BILL ANALYSIS Ó AB 306 Page 1 Date of Hearing: April 8, 2013 ASSEMBLY COMMITTEE ON TRANSPORTATION Bonnie Lowenthal, Chair AB 306 (Lowenthal) - As Introduced: February 12, 2013 SUBJECT : Vehicles: motor carrier SUMMARY : Requires any business that contracts with a tow operator to obtain proof of a valid motor carrier permit (MCP) before allowing the tow operator to retrieve vehicles from or deliver vehicles to its premises. EXISTING LAW : 1)Prohibits a motor carrier of property from operating on a public highway without a MCP. 2)Requires motor carriers of property to comply with maintenance inspections, carry insurance and workers' compensation coverage, and enroll in a controlled substance and alcohol testing program. 3)Prohibits a person from contracting with or otherwise engaging the services of a motor carrier of property unless the carrier holds a valid MCP. 4)Requires a motor carrier of property to register its carrier identification number with the Department of Motor Vehicles (DMV). 5)Prohibits certain motor carriers of property from subcontracting with or engaging the services of a motor carrier unless that motor carrier holds a valid MCP. 6)Requires a contracted motor carrier of property to provide notification to the person with whom they are under contract if their MCP has been suspended or revoked. FISCAL EFFECT : Unknown COMMENTS : In 1996, the Legislature enacted the Motor Carrier Safety Improvement Act (Act) to ensure that commercial motor carriers meet all of the statutory requirements to safely operate on California's highways. Under the Act, a motor AB 306 Page 2 carrier is prohibited from subcontracting with or engaging the services of another motor carrier unless the contracted motor carrier provides certification of compliance with existing law and regulations including the requirement to hold a valid MCP. Additionally, a contracted motor carrier is required to provide notification to the person with whom they are under contract if their MCP has been suspended or revoked. AB 145 (De Leon) Chapter 429, Statutes of 2010, among other things, addressed a loophole in the Act that allowed motor carriers to engage the services of other motor carriers who may not have a valid MCP. AB 145 closed this loophole by clarifying that construction trucking brokers (who in some cases may not themselves be motor carriers) were also required to ensure that the trucking companies they contract with possess a valid MCP. AB 145, however, did not explicitly address tow operators that deliver and retrieve vehicles. As a result, some tow operators are continuing to operate without a MCP and are able to do so because there is no explicit requirement that they show proof of having a valid MCP before providing transporting vehicles. As a result, some unscrupulous tow operators continue to operate without a valid MCP, placing motorists at risk and undercutting their competition. One example of how this is when storage yards hire tow truck operators to move damaged vehicles from one vehicle storage yard to another. In this situation, a vehicle may be held in a storage yard that has a high daily storage rate and the owner or agent decides to have the vehicle moved to a storage yard with a lower daily storage rate. The storage yard may hire a low cost tow operator to retrieve the vehicle in an effort to save money, but often times these "cut rate" tow operators work cheaply because they are not operating with a valid MCP. Because existing law does not authorize storage yards to check that tow operators have a valid MCP before releasing or accepting a vehicle, there is no mechanism in place to stop these rogue tow operators from doing business. Requiring tow operators to show proof of a valid MCP will result in improved compliance with the MCP program. Improving compliance with the MCP program will increase safety on California's roadways and eliminate the unfair business advantage scofflaws gain by failing to comply with existing law. AB 306 Page 3 Previous legislation : AB 145 (De Leon) Chapter 429, Statutes of 2010, prohibited a construction transportation broker from furnishing construction transportation services to a construction project unless it has secured a security bond of at least $15,000 or from contracting or engaging in the services of motor carrier of property that is out of compliance with existing law. AB 1518 (Assembly Transportation Committee) Chapter 652, Statutes of 1997, among other things, prohibited shippers from contracting with carriers until the carriers provide evidence of proper certification and compliance with Motor Carrier Permit Program. AB 1683 (Conroy) Chapter 1042, Statutes of 1996, put forth the Motor Carrier Safety Improvement Act which acknowledged and conformed state law with the federal preemption of state regulation of rates, routes, and services of motor carriers and transferred the authority for the registration and remaining oversight of motor carriers of property from the Public Utilities Commission to DMV and California Highway Patrol. REGISTERED SUPPORT / OPPOSITION : Support California Tow Truck Association (sponsor) Official Police Garages Association of Los Angeles Personal Insurance Federation of California Opposition None on file Analysis Prepared by : Victoria Alvarez / TRANS. / (916) 319- 2093