SECTION 1. The legislature finds that transportation network companies are operating across the country, including in Hawaii, and that the public is receptive to this innovation in transportation. Transportation network companies have expanded transportation options for the benefit of society. They have also inspired persons providing more traditional modes of public transportation to modernize and enhance their delivery of transportation services to the public.

The legislature further finds that consumers must be afforded the protection of law when doing business with transportation network companies. Currently, transportation network companies are not licensed or regulated in Hawaii. Although transportation network companies may operate under a different business model for connecting customers with drivers, their primary service is that of a motor carrier – to transport passengers or property for compensation. Accordingly, transportation network companies must be subject to the same regulations and governmental oversight applicable to other traditional motor carriers.

The legislature further finds that ensuring the availability and affordability of personal motor vehicle insurance policies and assigning the insurance risk where it belongs are of utmost importance. Because transportation network drivers provide transportation for compensation, they engage in commercial activity. Therefore, motor vehicles used by transportation network drivers must be insured under commercial motor vehicle insurance policies, at limits higher than the statutory minimum liability limits.

The purpose of this Act is to regulate transportation network companies and require transportation network drivers to obtain commercial motor vehicle insurance.

SECTION 2. Section 271-4, Hawaii Revised Statutes, is amended to read as follows:

"§271-4 Definitions. As used in this chapter:

(1) "Chapter" means the Motor Carrier Law.

(2) "Commission" means the public utilities commission.

(3) "Person" or "persons" means any individual, firm, copartnership, corporation, company, association, or joint stock association; and includes any trustee, receiver, assignee, or personal representative thereof.

(4) "Certificate" means a certificate of public convenience and necessity issued under this chapter to common carriers by motor vehicle.

(5) "Permit" means a permit issued under this chapter to contract carriers by motor vehicle.

(6) "Transportation of persons" includes every service in connection with or incidental to the safety, comfort, or convenience of persons transported and the receipt, carriage, and delivery of these persons and their baggage.

(7) "Transportation of property" includes every service in connection with or incidental to the transportation of property, including in particular its receipt, delivery, elevation, transfer, carriage, ventilation, refrigeration, icing, dunnage, storage in transit, handling, and its consolidation for the purposes of forwarding within the State.

(8) "Motor vehicle" means any vehicle, machine, tractor, trailer, or semitrailer propelled or drawn by mechanical power and used upon the highways in the transportation of passengers or property, or any combination thereof determined by the commission, but does not include any vehicle, locomotive, or car operated exclusively on a rail or rails or a trolley bus operated by electric power derived from a fixed overhead wire, furnishing local passenger transportation similar to street-railway service.

(9) "Highway" means the public roads, highways, streets, and ways in this State.

(10) "Rates" includes rates, fares, tolls, rentals, and charges of whatever kind and nature unless the context indicates otherwise.

(11) "Common carrier by motor vehicle" means any person which holds itself out to the general public to engage in the transportation by motor vehicle of passengers or property or any class or classes thereof for compensation[.], including a transportation network company and a transportation network driver.

(12) "Contract carrier by motor vehicle" means any person which engages in transportation by motor vehicle of passengers or property for compensation (other than transportation referred to in paragraph (11)) under continuing contracts with one person or a limited number of persons either (A) for the furnishing of transportation services through the assignment of motor vehicles for a continuing period of time to the exclusive use of each person served, or (B) for the furnishing of transportation services designed to meet the distinct need of each individual customer.

(13) "Motor carrier" includes both a common carrier by motor vehicle and a contract carrier by motor vehicle.

(14) "Private carrier of property by motor vehicle" means any person not included in the terms "common carrier by motor vehicle" or "contract carrier by motor vehicle", who or which transports by motor vehicle property of which the person is the owner, lessee, or bailee, when such transportation is for the purpose of sale, lease, rent, or bailment, or in the furtherance of any commercial enterprise.

