BILL ANALYSIS                                                                                                                                                                                                    

          |SENATE RULES COMMITTEE            |                        SB 541|
          |Office of Senate Floor Analyses   |                              |
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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

           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).


          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  

            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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            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.


          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  

                 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  

          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  

           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  

           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  
           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  

           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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