BILL ANALYSIS Ó
SB 541
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Date of Hearing: June 29, 2015
ASSEMBLY COMMITTEE ON UTILITIES AND COMMERCE
Anthony Rendon, Chair
SB
541 (Hill) - As Amended June 2, 2015
SENATE VOTE: 40-0
SUBJECT: Public Utilities Commission: for-hire transportation
carriers: enforcement.
SUMMARY: This bill codifies the State Auditor report's
recommendations on strengthening the California Public Utilities
Commission's (CPUC) oversight of transportation-related
activities of household goods carriers and charter party
carriers (CPC). Specifically, this bill:
1)Requires the CPUC to establish the following goals related to
its existing authority to provide oversight and regulation of
transportation-related activities of household goods carriers
and CPCs:
Prioritize the timely processing of applications and
hold "application workshops" for potential applicants
around the state,
Enable electronic filing of applications, reports, and
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fee payments,
Dedicate staff to answering telephone calls, mailings,
and electronic inquiries from carriers,
Prioritize the timely processing of consumer complaints,
Implement electronic case tracking of complaints and
their disposition,
Implement a process for appropriate and timely
enforcement against illegally operating carriers, including
by performing staff-driven investigations and performing
enforcement through sting operations and other forms of
presence in the field,
Maintain relationships with, and implement outreach and
education programs to local law enforcement, district
attorneys, and airports,
Meet with carrier trade associations at least annually,
and
Implement a consolidated case tracking system that
integrates each of the transportation program core
functions and data collection, administrative compliance
details, complaints, and investigations.
1)Requires the CPUC to assess its capabilities to carry out the
activities, specified in the goals, and report to the
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Legislature with an analysis of current capabilities and
deficiencies, and recommendations to overcome any deficiencies
identified by January 1, 2017.
2)Authorizes a peace officer, as defined, to enforce and assist
in the enforcement of the transportation-related services, as
specified, including to arrest violators and impound vehicles
lacking proper certificates or permits.
3)Defines a "peace officer" to include local city or county
police officers or sheriffs, California Highway Patrol (CHP)
officers, or airport law enforcement officers.
4)Directs the CPUC to coordinate enforcement with peace
officers, as defined, to including:
Education outreach to ensure that those peace officers
are aware of the transportation-related services, as
specified, and
Establishing lines of communications to ensure that the
CPUC is notified if an action is commenced to enforce the
requirements, as specified.
1)Authorizes the Attorney General, a district attorney, or a
city attorney to prosecute actions or proceedings for the
violation of any law committed in connection with a
transaction involving the transportation of household goods
and personal effects.
EXISTING LAW:
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1)Authorizes the CPUC to regulate passenger stage corporations
(PSC), through the issuance of a certificate, require
insurance and workers compensation, and take appropriate
enforcement actions and other provisions, as specified.
(Public Utilities Code Sections 1031 to 1045)
2)Directs the CPUC to issue permits or certificates to CPCs,
investigate complaints against carriers, cancel, revoke, or
suspend permits and certificates for specific violations.
(Public Utilities Code Section 5387)
3)Defines "charter party carriers of passengers" as every person
engaged in the transportation of person by motor vehicle for
compensation, whether in common or contract carriage, over any
public highway in the state. (Public Utilities Code Section
5360)
4)Authorizes the CPUC to regulate private carriers of
passengers, including requiring public liability and property
insurance, cargo insurance, knowledge of rates, documentation,
timely reporting of revenues and payment fees, and take
appropriate enforcement actions and other provisions, as
specified. (Public Utilities Code Sections 4000 to 4022)
5)Defines "private carrier" as not-for-hire motor carriers that
transports passengers and is required to obtain a carrier
identification number, as specified. (Public Utilities Code
Section 4001)
6)Authorizes the CPUC to regulate household goods carriers,
including requiring public liability and property insurance,
cargo insurance, knowledge of rates, documentation, timely
reporting of revenues and payment fees, and take appropriate
enforcement actions and other provisions, as specified.
(Public Utilities Code Sections 5101 to 5335)
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7)Defines "household goods carrier" as every corporation or
person engaged in the transportation for compensation by means
of a motor vehicle being used in the transportation of used
household goods and personal effects over any public highway
in the state. (Public Utilities Code Section 5109)
8)Authorizes a CHP officer to impound a CPC for 30 days if the
officer determines that a violation occurred while the bus
driver was operating CPC, as specified. (Vehicle Code Section
14602.9)
FISCAL EFFECT: According to the Senate Appropriations
Committee, this bill would have one-time contract costs in the
mid-hundreds of thousands of dollars to develop an electronic
permit program, a human resources plan, an enforcement strategy,
and a monitoring protocol, as well as unknown ongoing cost
pressures, likely in the millions of dollars, for a significant
increase in positions for additional enforcement and permitting
from the Public Utilities Transportation Reimbursement Account.
