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If S.B. No. 176 Passed, It Will Radically Change TNC & Limousine Business

TransGates-Limousine-at-Capitol-Hill-Meeting.
Austin 05/02/2017. 9:00 AM
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On Tuesday May 02, 2017, The Limousine Coalition of Texas has gathered in Capitol Hill in Austin to meet with State Sen. Charles Schwertner  to discuss his State bill S.B. No. 176. The meeting started at 9:00 am and six Limousine operators were representing different geographical areas of Texas, with different companies sizes from a one car operator to a 200 vehicles operation.
 
The Houston Limousine Association was represented by Matt Matt Assolin, VP of Nikkos Worldwide Chauffeured Services and Jon Ouazdi, owner of TransGates Limousine.  Austin was represented by Mark R. Sweetland, president of Carey of Austin. Dallas was present by Todd Davis, Business Relations manager of, Premier Transportation of Dallas, Jason L. Smith is the president of Lone Star Executive Limousine out of the Woodlands, Conroe area and Ed Herndon, president of Esquire Limousine out of Round Rock , TX.
TransGates-Limousine-at-Capitol-Hill-Meeting.

Texas Limousine Operators at State Sen. Charles Schwertner  office in Capitol Hill Austin. —  From Left to right: Jason L. Smith, Ed Herndon, Jon Ouazdi, Mark R. Sweetland, Matt Assolin, Todd Davis.

The Texas S.B. No. 176 introduced by State Sen. Charles Schwertner District 5 (R-Georgetown) is another bill that would allow the TNC Providers to be regulated by the State. If passed this bill will radically change the limousine business model as we know it today. The TNC will enjoy so much freedom and flexibility, and a state wide reduced overhead, and a huge saving when it comes to administrative work concerning licensing vehicles. The Limousine operators raised concerns about many issues that was overlooked and forgotten and we have a great meeting with Mr. Joey Halbert which is the person who wrote the actual bill.

Just an example compared to Limousine, the TNC  will pay $10,000 for a license for up to 50 drivers, and the license is valid for 2 years. which means $5000 per year. If we do the math, that’s a $100 per driver. Most Limousine companies in Houston pay between $700 & $1200 per vehicle, so we are already losing when it comes to the first expense to be paid to start driving, and the rest is on the way.

The stand of the Limousine Coalition of Texas is the fact that Texas TNC Bills  176 address the needs of a few, not the many.  It only accommodate the needs of the new players in the transportation business (TNC’s), while totally ignoring the classic providers of livery, charters, and other mode of transportations services. Moreover, Transportation Network Companies (TNCs) have a poor track record when it comes to public safety that bills do not entirely address.

Limousine, Shuttle, Charter, Airport Shuttle, jetney and other for hire vehicle companies (FHVs) in Texas support the following measures in general terms:

  1. Drug Testing Requirement
  2. Fingerprint Background Checks
  3. Full Time Commercial Insurance
  4. Vehicle Safety Checks

The regulatory power of cities and municipalities has been increasingly overreaching for the past decade.  Many regulate beyond their scope as provided by Texas Transportation Code Section 215.004.  Such infringements include regulating and levying fees on vehicles that seat 16 passengers and more, creating burdensome laws that result in poor business practices and municipalities with less than 1.9 million people regulating transportation.  For instance, small cities in the Dallas/Ft. Worth area are popping up with their own fees with less than the 1.9 million people requirement.  

Many FHV fleets in Texas have a mixed fleet of vehicles that end up falling under multiple regulatory agencies, such as several municipalities and under Texas DMV.  As an example, in the DFW area, companies must register and pay fees for their vehicles that seat 15 passengers or less to five different regulatory jurisdictions; then, they must also add Texas DMV for their vehicles seating 16 passengers or more.  In the case of Houston, the city regulates FHVs, what’s to stop Montgomery County (north of Houston) to begin levying fees arbitrarily.  Moreover, there is an increasing amount of travel between Austin and San Antonio due the close proximity of the cities and shared industries.  City officials in both cities are unduly harsh on FHVs requiring permits for each city, even in violation of the RIDE Act set out by US Congress five years ago regulating ground transportation with regard to interstate commerce.

