BILL ANALYSIS                                                                                                                                                                                                    



          SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
                              Senator Ben Hueso, Chair
                                2015 - 2016  Regular 

          Bill No:          SB 812            Hearing Date:   4/19/2016
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          |Author:    |Hill                                                 |
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          |Version:   |4/12/2016    As Amended                              |
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          |Urgency:   |No                     |Fiscal:      |Yes             |
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          |Consultant:|Nidia Bautista                                       |
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          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.  This bill also requires the California Public  
          Utilities Commission (CPUC) to monitor recalls of limousines and  
          buses, notify operators of the recalls that affect the safety of  
          the vehicle and suspend a license to operate if a recall has not  
          been addressed by the operator.

          ANALYSIS:
          
          Existing law:

          1)Establishes the CPUC and empowers it to regulate privately  
            owned public utilities and common carriers in California.   
            (Article XII of the California Constitution; Public Utilities  
            Code 301 et seq.)

          2)Defines passenger stage corporation as every corporation or  
            person engaged as a common carrier, for compensation, in the  
            ownership, control, operation, or management of any passenger  
            stage over any public highway in the state between fixed  
            termini or over a regular route, not including those  
            exclusively operating within a local jurisdiction or school  
            buses.  Establishes the CPUC's authority to regulate, require  
            license or permit to operate, require vehicles used are in  
            safe operating condition, require insurance and workers  
            compensation, take appropriate enforcement action and other  







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            provisions related to passenger stage corporations.  (Public  
            Utilities Code 226 and 1031 et seq.) 

          3)Defines "charter-party carrier of passengers" as every person  
            engaged in the transportation of persons by motor vehicle for  
            compensation, whether in common or contract carriage, over any  
            public highway in the state and includes any person,  
            corporation, or other entity engaged in the provision of a  
            hired driver service when a rented motor vehicle is being  
            operated by a hired driver. Establishes the CPUC's authority  
            to regulate, require license or permit to operate, require  
            insurance and workers compensation, require vehicles are in  
            safe operating condition, take appropriate enforcement action  
            and other provisions related to charter-party carrier of  
            passengers.  (Public Utilities Code 5351)

          4)Establishes the CPUC's authority 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 provides that the CPUC can take appropriate enforcement  
            action, etc. (Public Utilities Code 4001)

          5)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)

          6)Provides that the Department of Motor Vehicles (DMV) shall  
            regulate the safe operation of buses, including tour buses,  
            and establish regulations regarding equipment and operations.   
            (Vehicle Code 34500 et seq.)


          This bill:

          1)Requires the CPUC to monitor the recall notifications of the  
            National Highway Traffic Safety Administration (NHTSA) related  
            to buses, limousines, and modified limousines operated by  
            passenger stage corporations and charter-party carriers in the  
            state. 
               a.     Requires the CPUC to notify operators with affected  
                 vehicles.
               b.     Prohibits operators from transporting passengers in  








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                 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  
                 recalls. 

          2)Requires the CPUC to suspend a certificate to operate for a  
            charter-party carrier or passenger stage corporation, pending  
            a CHP recommendation and a hearing in the matter, that  
            receives three consecutive unsatisfactory compliance ratings  
            for terminal inspections conducted by the CHP. 

          3)Authorizes the CHP to establish a new fee structure to offset  
            the cost of bus terminal inspections for charter party  
            carriers and passenger stage corporations, while maintaining  
            the existing statutory cap of $6,500 for each operating  
            carrier.  Prohibits the revenues from the fees from being used  
            to supplant other sources of funding for any other inspection  
            program conducted by the CHP. 

          4)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. 
               a.     Provides the CHP can inspect terminals with two or  
                 more consecutive satisfactory ratings every 26 months as  
                 oppose 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. 

          5)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 percent of the inspections it conducts each year are  
            surprise inspections.

          6)Requires the CHP to conduct a comprehensive review, in  
            consultation with the Office of Legislative Counsel and the  
            CPUC, of the statutes and regulations governing tour buses,  








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            and buses generally, in order to identify opportunities to  
            simplify and consolidate where appropriate.  Requires the CHP  
            to provide a report for proposed changes to the policy  
            committees with responsibility for transportation matters  
            before January 2, 2018.

