BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 541|
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THIRD READING
Bill No: SB 541
Author: Hill (D)
Amended: 6/2/15
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 10-0, 4/27/15
AYES: Hueso, Fuller, Cannella, Hertzberg, Hill, Lara, Leyva,
McGuire, Morrell, Wolk
NO VOTE RECORDED: Pavley
SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/28/15
AYES: Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen
SUBJECT: Public Utilities Commission: for-hire
transportation carriers: enforcement
SOURCE: Author
DIGEST: This bill proposes to strengthen the California Public
Utilities Commission (CPUC)'s oversight of
transportation-related activities by requiring the CPUC to
assess its capabilities related to specific goals and report its
findings to the Legislature. This bill also expands enforcement
authority to other peace officers in addition to the California
Highway Patrol (CHP).
ANALYSIS:
Existing law:
1) Establishes the CPUC with five members appointed by the
Governor and confirmed by the Senate and empowers it to
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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 et
seq.).
3) Establishes the CPUC's authority to regulate private
carriers of passengers (Public Utilities Code §4001) and
household goods carriers (Public Utilities Code §5101 et
seq.) 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 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 to establish specific goals related its
existing authority to provide oversight and regulation of
transportation-related activities of household goods
carriers and charter-party carriers. These goals include
timely processing of applications, enabling electronic
filing of applications, processing of customer complaints,
timely enforcement of illegal operators, and others.
2) Requires the CPUC to assess it capabilities to carry out
the activities enumerated in the specific goals and to
report the Legislature by January 1, 2017, on its
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assessment.
3) 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 the Public Utilities Code related to
carriers, including the ability to arrest violators and
impound vehicles lacking proper certificates or permits.
4) 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.
5) Provides that peace officers, as defined, can assist in
enforcement cases related to provisions regarding carriers
in the Public Utilities Code which are executed by the
Attorney General, a district attorney, or city attorney.
Background
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:
Passenger Stage Corporations - 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 - operate under
the direction and control of their chartering party that
arranges the transportation, on a prearranged basis.
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Examples include tour buses, limousines, and transportation
network companies, including Uber, Lyft, and Sidecar.
Private Carriers of Passengers - 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 Transportation Enforcement Branch
(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 staff).
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
these carriers. The report concluded that the "branch does not
adequately ensure that passenger carriers comply with state
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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 allows.
Inconsistency regarding collecting money from passenger
carriers for citations.
Not adequately overseeing accounting related to the branch.
Not ensuring that passenger carrier fee payments are adequate.
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 airports.
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.
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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:
Developing policies and procedures for receiving complaints
and investigating passenger carriers, ensuring all complaints
are entered into a database.
Establishing a method for prioritizing complaints and
implementing a policy specifying the maximum amount of time
between the receipt of a complaint and the completion of the
subsequent investigation.
Requiring the TEB management to monitor and report regularly
on its performance to the CPUC agency management and
commissioners.
Establishing standards specifying the types of evidence that
CPUC considers sufficient to determine whether a carrier is
operating legally.
Implementing a policy that directs investigators to obtain
sufficient evidence to justify determinations.
Requiring investigators to review passenger carriers for
compliance with each state law relating to passenger carrier
requirements.
Implementing a formal training program to ensure that all
investigators have adequate knowledge and skills related to
regulating passenger carriers.
Creating a system to determine when a carrier merits a penalty
and the magnitude of the penalty and ensuring it is more
consistent with what state law permits.
And several other recommendations.
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Is the CPUC the appropriate 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 appropriate state agency to oversee
transportation-related efforts. After federal deregulation of
trucking, the CPUC's corresponding staffing and resources,
including its 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, such as Uber, Lyft and
Sidecar. Moving the transportation-related efforts at the CPUC
to another agency 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 CPUC is taking action to respond to
the recommendations, such as developing a strategic plan for the
branch and others. However, the CPUC still has a long way to
go. Therefore, additional direction from the Legislature is
warranted, particularly related to reporting on its performance.
Do the agencies have the right tools? Expanding authority for
enforcement to include local law enforcement authorities makes
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 effective enforcement.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
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According to the Senate Appropriations Committee:
One-time contract costs in the mid-hundreds of thousands
(special*) to develop an electronic permit program, a human
resources plan, an enforcement strategy, and a monitoring
protocol.
Unknown ongoing cost pressures, likely in the millions of
dollars, (special*) for a significant increase in positions
for additional enforcement and permitting.
* Public Utilities Transportation Reimbursement Account.
SUPPORT: (Verified6/2/15)
California Moving and Storage Association
Greater California Livery Association
OPPOSITION: (Verified6/2/15)
None received
ARGUMENTS IN SUPPORT: The author states that the CPUC's TEB
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.
Prepared by:Nidia Bautista / E., U., & C. / (916) 651-4107
6/2/15 22:18:42
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