It is the view of the current Limousine, Shuttle, Charter, Airport Shuttle and any for hire vehicle companies (FHVs) in Texas that having multiple jurisdictions of regulation is burdensome, punitive towards providers and consumers and stagnates growth of revenue and jobs.  Limousine Coalition of Texas can support SB176 with the following changes to the bill

  1. Re-writing of SB 176 to include all FHV categories and removing the ability for cities and municipalities to regulate and levy fees to the FHV industry with exception to public airports.  All regulation would be enforced by the Texas DMV.  This would include removing the term “Limousine” from Texas Transportation Code Section 215.004.
  2. 10-point fingerprint background check and criminal history report for all drivers.
  3. Implementation of 5-panel Drug Testing for all drivers of FHVs and TNCs.
  4. Change of fee levied upon FHVs and TNCs to a percentage of gross revenue directly related to vehicles operated in Texas or implementing a different category of fee for companies who own their own vehicles.
  5. Requirement of full time, primary payer, commercial liability insurance for no less than $1,000,000 per occurrence.
  6. Adding all FHVs would add funds to the general fund to support the activities of the DMV enforcement.
  7. We would like to reference California Public Utilities Commission (CPUC) section 5371 as a framework for a new Texas Transportation Regulatory Authorization.

Most recently, to prove how ineffective, burdensome and economically depressing our current system is, during the 2017 Super Bowl in Houston, companies in Houston had to jump through enormous hoops to bring other in-state licensed chauffeured vehicles into the market to satisfy demand.  It cost thousands of dollars and hours of time to satisfy the demands of the City of Houston regulatory burden.  

At the end of the day, all we ask for is a fair and level regulatory playing field.  Our position is that TNCs are here to stay and compete in the market.  However, they should not have a government given advantage.   We ask that any further consideration to SB176 would include ALL for hire vehicles in the State of Texas and can provide for a new regulatory environment.

Please read the bill and become familiar with your future. If you have any questions or suggestions for the bill, please join us on the Houston Limousine Association meeting, Tuesday May 16, 2017 at 6:30 pm, there will be a detailed discussion about the bill and other issues related to this matter.



State Sen. Charles Schwertner

State Sen. Charles Schwertner

85R2901 JTS-F 

By:  Schwertner   S.B. No. 176

  

A BILL TO BE ENTITLED

AN ACT

relating to the regulation of transportation network companies; requiring an occupational permit; authorizing a fee.

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)  “Commission” means the Texas Commission of Licensing and Regulation.

(2)  “Department” means the Texas Department of Licensing and Regulation.

(3)  “Digital network” means the online-enabled application, software, website, or system offered or used by a transportation network company to connect passengers and drivers.

(4)  “Passenger vehicle” means a motor vehicle designed to carry fewer than 16 passengers, including the driver.

Sec. 2402.002.  DEFINITION OF TRANSPORTATION NETWORK COMPANY.  In this chapter, “transportation network company” means a corporation, sole proprietorship, or other entity that enables a passenger to prearrange a ride in a passenger vehicle with the driver of the vehicle exclusively through the company’s digital network.  The term does not include an entity that provides, in addition to rides prearranged through a digital network:

(1)  street-hail taxicab services; or

(2)  limousine or other car services arranged by a method other than through a digital network.

Sec. 2402.003.  CONTROLLING AUTHORITY.  Notwithstanding any other provision of law, transportation network companies and drivers accessing a transportation network company’s digital network are governed exclusively by this chapter.  A municipality or other local entity may not:

(1)  impose a tax on or require a license for a transportation network company or a driver who has access to a transportation network company’s digital network; or

(2)  subject a transportation network company or a driver who has access to a transportation network company’s digital network to the municipality’s or other local entity’s rate, entry, operational, or other requirements.

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 under this chapter.

(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 transportation network company shall annually pay a fee to the department to maintain a permit under this chapter. The amount of the fee is:

(1)  $10,000 for a transportation network company whose digital network is used by 50 or fewer drivers;

(2)  $30,000 for a transportation network company whose digital network is used by 51-200 drivers;

(3)  $75,000 for a transportation network company whose digital network is used by 201-1,000 drivers; and

(4)  $125,000 for a transportation network company whose digital network is used by more than 1,000 drivers.

