BILL ANALYSIS �
Senate Appropriations Committee Fiscal Summary
Senator Kevin de Le�n, Chair
AB 612 (Nazarian) - Charter-party carriers of passengers: permit
requirements: drivers.
Amended: July 2, 2014 Policy Vote: EU&C 8-2
Urgency: No Mandate: No
Hearing Date: August 4, 2014 Consultant:
Marie Liu
This bill meets the criteria for referral to the Suspense File.
Bill Summary: AB 612 would require all charter-party carriers,
including transportation network companies (TNCs), to submit all
of its drivers to a Department of Justice (DOJ) criminal
background check and to participate in the Department of Motor
Vehicle's (DMV) Employer Pull Notice Program (EPN).
Fiscal Impact:
One-time costs of $185,000 from the Public Utilities
Commission Reimbursement Account (special) and the Public
Utilities Commission Transportation Reimbursement Account
(special) to the CPUC costs to oversee new requirements and to
update the general order regarding charter-party carriers.
Costs of $219,000 in FY 2014-15, $367,000 in FY 2015-16, and
$187,000 in subsequent years (special) to the DOJ for
background checks. These costs will be fully reimbursed by
fees charged to the charter-party carrier.
Background: Under existing law, the California Public Utilities
Commission (CPUC) regulates various transportation services,
including charter-party carriers of passengers. Charter-party
carriers are defined in PUC �5360 as every person engaged in the
transportation of persons by motor vehicles for compensation
over any public highway in California. Existing law establishes
a number of requirements that must be fulfilled in order for the
CPUC to issue a permit or certificate to a charter-party
carrier, such as requirements that it is financially and
organizationally capable of conducting an operation that
complies with the rules and regulations regarding highway
safety, it has a preventative maintenance program in effect for
its vehicles used in transportation for compensation, it has a
safety education and training program, it regularly checks the
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driving records of all persons operating vehicles used in
transportation for compensation, and it provides for mandatory
controlled substance and alcohol testing.
Last fall, the CPUC issued a decision that establishes
transportation network company (TNC) as a new category of
charter-party carriers (D.13-09-045) under its jurisdiction.
TNCs were defined as an organization that provides prearranged
transpiration services for compensation using an online- enabled
application (app) or platform to connect passengers with drivers
using their personal vehicle.
Proposed Law: This bill would require that all drivers of a
charter-party carrier shall be subject to the Department of
Justice fingerprint images and related information for a
background check. The Department of Justice (DOJ) would be
required to charge a fee sufficient to cover its costs in
providing the background check.
This bill would specify that a charter-party carrier must
participate in the DMV's EPN Program in order to fulfill the
existing requirement that it regularly checks the driving
records of all drivers.
This bill would explicitly state that the requirements for
driver background checks, mandatory participating in the DMV's
EPN program, and mandatory controlled substance and alcohol
testing apply to all charter-party carriers regardless of class
or category.
This bill states that it is the intent of the Legislature to
give direction to the CPUC to investigate and implement proper
identifying decals and trade dress for charter-party carriers.
Related Legislation: AB 2293 (Bonilla) amends the Passenger
Charter-party Carriers' Act to require liability insurance
coverage for transportation network companies and their drivers.
AB 2293 is set for hearing by the Senate Appropriations
Committee on August 4, 2014.
Staff Comments: The background check requirement under this bill
would be a new responsibility for all charter-party carriers,
including TNCs, and would apply to both existing and new
drivers. Compliance with background check requirements for
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existing drivers will be required immediately as the bill does
not specify a phase-in schedule for existing drivers. Thus, in
the first year after the effective date of this bill, the DOJ
will experience a large surge in background checks. Staff notes
that the bill requires that the charter-party carrier request
subsequent notification services from the DOJ. Thus, a driver
will only need to undergo a background check once so long as
they are employed with the same carrier. Assuming that there
will be 59,000 drivers that will be subject to the background
check requirement and that there is a 30% turnover each year
(i.e. 17,700 new drivers each year), the DOJ anticipates
$219,000 in costs in FY 2014-15, $367,000 in FY 2015-16, and
$187,000 in each subsequent year. These costs will be fully
reimbursed by fees charged to the charter-party carrier.
While compliance with the background check requirement will be
required immediately upon the effective date of the bill, the
CPUC will check for compliance as charter-party certificates
come up for renewal every three years. The CPUC will also have
some additional workload associated with ensuring compliance for
mandatory controlled substance and alcohol testing for TNCs only
(other charter-party carriers are already subject to this
requirement). Under last year's CPUC decision, TNCs were
required to have a no-tolerance policy, but were not explicitly
required to have a mandatory testing program. Thus, for the next
three years, the CPUC anticipates a temporary increase in costs
of $185,000 total for additional certificate application review
and to amend their general order on charter-party carriers to
reflect the bill's requirements. Enforcement costs will be
charged to the Public Utilities Commission Transportation
Reimbursement Account while proceeding costs will be charged to
the Public Utilities Commission Reimbursement Account.
This bill will also result in additional demand on the DMV EPN
program as TNC drivers will need to be enrolled. Compliance by
other charter-party carriers is existing law. Because the EPN
program is largely operated through an electronic process, the
DMV estimates that adjusting the EPN Program to apply to TNC
will cause minor costs that will be covered by program fees.
Additional positions would also not be needed on an ongoing
basis to add and delete drivers because companies are
responsible this activity themselves. Staff notes that there are
approximately 1.4 million drivers currently enrolled in the EPN
program.
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The requirement that charter-party carriers participate in the
DMV's EPN Program will only affect TNCs as charter-party
carriers already participate in the DMV's program. Staff notes
TNCs currently cannot participate in the EPN Program as the
program is designed for the employer to receive notifications
about their driver employees. However, TNCs do not consider
their drivers employees. Staff recommends that this bill amend
Vehicle Code �1808.1 to expand the EPN program to allow TNCs to
participate in the program.