BILL ANALYSIS                                                                                                                                                                                                    

                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 812 (Hill) - Charter-party carriers of passengers:  passenger  
          stage corporations:  private carriers of passengers
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          |Version: April 27, 2016         |Policy Vote: T&H 10 - 0; E,U,&  |
          |                                |          C 11 - 0              |
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          |Urgency: No                     |Mandate: Yes                    |
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          |Hearing Date: May 16, 2016      |Consultant: Mark McKenzie       |
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          This bill meets the criteria for referral to the Suspense File.

          Summary:  SB 812 would make changes to the bus terminal  
          inspection program and require the California Highway Patrol  
          (CHP) to perform additional unannounced inspections and follow  
          up inspections, as specified.  The bill would also require the  
          California Public Utilities Commission (CPUC) to monitor recall  
          notifications relative to buses and limousines, notify operators  
          of recalls, and issue out-of-service orders for vehicles  
          requiring certain recall repairs.

                CHP costs:
            Estimated CHP costs of up to $75,000 to develop and adopt  
            regulations to modify the tour bus inspection program and the  


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            fee schedule.  (Motor Vehicle Account)

           Estimated CHP staff costs off approximately $1 million to $1.4  
            million in the first year, and $500,000 to $700,000 annually  
            ongoing for 6-8 PY of new inspection staff.  First year costs  
            include initial training and equipment costs for new staff.   
            (Motor Vehicle Account)   

           Unknown, significant revenue gains as a result of the  
            requirement that CHP adopt a fee schedule that covers its  
            costs to administer the inspection program.  Increased fee  
            revenues would fully offset the increased staffing costs noted  
            above, and correct structural deficits in the current program.  
            (Motor Vehicle Account)

           CPUC costs:  
           One-time CPUC costs of approximately $100,000 to make  
            necessary automation upgrades.  (Transportation Reimbursement  

           Ongoing CPUC staff costs of approximately $471,000 for 3 PY  
            (Administrative Law Judge, Analyst, and Legal Counsel) for a  
            proceeding, conducting additional formal hearings in carrier  
            permit revocation cases, and associated formal litigation, as  
            well as staff time associated with the administration of  
            safety recall provisions.  (Transportation Reimbursement  

          Background:  Existing law provides for the regulation of private carriers  
          of passengers, passenger stage corporations, and charter-party  
          carriers by the CPUC.  Private carriers of passengers are  
          not-for-hire motor carriers that transport passengers, such as  
          those used by churches and nonprofit entities.  Passenger stage  
          corporations provide transportation to the general public on an  
          individual fare basis, such as scheduled bus operators with  
          buses that operate on a fixed route and scheduled services, or  
          airport shuttles that operate on an on-call door-to-door share  
          the ride service.  Charter party carriers provide transportation  
          services to individuals or groups for compensation on a  
          pre-arranged basis, and may provide limousine, tour bus, charter  
          bus, party bus, or sightseeing services.  Existing law defines a  
          tour bus as a vehicle designed, used, or maintained to carry  
          more than 10 persons, including the driver, and operated by a  


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          passenger stage corporation or a charter party carrier. 
          Existing law requires passenger stage corporations and  
          charter-party carriers obtain a permit and register all  
          individual buses with the CPUC.  These entities must also  
          conduct safety inspections on each of their buses at least every  
          45 days, correct any defects that are found during an inspection  
          before transporting passengers, and maintain detailed records of  
          inspections and repairs. 

          Existing law requires CHP to inspect the maintenance facilities  
          or terminals of tour bus operators at least once every 13  
          months; inspections of operators with 100 or fewer buses are  
          scheduled in advance, but inspections for those with over 100  
          buses are unannounced.  CHP inspects a representative subset of  
          each carrier's buses and records to verify that buses are being  
          maintained in accordance with the law.  Charter party carriers  
          are charged a fee of $15 per bus (not to exceed $6,500 total per  
          carrier) to offset the cost of inspection.  These fees are  
          deposited in the state Motor Vehicle Account.  Passenger stage  
          corporations are not required to pay a per-bus fee for terminal  

          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.

          Proposed Law:  
            SB 812 would make changes to CHP's bus terminal inspection  
          program.  Specifically, this bill would:
           Require CHP to adopt regulations by January 1, 2018 to modify  
            its tour bus inspection program to ensure that the  
            performance-based program targets companies that are  
            noncompliant, have a history of noncompliance with safety laws  


