BILL ANALYSIS                                                                                                                                                                                                    

                              Senator Ben Hueso, Chair
                                2015 - 2016  Regular 

          Bill No:          SB 541            Hearing Date:    4/27/2015
          |Author:    |Hill                                                 |
          |Version:   |4/6/2015    As Amended                               |
          |Urgency:   |No                     |Fiscal:      |Yes             |
          |Consultant:|Nidia Bautista                                       |
          |           |                                                     |
          SUBJECT: Public Utilities Commission:  for-hire transportation  
          carriers:  enforcement

            DIGEST:    This bill proposes a suite of requirements of the  
          California Public Utilities Commission (CPUC) in an effort to  
          strengthen the agency's overall program and enforcement of  
          for-hire transportation carriers. The bill also expands  
          enforcement authority to other peace officers in addition to the  
          California Highway Patrol. 

          Existing law:
            1)  Establishes the CPUC with five members appointed by the  
              governor and confirmed by the Senate and empowers it to  
              regulate privately owned public utilities and common  
              carriers in California.  Specifies that the Legislature may  
              prescribe that additional classes of private corporations or  
              other persons are public utilities.  (Article XII of the  
              California Constitution; Public Utilities Code 301 et seq.)

            2)  Establishes the CPUC's authority to regulate, require  
              license or permit to operate, require insurance and workers  
              compensation, take appropriate enforcement action and other  
              provisions related to passenger stage corporations. (Public  
              Utilities Code 1031 et seq) and transportation  
              charter-party carriers (Public Utilities Code 5351).

            3)  Establishes the CPUC's authority to regulate private  
              carriers of passengers (Public Utilities Code 4001) and  


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              household goods carriers (Public Utilities Code 5101)  
              including requiring public liability and property insurance,  
              cargo insurance, knowledge of rates, documentation, timely  
              reporting of revenues and payment fees, and provides that  
              the CPUC can take appropriate enforcement action, etc. 
            4)  Provides the California Highway Patrol (CHP) with the  
              ability to take enforcement action related to requirements  
              of buses of charter-party carriers as required by the Public  
              Utilities Code, including ensuring a proper and current  
              license or permit from the CPUC. (Vehicle Code 14602.9)

          This bill:

            1)  Requires the CPUC, in consultation with the Department of  
              Human Resources, to develop a comprehensive human resources  
              plan for the TEB of the CPUC's Safety and Enforcement  
              Division. The plan shall focuses on staff development,  
              management practices, and leadership, including policies to  
              adequately train and retain employees.
            2)  Requires the CPUC to implement a program to monitor the  
              performance of the TEB, including tracking the timeliness in  
              resolving applications for permits and certificates and  
              ensuring appropriate enforcement actions. 

            3)  Requires the CPUC to develop a comprehensive strategy to  
              detect, deter, and take enforcement actions against  
              charter-party carriers of passengers, passenger stage  
              corporations, and household goods carriers that are  
              operating illegally. Directs the CPUC to coordinate these  
              activities with state and local law enforcement, where  
              possible. Details several strategies, including the use of  
              strike-force enforcement at special events, a formal  
              complaints process, enforcement actions for illegally  
              operating carriers, coordination with relevant state  
              agencies, and other strategies. 

            4)  Requires the CPUC to develop and implement a plan to  
              improve technology capabilities to enhance customer service  
              at the TEB that facilitate complete online application and  
              renewal, vehicle registration, vehicle insurance compliance  
              and consumer complaints. Directs the CPUC to streamline the  
              way carriers submit information, reports, and applications.  
              Requires CPUC to ensure that staff of TEB are available by  
              phone during normal business hours to respond to questions.


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            5)  Requires the CPUC to meet annually with the industry  
              associations regulated by TEB to coordinate efforts to  
              improve customer service and enforcement.