(15) "Enforcement officer" means any person employed and authorized by the commission to investigate any matter on behalf of the commission. The term also means a motor vehicle safety officer employed and assigned, pursuant to section 271-38, by the department of transportation to enforce sections 271-8, 271-12, 271-13, 271-19, and 271-29 through the assessment of civil penalties as provided in section 271-27(h), (i), and (j).

(16) "Transportation network company" means any person that provides, coordinates, or maintains an online-enabled application or digital network used to connect customers with drivers of motor vehicles for the purpose of providing prearranged transportation of persons or prearranged transportation of property for compensation.

(17) "Transportation network driver" means any person who, at any time, uses a motor vehicle in connection with a transportation network company, and who is regulated by the counties in accordance with section 46-16.5(c)."

SECTION 3. Section 271-5, Hawaii Revised Statutes, is amended to read as follows:

"§271-5 Exemptions, generally. Notwithstanding any other provisions of this chapter, its contents shall not apply to:

(1) Persons transporting their own property where the transportation is in furtherance of a primary business purpose or enterprise of that person, except where the transportation is undertaken by a motor carrier to evade the regulatory purposes of this chapter;

(2) Persons operating motor vehicles when engaged in the transportation of school children and teachers to and from school, and to and from school functions; provided that these persons may engage in providing transportation at special rates for groups of persons belonging to an eleemosynary or benevolent organization or association domiciled in this State where the organization or association sponsors or is conducting a nonregular excursion; provided that whenever the persons engage in the transportation of persons other than those exempted in this paragraph, that portion of their operation shall not be exempt from this chapter. Nothing in this paragraph shall be construed to authorize any person to engage in the transportation of persons, other than the transportation of persons exempted by the terms of this paragraph, without a permit or certificate issued by the commission authorizing such transportation;

(3) Persons operating taxicabs or other motor vehicles utilized in performing a bona fide taxicab service. Persons performing a bona fide taxicab service includes providing transportation services to customers as transportation network drivers. "Taxicab" includes:

(A) Any motor vehicle used in the movement of passengers on the public highways under the following circumstances, namely the passenger hires the vehicle on call or at a fixed stand, with or without baggage for transportation, and controls the vehicle to the passenger's destination;

(B) Any motor vehicle for hire having seating accommodations for eight or fewer passengers used in the movement of passengers on the public highways that may, as part of a continuous trip, pick up or discharge passengers from various unrelated locations; provided that they shall be regulated by the counties in accordance with section 46-16.5(c); and provided further that this subparagraph shall not apply to any exclusive rights granted by the department of transportation for taxicab services at facilities under the department's control; and

(C) Any motor vehicle having seating accommodations for eight or fewer passengers used in the movement of passengers on the public highways between a terminal, i.e., a fixed stand, in the Honolulu district, as defined in section 4-1 and a terminal in a geographical district outside the limits of the Honolulu district, and vice versa, without picking up passengers other than at the terminals or fixed stands; provided that the passengers may be picked up by telephone call from their homes in the rural area or may be unloaded at any point between the fixed stands or may be delivered to their homes in the rural area;

(4) Persons operating motor vehicles in the transportation of persons pursuant to a franchise from the legislature and whose operations are presently regulated under chapter 269;

(5) Nonprofit agricultural cooperative associations to the extent that they engage in the transportation of their own property or the property of their members;

(6) Persons operating motor vehicles specially constructed for the towing of disabled or wrecked vehicles but not otherwise used in the transportation of property for compensation or hire;

(7) Persons operating motor vehicles in the transportation of mail, newspapers, periodicals, magazines, messages, documents, letters, or blueprints;

(8) Persons operating funeral cars or ambulances;

(9) Persons operating motor vehicles in the transportation of garbage or refuse;

(10) Persons operating the type of passenger carrying motor vehicles known as "sampan buses" within the radius of twenty miles from the city of Hilo, Hawaii;

(11) Persons transporting unprocessed pineapple to a cannery, seed corn to a processing facility, or returning any containers used in such transportation to the fields;

(12) Sugar plantations transporting sugarcane, raw sugar, molasses, sugar by-products, and farming supplies for neighboring farmers pursuant to contracts administered by the United States Department of Agriculture;