          7)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, this bill:
               a.     Allows the CHP to inspect terminals with two or more  
                 consecutive satisfactory ratings every 26 months as  
                 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.

          8)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 percent of the inspections it conducts each year are  
            surprise inspections.

          9)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.

          10)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. 

          11)Effective January 1, 2018, requires passenger stage  
            corporations and charter party carriers to show proof of their  
            most recent bus terminal inspection to the 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. 

          12)Requires the CHP to establish by January 1, 2018, a new  
            scaled fee structure for terminal inspections that retains the  








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            current maximum per-operator inspection fee.

          13)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.

          Background

          On November 13, 2015, a City Sightseeing bus crashed into  
          construction scaffolding in San Francisco's Union Square  
          resulting in 19 people injured.  The bus was originally used as  
          a transit vehicle and had been retrofitted as a double-decker  
          open-air tour bus before it was sold to City Sightseeing.  The  
          CHP's investigation found the cause of the crash was driver  
          error, specifically driving at an unsafe speed.  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.  The CHP investigation also  
          noted that there was a recall notice issued in December 2010  
          that was applicable to the bus, although it did not contribute  
          to the accident.  Specifically, the recall notice is related to  
          a fitting connected to the hydraulic pump in the engine  
          compartment. 
          As set forth in the Senate Transportation and Housing Committee  
          who heard this bill on April 5th:

          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  








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          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.

          New fee structure.  The existing terminal inspection fee of  
          $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.

          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.
          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 percent)  
          occurred in accidents involving a tour bus. In California, only  
          6.5 percent 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  








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          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) 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.

          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 this 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.   Amendments taken in Senate Transportation require  
          the CHP to recommend suspending an operator's license after it  
          receives three consecutive unsatisfactory ratings on terminal  
          inspections. 

          
          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  








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          on a terminal inspection. 
          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.

          SEUC Comments:

          A third kind of bus operator - the private carrier of  
          passengers. While this bill addresses recalls for buses and  
          limousines operating as charter-party carriers and passenger  
          stage corporations, there are other buses who register with the  
          CPUC as private carriers of passengers who could also benefit  
          from the notifications.  These vehicles are registered to carry  
          passengers for purposes such as nonprofits, churches and others.  
           To the extent feasible the CPUC should also notify those  
          vehicles of any safety recall notices.  The author and committee  
          may wish to amend this bill to require the CPUC to notify  
          private carriers of passengers of NHTSA vehicle safety recalls.

          Decoding the code.  Section 12 of this bill which requires the  
          CHP to work with the CPUC and Legislative Counsel to recommend  
          changes to simplify the statutes related to tour buses is a  
          worthy effort.  However, the direction is better suited as  
          intent language.  The author and committee may wish to amend  
          this bill to move Section 12 to intent language and include  
          language that provides the recommendations to both the policy  
          committees in each house related to transportation, including  
          the utilities committees overseeing the work of the CPUC.

          Prior/Related Legislation
          
          AB 1574 (Chiu) requires CPUC to verify with the DMV that the  








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          buses, limousines, and modified limousines used by a passenger  
          stage corporations or charter-party carriers have been reported  
          and meet safety requirements.  AB 1574 passed out of the  
          Assembly Committee on Utilities and Commerce on March 30, 2016,  
          and is scheduled to be heard by the Assembly Committee on  
          Transportation Committee on April 18, 2016.

          AB 1677 (Ting) requires the CHP to develop protocols for the  
          inspection of tour buses by local agencies.

          SB 247 (Lara) requires charter buses to have specified emergency  
          equipment by July 1, 2017, including a secondary exit door, burn  
          resistant materials, event data recorder, and others.  The bill  
          also requires charter bus drivers to instruct passengers of  
          locations and operations of emergency exits and the use of seat  
          belts prior to the beginning of a trip and provide these  
          instructions in writing.

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


            SUPPORT:  

          California Bus Association, if amended
          City and County of San Francisco

          OPPOSITION:

          None received

          ARGUMENTS IN SUPPORT:    The author states: "SB 812 puts forward  
          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.  This 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  








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          bus operators.  Lastly, SB 812 increases state oversight of  
          recalled limousines and buses."
          


          

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