            6)  Requires the CPUC to develop a budget plan for the TEB to  
              ensure that revenues and expenditures are appropriately  
              aligned, with detailed information regarding categorizing  
              revenues and expenditures by carrier type and enforcement  

            7)  Requires the CPUC to report to the Legislature on  
              implementation by January 1, 2017, and by January 1,  

            8)  Defines a peace officer to include local city or county  
              police officer or sheriff, CHP officer, or airport law  
              enforcement officer. Provides that peace officers, as  
              defined, can enforce Public Utilities Code related to  
              carriers, including the ability to arrest violators and  
              impound vehicles lacking proper certificates or permits. 

            9)  Directs the CPUC to coordinate enforcement with those  
              peace officers by providing educational outreach and  
              establishing lines of communication to ensure the CPUC is  
              notified if enforcement actions have commenced. 

            10) Provides that peace officers, as defined, can assist in  
              enforcement cases related to provisions regarding carriers  
              in Public Utilities Code which are executed by the Attorney  
              General, a district attorney, or city attorney.


          Since its inception in 1911 (then as the Railroad Commission),  
          the CPUC has regulated private companies and individuals that  
          own, operate, control or manage transportation of people and  
          property. Until 1995, with passage of federal trucking  
          deregulation laws, the CPUC licensed and regulated many types of  
          carriers transporting commodities over public highways within  
          California. Currently, the CPUC's remaining authority is limited  
          to non-rail passenger carriers and household goods movers. Under  
          state law, the CPUC is required to license carriers, and  
          investigate and enforce safety and consumer protection laws for  
          the following surface transportation carriers:


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          Passenger Stage Corporations (PSCs) - for-hire carriers  
          transporting passengers over public highways on an  
          individual-fare basis. Examples include: Greyhound bus service  
          and airport shuttles.

          Transportation Charter-Party Carriers (TCPs) - operate under the  
          direction and control of their chartering party that arranges  
          the transportation, on a prearranged basis. Examples include  
          tour buses, limousines, and transportation network companies,  
          including Uber, Lyft, and Sidecar.

          Private Carriers of Passengers (PCPs) - includes not-for-hire  
          motor carrier transporting passengers in buses (vehicles seating  
          10 or more) that are required to obtain a "CA number" from CHP. 

          Household Goods Carriers - includes for-hire moving companies. 

          The work to license, enforce and ensure safety of these carriers  
          is done through the CPUC's TEB within the Safety and Enforcement  
          Division with approximately 45 authorized staff positions. The  
          CPUC is responsible for issuing operating permits and  
          certificates (operating authority) to qualified applicants for  
          authority to operate as passenger stage corporations,  
          charter-party carriers of passengers, and household goods  
          carriers, and for denying, suspending and revoking operating  
          authorities of such carriers that fail to meet statutory and  
          regulatory requirements. This work is performed by the  
          Transportation License Section, the Transportation and  
          Enforcement Section. The 45 authorized staff positions in TEB  
          are spread evenly between licensing (14 staff), enforcement  
          section-north (15 staff) and enforcement section-south (15  

           Type of Carrier                              No. Permitted        
               Charter-party carriers of passengers8,942
               Private carrier of passengers           1,310
               Household goods carriers                1,077
               Passenger stage corporations               262
          In response to a request by the Joint Legislative Budget  
          Committee, the State Auditor developed and released a report in  
          June 2014 concerning the CPUC's TEB's efforts to regulate  
          passenger carriers, as well as its use of fees it collects from  


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          these carriers. The report concluded that the "branch does not  
          adequately ensure that passenger carriers comply with state  
          law." The Auditor's report cited 17 areas within TEB's efforts  
          that are lacking and merit improvement, including:
                 A lack of procedures for processing complaints.
                 Failure to complete investigations and issue  
               corresponding citations in a timely manner.
                 Failure to conduct adequate investigations.
                 Imposing penalties for lower amounts than state law  
                 Inconsistency regarding collecting money from passenger  
               carriers for citations.
                 Not adequately overseeing accounting related to the  
                 Not ensuring that passenger carrier fee payments are  
                 Not aligning revenues and expenditures associated with  
               passenger carriers as state law requires.
                 Lack of managerial oversigh, which led to incorrect  
               funding of transportation enforcement positions.
                 Incorrectly funded and used positions authorized in the  
               state budget for enforcement of passenger carriers at  
                 Failure to use the new positions for airport enforcement  
               as the legislature intended.
                 Limited efforts to implement an airport enforcement  
               program at other major airports.
                 Lack of internal controls and high turnover have led to  
               inadequate enforcement across the state.
                 Leadership within the branch has been lacking.
                 High management turnover for several years.
                 Failure to ensure staff receive adequate training.
                 Unprepared to handle additional responsibilities.

