Seattle Council Unanimously Votes to Regulate & Limit TNC's

SUMMARY OF CITY OF SEATTLE ORDINANCE RELATED TO TNCS (TRANSPORTATION NETWORK COMPANIES) 

-- PASSED BY FULL COUNCIL March 17, 2014
by
Anonymous

Background

The city of Seattle Council passed the ordinance 9-0 with no dissenting votes.  The vote came after a special council committee spent more than a year delving into the issues of taxicabs, for hire vehicles (special flat rate vehicles in Seattle), limousines and TNCs.  No one has declared victory, but the TNCs for the first time in the nation have had local government "caps" placed on them.  The cap essentially limits the number of drivers that can be logged into their system at one time.  There were several other important provisions that I will describe below:

INTENT

The Council wrote that the "application dispatch technology by unlicensed companies, vehicles and drivers raises significant public safety and consumer protection concerns."  The Council also declared the companies to be illegal with no license or regulatory oversight.  The Council called for a pilot program and 100 new taxicab licenses per year for 2014 and 2015.

PURPOSE

In this section, the Council defined a TNC (Transportation Network Company) driver as a for hire driver operating a for hire vehicle, meaning they can be regulated by the city.  The Director of the city's office of Financial and Administrative services can issue a moratorium suspending the issuance of TNC licenses based on certain criteria.

DEFINITIONS

"Compensation" -- "renumeration of anything of economic value that is provided, promised or donated in exchange for services rendered.  Lyft voluntary donations are covered.  The term transportation network company or TNC is added in places that previously said only taxicab and for hire vehicle.  An extensive section was added describing TNCs and TNC drivers.

SCOPE

Makes it clear that nothing in the ordinance related to TNCs applies to taxicab associations, all taxicabs, all for hire vehicles and all for hire drivers operating in Seattle.  TNCs are added to the section related to taxicab violations, making them subject to the same penalties as taxis and for hire vehicles.  This essentially allows taxis and for hire vehicles to offer app services without becoming TNCs.

LICENSE

No TNC driver can operate in the city without a valid for hire driver's license and the vehicle must either be a personal one with a TNC vehicle endorsement (inspection, fee required) or be a for hire vehicle or taxicab licensed to operate in the city.  It also says TNCs cannot operate in the city without a valid license and without one, the TNC will be suspended.

FEES

A driver cannot be affiliated with more than 3 taxicab associations or TNCs and must pay $50 annually for a "vehicle endorsement fee."  The annual fee for the TNC company is $50,000 for the first year and .35% of annual gross revenue or $50,000, whichever is greater.

TNC ELIGIBILITY/APPLICATION

Much information is required -- Washington state business license, names/details of all officers, directors, general and managing partners, registered agents, dates of birth for everyone, etc...  No trade dress for vehicles can be put on the roof or windows, no vehicle lights, etc.

TNC INSURANCE

Each vehicle affiliated with the TNC must have underinsured motorist coverage of $100,000 per person and $300,000 per accident, at any time while active on the TNC dispatch system (when signed in).  

The insurance policy or binder must be submitted to the Director and adhere to the following:
1)  Issued by admitted carrier with A.M. Best Rating (A-VII);
2)  Must notify Director of cancellation/non-renewal 30 days beforehand;
3)  Not include self-insured retention, nonstandard deductibles, aggregate limits, territorial restrictions, names driver requirements or anything other policy limitation;
4)  In the event of failure of the driver to maintain personal auto insurance covering commercial activity, the TNCs insurance will be exclusive and primary;
5)  Must provide underinsured motorist coverage for bodily injury and property damages at $100,000 per person and $300,000 combined single limit of liability;
6)  State of Washington for-hire certification for each TNC driver;
7)  State of Washington vehicle registration for each vehicle affiliated with the TNC;
8)  Certificate of 19-point inspection (to be detailed later);
9)  Dispatch records identifying average, minimum, maximum number of drivers and dispatches on the TNC system per day for six months prior to the date of application (not applicable to TNCs not operating in Seattle already);
10) Any other information - must also be provided for each annual license renewal;
11) The city must be named "additional insured."

Changes to any of the above information must be submitted to the Director within 7 days.

TNCs are required to backfill a driver's insurance if his/her insurance does not cover all claims.


TNC STANDARDS FOR APPLICATION OR RENEWAL DENIAL

The Director shall deny any TNC application if he/she determines that:

1. Applicant fails to submit proof of insurance;
2. Applicant provides dispatch services to anyone other than TNC drivers who meet the standards in the ordinance;
3. Applicant uses more than one application dispatch system;
4. Applicant leases, permits or otherwise allows others to use the app dispatch system;
5. Applicant affiliates with/provides app dispatch services to drivers without a for-hire license;
6. Applicant affiliates with and provides app dispatch to unlicensed vehicle(s);
7. –  9. Incomplete application, criminal activity, etc..

