BILL ANALYSIS                                                                                                                                                                                                              1





                SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
                                 ALEX PADILLA, CHAIR
          

          AB 2118 -  Butler                                 Hearing Date:  
          June 19, 2012              A
          As Amended:         June 12, 2012            FISCAL       B

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                                      DESCRIPTION
           
           Current law  authorizes the California Public Utilities 
          Commission (CPUC) to regulate any "household goods carrier," 
          defined as a corporation or person that transports for 
          compensation or hire used household goods and personal effects 
          by a motor vehicle over any public highway in this state.

           Current law  prohibits a household goods carrier from operating 
          without a permit issued by the CPUC and meeting requirements 
          that include showing financial and safety fitness and residency, 
          having adequate insurance, clearing a criminal background check, 
          and complying with operating regulations, including maximum rate 
          tariffs.

           This bill  identifies "broker" as a person engaged by others in 
          the act of arranging for service by a household goods carrier 
          and makes a "broker" subject to the permit requirement.

           Current law  provides various penalties for household goods 
          carriers that violate applicable laws and CPUC rules, including 
          being subject to vehicle impoundment and court action for 
          recovery of customer charges, and being found guilty of a 
          misdemeanor punishable by a fine of not more than $1,000 or 
          three months in county jail, or both, or, for a willful 
          violation, a fine of not more than $10,000 or one year in county 
          jail.


           This bill  clarifies that an entity falling within the definition 
          of "household goods carrier," including a "broker," is subject 











          to all of these penalties regardless of whether it has obtained 
          a permit and also maintains the failure to obtain a permit as a 
          separate violation.


           This bill  increases these fines from a maximum of $1,000 to 
          $2,500 and requires that the fine for a violation that involves 
          operating or holding oneself out as a household goods carrier 
          without a permit be not less than $1,000.


           This bill  authorizes the CPUC to suspend or revoke a household 
          goods carrier's permit, or assess a fine up to $2,500, for 
          unauthorized use of another person's or corporation's trademark 
          and authorizes the CPUC to assess an additional amount to cover 
          the reasonable expense of CPUC investigation to verify the 
          trademark infringement.


           This bill  requires every household goods carrier to add a 
          prominent link to its Internet Web site that immediately directs 
          all consumers to the CPUC's Internet Web site related to 
          protection for consumers of moving companies and household goods 
          carriers.


           Current law  authorizes the CPUC to seek the termination of 
          telephone service of a household goods carrier operating without 
          a permit.


           Current law  prohibits a telephone corporation from releasing 
          subscriber information without customer consent except in 
          specified circumstances.


           This bill  authorizes the release, without customer consent, of 
          the name and address of a subscriber whose telephone number is 
          being use by a household goods carrier operating without a 
          permit.


           Current law  establishes various requirements related to 
          household goods carriers' records, customer contracts, 










          signatures, insurance, and other documentation.


           This bill  would require the CPUC to adopt rules for meeting 
          these requirements with electronic records.

                                      BACKGROUND
           
          According to the CPUC, sponsor of this bill, consumers who hire 
          a household goods carrier that has not obtained a permit are 
          potentially subject to excessive charges, uninsured losses, and 
          other service problems.  Carriers operating without a permit 
          have an unfair cost advantage over permitted carriers because 
          they maintain inadequate liability and workers' compensation 
          insurance, which is a substantial expense for lawful operators.  
          As a consequence, carriers who obtain a permit and comply with 
          the rules lose business to the violators, which in turn, makes 
          it more difficult for them to fully comply with insurance and 
          safety standards, all to the detriment of consumers.

          The CPUC states that its enforcement staff receives many 
          complaints about carriers without permits, many from licensed 
          carriers or the California Moving and Storage Association, an 
          industry trade group.  Stopping the violators is difficult, the 
          CPUC states, because of the relative anonymity afforded by 
          Internet advertising and because many claim to be operating only 
          as a "broker" and not subject to permit requirements.  
          Unsuspecting customers are frequently subject to abusive 
          practices such as "holding goods hostage" - refusal to deliver 
          goods until the customer pays additional charges not disclosed 
          when the service was arranged.  

                                       COMMENTS
           
              1.   Author's purpose  .  According to the author, this bill 
               "is designed to allow the CPUC greater ability to stop 
               illegal moving companies who are preying on unknowing 
               consumers."  

              2.   Investigating Trademark Infringement  .  A provision in 
               this bill as approved by the Assembly made a household 
               goods carrier subject to a penalty of not more than $5,000 
               per day for falsifying licensure, membership in an 
               association, or location.  The author states that this was 










               to address the problem of carriers fraudulently holding 
               themselves out to the public as a member of a moving 
               association that operates lawfully.  The current version of 
               the bill deleted this provision and instead authorizes the 
               CPUC to investigate trademark infringement and makes use of 
               an infringing trademark subject to a fine not to exceed 
               $2,500.  However, recognizing that the CPUC does not have 
               expertise in trademark infringement, the author has agreed 
               to delete the trademark provision and revert to the prior 
               language.  Thus, the author and committee may wish to 
               consider amending the bill to delete the new trademark 
               provisions on page 7, lines 18 to 29, and reinstate the 
               provisions in strikeout on page 7, lines 15 to 18.