(13) Persons engaged in the ranching or meat or feed business who transport cattle to slaughterhouses for hire where such transportation is their sole transportation for hire and where their earnings from the transportation constitute less than fifty per cent of their gross income from their business and the transportation for hire;

(14) Persons transporting unprocessed raw milk to processing plants and returning any containers used in such transportation to dairy farms for reloading;

(15) Persons transporting animal feeds to animal husbandry farmers and farming supplies directly to animal husbandry farmers and returning any containers used in such transportation to these sources of such feeds and supplies for reloading;

(16) Persons engaged in transporting not more than fifteen passengers between their places of abode, or termini near such places, and their places of employment in a single daily round trip where the driver is also on the driver's way to or from the driver's place of employment, but not including transportation network drivers;

(17) Persons transporting passengers without charge in motor vehicles owned or operated by such person, where such transportation is provided in conjunction with and in furtherance of a related primary business purpose or enterprise of that person, and such transportation is provided only directly to and from the place of business of such person, except that this exemption shall not apply to persons making any contract, agreement, or arrangement to provide, procure, furnish, or arrange for transportation as a travel agent or broker or a person engaged in tour or sightseeing activities, nor shall this exemption apply where the transportation is undertaken by a person to evade the regulatory purposes of this chapter; and

(18) Persons conducting the type of county-regulated passenger carrying operation known as "jitney services". For the purposes of this paragraph, "jitney services" means public transportation services utilizing motor vehicles that have seating accommodations for six to twenty-five passengers, operate along specific routes during defined service hours, and levy a flat fare schedule."

SECTION 4. Section 271-8.5, Hawaii Revised Statutes, is amended to read as follows:

"§271-8.5 Advertising. (a) It shall be a misdemeanor for any person, including a person who is exempt under section 271-5, to advertise as a motor carrier of passengers or property, unless the person holds a valid certificate or permit required by this chapter as to the classification so advertised. The term "advertise", as used in this section, includes: the issuance of any card, sign, or device to any person, or the causing, permitting, or allowing of any sign or marking on or in any building or motor vehicle, or the advertising in any newspaper, magazine, or advertising other than in-column listings in any directory, or the commercial broadcasting by airwave transmission, or any and all communications media[.]; including offering motor carrier service through the Internet via an application or "app".

(b) A licensee [~~may advertise in print or broadcast medium as described in subsection (a) only if the licensee includes in the advertisement~~] shall include in any form of advertising the licensee's applicable and current certificate or permit number [~~and provides proof of the number's validity to the publisher or producer of the advertising medium~~]. The publisher or producer of a print or broadcast advertising medium or transportation network company shall not publish or broadcast an advertisement or provide access for a licensee who does not provide proof of a current certificate or permit or who does not include a currently valid certificate or permit number in the advertisement.

(c) Upon notice from the public utilities commission of the entry of a final order of the commission pursuant to chapter 91 or a judgment by a court of competent jurisdiction, that a person has advertised in violation of either subsection (a) or section 271-8, the public utility furnishing the telecommunications service or transportation network company shall disconnect that person's access to the application, telephone number, or telecommunications service number contained in the advertisement or listing. A public utility or transportation network company complying with a notice to disconnect is immune from liability for damages resulting from its compliance.

(d) The publisher or producer of a print or broadcast advertising medium, or transportation network company, shall not be liable in any suit, action, or claim arising from its refusal to list or accept advertisements pursuant to subsection (b)."

