BILL ANALYSIS                                                                                                                                                                                                    

          |SENATE RULES COMMITTEE            |                        SB 812|
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                                   THIRD READING 

          Bill No:  SB 812
          Author:   Hill (D), et al.
          Amended:  5/31/16  
          Vote:     21 

           SENATE TRANS. & HOUSING COMMITTEE:  10-0, 4/5/16
           AYES:  Beall, Cannella, Allen, Bates, Galgiani, Leyva, McGuire,  
            Mendoza, Roth, Wieckowski
           NO VOTE RECORDED:  Gaines

           SENATE ENERGY, U. & C. COMMITTEE:  11-0, 4/19/16
           AYES:  Hueso, Morrell, Cannella, Gaines, Hertzberg, Hill, Lara,  
            Leyva, McGuire, Pavley, Wolk

           AYES:  Lara, Bates, Beall, Hill, McGuire, Mendoza, Nielsen

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

          SOURCE:    Author
          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 increases state oversight of  
          recalled limousines and buses.


          Existing law: 


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           1) Requires that charter-party carriers of passengers and  
             passenger stage corporations:

              a)    Obtain a permit from the California Public Utilities  
                Commission (CPUC); 

              b)    Register all individual buses with the CPUC;

              c)    Conduct safety inspections on each of their buses at  
                least every 45 days;

              d)    Correct any defects that are found during an  
                inspection before transporting passengers; and

              e)    Keep detailed records of inspections and repairs  

           2) Requires the CHP to: 

              a)    Conduct annual 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.  For carriers with fewer than 100 buses,  
                inspections are scheduled.  For carriers with more than  
                100 buses, inspections are not scheduled in advance.

              b)    Collect a fee of $15 per bus (not to exceed $6,500  
                total) to offset the cost of terminal inspections of  
                charter party carriers.  These fees are deposited in the  
                state Motor Vehicle Account. 

              c)    Reinspect, within 120 days, any terminal that receives  
                an "unsatisfactory" rating in an inspection. 

           3) Authorizes the CHP to recommend that the CPUC suspend a  
             carrier's operating authority when the CHP finds violations  
             at a terminal that constitute an imminent threat to public  
             safety or a consistent failure to comply with regulations.

           4) Requires the CPUC to follow the CHP's recommendation,  
             pending a hearing.

          This bill:


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           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, 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; 

              c)    When a terminal receives an unsatisfactory rating in a  
                regular inspection, requires the CHP to conduct a  
                follow-up inspection within 30 days; and

              d)    Requires any operator that is being inspected every  
                six months and acquires a bus that is more than two years  
                old to have the vehicle inspected by the CHP before it is  
                used to transport passengers.

           2) Requires the CPUC to suspend the operating license of a  
             passenger stage corporation or charter party carrier of  
             passengers that receives an unsatisfactory rating in three  
             consecutive terminal inspections, pending a hearing.

           3) 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. 

           4) 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. 

           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  


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             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  
             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.  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  


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             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, 2016), a companion bill which compels the CPUC  
             and 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) 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. 

           6) 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  


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             cap in existing law. 

           7) 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 more frequent checks of poorly performing  
             operators would increase the safety of bus travel. 

           8) 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)  
             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  


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           9) 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.  Revoking  
             operating authority from chronically noncompliant carriers is  
             another way to protect public safety that can also act as a  
             cap on the number of additional inspections the state must  
             undertake.  This bill therefore also requires the CHP to  
             recommend suspending an operator's license after it receives  
             three consecutive unsatisfactory ratings on terminal  
             inspections.  An operator is considered to have received  
             three consecutive unsatisfactory ratings if it obtained (a)  
             an unsatisfactory compliance rating in a regular terminal  
             inspection and the next two consecutive follow-up terminal  
             inspections, or (b) 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  

           10)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. 

           11)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  


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             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.  

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

          According to the Senate Appropriations Committee:

          1)Estimated CHP costs of up to $75,000 to develop and adopt  
            regulations to modify the tour bus inspection program and the  
            fee schedule.  (Motor Vehicle Account)

          2)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)   

          3)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)

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

          5)Ongoing CPUC staff costs of approximately $330,000 for PY  
            (Administrative Law Judge and Legal Counsel) for a proceeding,  


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            conducting additional formal hearings in carrier permit  
            revocation cases, and associated formal litigation.   
            (Transportation Reimbursement Account)

          SUPPORT:   (Verified5/27/16)

          California Association of Highway Patrolmen
          California Bus Association
          City and County of San Francisco

          OPPOSITION:   (Verified5/27/16)

          None received

          Prepared by:Randy Chinn / Sarah Carvill / T. & H. / (916)  
          5/31/16 21:58:39

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