BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2572
                                                                  Page  1

          Date of Hearing:   April 19, 2010

                        ASSEMBLY COMMITTEE ON TRANSPORTATION
                               Bonnie Lowenthal, Chair
                AB 2572 (Bradford) - As Introduced:  February 19, 2010
           
          SUBJECT  :  Charter-party carriers of passengers

           SUMMARY  :  Modifies provisions related to charter-party carriers  
          of passengers.  Specifically,  this bill:

           1)Expands the definition of a "charter-party carrier of  
            passengers" (charter-party carrier) to include any person, or  
            entity engaged in providing either a hired driver or a rented  
            motor vehicle operated by a hired driver.  

          2)Deletes provisions limiting the term of a charter-party  
            carrier operating permit or certificate to three years,  
            thereby making the permits or certificates valid indefinitely;  
            amends related provisions accordingly, including the  
            associated fee structure that increases new permit fees from  
            $500 to $700.  

          3)Authorizes the California Public Utilities Commission (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.  

          4)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.  

          5)Requires the return of an impounded vehicle to the owner after  
            all impoundment fees are paid when the vehicle is seized due  
            to a violation of a person other than the owner of the  
            vehicle.  

           EXISTING LAW  :  

          1)Prohibits a charter-party carrier from engaging in  








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            transportation services subject to regulation by CPUC without  
            obtaining a specified permit or certificate from CPUC.  

          2)Limits the term for a charter-party carrier permit or  
            certificate to three years.  

          3)Sets forth a rate schedule for charter-party carrier permit or  
            certificate applications depending on the class of vehicle  
            being operated, as follows:

             a)   Class A certificates: $1,500 new or $500 renewed;

             b)   Class B certificates: $500 for both new and renewed;

             c)   Class C certificates:  $500 for both new and renewed;

             d)   Permits:  $500 for both new and renewed.

          4)Requires CPUC to deny the application for a new or renewed  
            permit or certificate upon a written recommendation from the  
            California Highway Patrol (CHP) that the application should be  
            denied for specified reasons, and requires CPUC to provide an  
            appeal process.

          5)Pursuant to the California Constitution, 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 that are  
            subject to control by the Legislature; allows CPUC to fix  
            rates and establish rules for the transportation of passengers  
            and property by transportation companies.

           FISCAL EFFECT  :  Unknown

           COMMENTS  :  According to the author, the purpose of this bill is  
          to increase public safety and consumer protections by providing  
          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 to California.  The author  
          would like to ensure the state's rigorous charter-party carrier  
          laws capture this new business model by expanding the definition  
          of charter-party carrier.  








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           Charter-party carriers for-hire drivers  :  Charter-party carriers  
          are rented as an entire vehicle (vehicle and driver) and  
          transport passengers on a prearranged basis.  Some examples  
          include limousines and chartered buses for tours or events.   
          Currently, for the chartered buses and limousines, the law  
          prescribes specific requirements for vehicle maintenance and  
          safety standards, driver screening and training, controlled  
          substance and alcohol testing, workers' compensation insurance,  
          and fitness and financial responsibility.  However, the law is  
          ambiguous wherein a hired driver operates a rented vehicle under  
          separate travel agreements.  This bill intends to clarify this  
          situation.  

           Charter-party carrier three-year operating permit  :  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 and safety standards,  
          driver screening and training, controlled substance and alcohol  
          testing, and workers' compensation insurance.  The law also  
          requires a carrier to renew their operating permit every three  
          years.  

          This bill would delete the requirement to renew a permit every  
          three years.  Writing in support of deleting that requirement,  
          the bill's sponsor, the Greater 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 CPUC.  Any public  
          entity or member of the public can submit evidence and file a  
          complaint with CPUC against a charter-party carrier at any time.  
           The three-year renewal has no connection to complaints."  The  
          CPUC also contends 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 CPUC of a carrier's non-compliance  
          with the law.  

          However, writing in opposition to the bill's proposed repeal of  
          the three-year renewal process, the California Airports Council  
          (Airports Council) believes that repealing the three-year  








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          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 contends that  
          the law "delineates a series of factors 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 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 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."  

           Complaint process  :  The Airports Council also voiced concern  
          that once they file a complaint with CPUC, that they don't know  
          whether the complaint was investigated and the results of the  
          investigation.  According to 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. 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 bills  :  AB 1310 (Leno) Chapter 701, Statutes of 2007,  
          streamlined CPUC's regulation and investigation procedures of  
          charter-party carriers.  

          AB 2985 (Duvall, 2008), a similar bill, would have eliminated  
          the three-year permit and certificate renewal process and  
          proposed to eliminate or reduce a number of other requirements.   
          The bill passed out of the Assembly Utilities and Commerce (U &  
          C) Committee on a unanimous vote (13-0) but was later amended  
          and held in the Assembly Rules Committee.

           Transportation Committee amendments  :  This bill was heard in the  








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          U & C Committee on April 12, 2010, and passed out on a unanimous  
          vote of 15-0.  The U & C Committee approved the bill on  
          condition that the amendments would be taken in the Assembly  
          Transportation Committee to:  

          1)Retain the three-year renewal requirement of licensed charter  
            party carriers.  

          2)Require when the hired driver is utilizing a rented vehicle to  
            provide chauffeured transportation, that the hired driver  
            provide insurance coverage and possess a current and  
            appropriate license to drive in the State of California.  

          3)Add intent language to streamline the complaint resolution  
            process.  

          The author intends to take these amendments as author's  
          amendments in the Assembly Transportation Committee today.   
          Although the amendments remove the concerns of the parties  
          opposed to this bill, it may raise the concerns of others, such  
          as Avis, as the for-hire drivers using the Avis limousines would  
          be required to purchase liability insurance.  

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          The Greater California Livery Association (sponsor)  
          California Bus Association

           Opposition 
           
          California Airports Council
          San Francisco International Airport (SFO)
           

          Analysis Prepared by  :   Ed Imai / TRANS. / (916) 319-2093