SECTION 5. Section 271-17, Hawaii Revised Statutes, is amended to read as follows:

"§271-17 Security for protection of public. No certificate or permit shall be issued to a motor carrier, including transportation network drivers, or remain in force unless such carrier complies with such reasonable rules and regulations as the public utilities commission shall prescribe governing the filing and approval of surety bonds, policies of insurance, qualifications as a self-insurer, or other securities or agreements, in amounts required by section 431:10C-301(b) or in such [~~reasonable~~] greater amounts as the commission may require, [~~conditioned to pay within the amount of the surety agreements moneys finally recovered against the motor carrier~~] for bodily injuries to or the death of any person resulting from the negligent operation, maintenance, or use of motor vehicles under the certificate, or permit or for loss or damage to property of others. The commission may, in its discretion and under such rules and regulations as it shall prescribe, require any such carrier to file a surety bond, policies of insurance, qualifications as a self-insurer, or other securities or agreements in a sum to be determined by the commission to be conditioned upon the carrier making compensation to shippers or consignees for all property belonging to shippers or consignees, and coming into the possession of such carrier in connection with its transportation service. Any common carrier which may be required by law to compensate a shipper or consignee for any loss, damage, or default for which a connecting motor common carrier is legally responsible shall be subrogated to the rights of such shipper or consignee under any such bond, policies of insurance, or other securities or agreements, to the extent of the sum so paid."

SECTION 6. Section 271-27, Hawaii Revised Statutes, is amended to read as follows:

"§271-27 Unlawful operation. (a) Any person intentionally, knowingly, or recklessly violating any provision of this chapter, or any rule, requirement, or order thereunder, or any term or condition of any certificate or permit for which a penalty is not otherwise provided, shall be guilty of a misdemeanor. In addition, any shipper or consignee located in this State, or any officer, employee, agent, or representative thereof, who intentionally, knowingly, or recklessly engages the services of any person violating any provision of this chapter, or any rule, requirement, or order, or any term or condition of any certificate or permit for which a penalty is not otherwise provided, shall be guilty of a misdemeanor. In addition, any company that solicits, contracts with, or hires drivers that the company knows, or has reason to know, are violating any provision of this chapter, or any rule, requirement, or order, or any term or condition of any certificate or permit for which a penalty is not otherwise provided, shall be guilty of a misdemeanor.

(b) Any person, whether carrier, shipper, or consignee, or any officer, employee, agent, or representative thereof, who intentionally, knowingly, or recklessly offers, grants, or gives, or solicits, accepts, or receives any rebate, concession, or discrimination in violation of any provisions of this chapter, or who by means of any false statement or representation or by the use of any false or fictitious bill, bill of lading, receipt, voucher, roll, account, claim, certificate, affidavit, deposition, lease, or bill of sale, or by any other means or device, intentionally, knowingly, or recklessly assists, suffers, or permits any person or persons, natural or artificial, to obtain transportation of passengers or property subject to this chapter for less than the applicable rate, fare, or charge, or who intentionally, knowingly, or recklessly by any such means or otherwise fraudulently seeks to evade or defeat regulation as in this chapter provided for motor carriers, shall be deemed guilty of a misdemeanor.

(c) Any special agent, accountant, or examiner who knowingly and wilfully divulges any fact or information which may come to the special agent's, accountant's, or examiner's knowledge during the course of any examination or inspection made under authority of sections 271-9(a)(4), 271-23, and 271-25, except as the special agent, accountant, or examiner may be directed by the commission or by a court or judge thereof, shall be guilty of a misdemeanor.

(d) It shall be unlawful for any motor carrier or any officer, receiver, trustee, lessee, agent, or employee of the carrier, or for any other person authorized by such carrier or person to receive information, knowingly to disclose to, or permit to be acquired by any person other than the shipper or consignee without the consent of the shipper or consignee, any information concerning the nature, kind, quantity, destination, consignee, or routing of any property tendered or delivered to the motor carrier for transportation, which information may be used to the detriment or prejudice of the shipper or consignee, or which may improperly disclose the shipper's or consignee's business transactions to a competitor; and it shall also be unlawful for any person to solicit or knowingly receive any such information which may be so used.

(e) Nothing in this chapter shall be construed to prevent the giving of such information in response to any legal process issued under the authority of any court, or to any officer or agent of the government of the United States or of any state or of any political subdivision of any state, in the exercise of the officer's or agent's power or to any officer or other duly authorized person seeking the information for the prosecution of persons charged with or suspected of crimes or to another carrier, or its duly authorized agents, for the purpose of adjusting mutual traffic accounts in the ordinary course of business of the carriers.