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 commission 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.  DRIVER REQUIREMENTS AND POLICIES

Sec. 2402.101.  DRIVER PREREQUISITES.  (a) Before allowing an individual to act as a driver on the company’s digital network, a transportation network company must:

(1)  require the individual to submit an application to the company that includes 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)  A transportation network company may not permit to act as a 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 five-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;

(D)  an offense listed in Article 42A.054(a), Code of Criminal Procedure; or

(E)  invasive visual recording under Section 21.15, Penal Code;

(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 that will be used to provide rides prearranged through the company’s digital network; or

(7)  is younger than 19 years of age.

Sec. 2402.102.  DRIVER DRUG AND ALCOHOL USE POLICY.  (a) A transportation network company shall adopt and implement a policy prohibiting drivers from using or being under the influence of drugs or alcohol when the driver is logged on to the company’s digital network, regardless of whether the driver is providing a ride prearranged through the network.

(b)  A transportation network company shall post on the company’s Internet website:

(1)  notice of the drug and alcohol policy; and

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

Sec. 2402.103.  DISCRIMINATION POLICY.  (a) A transportation network company shall adopt and implement a policy prohibiting driver discrimination against passengers and individuals requesting rides using the company’s digital network based on:

(1)  a characteristic protected from discrimination under state or federal law, including race, color, national origin, religion, sex, disability, age, sexual orientation, or gender identity or expression; or

(2)  the geographic location of a person requesting a ride.

(b)  A policy adopted under Subsection (a) must include provisions prohibiting drivers from:

(1)  refusing to accept a ride request based on the geographic location of the person requesting a ride if the passenger’s destination is 30 miles or less from the passenger’s departure point;

(2)  refusing to accommodate service animals; and

(3)  charging an additional fee or higher rate based on a factor described by Subsection (a).

(c)  A transportation network company shall post on the company’s Internet website:

(1)  notice of the discrimination policy; and

(2)  procedures to report a complaint about a driver who:

(A)  accepted or declined a person’s ride request; and

(B)  the person reasonably suspects discriminated against the person on a basis described by Subsection (a).

Sec. 2402.104.  POLICY ENFORCEMENT.  (a)  On receipt of a complaint alleging a violation by a driver of the drug and alcohol policy under Section 2402.102 or the discrimination policy under Section 2402.103, the transportation network company shall:

(1)  conduct an investigation into the reported incident;

(2)  immediately suspend the driver’s access to the company’s digital network for the duration of the investigation; and

(3)  permanently suspend the driver’s access if the company determines that the driver has violated the policy.

(b)  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. 2402.105.  NO STREET HAILS.  Unless authorized by other law, including Section 215.004, Local Government Code, a driver authorized to access a transportation network company’s digital network may not solicit or accept street hails.

SUBCHAPTER D. TRANSPORTATION NETWORK COMPANY REQUIREMENTS

Sec. 2402.151.  DISCLOSURE OF RATES; ESTIMATED FARES.  A transportation network company shall, before a passenger enters a driver’s vehicle, provide the passenger with:

(1)  the applicable rates being charged for the ride; and

(2)  the option to receive an estimated fare.

Sec. 2402.152.  ELECTRONIC RECEIPT.  Within a reasonable period of time following the completion of a ride, a transportation network company shall transmit an electronic receipt to the passenger that lists:

(1)  the origin and destination of the ride;

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

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

Sec. 2402.153.  IDENTIFICATION OF VEHICLES AND DRIVERS.  A transportation network company’s digital network must display to a passenger, before the passenger enters the vehicle:

(1)  a picture of the driver; and

(2)  the vehicle’s license plate number.

Sec. 2402.154.  ACCESSIBLE TRANSPORTATION; SURCHARGE. (a) A transportation network company shall provide passengers an opportunity to indicate whether they require a wheelchair-accessible vehicle. If a transportation network company is unable to arrange wheelchair-accessible service, the company shall direct the passenger to an alternate provider of wheelchair-accessible service, if available.

(b)  The department may impose a fee, not to exceed $20,000 annually, on transportation network companies that have more than 200 drivers and that do not provide, at a minimum level determined by commission rule, wheelchair-accessible service. The department shall 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 to provide wheelchair-accessible service.

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

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

(2)  may be distributed only to a company that meets the minimum level of wheelchair-accessible service as determined by commission rule.

Sec. 2402.155.  RECORDS.  A transportation network company shall maintain:

(1)  individual ride records for at least two years after the date the ride was provided; and

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

SECTION 2.  This Act takes effect September 1, 2017.

Jon Ouazdi
Admin
Transgates Limousine

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