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            or regulations, or that have received unsatisfactory ratings.
           Require a maintenance facility or terminal that receives an  
            unsatisfactory rating to be inspected every six months until  
            the operator receives a satisfactory rating.
           Require CHP to conduct a follow-up inspection within 30 days  
            after an initial inspection of a carrier that received an  
            unsatisfactory rating, rather than 120 days. 
           Require tour bus operators that are subject to bi-annual  
            inspections to obtain a satisfactory inspection rating for any  
            newly acquired bus that is more than two years old prior to  
            operation of that bus.
           Require the CPUC to suspend a passenger stage corporation's or  
            charter party carrier's certificate or permit to operate,  
            pending a hearing on the matter, for receiving unsatisfactory  
            ratings in three consecutive terminal inspections. 
           Authorize a maintenance facility or terminal that receives two  
            or more successive satisfactory ratings to be inspected every  
            26 months, rather than every 13 months, unless the  
            satisfactory rating is the result of a reinspection.
           Require CHP to recommend to the CPUC that a tour bus or  
            modified limousine carrier's operating authority be suspended,  
            denied or revoked if that carrier has either received an  
            unsatisfactory compliance rating for a regular terminal  
            inspection and two consecutive follow-up inspections, or  
            received that rating for three consecutive inspections.
           Require CHP to immediately order a tour bus out of service if  
            it determines that the bus has multiple safety violations that  
            make operation an imminent danger to public safety.  The bus  
            may not be operated until all violations have been corrected  
            and verified by CHP in a subsequent inspection, which shall  
            occur within five days of a reinspection request.
           Require CHP to conduct unannounced surprise inspections of  
            tour bus operators in addition to regularly scheduled  
           Require CHP to prioritize surprise inspections of companies  
            that are noncompliant, have a history of noncompliance with  
            safety laws or regulations, or that have received  
            unsatisfactory ratings.
           Require at least 10 percent of tour bus carrier inspections in  
            a given fiscal year to be surprise inspections.
           Require CHP, by regulation, to develop and adopt a fee  
            structure for bus terminal inspections, with fees that are  
            scaled and based upon the number of buses a company operates,  
            and charged in an amount to offset costs to administer the  


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            inspection program, as specified.
           Specify that the fees would be charged to both passenger stage  
            corporations and charter party carriers, and retains the  
            $6,500 cap for each tour bus operator.
           Specify that the current fee structure for charter party  
            carriers will remain in place until CHP adopts the new fee  

          The bill would also require the CPUC to monitor National Highway  
          Traffic Safety Administration's (NHTSA's) recall notifications  
          relative to buses, limousines, and modified limousines operated  
          by passenger stage corporations, charter party carriers, and  
          private carriers of passengers.  The CPUC must immediately  
          contact the operator affected by a recall that involves parts or  
          accessories necessary for safe operation to ensure that the  
          entity is aware of the recall and has a plan in place to correct  
          the defect.  The bill authorizes the CPUC to issue an  
          out-of-service order for any vehicle affected by such a recall.

          Legislation:  AB 1574 (Chiu), pending on the Assembly  
          Appropriations Committee's Suspense File, requires the CPUC to  
          verify with the Department of Motor Vehicles that the buses,  
          limousines, and modified limousines used by a passenger stage  
          corporation or a charter party carrier have been reported to the  
          CPUC and meet safety requirements.
          AB 1677 (Ting), pending on the Assembly Appropriations  
          Committee's Suspense File, requires CHP to develop protocols for  
          entering into agreements with local governments to increase the  
          number of tour buses inspected by CHP.

          Comments:  CHP indicates that it currently inspects nearly 2,500  
          tour bus terminals and nearly 5,200 individual buses annually  
          that are subject to the requirements of SB 812.  Approximately  
          93 percent of terminals receive a satisfactory rating, and the  
          number of individual buses that are taken out of service as a  
          result of safety violations is currently unknown, but could  
          represent more than 10 percent of those inspected.  The current  
          inspection fees of $15 per bus, with a maximum charge of $6,500  


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          per operator, which is only charged to charter party carriers,  
          is not sufficient to offset the costs to administer the program.
          SB 812 would make significant revisions to the inspection  
          program, and impose new requirements on CHP, such as additional  
          annual surprise inspections, more frequent reinspections of  
          terminals that receive unsatisfactory ratings, additional  
          inspections of buses when they are initially put into service by  
          specified operators, and additional inspections of buses before  
          returning to service after failing safety inspections.   The net  
          overall impact over time is difficult to predict, but the bill  
          will require CHP to conduct significantly more inspections each  
          year over the first several years of the modified program.  

          Staff estimates that the bill would conceivably result in  
          hundreds of additional annual bus inspections as well as  
          hundreds of additional terminal inspections, which could require  
          an additional 6 to 8 PY of inspection staff at a cost of  
          approximately $500,000 to $700,000 annually.  Initial training  
          and equipment costs for inspection personnel would add an almost  
          equivalent amount to the first year staff costs.  The number of  
          inspections will decrease over time as carriers that  
          consistently receive satisfactory ratings would only be subject  
          to inspection every 26 months, rather than every 13 months, and  
          the program focuses inspection efforts on habitually  
          non-compliant carriers and unsafe vehicles.  Staff notes that  
          these factors would partially mitigate new costs for additional  
          personnel, and the bill also requires CHP to adopt a revised fee  
          schedule that would fully offset the costs to administer the  

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