation network company regarding transportation network driver background checks under Section 2402.107 or transportation network riders' personally identifiable information are not subject to release under Chapter 552, Government Code, and the department does not have a right of access to those records for purposes of that chapter.

(d) Failure to provide records as required by this section is a violation of this chapter.

Sec. 2402.152. HEARINGS. (a) A hearing arising under this chapter or a board rule adopted under this chapter must be conducted in accordance with this chapter, any order, decision, or rule of the board, and Chapter 2001, Government Code.

(b) A hearing may be informally disposed of in accordance with Chapter 2001, Government Code.

(c) A hearing under this chapter must be held by an administrative law judge of the State Office of Administrative Hearings.

(d) An administrative law judge has all of the board's authority as provided by this chapter to conduct hearings arising under this chapter, including the power to:

(1) hold a hearing;

(2) administer an oath;

(3) receive pleadings and evidence;

(4) issue a subpoena to compel the attendance of a witness;

(5) compel the production of papers and documents;

(6) issue an interlocutory order, including a cease and desist order in the form of a temporary restraining order or a temporary injunction;

(7) make findings of fact and conclusions of law; and

(8) issue a proposal for decision and recommend a final order.

Sec. 2402.153. DISCIPLINARY ACTION; CIVIL PENALTY. (a) The department, after notice and opportunity for hearing, may deny an application for a permit or suspend or revoke a permit if the applicant or permit holder:

(1) makes a material misrepresentation or omission in any application or other information filed under this chapter or board rules;

(2) violates this chapter or a board rule or order;

(3) violates any law relating to the operation of a transportation network company; or

(4) fails to maintain the qualifications for a permit.

(b) A proceeding under this section is subject to Chapter 2001, Government Code.

(c) In addition to the authority under Subsection (a), the board, after notice and opportunity for hearing, may request that the attorney general bring an action against a person that has violated this chapter or board rules to collect a civil penalty in an amount not to exceed $10,000 for each violation. Each act in violation of this chapter and board rules and each day a violation continues is a separate violation. In determining the amount of the penalty, the board shall consider:

(1) the seriousness of the violation, including the nature, circumstances, extent, and gravity of any prohibited act, and the harm or potential harm to the safety of the public;

(2) the economic damage to the public caused by the violation;

(3) the history of previous violations;

(4) the amount necessary to deter a future violation;

(5) efforts to correct the violation; and

(6) any other matter that justice may require.

(d) Notwithstanding any other law to the contrary, a civil penalty recovered under this section shall be deposited in the state treasury to the credit of the Texas Department of Motor Vehicles fund.

Sec. 2402.154. COMPLAINT PROCEDURE AND NOTICE. (a) A transportation network company shall establish and maintain a complaint procedure through which any transportation network rider or other person using the transportation network service may submit a complaint with the department about the company, the transportation network service, a transportation network driver, or another affiliate of the company.

(b) A transportation network company shall provide notice of the complaint procedure provided by this section to each transportation network rider and to each person that contacts the company to inquire about transportation network services.

(c) A transportation network company shall provide notice of the complaint procedure under this section on each electronic receipt required by Section 2402.104.

(d) The department shall approve the content and manner of delivery of the notice required by Subsections (a), (b), and (c).

(e) Failure to provide notice as required by this section is a violation of this chapter.

SECTION 2. Subtitle C, Title 10, Insurance Code, is amended by adding Chapter 1954 to read as follows:

CHAPTER 1954. INSURANCE FOR TRANSPORTATION NETWORK DRIVERS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 1954.001. DEFINITIONS. In this chapter, the following terms have the meanings assigned by Section 2402.001, Occupations Code:

(1) "digital network";

(2) "personal vehicle";

(3) "transportation network company";

(4) "transportation network driver";

(5) "transportation network rider"; and

(6) "transportation network services".

Sec. 1954.002. APPLICABILITY OF CHAPTER. This chapter applies to automobile insurance policies in this state, including policies issued by a Lloyd's plan, a reciprocal or interinsurance exchange, and a county mutual insurance company.

SUBCHAPTER B. INSURANCE REQUIREMENTS

Sec. 1954.051. GENERAL INSURANCE REQUIREMENT. (a) A transportation network driver or transportation network company on the driver's behalf shall maintain primary automobile insurance as required by this subchapter.

(b) Insurance maintained under this subchapter must allow a transportation network driver to use a personal vehicle to transport transportation network riders for compensation and cover the driver while:

(1) the driver is logged on to the transportation network company's digital network as provided by Section 1954.052; or

(2) the driver is providing transportation network services as provided by Section 1954.053.

(c) Insurance maintained under this subchapter must comply with the law applicable to personal automobile insurance in this state, including this subtitle and Chapter 601, Transportation Code.

(d) The coverage requirements of this subchapter may be satisfied by:

(1) automobile insurance maintained by the transportation network driver;

(2) automobile insurance maintained by the transportation network company; or

(3) a combination of Subdivisions (1) and (2).

(e) Insurance required under this subchapter may be placed with an automobile insurer authorized to engage in business in this state or with an eligible surplus lines insurer.

Sec. 1954.052. INSURANCE REQUIREMENTS: WHEN NOT PROVIDING SERVICES. At the time a transportation network driver is logged on to the transportation network company's digital network and is available to receive transportation network requests but is not providing transportation network services, the automobile insurance policy must provide:

(1) the following minimum amounts of liability insurance coverage:

(A) $50,000 for bodily injury to or death for each person in an incident;

(B) $100,000 for bodily injury to or death of a person per incident; and

(C) $25,000 for damage to or destruction of property of others in an incident;

(2) uninsured or underinsured motorist coverage where required by Section 1952.101; and

(3) personal injury protection coverage where required by Section 1952.152.

