BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 541 (Hill) - Public Utilities Commission: for-hire transportation carriers: enforcement. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: May 5, 2015 |Policy Vote: E., U., & C. 10 - | | | 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: No | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 26, 2015 |Consultant: Marie Liu | | | | ----------------------------------------------------------------- This bill meets the criteria for referral to the Suspense File. Bill Summary: SB 541 would make a number of changes to the California Public Utilities (CPUC) oversight and enforcement of for-hire transportation carriers. Fiscal Impact: One-time contract costs of $750,000 (special*) to develop an electronic permit program, a human resources plan, an enforcement strategy, and a monitoring protocol. Annual costs of $207,000 (special*) to the CPUC for two years followed by $100,000 annually to manage the contract work and oversee the IT system. Unknown ongoing costs, expected in the millions of dollars, (special*) for a significant increase in positions for additional enforcement and permitting. SB 541 (Hill) Page 1 of ? * Public Utilities Transportation Reimbursement Account. Background: Existing law grants the CPUC the authority to regulate and license or permit passenger state corporations and transportation charter-party carriers. The commission is divided into several divisions, including the Safety and Enforcement Division which has the Transportation Enforcement Branch (TEB). The TEB has authority over non-rail passenger carriers and household goods movers (i.e. moving companies and vans). The term "passenger carriers" is encompassing of several types of carrier including passenger stage corporations, charter-party carriers, and vessel common carriers. A passenger stage corporation provides transportation services on a fixed route, scheduled service or an on-call, door-to-door shuttle-type services like airport shuttles. A transportation charter-party carrier operates under the direction and control of their chartering party and includes services such as tour buses and limousines. Charter-party carriers also include transportation network companies like Uber, Lyft, and Sidecar. And vessel common carriers include commute and tourist ferry service such as in the San Francisco Bay and service to Catalina Island. According to the CPUC's January 2015 zero-based budget, there are nearly 12,000 carriers under the CPUC's jurisdiction. Carriers are required to pay a license fee to the CPUC, which are deposited into the Public Utilities Transportation Reimbursement Account, which funds CPUC's related regulatory activities. In June 2014, the California State Auditor released a report on the CPUC's oversight of passenger carriers. Overall, the audit concluded that, "The Transportation Enforcement Branch (branch) of the California Public Utilities Commission (commission) does not provide sufficient oversight of charter-party carriers and passenger stage corporations (passenger carriers) to ensure customer safety?the branch does not adequately ensure that such passenger carriers comply with state law." The auditor cited 17 areas within the TEB's efforts that are lacking and merit improvement including: SB 541 (Hill) Page 2 of ? A lack of procedures for processing complaints. Failure to complete investigations and issue corresponding citations in a timely manner. Failure to conduct adequate investigations. Inconsistency regarding collecting money from passenger carriers for citations. Not adequately overseeing accounting related to the branch. Lack of managerial oversight, 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 airports. Limited efforts to implement an airport enforcement program at other major airports. Failure to ensure staff receive adequate training. Proposed Law: This bill would make a number of changes to the CPUC's oversight of transportation carriers. Specifically, this bill would: Require 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 focus on staff development, management practices, and leadership, including policies to adequately train and retain employees. Require 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. Require 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. The strategy would be required to include strike-force enforcement actions, a formal process to respond to consumer complaints, and enforcement actions against illegally operating passenger carriers. Require 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, SB 541 (Hill) Page 3 of ? vehicle registration, vehicle insurance compliance and consumer complaints. This bill would direct the CPUC to streamline the way carriers submit information, reports, and applications. The CPUC would be required to ensure that the staff of TEB are available by phone during normal business hours to respond to questions. Require the CPUC to meet annually with the industry associations regulated by TEB to coordinate efforts to improve customer service and enforcement. Require 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 activities. Require the CPUC to report to the Legislature on implementation by January 1, 2017, and by January 1, thereafter. Allow a peace officer to enforce Public Utilities Code related to carriers, including the ability to arrest violators and impound vehicles lacking proper certificates or permits. "Peace officer" would be defined to include local city or county police officer or sheriff, California Highway Patrol officer, or airport law enforcement officer. Direct 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. Provide 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. Staff Comments: Aside from the bill provisions that expand the persons who may enforce the Public Utilities Code, this bill is largely requiring the CPUC to undertake activities that are within its existing powers and authorities. However, as SB 541 (Hill) Page 4 of ? illustrated by the state auditor's report, these existing powers and authorities are not being utilized effectively. This year, the CPUC released a zero-based budget to the Legislature. In respect to the TEB, the CPUC found that the number of carriers overseen by the CPUC has increased by 224% since 2001 while they have had a 36% decrease in staffing. The average time to process license applications has increased and is currently three months from docketing to issue date with a large variance, partially due to the variable level of application completeness. As part of the formulation of the zero-based budget, the CPUC developed some performance measures and is able to generate simple reports on the number of open applications, license application process times, and other factors. The CPUC also now has the ability to extract performance metrics regarding enforcement as a result of actions taken for the zero-based budget. The CPUC notes that it is working with a 30 year-old information management system. While the zero-based budget indicated that there are more needs in licensing and enforcement in addition to the need for analysts in the TEB, the zero-based budget failed to identify the resources that the CPUC feels is necessary to properly accomplish its mission in this area. This bill, by requiring specific actions of the CPUC, has brought forward budget needs that may be existing. However, as this bill is making certain actions mandatory, these costs, at least in part, are appropriately attributable to this bill, especially the planning and IT activities. Specifically, the CPUC believes it would need a one-time contract to develop the human resources plan, monitoring program, and enforcement strategy required under the bill plus one limited term position to oversee the contract for an annual cost of $107,000, likely for two years. Staff notes that normally such planning and strategy development should be within a department's existing capabilities as it is core to management. However, the CPUC notes that the TEB currently only has one analyst position for the entire branch, severely limiting its planning capabilities. Therefore, the CPUC believes that contracting out this work with a limited-term staff overseeing the contract is the most efficient and effective way of developing the plans and strategies required by this bill. SB 541 (Hill) Page 5 of ? To fulfill the bill's requirement that the CPUC improve its technology capabilities in order to improve customer service and the permit application process, the CPUC anticipates needing a $500,000 information-technology contract that would be overseen by a systems analyst or by a maintenance contractor for an additional $100,000 in ongoing costs. The CPUC notes that it is in the preliminary stages of implementing such an IT upgrade, though no additional budget resources have been allocated for this purpose at this time. This bill would make those IT costs mandatory. To implement the customer service and enforcement changes prompted by this bill to accomplish requirements including ensuring sufficient staff is available to answer phones during business hours, performing strike-force enforcement actions, and providing a written acknowledgement of all complaints, the CPUC anticipates needing 38 new positions at an annual cost of $3.0 million, divided between customer service (8), licensing (5), enforcement (20), and legal and supervisorial needs (5). While the CPUC did not provide specifics on the workload assumptions used to calculate these positions, staff believes it is reasonable to assume that at least some of these positions would be needed to reach the specific requirements of the bill. However, the vast majority of these positions are likely needed to achieve unspecified performance goals of the CPUC that would be prompted by this bill, but are not necessarily required. Therefore it is unclear how many of these positions are a result of the required activities of the bill versus how many positions are needed to make improvements identified by the zero-based budget and audit. Staff notes that the Public Utilities Transportation Reimbursement Account currently has a reserve over $10 million. As such, should this bill be passed, an increase in fees to cover the additional costs imposed by this bill would not be needed for several years. -- END -- SB 541 (Hill) Page 6 of ?