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.

"Chapter" means the Motor Carrier Law.

"Commission" means the public utilities commission.

"Common carrier by motor vehicle" means any person, including a transportation network company or a transportation network driver, 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.

"Contract carrier by motor vehicle" means any person, including a transportation network company or a transportation network driver, which engages in transportation by motor vehicle of passengers or property for compensation (other than transportation referred to in the definition of "common carrier by motor vehicle") under continuing contracts with one person or a limited number of persons either: 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 for the furnishing of transportation services designed to meet the distinct need of each individual customer.

"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).

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

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

"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.

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

"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.

"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.

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

[~~(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.

~~(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).]

"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.

"Transportation network driver" means any person who, at any time, uses a motor vehicle in connection with a transportation network company, and who is not 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~~]. "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;

"Taxicab" does not include a motor vehicle while being operated by a transportation network driver.

(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 271-17, 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 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 5. Section 271-29, Hawaii Revised Statutes, is amended to read as follows:

"§271-29 Identification of carriers. (a) 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.

(b) 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 6. Section 431:10C-301, Hawaii Revised Statutes, is amended to read as follows:

"§431:10C-301 Required motor vehicle policy coverage. (a) An insurance policy covering a motor vehicle shall provide:

(1) Coverage specified in section 431:10C-304; and

(2) Insurance to pay on behalf of the owner or any operator of the insured motor vehicle using the motor vehicle with a reasonable belief that the person is entitled to operate the motor vehicle, sums which the owner or operator may legally be obligated to pay for injury, death, or damage to property of others, except property owned by, being transported by, or in the charge of the insured, which arise out of the ownership, operation, maintenance, or use of the motor vehicle; provided that in the case of a U-drive motor vehicle, insurance to pay on behalf of the renter or any operator of the insured motor vehicle using the motor vehicle with the express permission of the renter or lessee, sums which the renter or operator may be legally obligated to pay for damage or destruction of property of others (except property owned by, being transported by, or in the charge of the renter or operator) arising out of the operation or use of the motor vehicle unless the motor vehicle is reported stolen by the owner within three days of notification of the incident; provided that the insurer and owner of a U-drive vehicle shall have the right of subrogation against the renter and operator for breach of the rental contract between owner and renter; and provided further that, in the event that any motor vehicle offered for rental or lease is involved in an accident, the lessor shall provide all information it has or obtains relevant to the accident to all other involved parties upon their request, including but not limited to information about the lessee, and the driver of the vehicle if other than the lessee.

(b) A motor vehicle insurance policy shall include:

(1) Liability coverage of not less than $20,000 per person, with an aggregate limit of $40,000 per accident, for all damages arising out of accidental harm sustained as a result of any one accident and arising out of ownership, maintenance, use, loading, or unloading of a motor vehicle; provided that, in the case of any taxicab or motor carrier, as defined in chapter 271, liability coverage under a commercial motor vehicle insurance policy of not less than $100,000 per person, with an aggregate limit of $200,000 per accident, for all damages arising out of accidental harm sustained as a result of any one accident and arising out of ownership, maintenance, use, loading, or unloading of a motor vehicle;

(2) Liability coverage of not less than $10,000 for all damages arising out of damage to or destruction of property including motor vehicles and including the loss of use thereof, but not including property owned by, being transported by, or in the charge of the insured, as a result of any one accident arising out of ownership, maintenance, use, loading, or unloading, of the insured vehicle; provided that, in the case of any taxicab or motor carrier, as defined in chapter 271, liability coverage under a commercial motor vehicle insurance policy of not less than $50,000 for all damages arising out of damage to or destruction of property including motor vehicles and including the loss of use thereof, and including property being transported by or in the charge of the insured, as a result of any one accident arising out of ownership, maintenance, use, loading, or unloading, of the insured vehicle;

(3) With respect to any motor vehicle registered or principally garaged in this State, liability coverage provided therein or supplemental thereto, in limits for bodily injury or death set forth in paragraph (1), under provisions filed with and approved by the commissioner, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness, or disease, including death, resulting therefrom; provided that the coverage required under this paragraph shall not be applicable where any named insured in the policy shall reject the coverage in writing; and

(4) Coverage for loss resulting from bodily injury or death suffered by any person legally entitled to recover damages from owners or operators of underinsured motor vehicles. An insurer may offer the underinsured motorist coverage required by this paragraph in the same manner as uninsured motorist coverage; provided that the offer of both shall:

(A) Be conspicuously displayed so as to be readily noticeable by the insured;

(B) Set forth the premium for the coverage adjacent to the offer in a manner that the premium is clearly identifiable with the offer and may be easily subtracted from the total premium to determine the premium payment due in the event the insured elects not to purchase the option; and

(C) Provide for written rejection of the coverage by requiring the insured to affix the insured's signature in a location adjacent to or directly below the offer.

(c) The stacking or aggregating of uninsured motorist coverage or underinsured motorist coverage is prohibited, except as provided in subsection (d).

(d) An insurer shall offer the insured the opportunity to purchase uninsured motorist coverage and underinsured motorist coverage by offering the following options with each motor vehicle insurance policy:

(1) The option to stack uninsured motorist coverage and underinsured motorist coverage; and

(2) The option to select uninsured motorist coverage and underinsured motorist coverage, whichever is applicable, up to but not greater than the bodily injury liability coverage limits in the insured's policy.

These offers are to be made when a motor vehicle insurance policy is first applied for or issued. For any existing policies, an insurer shall offer such coverage at the first renewal after January 1, 1993. Once an insured has been provided the opportunity to purchase or reject the coverages in writing under the options, no further offer is required to be included with any renewal or replacement policy issued to the insured.

(e) If uninsured motorist coverage or underinsured motorist coverage is rejected, pursuant to section 431:10C-301(b):

(1) The offers required by section 431:10C-301(d) are not required to be made;

(2) No further offers or notice of the availability of uninsured motorist coverage and underinsured motorist coverage are required to be made in connection with any renewal or replacement policy; and

(3) The written rejections required by section 431:10C-301(b) shall be presumptive evidence of the insured's decision to reject the options.

(f) A personal motor vehicle insurance policy issued or renewed after July 1, 2015, shall not include coverage of any kind under this article for a taxicab or a motor vehicle used by a motor carrier, as defined in chapter 271, or their owners or operators."

SECTION 7. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 9. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	732
TWENTY-EIGHTH LEGISLATURE, 2015
STATE OF HAWAII