BILL ANALYSIS                                                                                                                                                                                                    

                              Senator Jim Beall, Chair
                                2015 - 2016  Regular 

          Bill No:          SB 812            Hearing Date:    4/5/2016
          |Author:   |Hill                                                  |
          |Version:  |3/17/2016                                             |
          |Urgency:  |No                     |Fiscal:      |Yes             |
          |Consultant|Randy Chinn, Sarah Carvill                            |
          |:         |                                                      |

          SUBJECT:  Charter-party carriers of passengers and passenger  
          stage corporations

            DIGEST:  This bill makes multiple changes to the California  
          Highway Patrol's   (CHP) authority to inspect tour buses, with the  
          goal of increasing regulatory scrutiny of operators with poor  
          safety records. The bill also increases state oversight of  
          recalled limousines and buses.

          Existing law requires that charter-party carriers of passengers  
          obtain a permit from the California Public Utilities Commission  
          (CPUC) and register all individual buses with the CPUC.  Charter  
          party carriers are also required to conduct safety inspections  
          on each of their buses at least every 45 days, to correct any  
          defects that are found during an inspection before transporting  
          passengers, and to keep detailed records of inspections and  
          repairs performed. 

          The CHP is required to conduct annual but unscheduled terminal  
          inspections on a representative subset of each carrier's buses  
          and records to verify that buses are being maintained in  
          accordance with the law, and to collect a fee of $15 per bus  
          (not to exceed $6,500 total) to offset the cost of inspection.   
          These fees are deposited in the state Motor Vehicle Account.   
          For companies with fewer than 100 buses, inspections are  


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          Passenger stage corporations are subject to the same  
          requirements as charter-party carriers with respect to reporting  
          their individual vehicles to the CPUC, inspecting their own  
          buses, correcting defects, and maintaining records of  
          maintenance and inspection.  They are not required to pay a  
          per-bus fee for terminal inspections. 

          Existing law also provides that if a terminal receives an  
          "unsatisfactory" rating in an inspection, it must be inspected  
          again within 120 days.  When the CHP finds violations at a  
          terminal of either a charter-party carrier or a passenger stage  
          corporation that constitute either an imminent threat to public  
          safety or evidence of consistent failure to comply with relevant  
          regulations, it is authorized to make a recommendation that the  
          CPUC suspend the carrier's operating authority.  The CPUC is  
          required to follow the CHP's recommendation, but must first hold  
          a hearing on the matter.

          This bill:

            1)  Imposes new requirements on the CPUC, passenger stage  
              corporations, and charter-party carriers with respect to  
              National Highway Traffic Safety Administration (NHTSA)  
              recalls in cases where the defect that prompted the recall  
              threatens the safe operation of a bus, limousine, or  
              modified limousine.  Specifically, the bill:

              a)    Requires the CPUC to monitor NHTSA recalls and notify  
                operators with affected vehicles of certain safety  
              b)    Forbids operators from transporting passengers in  
                vehicles subject to certain safety recalls until the  
                defect that prompted the recall has been corrected; and
              c)    Gives the CPUC the authority to order out of service  
                any vehicle operated by a passenger stage corporation or a  
                charter-party carrier that is subject to certain safety  

            1)  Modifies the CHP's existing terminal inspection program so  
              that terminals with a history of unsatisfactory ratings are  
              inspected more frequently than terminals with a record of  
              satisfactory performance.  Specifically, the bill:

              a)    Allows the CHP to inspect terminals with two or more  
                consecutive satisfactory ratings every 26 months as  


          SB 812 (Hill)                                       Page 3 of ?
                opposed to every 13 months;
              b)    Requires the CHP to inspect terminals that receive an  
                unsatisfactory rating every six months until the operator  
                achieves a satisfactory rating; and
              c)    When a terminal receives an unsatisfactory rating in a  
                regular inspection, requires the CHP to conduct a  
                follow-up inspection within 30 days.

            1)  Augments the existing terminal inspection program by  
              requiring the CHP to conduct additional surprise  
              inspections.  The CHP is directed to prioritize companies  
              that have a history of noncompliance for these inspections,  
              and to ensure that at least 10% of the inspections it  
              conducts each year are surprise inspections.

