BILL ANALYSIS
AB 2572
Page 1
Date of Hearing: April 12, 2010
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Steven Bradford, Chair
AB 2572 (Bradford) - As Introduced: February 19, 2010
SUBJECT : Charter-party carriers of passengers.
SUMMARY : Expands the definition of a charter-party carrier to
include any person, or entity engaged in providing
transportation service where the vehicle is rented and is
operated by a for-hire driver. In addition, it eliminates the
three-year permit renewal requirement for charter-party
carriers, and imposes additional enforcement provisions to allow
the California Public Utilities Commission (CPUC) to exercise
more diligent enforcement techniques. Specifically, this bill:
1)Expands the existing definition of a charter-party carrier of
passengers to include any person, corporation, or other entity
engaged in the provision of either a hired driver services, or
a rented motor vehicle that is being operated by a hired
driver.
2)Deletes the 3-year permit or certificate renewal requirement
for charter-party carriers.
3)Increases the permit or certificate filing fee for certain
classes of vehicles from $500 to $700.
4)Authorizes the CPUC to cancel, revoke, or suspend any
charter-party carrier operating permit or certificate for
failure of a permit or certificate holder, or any of its
employees, to follow any order, decision, rule, regulation,
direction, demand, ordinance, or other requirement established
by the governing body of an airport, including solicitation
practices.
5)Deletes a provision that restricts a police officer from
impounding a vehicle used by a charter-party carrier who
operates in violation of the law, if the person is within 100
feet of a public airport or within two miles of the
international border between the United States and Mexico.
6)Requires the return of an impounded vehicle to the owner after
all impoundment fees are paid when the vehicle is seized due
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to a violation of a person other than the owner of the
vehicle.
EXISTING LAW :
1)Article XII of the California Constitution:
a) Establishes private corporations and persons that own,
operate, control, or manage a line, plant, or system for
the transportation of people or property, and common
carriers, as public utilities subject to control by the
Legislature.
b) Allows the CPUC to fix rates and establish rules for the
transportation of passengers and property by transportation
companies.
2)The Public Utilities Code:
a) Requires every application for a charter-party carrier
certificate, permit, or renewal to be accompanied by a
specified fee and adequate evidence of reasonable fitness
and financial responsibility.
b) Limits the term for a charter-party carrier permit or
certificate to three years.
c) Requires each application for a charter-party carrier of
passengers permit or certificate shall be accompanied by a
filing fee of $1,500 for a new Class A certificate and $500
for a renewal, and $500 for Class B and C certificates, and
permits, new and renewal.
d) Requires the CPUC to deny the application for a new
permit or certificate or renewal upon written
recommendation from the California Highway Patrol (CHP)
that the application be denied for specified reasons, and
requires the CPUC to provide the charter-party carrier
written notice and hold a hearing to allow the carrier to
show cause why the denial was improper or unwarranted.
FISCAL EFFECT : Unknown.
COMMENTS : According to the author, the purpose of this bill is
to increase public safety and consumer protections by providing
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the CPUC greater authority to enforce charter-party carrier
laws. In addition, Avis, a well-known rental car company, would
like to implement a program in California where it hires drivers
to drive Avis cars as a limousine-for-hire service. Avis has
successfully tested this business model on the East Coast and
would like to expand that service California. The author would
like to ensure the state's rigorous charter-party carrier laws
capture this new business arrangement.
1) Charter-party carriers : Charter-party carriers are rented
as an entire vehicle and transport passengers on a prearranged
basis. Some examples include limousines and chartered buses for
tours or events.
Charter-party carriers are regulated by the CPUC pursuant to the
Passenger Charter-Party Carriers' Act (Public Utilities Code
Section 5351). Carriers operate under one or more of the
various types of permits and certificates issued by the CPUC.
There are three categories of certificates (designated Class A,
B, and C) and three categories of permits (designated P, S, and
Z). The certificates and permits authorize different kinds of
transportation services or limit the size of the vehicle that
may be operated. Approximately 5,600 carriers hold one or more
certificates and permits.
2) Who is not covered : The California Public Utilities code is
silent when the prearranged travel is divided between two
entities - the vehicle and the driver. Although service to the
public appears to be the same, CPUC regulation and public safety
assurance can be avoided because the vehicle can be recognized
as a licensed charter-party carrier vehicle, while the driver
could be operating the vehicle illegally as an unrecognized
charter-party carrier driver. AB 2572 expands the definition of
charter-party carrier to capture this business practice. This
committee may wish to further require that when the hired driver
is utilizing a rented vehicle to provide the chauffeured
transportation, the vehicle owner shall provide insurance
coverage. This committee may wish to further add the
requirement that the driver possess a current and appropriate
license to drive in the State of California.
3) Who's kicking the tires : Current law requires applicants
for a charter-party carrier permit or certificate to establish
reasonable fitness and financial responsibility. Current law
also prescribes specific requirements for vehicle maintenance
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and safety standards, driver screening and training, controlled
substance and alcohol testing, and workers' compensation
insurance.
Sponsor of the bill, California Livery Association mentions
that, "the elimination of the three-year renewal does not
eliminate an opportunity for a public entity, such as an
airport, to submit concerns or object to a 'bad' charter-party
carrier having their license renewed with the CPUC. Any public
entity or member of the public can submit evidence and file a
complaint with the CPUC against a charter-party carrier at any
time. The three-year renewal has no connection to complaints."
The CPUC uses the CHP to investigate vehicle fitness compliance
during the renewal process and relies on the existing CHP
process. When carriers apply to renew their permits, they must
provide CHP inspection reports; however, the CPUC states that
they do not need to see these again because the CHP inspects the
vehicles and notifies the CPUC within one month if the vehicle
does not comply with safety standards.