TNC OPERATING RESPONSIBILITIES

TNC must have a business office staffed all business days between 9 a.m. and 5 pm., a toll-free business telephone and passenger complaint hotline answered all hours TNCs are operating.  In addition, the TNC must keep all records regarding divers, insurance, vehicles, etc and maintain them electronically.  The TNC will also ensure that only 150 TNC endorsed drivers are active on the dispatch system at any one time.  TNCs must also ensure their drivers are only paid electronically, do not pick up hails and ensure passengers see a picture of the driver and license plate number before the trip.

A year from the effective date of the ordinance the TNC must submit a report on violations, dispatch records, collision reports, response times, passenger complaints, etc...  The TNC must notify the director of having knowledge of driver criminal offenses, accidents, license revocation, etc.. There are standards for TNC creation/maintenance of a website and report on serving persons with disabilities.  A 19-point vehicle inspection is required of all TNC vehicles provided by a 3rd party vendor approved by the Director.  The TNC must provide a written disclosure on insurance to  TNC drivers.

TNC VEHICLE OPERATING REQUIREMENTS

Vehicles must be no more than 7 years old, have insurance (delineated previously), be affiliated with a TNC and the driver must have a for-hire license.

TNC VEHICLE ENDORSEMENT/ELIGIBILITY

Criteria for applying to be a TNC in Seattle.

TNC VEHICLE ENDORSEMENT STANDARDS FOR DENIAL

1. Applicant failed to submit complete application;
2. Applicant failed to affiliate with a licensesd TNC
3. Applicant made misstatement or omission in endorsement application;
4. Applicant fails to meet vehicle requirements;
5. Within 3 years of application, conviction of criminal activity.

There is also a listing of criteria that can be used in the Director's discretion to deny a TNC vehicle endorsement.

TNC VEHICLE ENDORSEMENT EXPIRATION/RENEWAL

Endorsement for vehicle good for one year coinciding with for-hire driver's license renewal and renewals will be issued in a timely fashion so long as all penalties are paid.

Several changes will be made to the wheelchair taxi license provisions that were sought by wheelchair taxi license owners.

Changes will also be made to the licensing requirements for taxi and for-hire license applicants.

TNC DRIVER OPERATING, CONDUCT AND PASSENGER RELATIONS STANDARDS

Detailed provisions related to TNC drivers are specified including hours driven, insurance requirements, mobile phone use, random inspections, payment by app only, registered owner picking up passengers, etc...  There are also requirements to pick up passengers with wheelchairs, assist or guide dogs, groceries, etc...  

Changes are made to the For Hire driver passenger relations standards

For Hire vehicles are given the ability to pick up hailing passengers and 200 new taxi licenses will be issued -- 100 in 2014 and 100 in 2015.

RATES

The TNC company must submit a rate structure consistent with state law (accepted meter requirements) to the Director with provisions for handling tolls and other charges.  The rates must be disclosed to the passenger before the trip begins, which starts when the passenger enters the vehicle.

PENALTIES

TNCs are added to the taxicab/for hire vehicle penalty provisions.  Violations are as follows:

1. First Class A in one year -- $35; 2nd -- $70; 3rd or more in one year -- $70;
2. First Class B in one year -- $70; 2nd -- $175; 3rd or more in one year -- $120
3. All Class C violations -- $1000.

SUSPENSION/REVOCATION

The Director shall revoke a TNC license if the company or its officers, director, managing or general partner or principal of the TNC is engaged in criminal activity.  The Director also shall revoke the license if the TNC allows more than 150 endorsed drivers to be active on the system, fail to meet insurance requirements, fail to pay penalties or the TNC has committed one Class C violation.  The Director may revoke the license if the TNC dispatches to unlicensed/affiliated driver, unaffiliated vehicle, driver picks up hails, fails to review driving records or knowingly permits TNC drivers with any listed conviction operate.

The TNC driver shall have his/her license revoked for violating provisions related to criminal convictions, license expiration, Class C violations, picking up hailing passengers, etc..  The Director may revoke a TNC driver's license if the driver is found to be in possession of illegal drugs or an open container of alcohol while in operation or has been convicted of certain crimes.  Provisions for hearings, appeals etc are included.


DIRECTOR TNC MORATORIUM/REPORTING REQUIREMENTS

The Director can issue a moratorium suspending issuance of TNC vehicle endorsements under certain conditions.  The Director is required to report to the Taxi, For Hire, Limousine Committee every 90 days through June 2015 and that committee will determine any changes to the 150 vehicle "live on the system cap" on TNCs.

TNC OWNERSHIP

No TNC vehicle licensed in the city can be owned or controlled, in whole or in part, by any other TNC licensed in the city.