            2)  Requires any operator that acquires a bus to have the  
              vehicle inspected by the CHP before it is used to transport  
              passengers, unless the bus is less than two years old.
            3)  Requires the CHP to order a bus out of service if it  
              finds, either during a terminal inspection or at some other  
              time, multiple safety violations that could constitute an  
              imminent threat to the public. 

            4)  Effective January 1, 2018, requires passenger stage  
              corporations and charter party carriers to show proof of  
              their most recent bus terminal inspection to the Department  
              of Motor Vehicles (DMV) when renewing the registration of  
              any individual bus, and prohibits the DMV from registering a  
              bus if the operator has not attained a satisfactory rating. 

            5)  Requires the CHP to establish by January 1, 2018, a new  
              scaled fee structure for terminal inspections that retains  
              the current maximum per-operator inspection fee.

            6)  Requires the CHP, in consultation with the CPUC and the  
              Office of the Legislative Counsel, to conduct a study of  
              existing statutes and regulations governing tour buses with  
              the goal of identifying opportunities to avoid duplication  
              and use terminology consistently.  The CHP would be required  
              to report to the Legislature on its findings on or before  
              January 1, 2018.


            1)  Purpose.  According to the author, "SB 812 puts forward  


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              common sense policies to improve the safety of tour buses  
              driven in California.  Since 1986, the CHP has had a program  
              in place to inspect the safety of tour buses in the state.  
              Since the inception of the program the CHP has inspected  
              thousands of buses and caught many mechanical problems.   
              There are components of the inspection program, however,  
              that need to be updated and strengthened, which SB 812 seeks  
              to do.  The bill will increase the number of surprise,  
              un-announced tour bus inspections, will shorten the amount  
              of time a bus operator has to fix safety problems, and will  
              implement a risk-based inspection methodology so tour bus  
              operators with a history of unsatisfactory ratings will be  
              inspected more often, meaning the CHP will focus more of  
              their efforts and limited resources on problematic and  
              unsafe bus operators.  Lastly, SB 812 increases state  
              oversight of recalled limousines and buses."

            2)  What's covered.  This bill deals with bus transportation  
              by charter-party carriers and passenger stage corporations.  
              It does not affect school buses or public transit buses.  A  
              bus is defined as a vehicle designed to carry more than 10  
              people, including the driver.  Charter party carriers  
              transport passengers traveling under a single contract for a  
              fixed fee, while passenger stage corporations transport  
              passengers over a fixed route between regular termini.
            3)  Background:  San Francisco tour bus accident.  On November  
              13, 2015, 19 people were injured when a City Sightseeing bus  
              crashed into construction scaffolding in San Francisco's  
              Union Square.  The bus was originally a transit vehicle and  
              had been retrofitted as a double-decker open-air tour bus  
              before it was sold to City Sightseeing.  Despite early  
              speculation that the vehicle's brakes may have failed, on  
              March 23, 2016, the CHP announced that the cause of the  
              crash was driver error.  Post-crash investigations revealed  
              that City Sightseeing had not notified the CPUC when it  
              added the bus to its fleet, as required by law, and the CHP  
              identified other safety violations at the company in a  
              December 2015 terminal inspection. 

            4)  Related legislation:  AB 1574.  The San Francisco bus  
              crash has drawn attention to the problem of unregistered  
              "ghost buses" and to the possibility of improving the CHP's  
              bus inspection program.  The former issue is the target of  
              AB 1574 (Chiu), a companion bill which compels the CPUC and  


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              the DMV to ensure that the former has a record of all  
              commercial buses registered with the latter.  AB 1574  
              imposes additional triggers for bus inspections and broadens  
              the authority of the CHP and the CPUC to impound vehicles.  
            5)  NHTSA recalls. The provisions of this bill concerning  
              recalls were included in response to a fire in a modified  
              limousine that killed five passengers on the San Mateo  
              Bridge in 2013.  The maker of that vehicle later recalled  
              nearly 1,000 limousines for the defect implicated in the  
              fire, but the recall went unnoticed by state regulators  
              until a California newspaper discovered it.  The author of  
              this bill is concerned that buses and limousines under  
              safety recalls may continue to be used to transport  
              passengers even if the defects that prompted the recall have  
              not been fixed.  Representatives of the bus industry point  
              out that many "safety" recalls arise from defects that do  
              not present an imminent threat to the operation of the  
              vehicle, so the bill provides the CPUC with discretion to  
              determine whether or not a particular recall warrants an out  
              of service order.  

