BILL ANALYSIS                                                                                                                                                                                                    

                                                                     SB 541

                                                                    Page  1

          Date of Hearing:  June 29, 2015


                                Anthony Rendon, Chair

          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  


                                                                     SB 541

                                                                    Page  2

               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,  

                 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  


                                                                     SB 541

                                                                    Page  3

            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:   


                                                                     SB 541

                                                                    Page  4

          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  

          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) 


                                                                     SB 541

                                                                    Page  5

          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  

          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.


           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." 


                                                                     SB 541

                                                                    Page  6

           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.  


                                                                     SB 541

                                                                    Page  7

            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  

             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  


                                                                     SB 541

                                                                    Page  8

            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  

                 Not ensuring that passenger carrier fee payments are  

                 Not aligning revenues and expenditures associated with  
               passenger carriers as state law requires, 


                                                                     SB 541

                                                                    Page  9

                 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  

                 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


                                                                     SB 541

                                                                    Page  10

                 The branch being unprepared to handle additional  

            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  

                 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  


                                                                     SB 541

                                                                    Page  11

               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  

                 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  

                 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.


                                                                     SB 541

                                                                    Page  12

            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.   


                                                                     SB 541

                                                                    Page  13

            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.


          Greater California Livery Association


                                                                     SB 541

                                                                    Page  14


          None on file. 

          Analysis Prepared by:Edmond Cheung / U. & C. / (916)