BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                   AB 145|
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                                 THIRD READING


          Bill No:  AB 145
          Author:   De Leon (D)
          Amended:  8/3/10 in Senate
          Vote:     21

           
           SENATE TRANSPORTATION & HOUSING COMMITTEE :  8-0, 6/15/10
          AYES:  Lowenthal, Huff, Ashburn, DeSaulnier, Harman, Kehoe,  
            Pavley, Simitian
          NO VOTE RECORDED:  Oropeza
           
          SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8

           ASSEMBLY FLOOR  :  79-0, 5/4/09 (Consent) - See last page for  
            vote


           SUBJECT  :    Dump trucks:  brokers

           SOURCE  :     California Dump Truck Association


           DIGEST  :    This bill requires that a broker of construction  
          trucking services post a bond to ensure payment to a dump  
          truck operator whose services he/she is brokering and that  
          the broker receive certification of the dump trucker  
          operator's permit to operate.

           ANALYSIS  :    Motor carriers of property transport property,  
          other than household goods, for hire.  The Department of  
          Motor Vehicles (DMV) and the Department of the California  
          Highway Patrol (CHP) regulate those motor carriers that  
          operate within California, and existing law requires that a  
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          motor carrier have a valid motor carrier permit of property  
          to operate in this state.

          DMV issues motor carrier permits subject to the motor  
          carrier paying the required fee, providing proof of  
          financial responsibility (e.g., liability insurance),  
          certifying that it has workers' compensation coverage for  
          its employees, securing a CHP inspection, and obtaining a  
          carrier identification number from CHP.  A motor carrier  
          must renew this permit every year.  
          No person, including another motor carrier, may engage the  
          services of a motor carrier of property, unless that motor  
          carrier holds a valid permit.  In instances in which a  
          motor carrier enlists the service of another motor carrier,  
          the contracted motor carrier must certify in manner  
          prescribed by CHP that it possesses a permit to operate and  
          must immediately notify the contracting motor carrier to  
          whom it is contracted if DMV suspends or revokes the  
          permit.

          Existing law defines a "broker of construction trucking  
          services" (broker) as any person, excluding a licensed  
          contractor, who arranges services from and is responsible  
          for paying an independent contractor motor carrier of  
          property in dump truck equipment (dump truck operator).   
          Existing law requires that a broker pay a dump truck  
          operator by the 25th day following the last day of the  
          month in which the dump truck provided services, provided  
          that the dump truck operator documents the charges, the  
          dump truck operator is properly permitted, and no dispute  
          exists.  If the broker does not pay in a timely fashion,  
          state law prescribes a penalty of two percent per month of  
          withheld charges.
          
          This bill:

          1. Prohibits a broker from contracting with or engaging the  
             services of any motor carrier of property unless that  
             contracted motor carrier certifies in a manner  
             prescribed by CHP that it possesses a valid permit to  
             operate and requires that the contracted motor carrier  
             immediately notify the broker if DMV suspends or revokes  
             the motor carrier's permit.


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          2. Requires a broker to secure a surety bond of not less  
             the $15,000 to ensure payment of the claims of a  
             contracted dump truck operator, if the broker fails to  
             pay the dump truck operator by the 25th day of the month  
             following when services were rendered.  A broker who  
             does not secure this surety bond shall be guilty of a  
             misdemeanor and subject to a fine of up to $5,000.

          3. Provides that in a civil action that a dump truck  
             operator brings against a broker with whom it contracted  
             during any period of time in which the broker did not  
             maintain a surety bond, the failure to have the bond  
             shall create a rebuttable presumption that the broker  
             failed to pay the motor carrier the amount due, thus  
             favoring the dump truck operator in any civil lawsuit.

          4. Specifies that "a broker of construction trucking  
             services" does not include a facility that meets all the  
             following conditions:

                  Arranges for transportation services of its  
                product.

                  Primarily handles raw materials to produce a new  
                product.

                  Is a rock product operation (such as an  
                "aggregate" operation), a hot mixing asphalt plant,  
                or a concrete, concrete product, or Portland cement  
                product manufacturing facility.

                  Does not accept a fee for the arrangement.

           Comments  

           Purpose of the bill  .  The bill's sponsor notes that in  
          recent years an increasing number of construction trucking  
          brokers have engaged in unscrupulous practices toward the  
          dump truck operators whose services they broker.  The  
          sponsor reports that the practices include delayed or lack  
          of complete payment, filing bankruptcy or fleeing  
          California to avoid paying amounts due, encouraging  
          noncompliance with safety requirements, and coercing dump  
          truck owners into accepting lesser payment amounts after  

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          the dump truck owner has provided services.

          The author introduced this bill to assist in the timely  
          payment of dump truck operators who are hired by  
          construction trucking brokers.  Because these dump trucker  
          owners are not subcontractors on the construction job, they  
          do not have lien rights and have little recourse when they  
          are underpaid or not paid at all.  This bill requires  
          brokers of construction trucking services to obtain a  
          $15,000 surety bond to ensure they are adequately solvent  
          to meet their contractual obligations, and it also creates  
          a rebuttable presumption in favor of the dump truck  
          operator if there is a civil action filed due to lack of  
          payment.

          In addition, this bill addresses a loophole in existing law  
          under which motor carriers of property must obtain written  
          certification that their subcontractors hold valid motor  
          carrier permits.  This requirement does not, however, apply  
          to brokers of construction trucking services if they do not  
          own dump trucks or are not acting in a motor carrier  
          capacity when brokering these services.  The author  
          introduced this bill to address this loophole by extending  
          the same mandate to construction trucking brokers.   
          Proponents assert that holding brokers to the exact same  
          standards as motor carriers is important for public safety  
          as it assures that dump trucks are permitted and have  
          passed the related inspection.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

           SUPPORT  :   (Verified  8/4/10)

          California Dump Truck Association (source)


           ASSEMBLY FLOOR  : 
          AYES:  Adams, Ammiano, Anderson, Arambula, Beall, Bill  
            Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,  
            Brownley, Buchanan, Caballero, Charles Calderon, Carter,  
            Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,  
            DeVore, Duvall, Emmerson, Eng, Evans, Feuer, Fletcher,  
            Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,  

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            Garrick, Gilmore, Hagman, Hall, Harkey, Hayashi,  
            Hernandez, Hill, Huber, Jeffries, Jones, Knight,  
            Krekorian, Lieu, Logue, Bonnie Lowenthal, Ma, Mendoza,  
            Miller, Monning, Nava, Nestande, Niello, Nielsen, John A.  
            Perez, V. Manuel Perez, Portantino, Price, Ruskin, Salas,  
            Saldana, Silva, Skinner, Smyth, Solorio, Audra  
            Strickland, Swanson, Torlakson, Torres, Torrico, Tran,  
            Villines, Yamada, Bass
          NO VOTE RECORDED:  Huffman


          JJA:mw  8/4/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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