            6)  Terminal inspections: What they do and what they don't do.  
               Buses must undergo frequent maintenance, which is why  
              existing law requires operators to perform their own safety  
              checks and routine repairs on every vehicle at least once  
              every 45 days - far more often than regulators could be  
              called in for inspections.  There are also tradeoffs between  
              the number of buses that are checked in an inspection and  
              the amount of notice given to operators, on the one hand,  
              and the impact to an operator's service on the other.  While  
              the ideal inspection program might involve surprise terminal  
              visits in which all buses are physically examined, this  
              approach would severely compromise an operator's ability to  
              deliver reliable service to paying customers.  The current  
              terminal inspection program balances these tradeoffs by  
              checking a subset of vehicles and examining terminal records  
              to determine whether operators have established systems that  
              ensure that all of their vehicles are safely maintained.   
              One assumption underlying this approach is that it would be  
              extraordinarily difficult for operators to persuasively  
              "fake" correspondence between maintenance records and actual  
              under-the-hood conditions.

            7)  New fee structure. The existing terminal inspection fee of  


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              $15/bus does not begin to cover the cost of inspections.   
              Depending on their operating authority, some bus companies  
              may not pay inspection fees at all.  While matching fees to  
              the true cost of inspections could have a significant impact  
              on operators, raising the fees somewhat would at least  
              relieve the impact on the Motor Vehicle Account.  This bill  
              requires the CHP to develop a new fee structure by  
              regulation, taking into account the costs to the state to  
              operate the program and preserving the $6,500 per terminal  
              cap in existing law.

            8)  The case for a performance-based system.  This bill aims  
              to change the terminal inspection program so that it  
              prioritizes for inspection operators with a record of  
              safety-related violations.  Some of the bus companies that  
              have been involved in accidents in California were out of  
              compliance with state safety regulations, and these  
              violations were either not detected prior to the accident or  
              were not corrected after detection.  For example, City  
              Sightseeing had a record of satisfactory ratings on terminal  
              inspections prior to the November 2015 accident, but in a  
              surprise inspection following the crash, the CHP found  
              multiple serious violations in the terminal.  A 2013 bus  
              crash near Pala, California, involved a company that had  
              received multiple "unsatisfactory" ratings in terminal  
              inspections in the three years leading up to the crash.   
              These examples suggest that some of the measures in this  
              bill, such as more frequent checks of poorly performing  
              operators, would increase the safety of bus travel.
            9)  Does the magnitude of the changes match the magnitude of  
              the problem? It is important to bear in mind, however, that  
              bus crashes are actually quite rare. In the year 2013, for  
              example, only 43 of 32,719 U.S. traffic fatalities (0.13%)  
              occurred in accidents involving a tour bus. In California,  
              only 6.5% of traffic fatalities and serious injuries occur  
              in accidents involving commercial vehicles - a category that  
              includes trucks as well as several different types of buses.  
              When bus accidents do occur, mechanical failures or defects  
              are usually not the cause. It is also worth noting that the  
              CHP's terminal inspection program is more comprehensive than  
              its counterparts in other states, and the existing program  
              includes performance-based elements. Specifically, if a  
              terminal inspection results in an unsatisfactory rating, the  
              CHP returns to that terminal within four months (120 days)  


          SB 812 (Hill)                                       Page 7 of ?
              for a follow-up inspection. Inspections continue on this  
              four-month interval until the operator receives a  
              satisfactory rating. With respect to terminals that receive  
              an unsatisfactory rating in an annual inspection, this bill  
              effectively replaces inspections every four months until  
              compliance is achieved with inspections every one month  
              until compliance is achieved, followed by inspections every  
              six months.

