Safety Regulation

Finding 9: The PUC's transportation safety and insurance functions overlap with the duties of the California Highway Patrol and the Department of Motor Vehicles. The overlap results in unnecessary regulation and contributes to gaps in safety.

As rate setter and consumer watchdog -- as well as industry guardian -- for virtually the entire transportation sector, the PUC was a logical place to consolidate most of the State's regulation of buses, trucks, rail and other common carriers in the early days of the century.

The PUC's historic rate regulation of transportation providers also put it in a strong position to impose licensing and safety regulations to serve the customers of both common carriers and others sharing the State's roadways. Its judicial authorities were swift mechanisms for dealing with violators.

But since the PUC's role in economic regulation has been pre-empted at the federal level, it is appropriate to reassess the agency's remaining roles in licensing and safety.

The State has an agency whose primary function is transportation. And within that agency, there are departments whose primary duties are licensing drivers and enforcing safety laws. While it is possible to carefully define responsibilities to avoid technical overlaps, that effort often avoids placing functions with the agency most capable of performing them.

Gaps and Overlaps

Two aspects of the PUC's comprehensive regulation -- liability and safety -- have enduring public benefits and have survived beyond rate deregulation. The PUC uses its licensing authority to require companies to have driver and vehicle safety programs and to ensure that operators carry liability insurance.

The PUC maintains that these functions require its expertise. But many of the PUC's activities duplicate functions of departments in the Business and Transportation Agency -- particularly those of the California Highway Patrol (CHP) and the Department of Motor Vehicles (DMV).

The PUC's liability program requires moving vans, buses, limousines and shuttle buses to maintain adequate liability insurance as a condition of operating in the State. Until January 1, 1997 that requirement also applies to commercial trucks. Legislation effective that date will end PUC jurisdiction over trucking companies.

The PUC also requires intrastate carriers (but not private companies carrying their own goods) to have workers' compensation insurance. Insurance companies are required to notify the PUC when a company's insurance is about to lapse, and the PUC can suspend or revoke a company's operating license if it fails to maintain its insurance or safety programs.

The PUC's safety program consists of requiring companies to have a preventive vehicle maintenance program in place and to subscribe to the Department of Motor Vehicles driver "pull-notice program," which gives companies access to drivers' records.

Because the PUC has an enforcement staff of only 34 in its six field offices statewide, it relies on industry informants to enforce these requirements and to make sure that all carriers operating are licensed. When the PUC certifies a company as having met the insurance and safety requirements, it issues a "Cal T" number for the company to display on its vehicles. Licensed companies, anxious to eliminate "illegal" operators that might be charging lower rates, report companies that appear to lack a Cal-T number.

The California Highway Patrol, meanwhile, has its own safety programs. The CHP conducts regular inspections of bus and truck terminals in which it checks driver logs, makes sure the company has adequate vehicle maintenance and driver training programs, checks accident rates and inspects vehicles for safety.

The CHP also conducts routine roadside inspections of all trucks operating on California highways -- requiring every truck over 10,000 pounds to be inspected once every three months -- and inspects buses in occasional highway "strike force" operations. The CHP (with some exceptions) has no jurisdiction over vehicles with fewer than 11 seats, which takes in nearly all limousines and airport shuttle buses. The CHP also does not have access to the PUC's insurance records for checking either at terminal inspections or roadside stops.

For all of its authority over vehicle safety, the PUC has no vehicle inspectors and does not inspect vehicles. Occasionally the PUC accompanies the CHP on "surprise inspections" at places where buses and shuttles congregate -- at airports, national parks and Disneyland on Prom Night. In these instances, the CHP inspects the vehicles while the PUC provides the jurisdictional authority for the inspection. The CHP conducts similar surprise inspections at airports, in those instances using the jurisdictional authority of airport police.

The CHP and the PUC maintain that there are no overlaps in their safety efforts -- because the CHP deals with actual vehicles and drivers and the PUC deals with companies. At best, however, the present system has the PUC, CHP and DMV performing parallel functions and requires the various agencies to coordinate efforts to avoid overlaps and gaps.

And even with all three agencies involved, the jurisdictional divide leaves at least one serious public safety gap. Because the CHP has no jurisdiction over vehicles carrying fewer than 11 passengers and because the PUC does not inspect vehicles on its own, one large class of commercial vehicles may never be inspected at all.

Shuttle vans -- which the PUC estimates transport between 8 million and 12 million passengers a year in California -- are not included in the CHP's terminal and roadside inspections. As a result, they may never be inspected unless they are examined by airport police or caught in a surprise joint inspection. As a practical matter, many shuttles are able to elude even these inspections by leaving airport grounds whenever inspectors appear.