              3.   Electronic Records Rulemaking  .  This bill requires the 
               CPUC to adopt rules permitting electronic transactions, 
               including electronic signatures and electronic 
               transmission, completion, and execution of forms, contracts 
               and documents.  This provision further states that 
               requirements pursuant to Public Utilities Code Sections 
               5142, 5143, 5221, 5223, 5224, and 5225 related to written 
               forms and documents, information booklet, document storage, 
               signatures, "and the like" may be satisfied by complying 
               with the new rules the CPUC is required to adopt for 
               electronic transactions.

               This provision is both exceedingly broad and at the same 
               time vague in referring to "and the like."  Moreover, 
               current law in Section 5223 provides that the CPUC "may 
               prescribe the forms of any account, records, and memoranda, 
               including those pertaining to the movement of traffic and 
               the receipt or expenditure of money, to be kept by 
               household goods carriers, and the length of time the 
               accounts, records, and memoranda shall be preserved."  
               Thus, the CPUC has existing authority to prescribe the form 
               of required records and could undertake a rulemaking to 
               prescribe an electronic form of these records.  
               Accordingly, the author and committee may wish to consider 
               amending the bill to delete Section 4.

              4.   Technical Amendments  .  This bill needs two technical 
               amendments to achieve the author's purpose.  First, the 
               bill adds a definition of "broker" with the goal of making 
               a broker of household goods carrier service subject to the 










               same permit requirement as the actual provider of this 
               service.  Instead, the definition of "household goods 
               carrier" should be amended to include a broker.  Second, 
               this bill also adds to the definition of "household goods 
               carrier" a reference to "licensed or unlicensed" with the 
               goal of ensuring that an entity that falls within the 
               definition of household goods carrier is required to comply 
               with applicable requirements regardless of whether it has 
               obtained a permit, although that also is a separate 
               violation.  This reference should be to a carrier operating 
               with or without a permit, rather than a license.  

                                    ASSEMBLY VOTES
           
          Assembly Floor                (70-0)
          Assembly Appropriations Committee  (17-0)
          Assembly Utilities and Commerce Committee                      
          (14-0)

                                       POSITIONS
           
           Sponsor:
           
          California Moving and Storage Association
          California Public Utilities Commission

           Support:
           
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          |21st Century Van Lines, Inc.    |Main Street Moving & Storage    |
          |Ace Relocation Systems, Inc.    |Metropolitan Van & Storage,     |
          |Advantage Moving & Storage      |Inc.                            |
          |Andy's Transfer & Storage       |Monument Moving & Storage       |
          |Atlas Transfer & Storage        |Mother Lode Van & Storage, Inc. |
          |Company                         |Move Pros                       |
          |Best Moving Service, Inc.       |Movers Supply Brokerage, Inc.   |
          |Beverly Hills Transfer &        |Nor-Cal Moving Services         |
          |Storage                         |North Bay Moving & Storage      |
          |Blue Chip Moving & Storage,     |Oakley Relocation               |
          |Inc.                            |One Big Man & One Big Truck     |
          |CDS Moving Equipment, Inc.      |Ortiz Bros. Moving & Storage    |
          |California Moving Systems       |Paul Hanson Partners            |
          |Cardinal Van & Storage          |Poulos Moving Systems, Inc.     |
          |California Relocation Service,  |Priority Moving, Inc.           |










          |Inc.                            |Qualex Inc.                     |
          |Careful Moving & Storage        |Redwood Moving & Storage        |
          |Chipman Moving & Storage        |Roseville Van & Storage, Inc.   |
          |Colonial Van & Storage, Inc.    |San Diego Van & Storage Company |
          |Crown Moving & Storage          |Santa Rosa Moving & Storage     |
          |Dewitt Companies of California  |Company                         |
          |Earl Farnsworth Express         |Seniors On The Move, Inc.       |
          |Ernie's Van & Storage           |Stadler & Jensen Moving         |
          |EXCEL Moving Services           |Starving Students               |
          |E-ZMOVE Moving Services         |State Council for Independent   |
          |G&H Moving & Storage Company    |Living                          |
          |Galbraith Van & Storage         |Sterling Van Lines              |
          |Company, Inc.                   |Unipack Global Relocation       |
          |Golden Eagle Moving Services    |Services                        |
          |Golden Gate Moving & Storage    |Vandenberg Van & Storage, Inc.  |
          |Company                         |VIP Transport                   |
          |Hi Desert Moving & Storage      |Walton Family Moving &          |
          |Johnson Storage & Moving        |Storage                         |
          |Lompoc Van & Storage, Inc.      |                                |
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           Oppose:
           
          None on file

          







          Jacqueline Kinney 
          AB 2118 Analysis
          Hearing Date:  June 19, 2012