(f) Any motor carrier or any officer, agent, employee, or representative thereof, who wilfully fails or refuses to make a report to the commission as required by this chapter, or to make specific and full, true, and correct answer to any question within thirty days from the time it is lawfully required by the commission, or to keep accounts, records, and memoranda in the form and manner prescribed by the commission, or knowingly and wilfully falsifies, destroys, mutilates, or alters any report, account, record, or memorandum or knowingly and wilfully files with the commission any false report, account, record, or memorandum, or knowingly and wilfully neglects or fails to make full, true, and correct entries in the accounts, records, or memoranda of all facts and transactions appertaining to the business of the carrier, or person required under this chapter to keep the same, or knowingly and wilfully keeps accounts, records, or memoranda contrary to the rules, regulations, or orders of the commission with respect thereto, shall be deemed guilty of a misdemeanor. As used in this subsection, the words "keep" and "kept" mean made, prepared, or compiled, as well as retained.

(g) Except when required by state law to take immediately before a district judge a person arrested for violation of this chapter, including any rule adopted pursuant to this chapter, any enforcement officer, other than a motor vehicle safety officer employed and assigned, pursuant to section 271-38, by the department of transportation to assess civil penalties, upon arresting a person for violation of this chapter, including any rule adopted pursuant to this chapter shall issue to the alleged violator a summons or citation printed in the form hereinafter described, warning the alleged violator to appear and answer to the charge against the alleged violator at a certain place within seven days after the arrest.

(1) The summons or citation shall be printed in a form comparable to that of other summonses and citations used for arresting offenders and shall include all necessary information. The form and content shall be adopted or prescribed by the district courts.

(2) The original of a summons or citation shall be given to the alleged violator and any other copies distributed in the manner prescribed by the district courts; provided that the district courts may prescribe alternative methods of distribution for the original and any other copies.

(3) Summonses and citations shall be consecutively numbered and any other copies of each shall bear the same number.

(4) Any person who fails to appear at the place and within the time specified in the summons or citation shall be guilty of a misdemeanor.

(5) If any person fails to comply with a summons or citation or fails or refuses to deposit bail as required, the enforcement officer shall cause a complaint to be entered against the person and secure the issuance of a warrant for the person's arrest.

(6) When a complaint is made to any prosecuting officer of a violation of this chapter or any rule, the enforcement officer who issued the summons or citation shall subscribe to it under oath administered by another official whose name has been submitted to the prosecuting officer and who has been designated by the commission to administer the same.

(h) Any motor carrier, including a transportation network company driver, or lessor, or any officer, agent, employee, transportation network company, or representative thereof, who fails or refuses to comply with any provision of this chapter, or any rule, requirement, or order thereunder, and any person located in this State, or any officer, agent, employee, or representative of any such person, who engages the services of any motor carrier, including a transportation network company driver, or lessor, or any officer, agent, employee, transportation network company, or representative thereof, who fails or refuses to comply with any provision of this chapter, or any rule, requirement, or order, may be assessed a civil penalty payable to the State in a sum:

(1) Up to [~~$1,000~~] $5,000 for each offense; and

(2) In the case of a continuing violation, not less than [~~$50~~], $1,000 and not more than [~~$500~~], $5,000 for each additional day during which the failure or refusal continues.

(i) Notwithstanding subsection (h), a motor carrier who fails to file, within the prescribed time, a financial report with the commission pursuant to its rules may be assessed a civil penalty payable to the State up to the sum of one-sixteenth of one per cent of the gross revenues from the motor carrier's business during the preceding calendar year, if the failure is for not more than one month, with an additional one-sixteenth of one per cent for each additional month or fraction thereof during which the failure continues, but in no event shall the total civil penalty be less than the sum of $50.