COMMENTS:
1)Author's Statement: "In a 2014 report, the California State
Auditor concluded that the CPUC Transportation Enforcement
Branch does not provide sufficient oversight of [CPCs] and
[PSCs] to ensure consumer safety ? In addition, many carriers
experience long delays when they apply for carrier
certificates and permits ? SB 541 improves the functions of
the Transportation Enforcement Branch at the CPUC to improve
customer service and enforcement against illegally operating
[CPCs], [PSCs], and moving companies."
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2)Background: California law regulates different modes of
passenger transportation for compensation, including taxi
services, which are regulated by cities and/or counties, as
well as CPCs and PSCs, which are regulated by the CPUC. The
division within the CPUC responsible to ensure that services
are delivered in a safe and reliable manner is the Safety and
Enforcement Division. The division is responsible for safety
oversight in specific industries, including electric, natural
gas, and telecommunications infrastructure; railroads, rail
crossings, and light rail transit system; passenger carriers,
ferries; and household goods carriers.
The Division is funded through a fee assesssed on various
types of state-regulated vehicles, including passenger
carriers. The CPUC collects these fees from operators and
deposits them in the Transportation Reimbursement Account.
The CPUC has set the fee for passenger carriers that seat no
more than 15 persons at 1/3 of 1 percent of their annual gross
revenue, plus a $10 quarterly fee or a $25 annual fee. The
CPUC is allowed to maintain an appropriate reserve in the
account based on past and projected operating experiences.
3)What are Passenger Stage Corporations? PSCs are services that
provide transportation to the general public on an individual
fare basis, such as scheduled bus operators, which are buses
that operate on a fixed route and scheduled services, or
airport shuttles, which operate on an on-call door-to-door
share the ride service.
4)What are Charter-Party Carriers? CPCs are services that
charter a vehicle, on a prearranged basis, for the exclusive
use of an individual or group. Charges are based on the
mileage or time of use, or a combination of both. The CPUC
does not regulate the level of charges for CPCs. Types of
CPCs include limos, tour buses, sightseeing services, and
charter and party buses.
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The CPUC requires CPCs to meet a number of requirements until
an operating permit or certificate is issued. These
requirements include providing sufficient proof of financial
responsibility, maintain a preventative maintenance program
for all vehicles, possessing a safety education and training
program, and regularly checking the driving records of all
persons operating vehicles used in transportation for
compensation. Taxis are excluded from the definition of CPCs
and are regulated by cities or counties.
5)What are Private Carriers of Passengers and Household Good
Carriers? Private carriers of passengers are not-for-hire
motor carriers that do not receive any compensation for
services and are required to obtain a carrier identification
number. Examples of private carriers of passengers include
vehicles used by employers to transport employees or vehicles
used by an organization to transport members to and from a
location.
Household good carriers are often referred to as moving
companies which transports used household goods and personal
effects for residential moves. They may also conduct office
moves if granted a permit by the CPUC.
6)State Auditor Report: In June 2014, the California State
Auditor released a report examining the CPUC's Transportation
Enforcement Branch, within the Safety and Enforcement
Division, efforts to regulate passenger carriers, as well as
its use of fees collected from carriers. The report found
that the branch did not provide sufficient oversight of CPCs
and PSCs to ensure consumer safety. Among the issues the
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Auditor's report cited included:
The lack of procedures for processing complaints,
Failure to ensure that it completes investigations and
issues corresponding citations in a timely manner,
Failure to conduct adequate investigations,
Imposing penalties for consistently lower amounts than
state law allows,
Not consistently collecting money from passenger
carriers related to citations,
Not effectively overseeing accounting related to the
branch,
Not ensuring that passenger carrier fee payments are
accurate,
Not aligning revenues and expenditures associated with
passenger carriers as state law requires,
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Incorrect funding of transportation enforcement
positions due to the lack of managerial oversight,
Incorrectly funding and using positions authorized in
the state budget for enforcement of passenger carriers at
airports,
Not using the new positions for airport enforcement as
the Legislature intended,
Limited efforts to implement an airport enforcement
program at other major airports,
Inadequate enforcement across the state due to the lack
of internal control and high turnover,
Lack of leadership within the branch,
High management turnover,
Failure to ensure adequate training for staff, and
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The branch being unprepared to handle additional
responsibilities.
