BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 612
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          Date of Hearing:   August 25, 2014

                        ASSEMBLY COMMITTEE ON TRANSPORTATION
                               Bonnie Lowenthal, Chair
                   AB 612 (Nazarian) - As Amended:  August 19, 2014
           
          SUBJECT  :  Charter-party carriers of passengers: permit  
          requirements: drivers

           SUMMARY  :  Requires charter-party carriers (CPC) to participate  
          in the Department of Motor Vehicles (DMV) Employer Pull Notice  
          system (EPN) and submit all drivers to a Department of Justice  
          (DOJ) criminal background check.  Specifically,  this bill  :

          1)Prohibits the California Public Utilities Commission (PUC)  
            from issuing or renewing a permit or certification to a CPC  
            unless the applicant, in addition to existing requirements: 

             a)   Participates in DMVs EPN system; and, 

             b)   Submits all of its drivers to a DOJ background check as  
               specified.  

          2)Specifies that CPC drivers are required to submit fingerprint  
            images to DOJ for purposes of carrying out background checks  
            and permit DOJ to charge a fee to cover the cost of providing  
            background checks.  

          3)Requires a CPC driver to be denied employment or have their  
            contract voided if they are required by any law to register as  
            a sex offender or have been convicted of any specified felony,  
            within a seven-year period from the date of his or her  
            application.  

          4)Requires all CPCs, regardless of class or category, to  
            participate in the EPN system, mandatory controlled substance  
            and alcohol testing, and the DOJ background check process.  

          5)Specifies that drivers hired or initially retained by a CPC on  
            or after January 1, 2015, are subject to the abovementioned  
            requirements.  Further specifies that CPC drivers hired or  
            initially retained prior to January 1, 2015, are required to  
            complete the abovementioned requirements before January 1,  
            2016.  









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          6)Clarifies that all CPC drivers are required to participate in  
            the EPN system.  Further clarifies that a CPC employer is the  
            entity subject to PUC permitting and certificate requirements.  
             

          7)Deletes provisions related to yellow-light intervals.  

           EXISTING LAW:  

          1)Establishes the "Passenger Charter-Party Carriers Act," which  
            directs PUC to issue permits or certificates to CPCs,  
            investigate complaints against carriers, and cancel, revoke,  
            or suspend permits and certificates for specific violations.  

          2)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.  

          3)Requires CPCs to operate on a prearranged basis.  Further  
            defines "prearranged basis" to mean that the transportation of  
            the prospective passenger was arranged with the carrier by the  
            passenger, or a representative of the passenger, either by  
            written contract or telephone.  

          4)At the regulatory level, establishes transportation network  
            company (TNCs) as a category of CPCs and defines a TNC as an  
            organization whether a corporation, partnership, sole  
            proprietor, or other form, operating within the state that  
            provides prearranged transportation services for compensation  
            using an online-enabled application or platform to connect  
            passengers with drivers using their personal vehicles.  

          5)Establishes the EPN system administered by the DMV that  
            provides the employer of a driver who drives a specified type  
            of vehicle with a report showing the driver's current public  
            record and any subsequent convictions, driver's license  
            revocations, failures to appear, accidents, driver's license  
            suspensions, driver's license revocations, or any other  
            actions taken against the driving privilege.  

          6)Requires employers of drivers of specified vehicles such as  
            commercial truck drivers, school buses, farm labor vehicles,  
            tow trucks, youth buses, paratransit vehicles, ambulances,  
            vehicles that transport hazardous materials, to show EPN  








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            reports, during regular business hours, upon the request of  
            the California Highway Patrol (CHP).  

          7)Requires employers of drivers of specified vehicles as  
            described above to obtain EPN reports from DMV at least every  
            12 months that is to be signed, dated, and maintained by the  
            employer.  

          8)Requires DOJ to maintain criminal history information on any  
            person within the state and requires DOJ to generate a report  
            to a requesting entity, as specified.  

           FISCAL EFFECT  :  Unknown 

           COMMENTS  : Existing law requires PUC to regulate various  
          transportation services, including CPCs.  CPCs perform various  
          types of transportation services including, but not limited to,  
          a limousine with seating capacity up to eight passengers, a bus  
          providing prearranged services with capacity up to 15  
          passengers, or buses providing round-trip sightseeing trips.  In  
          order to obtain an operating permit or certificate from PUC,  
          CPCs must meet a number of requirements including providing  
          sufficient proof of financial responsibility, maintaining a  
          preventative maintenance program for all vehicles, possessing a  
          safety education and training program, and regularly checking  
          the driving records of all persons operating vehicles used in  
          transportation for compensation.  