(j) In addition to any other remedy available, the commission or its enforcement officer, including a motor vehicle safety officer employed and assigned by the department of transportation pursuant to section 271-38, may issue citations to persons acting in the capacity of or engaging in the business of a motor carrier within this State, without having a certificate of public convenience and necessity or other authority previously obtained under and in compliance with this chapter and rules adopted, or to any shipper or consignee located in this State, or any officer, employee, agent, or representative thereof who engages the services of those persons.

(1) The citation may contain an order of abatement and an assessment of civil penalties as provided in subsection (h). All penalties collected under this subsection shall be deposited in the treasury of the State. Service of a citation issued under this subsection shall be made by personal service whenever possible or by certified mail, restricted delivery, sent to the last known business or residence address of the person cited.

(2) Any person served with a citation under this subsection may submit a written request to the commission for a hearing within twenty days from the receipt of the citation, with respect to the violations alleged, the scope of the order of abatement, and the amount of civil penalties assessed. If the person cited under this subsection notifies the commission of the request for a hearing in time, the commission shall afford the person an opportunity for a hearing under chapter 91. The hearing shall be conducted by the commission, or the commission may designate a hearings officer to hold the hearing.

(3) If the person cited under this subsection does not submit a written request to the commission for a hearing in time, the citation shall be deemed a final order of the commission. The commission may apply to the appropriate court for a judgment to enforce the provisions of any final order issued by the commission or designated hearings officer pursuant to this subsection, including the provisions for abatement and civil penalties imposed. In any proceeding to enforce the final order, the commission need only produce a certified copy of the final order and show that the notice was given and that a hearing was held or the time granted for requesting the hearing has run without a request.

(4) If any party is aggrieved by the decision of the commission or the designated hearings officer, the party may appeal, subject to chapter 602, in the manner provided for civil appeals from the circuit courts; provided that the operation of an abatement order shall not be stayed on appeal unless specifically ordered by a court of competent jurisdiction after applying the stay criteria enumerated in section 91-14(c). The sanctions and disposition authorized under this subsection shall be separate and in addition to all other remedies either civil or criminal provided by law. The commission may adopt any rules under chapter 91 that may be necessary to fully effectuate this subsection.

(k) Any motor carrier, including a transportation network company driver, or lessor who violates any provision of this chapter shall have his, her, or its (as applicable) motor vehicle impounded until the violation is fully remedied to the satisfaction of the commission. All enforcement officers shall be vested with the power to impound motor vehicles belonging to parties in violation of this chapter, and all associated costs shall be charged to the parties in violation of this chapter."

SECTION 7. Section 271-28, Hawaii Revised Statutes, is amended to read as follows:

"§271-28 Collection of rates and charges. No common carrier by motor vehicle shall deliver or relinquish possession at destination of any freight transported by it until all tariff rates and charges thereon have been paid, except under such rules and regulations as the public utilities commission may from time to time prescribe to govern the settlement of all the rates and charges, including rules and regulations for weekly or monthly settlement, and to prevent unjust discrimination or undue preference or prejudice; provided that this section shall not be construed to prohibit any carrier from extending credit in connection with rates and charges on freight transported for the United States, for any department, bureau, or agency thereof, or for any state or political subdivision thereof. In addition, no motor carrier, including a transportation network company, shall charge higher prices for transportation services, based on the supply of available motor carriers at a moment in time, and the demand for motor carriers at said moment in time."

SECTION 8. Section 271-29, Hawaii Revised Statutes, is amended to read as follows:

"§271-29 Identification of carriers. The public utilities commission is authorized, under such rules and regulations as it shall prescribe, to require the display of suitable identification number or numbers, upon any motor vehicle used in transportation subject to this chapter, and to provide for the issuance of numbers. Any substitution, transfer, or use of any identification number or numbers, except such as may be duly authorized by the commission, is prohibited and shall be unlawful. In addition, any motor vehicle being operated by a transportation network driver shall display the name or other mark of the transportation network company in a conspicuous place on the motor vehicle at all times."

SECTION 9. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 11. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	1351
TWENTY-EIGHTH LEGISLATURE, 2015
STATE OF HAWAII