The CHP is required to inspect any maintenance facility or
terminal of any bus operator at least once every 13 months
("bus" includes any vehicle that carries more than 10 persons,
including stretch limousines and mini-vans). When conducting
the bus terminal inspections, the CHP not only physically
inspects the vehicles (in a large fleet, the CHP inspects a
sample), it also inspects the operator's vehicle maintenance
logs, driver service logs, and participation status in the DMV's
pull notice program. The CHP inspects a different class of
charter-party carriers (School Pupil Activity Buses) once a
year. Each vehicle is inspected manually and more stringent
requirements are required on driver qualifications.
The CPUC requires all carriers to maintain a current equipment
list with the CPUC. Any time the carrier retires a vehicle or
adds a vehicle to its fleet, it must update its equipment list
at the CPUC and the CPUC should receive inspection reports from
the CHP. The CPUC shares the fleet information with the
carrier's liability insurer, and if there are any discrepancies
between the equipment list and liability insurance coverage, the
CPUC may suspend and fine the carrier for a first occurrence and
revoke their permit to operate thereafter. If investigated by
the CPUC and found to have violated the requirements of vehicle
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and financial fitness, the CPUC can suspend or revoke their
permit to operate.
4) Who's ensuring compliance with employment laws : According
to the CPUC, they do not investigate safety education and
training compliance when a carrier files for an initial
certificate or permit, and it does not require records when a
carrier renews.
The CPUC is required to ensure that the company has a safety
education and training program in effect for all employees.
Carriers with gross revenues exceeding $350,000 annually must
file a report listing their employees. The CPUC shares that
information with the carrier's workers' compensation insurer,
and if there are any discrepancies, the CPUC may suspend, fine
and revoke the carrier's permit to operate. In addition to
these steps, both liability insurance carriers and workers'
compensation carriers are required to notify the CPUC when a
charter-party carrier's insurance has lapsed or been cancelled.
5) Who's watching out for the consumer : The CPUC states that
the current renewal process does not provide greater consumer
protection. The CPUC audits the carrier's compliance when
conducting investigations triggered by consumer complaints,
industry complaints, law enforcement complaints, notice of
lapsed or cancelled insurance policies, or any other means of
notice to the CPUC of a carrier's non-compliance with the law.
The California Airports Council is concerned about the repeal of
the 3-year renewal process and believes that repealing the
3-year renewal process would compromise consumer protections and
public safety. By repealing this section, once a license is
granted, the Airports Council believes it will remain valid
indefinitely with no further CPUC review. The Airports Council
states, "Public Utilities Code Section 5374 delineates a series
of factors the CPUC must review and examine prior to licensure
or renewal of a charter party carrier, including financial
condition, adherence to hours of service regulations,
preventative maintenance of fleet vehicles, driver record
reviews, safety and training of drivers, and vehicle safety. AB
2572 would result in none of these factors ever being reviewed
again by the CPUC once the original license is granted. In the
ongoing air travel security environment that airports are
required by the federal government to maintain, eliminating
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periodic state oversight of the charter-party carrier industry
jeopardizes the safety and security of the flying public. We
strongly oppose this provision and urge retention of current
law, at a minimum."
6) Who is communicating : The Airports Council voiced concern
that once they file a complaint with the CPUC, that they don't
know whether the complaint was investigated and the results of
the investigation. According to the CPUC, the current process
for receiving complaints from airport personnel and following up
with the complainant is not a formal process. CPUC staff
believes this process can be more formal by requiring that
airport personnel file informal complaints in the same manner as
members of the public. This process requires the completion of a
complaint form that is then entered into the Transportation
Informal Complaint Tracking System (TICTS). These complaints can
be tracked by CPUC staff and airports will receive feedback on
the resolution of the complaint when the investigation is
completed.
RELATED LEGISLATION:
AB 1310 (Leno) Chapter 701, Statutes of 2007, streamlined the
CPUC's regulation and investigation procedures of charter-party
carriers. At that time, the CPUC wanted to transfer the
responsibility of licensing these entities to the DMV. The CPUC
claimed that this transfer would comply with federal law.
However, the California Constitution requires the CPUC to
regulate and set rates for charter-party carriers. The
Legislature denied the CPUC request to transfer responsibility.
In 2008, this committee heard AB 2985 (Duvall), which would have
eliminated the 3-year permit and certificate renewal process and
proposed to eliminate or reduce a number of other requirements.
This committee amended AB 2985 by deleting the contents of the
bill, and instead, required the Legislative Analyst to conduct a
programmatic audit and comprehensive review of the charter-party
carrier programs and to recommend any statutory modifications to
these programs, taking into account the goals of reducing
regulatory burdens, while ensuring consumer protection and
public safety. The audit was never completed because the author
dropped the bill.
In order to ensure the public safety and consumer protection
provisions in this bill are retained, this committee may wish to
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amend the bill to retain current law with regard to the permit
and certificate renewal frequency and retain the current filing
fees.
ADDITIONAL AMENDMENTS :
The sponsor of the bill requested this committee to adopt
uncodified legislative intent language. The committee may wish
to adopt the following: (1) It is the intent of the Legislature
that the commission have access to "real time" information on
licensed charter-party carrier drivers by utilizing information
that is contained in the DMV's "Pull Notice" program. (2) It is
the intent of the Legislature that the commission create an
on-line renewal process for charter-party carriers and a renewal
process that is administratively efficient.
REGISTERED SUPPORT / OPPOSITION :
Support
The Livery Association (sponsor)
Opposition
California Airports Council
San Francisco International Airport (SFO)
Analysis Prepared by : Gina Adams / U. & C. / (916) 319-2083