          In a September 2013 decision, PUC began regulation of the new  
          online app-based ride services by creating a distinct new  
          category of CPCs called TNCs.  PUC tailored specific new rules  
          in response to the introduction of new technology into an  
          existing industry. The decision requires TNCs to obtain a permit  
          from the PUC, conduct criminal background checks of drivers,  
          establish a driver training program, implement a zero-tolerance  
          policy on drugs and alcohol, conduct vehicle inspections, and  
          obtain authorization from airports before conducting any  
          operations on or into airport property. The decision also  
          requires each TNC to maintain commercial liability insurance  
          policies providing not less than $1 million per-incident  
          coverage for incidents occurring under specific conditions.  



          The author states that this bill was introduced in attempt to  








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          provide additional clarification to the TNC regulations set  
          forth by PUC and to also bring into alignment inconsistent  
          requirements that currently exist between TNCs and other CPC  
          providers.  Specifically, this bill requires all CPCs, including  
          TNCs, to participate in the EPN system, to be subject to  
          mandatory alcohol and controlled substance testing, and undergo  
          criminal background checks through DOJ.  



          DMV's EPN was established as a voluntary program in 1983 to  
          provide employers and regulatory agencies with a means of  
          providing driver safety through the ongoing review of driver  
          records.  By 1998, the EPN system had expanded to require  
          participation by most commercial drivers, including drivers  
          transporting property, passengers, and household goods.  The  
          current EPN system is designed to automatically generate a  
          report of a driver's record and electronically send the report  
          to the employer under specific circumstances including: upon  
          enrollment of a driver, annually from the date of employment, or  
          whenever a driver commits certain moving violations (e.g.  
          accidents, driving under the influence, suspended driver's  
          license).  Presently, approximately 1.6 million commercial  
          drivers are enrolled in the EPN system and while specific types  
          of CPC drivers are currently required to be enrolled in EPN, TNC  
          drivers are not subject to the same requirement.  This bill will  
          expand the EPN system by clarifying that all CPC drivers,  
          including TNC drivers, are required to enroll in EPN, thus  
          providing TNCs such as Uber, Lyft, and Sidecar, with timely  
          information on the DMV records of the drivers they employ.  



          This bill also intends to address a discrepancy related to  
          existing mandatory alcohol and substance testing requirements.   
          The PUC's September 2013 regulations require TNCs to implement a  
          zero-tolerance alcohol and controlled substance use policy and  
          provide riders with information on how to report a driver  
          suspected of being under the influence of intoxicating  
          substances.  The regulations further provide that TNCs are  
          required to suspend a driver promptly after a zero-tolerance  
          complaint is filed.  However, this regulation differs from  
          existing PUC requirements for other types of CPCs which are  
          required to participate in mandatory and periodic alcohol and  
          controlled substance testing on top of implementing a  








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          zero-tolerance policy.  In order to remedy this discrepancy,  
          this bill expands the mandatory testing requirement to apply to  
          all CPCs and their drivers.  



          Lastly, this bill will require all CPC drivers to now undergo  
          criminal background checks.  PUC regulations require TNCs to run  
          criminal background checks on all hired drivers yet the same  
          requirement does not apply to other types of CPCs.  Furthermore,  
          while PUC regulations require driver background checks,  
          regulations lack specific parameters as to how TNCs are to  
          proceed with this requirement. As a result, TNCs may, for  
          example, use a third party firm that fails to provide a  
          comprehensive search - for instance, only reviewing online  
          digital records, thus failing to capture any data from  
          jurisdictions that exclusively maintain hard copy criminal  
          records.  This bill will bring all CPCs up to the same standards  
          by requiring all drivers to undergo criminal background checks  
          and provides a uniform process by using the DOJ system to ensure  
          the most comprehensive and updated data of an employee is  
          provided to all CPCs.  



          With the demand for online app-based transportation services  
          continuing to rise, the provisions in this bill aim to mitigate  
          the public safety issues and incidents that have been widely  
          reported related to TNCs over the past year and to also provide  
          clarification that all CPCs will be subject to specific PUC  
          requirements.  The author asserts that this bill will provide  
          the necessary tools to ensure the public is safe and closes the  
          gaps that currently exist between TNCs and other CPC providers.   


           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Taxicab Paratransit Association of California (Sponsor) 
          Association for Los Angeles Deputy Sheriffs 
          California Airports Council 
          California Association of Highway Patrolmen 
          California Fraternal Order of Police 
          California Labor Federation 








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          Consumer Attorneys of California 
          Greater California Livery Association 
          Long Beach Police Officers Association 
          Los Angeles County District Attorney's Office 
          Los Angeles County Professional Peace Officers Association 
          Los Angeles Police Protective League 
          Riverside Sheriffs' Association 
          Sacramento County Deputy Sheriffs Association  
          San Diego County Regional Airport Authority 
          San Francisco International Airport 
          Santa Ana Police Officers Association 
          The Honorable Paul Koretz, Councilman, City of Los Angeles

           Opposition 
           
          California Bus Association 
          Legal Services for Prisoners with Childern 
          Lyft Inc. 
          Uber Technologies, Inc. 
           

          Analysis Prepared by  :   Manny Leon / TRANS. / (916) 319-2093