          The Auditor's report also provided a series of recommendations  
          to address the many failures and shortcomings and to improve the  
          TEB's efforts to ensure carrier and public safety. The  
          recommendations include:
                 Develop policies and procedures for receiving complaints  
               and investigating passenger carriers, ensuring all  
               complaints are entered into a database. 
                 Establish a method for prioritizing complaints and  
               implement a policy specifying the maximum amount of time  
               between the receipt of a complaint and the completion of  
               the subsequent investigation. 


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                 Require the TEB management to monitor and report  
               regularly on its performance to the CPUC agency management  
               and commissioners.
                 Establish standards specifying the types of evidence  
               that CPUC considers sufficient to determine whether a  
               carrier is operating legally.
                 Implement a policy that directs investigators to obtain  
               sufficient evidence to justify determinations.
                 Require investigators to review passenger carriers for  
               compliance with each state law relating to passenger  
               carrier requirements.
                 Implement a formal training program to ensure that all  
               investigators have adequate knowledge and skills related to  
               regulating passenger carriers.
                 Create a system to determine when a carrier merits a  
               penalty and the magnitude of the penalty and ensure it is  
               more consistent with what state law permits.
                 And several other recommendations.

           Is the CPUC the Right Agency to Regulate Transportation-Related  
          Efforts? - In consideration of the many challenges the agency is  
          facing, the question must be raised as to whether the CPUC is  
          the right state agency to oversee transportation-related  
          efforts. After federal deregulation of trucking, the CPUC's  
          corresponding staffing and resources, including investigators,  
          were largely eliminated. Today, the CPUC is struggling to keep  
          up with existing demands, as well as new challenges that have  
          emerged, such as addressing transportation network companies,  
          like Uber, Lyft and Sidecar. Moving the transportation-related  
          efforts at the CPUC may be limited by constitutional  
          requirements. However, the legislature may wish to more deeply  
          explore the question with other relevant legislative committees  
          and agencies.
           Is a bill needed? - The CPUC already has authority to institute  
          the recommendations in the Auditor's report and most of the  
          proposals in this bill. In response to the Auditor's report, the  
          CPUC acknowledged its agreement with many of the findings and  
          recommendations. The agency is taking action to respond to the  
          recommendations, such as developing a strategic plan for the  
          branch and others. However, the agency still has a long way to  
          go. Therefore, additional direction from the legislature is  
          warranted, particularly related to reporting on its performance.  


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          Do the agencies have the right tools? - Expanding authority for  
          enforcement to include local law enforcement authorities makes a  
          lot sense in theory. However, there are currently technological  
          challenges to provide the CHP the ability to ensure the most  
          current information regarding the status of CPUC permit or  
          license. More work is needed, much of which is detailed in SB  
          541, to provide all the necessary agencies the appropriate tools  
          to conduct appropriate enforcement. 

          Reporting to the Legislature - The CPUC is already required to  
          provide an annual report to the Legislature by February 1st of  
          each year. The author and committee may wish to amend the bill  
          to align the reporting requirements with the annual report  
          deadline, February 1st of each year.

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


          Greater California Livery Association


          None received 



          The author states that the CPUC's Transportation Enforcement  
          Branch requires further direction from the Legislature to  
          improve its functions. SB 541 is a proposal to ensure the CPUC  
          is focusing its efforts appropriately to ensure safety and  
          improved customer service and enforcement of illegally operating  
          limousines, buses, and moving companies.

                                      -- END --


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