The report provided a series of recommendations to address the
issues, which include:
Developing policies and procedures for receiving
complaints and investigating passenger carriers to ensure
that all complaints are entered into the complaints
database,
Establish 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,
Establishing standards specifying the type of evidence
that it considers sufficient to determine whether a
passenger carrier is operating illegally,
Implement a policy that directs investigators to obtain
sufficient evidence to justify determinations, and to
verify carrier claims that they are no longer operating or
are not operating illegally,
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
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regulating passenger carriers,
Create a system to determine when a carrier merits a
penalty, what the magnitude of the penalty should be, and
ensure it is more consistent with what state law permits,
Require staff to examine and formally report on the
feasibility of impounding the vehicles of passenger
carriers that refuse to comply with orders or pay citation
penalties, and the feasibility of making use of the Tax
Board's program to collect unpaid citation penalties,
Require its fiscal staff to implement a process to
verify passenger carrier fee payments and associated
revenues,
Implement a process to ensure that passenger carriers
fee revenues more closely match related enforcement costs,
Require the branch to review annually all branch staff
funding distributions and align them with recent time
changes,
Use the five positions added for passenger carrier
enforcement at airports as intended, and
Produce a strategic plan to include goals for the
program and strategies to achieve those goals, including
strategies for staff development and training, and
performance measures to assess goal achievements.
This bill codifies these recommendations by requiring the CPUC
to establish specific goals and assess its capabilities to
achieve such goals, and report to the Legislature with an
analysis of current capabilities and deficiencies, and
recommendations to overcome any deficiencies identified by
January 1, 2017.
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To improve enforcement of the branch, the bill authorizes
peace officers, as defined, to help in the enforcement of
transportation-related services, including arresting violators
and impounding vehicles that lack proper certificates or
permits. The CPUC would coordinate efforts with peace
officers through educational outreach and establishing lines
of communication.
1)What about Transportation Network Companies? The CPUC defines
Transportation Network Companies (TNC), such as Uber, Lyft,
and Sidecar, as an "organization, including, but not limited
to, a corporation, limited liability company, partnership,
sole proprietor, or any entity, operating in California that
provides prearranged transportation services for compensation
using an online-enabled application or platform to connect
passengers with drivers using a personal vehicle." The CPUC
believes that TNCS are currently providing passengers
transportation for compensation, and reasonably concludes that
TNCs are CPCs, therefore, falling under the CPUC's existing
jurisdiction over these services.
With the continued growth of TNCs, there have been a number of
airports, including San Francisco International Airport,
seeking to prohibit TNC drivers from picking up and dropping
off passengers. This bill would authorize a peace officer,
including airport law enforcement officers, to enforce CPUC
regulations of transportation services, including services
relating to TNCs. The CPUC requires a TNC to obtain an
operating permit; however, there is no limit to the number of
drivers a TNC can have under a permit. Individual TNC drivers
do not have to obtain permits from the CPUC as long as they
complete the TNCs process to be enrolled as a driver. Hence,
airport law enforcement officers would only be enforcing CPUC
regulations and impound vehicles if a driver was working for a
TNC that did not have a valid permit, or the driver was
operating a vehicle without a driver's license, as specified.
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However, this does not preclude the airport law enforcement
officer from operating under its normal capacity of enforcing
airport policies concerning TNCs and how the officer
determines when a TNC driver is officially on duty or off.
2)Arguments in Support: According to the Greater California
Livery Association, "California's charter-party carriers are
assessed a fee based on their annual gross receipts to fund
the Transportation Enforcement Branch responsibilities, those
responsibilities have not been undertaken by the branch ?
Greater California Livery Association members are being
assessed millions of dollars each year to fund an organization
that does not do its job. Senate Bill 541 fixes that. The
pending 2015-16 California general fund budget demonstrates a
dramatic, if not obscene, reserve in the CPUC Public Utilities
Transportation Reimbursement Account; these funds must be
utilized now to correct the deficiencies noted in the
auditor's report and to truly enforce California's public
transportation safety laws."
3)Double Referred: This bill is double referred to the Assembly
Committee on Public Safety.
REGISTERED SUPPORT / OPPOSITION:
Support
Greater California Livery Association
SB 541
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Opposition
None on file.
Analysis Prepared by:Edmond Cheung / U. & C. / (916)
319-2083