            10) Alternative to inspection: loss of operating authority.   
              One of the primary ways this bill aims to make bus travel  
              safer is by requiring the CHP to conduct more vehicle and  
              terminal inspections than are required under existing law.   
              Several provisions of the bill either increase the number of  
              inspections that would be conducted under the CHP's existing  
              authority or require inspections to be conducted in  
              circumstances that do not trigger an inspection under  
              current law.  These added inspections increase the cost of  
              the inspection program to the state. Revoking operating  
              authority from chronically noncompliant carriers is another  
              way to protect public safety that does not necessitate  
              imposing additional inspections.  The author and committee  
              may wish to consider amendments that require the CHP to  
              recommend suspending an operator's license after it receives  
              three consecutive unsatisfactory ratings on terminal  
              inspections.  These amendments would specify that an  
              operator would be considered to have received three  
              consecutive unsatisfactory ratings if it received (1) an  
              unsatisfactory compliance rating in a regular terminal  
              inspection and the next two consecutive follow-up terminal  
              inspections, or (2) an unsatisfactory compliance rating for  
              three consecutive regular terminal inspections, irrespective  
              of receiving satisfactory ratings on the follow-up  
              inspections associated with the first two terminal  

            11) Inspections of newly acquired buses.  Among the many  
              provisions in this bill relating to inspections, the  
              requirement that the CHP inspect all newly acquired buses  
              that are more than two years old is notable in that it  
              applies to all operators, not just those with a record of  
              poor performance.  It is therefore less consistent with the  
              author's goal of instituting a more performance-based  
              inspection program than many of the bill's other  


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              requirements.  This provision is also unique in that it  
              would require the CHP to send inspectors to terminals for  
              the purpose of examining a single vehicle - a less efficient  
              use of state resources than terminal inspections in which  
              multiple vehicles are inspected.  The author and committee  
              may wish to consider amending the bill to limit this  
              provision to operators who have received an unsatisfactory  
              rating in their most recent terminal inspection.
            12) Showing proof of successful terminal inspection to renew  
              DMV registration. The provisions in this bill requiring  
              operators to show proof of a recent terminal inspection to  
              the DMV in order to renew the registration of their buses  
              would not prevent an operator from renewing the registration  
              of an individual bus that has not been properly registered  
              with the CPUC.  This requirement only provides an additional  
              incentive to operators to obtain a satisfactory rating on  
              their terminal inspections.  An operator will only be  
              subject to this incentive in cases where the registration  
              renewal deadline for one of its vehicles coincides with the  
              interval between a failed terminal inspection and a  
              successful follow-up inspection.  Both this bill and  
              existing law provide several more direct and consistent  
              penalties for operators who cannot obtain a satisfactory  
              rating on a terminal inspection. The author and committee  
              may wish to consider amending the bill to remove this  
              provision by striking Section 9 (page 12, lines 20-29).

            13) Two years between inspections for good performers? This  
              bill attempts to offset the expansion of inspections for  
              poor performers by providing relief from annual inspections  
              to good performers. Instead, terminal inspections would be  
              required once every 26 months for operators who receive two  
              consecutive satisfactory ratings on terminal inspections.  
              This provision is not without precedent: Until recently, the  
              CHP permitted property carriers with strong compliance  
              records to bypass some annual inspections by certifying  
              their continued compliance with state safety requirements.  
              However, this relaxed inspection option was not extended to  
              carriers of hazardous materials, suggesting that the state  
              found it important to maintain annual inspections for  
              higher-risk cargo. Loosening the annual inspection  
              requirement for carriers who are responsible for the safety  
              of human passengers may be out of step with this practice.


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            14) Two kinds of bus operators, two sets of rules.  Currently,  
              the statutory requirements facing charter-party carriers and  
              passenger stage corporations are enumerated in different  
              sections of the Public Utilities Code.  In many cases they  
              are similar or even identical, but sometimes they are  
              markedly different. A good example is the fee for terminal  
              inspections, which is fixed in statute for charter-party  
              carriers but not for passenger stage corporations.   
              Terminology related to vehicles (e.g., buses, tour buses)  
              also varies among code sections and codes.  The study of  
              statutes and regulations required by this bill would  
              evaluate whether the complexity of state policy in this area  
              has resulted in uneven public safety requirements or  
              arbitrary distribution of costs among operator types.

          Related Legislation:

          AB 1574 (Chiu) - imposes new requirements on the CPUC and the  
          DMV with the goal of ensuring that all commercial buses,  
          limousines, and modified limousines are registered with the CPUC  
          and broadens the authority of the CHP and the CPUC in cases  
          where such vehicles are not properly registered.  This bill is  
          pending in the Assembly Utilities and Commerce Committee.

          FISCAL EFFECT:  Appropriation:  No    Fiscal Com.:  Yes     
          Local:  Yes

            POSITIONS:  (Communicated to the committee before noon on  
                          March 30, 2016.)

          California Bus Association


          None received


                                      -- END --


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