Sec. 1954.053. INSURANCE REQUIREMENTS: WHILE PROVIDING SERVICES. At the time a transportation network driver is providing transportation network services, the automobile insurance policy must provide, at minimum:

(1) coverage with a total aggregate limit of liability of $1 million for death, bodily injury, and property damage for each incident;

(2) uninsured or underinsured motorist coverage where required by Section 1952.101; and

(3) personal injury protection coverage where required by Section 1952.152.

Sec. 1954.054. LAPSE OF OR INSUFFICIENT COVERAGE. If an insurance policy maintained by a transportation network driver under this subchapter has lapsed or does not provide the coverage required by this subchapter, the transportation network company shall provide the coverage required by this subchapter beginning with the first dollar of a claim against the driver.

Sec. 1954.055. RELATION TO PERSONAL AUTOMOBILE INSURANCE. Coverage under an automobile insurance policy maintained by the transportation network company is not contingent on a transportation network driver's personal automobile insurer initially denying a claim.

Sec. 1954.056. FINANCIAL RESPONSIBILITY. (a) Insurance satisfying the requirements of this subchapter satisfies the financial responsibility requirement for an automobile under Chapter 601, Transportation Code.

(b) A transportation network driver shall carry proof of insurance that satisfies Sections 1954.052 and 1954.053 with the driver when the driver uses a personal vehicle in connection with a transportation network company's digital network. In the event of an accident, a driver shall provide the proof of insurance to a directly interested person, automobile insurer, and investigating peace officer on request under Section 601.053, Transportation Code. On request, a driver shall also disclose to a directly interested person, automobile insurer, and investigating peace officer whether, at the time of the accident, the driver was:

(1) logged on to the company's digital network; or

(2) providing transportation network services.

Sec. 1954.057. PAYMENT DIRECTLY TO REPAIRING BUSINESS. If a transportation network company's insurer makes a payment for a claim covered under comprehensive or collision coverage, the transportation network company shall cause its insurer to issue the payment directly to the business repairing the vehicle or jointly to the owner of the vehicle and the primary lienholder on the covered vehicle.

SUBCHAPTER C. REQUIRED DISCLOSURES TO TRANSPORTATION NETWORK

DRIVER

Sec. 1954.101. REQUIRED DISCLOSURES. Before a transportation network driver may accept a request for transportation network services on a transportation network company's digital network, the company shall disclose in writing the following:

(1) the insurance policy, including the types of coverage and the limits for the policy, that the company provides while a driver uses a personal vehicle in connection with the company's digital network; and

(2) that the driver's personal automobile insurance policy may not provide coverage, depending on the policy's terms, while the driver is logged on to the company's digital network and is available to receive transportation requests or is engaged in transportation network services.

SUBCHAPTER D. PERSONAL AUTOMOBILE INSURANCE

Sec. 1954.151. AUTHORIZED EXCLUSIONS FROM COVERAGE. (a) An insurer may exclude from coverage under a personal automobile insurance policy issued to an owner or operator of a personal vehicle any loss or injury that occurs while a transportation network driver using the personal vehicle:

(1) is logged on to a transportation network company's digital network; or

(2) is providing transportation network services.

(b) Subsection (a) applies to any coverage included in a personal automobile insurance policy, including:

(1) liability coverage for bodily injury and property damage;

(2) personal injury protection coverage under Subchapter D, Chapter 1952;

(3) uninsured and underinsured motorist coverage;

(4) medical payment coverage;

(5) comprehensive physical damage coverage; and

(6) collision physical damage coverage.

(c) An exclusion authorized under this section applies notwithstanding a financial responsibility requirement under Chapter 601, Transportation Code.

(d) This subchapter may not be construed to invalidate or limit an exclusion contained in a policy form, including a policy form in use or approved for use in this state before September 1, 2015, that excludes coverage for automobiles used to carry persons or property for compensation or available for hire by the public.

Sec. 1954.152. COVERAGE UNDER PERSONAL AUTOMOBILE INSURANCE NOT REQUIRED. (a) This subchapter does not require a personal automobile insurance policy to cover a transportation network driver while:

(1) the driver is logged on to a transportation network company's digital network;

(2) the driver is providing transportation network services; or

(3) the driver otherwise uses a vehicle to transport passengers for compensation.

(b) This section does not prevent an insurer from providing coverage that may be excluded under this section if the insurer elects to provide the coverage in the policy or by endorsement.

Sec. 1954.153. DEFENSE OR INDEMNIFICATION OF CLAIM. (a) An automobile insurer that issues a personal automobile insurance policy that includes an exclusion from coverage authorized by Section 1954.151 does not have a duty to defend or indemnify a claim arising from an event subject to the exclusion.

(b) An automobile insurer that defends or indemnifies a claim against a transportation network driver for which coverage is excluded under the terms of the policy as authorized by this subchapter has a right of contribution against another insurer that provides automobile insurance to the driver in satisfaction of the coverage requirements under Section 1954.052 or 1954.053, as applicable.

Sec. 1954.154. ASSISTANCE IN CLAIM INVESTIGATION. In an insurance claim investigation, a transportation network company and any insurer providing coverage under Subchapter B shall assist each insurer involved in the claim by providing information to directly interested persons and an insurer of the transportation network driver. Information provided under this section must include:

(1) the precise times that a driver logged on and off of the transportation network company's digital network in the 12-hour period immediately preceding and the 12-hour period immediately following the accident; and

(2) a clear description of the coverage, exclusions, and limits provided under an automobile insurance policy maintained under Subchapter B.

SECTION 3. This Act takes effect September 1, 2015.