To further complicate matters, local police agencies, DMV, the State Board of Equalization, and Department of Transportation all have some role in regulating commercial vehicles. The Commissioner of the Highway Patrol testified that while cooperation among agencies is good, the system could be better:

Some minor overlaps inevitably occur, but the system generally has worked out the kinks and each agency understands and carries out its responsibilities. Industry would echo that conclusion, we think with the possible footnote that the PUC has been characterized as lacking responsiveness.⁽⁹²⁾

One additional factor soon may affect the State's safety oversight of transportation carriers. A proposal now under debate at the federal level would incorporate insurance records for both interstate and intrastate transportation carriers into a centralized national database. Once the database is in place, the trucking industry is expected to propose that the authority of states to prevent uninsured carriers from operating be removed. If the move is successful, state oversight of carrier liability insurance could end by 1999.⁽⁹³⁾

Legislative Changes

After Congress deregulated intrastate trucking in 1994, ending state control over rates, the Governor's Deregulation Task Force was convened to decide how the State should respond. The Task Force, which was made up of industry and state agency representatives, concluded that the PUC's licensing and insurance authority over all commercial vehicles except for household goods movers and passenger carriers, should be transferred to the California Highway Patrol. The Task Force further recommended that a Motor Carrier Advisory Committee be set up to look at more long-range issues, including transferring all trucks and passenger carriers remaining under PUC oversight to the CHP.⁽⁹⁴⁾

Representatives from the trucking industry followed up by sponsoring legislation. The truckers were motivated partly by the fact that the fees they were paying to the PUC exceeded what the PUC was spending to regulate the industry. Legislative hearings on the issue revealed that in 1995 the PUC collected $20 million in fees from trucking companies, but spent only $9 million on transportation issues.⁽⁹⁵⁾

The legislation that resulted -- AB 1683 (Conroy), which will become effective in January 1997 -- differed from the task force recommendations in two ways.

First, instead of consolidating the PUC's licensing and safety functions at the CHP as the task force recommended, the new law divides those responsibilities between the CHP and the DMV. Under AB 1683, the CHP will take over the PUC's function of checking trucks for liability and workers compensation insurance, adding those requirements to its truck terminal inspections. The DMV will enter the insurance information into a database to which the CHP will have access. The DMV will issue companies a motor carrier permit, which will be the equivalent of the PUC's license to operate a commercial vehicle.

Second, instead of following the long-term recommendation of the task force that both trucking and passenger carriers eventually be moved out of the PUC, the bill transferred only trucking carriers. According to the executive vice president of the California Trucking Association, the exclusion of passenger carriers was strategic:

This was a tough bill, a consensus-building bill. As it was it took us two years to get the bill through. The (federal) pre-emptive legislation dealt only with freight transportation and we made a decision to stick close to the federal deregulation guidelines. If the bill had included passenger carriers it would have taken four years to get it passed.⁽⁹⁶⁾

Household goods movers, who were not included in trucking deregulation at the federal level, also opted to exclude themselves from AB 1683. According to the president of the California Moving & Storage Association, the reason is that the moving industry needs the consumer protection oversight of the PUC because consumers are unsophisticated about using household moving services and moving is stressful. But here again the public interest is confused with protecting industry :

Movers want to stay with the PUC because the PUC knows how to regulate. They go after the unlicensed movers who take business away from licensed movers. They understand the vulnerability of the moving industry to consumer complaints.⁽⁹⁷⁾

Realigning Responsibilities

The State has at least three options for realigning the PUC's safety, liability and consumer protection functions:

1. Change the CHP's Jurisdictional Threshold. One solution would be to expand the CHP's jurisdiction from the present 11-passenger limit to all commercially operated passenger vehicles except taxi cabs, which are under local authority. This would leave the PUC with authority to check for liability insurance and other safety programs and to issue an operating license. However it would bring shuttle buses into the CHP's terminal inspection program and also allow the CHP to inspect these vehicles on its own authority at airports, in roadside stops and at other locations without PUC involvement. Even without putting shuttle buses under CHP jurisdiction, the PUC role in inspecting shuttle buses adds little value since airport police have authority to inspect these vehicles on their own and to prevent vehicles that fail inspections from operating on airport grounds.

2. Shift Passenger Carrier Jurisdiction. A broader solution to eliminating both gaps and duplication would be to follow the recommendation of the Governor's deregulation task force and build on the model of AB 1683 by transferring passenger carrier oversight to the CHP and the DMV. That move would allow the CHP to include shuttle vans in its terminal and vehicle inspection programs, take over the PUC's function of checking for insurance and carry out enforcement through the courts or by instructing the DMV to revoke a company's motor carrier permit. The PUC argues that its authority over passenger carriers is necessary because it is the only state entity with the power to revoke an operating license. But this authority could be replicated at DMV, as planned for trucking companies under AB 1683 -- particularly since DMV issues licenses and maintains records for drivers.

3. Consumer Protection. Providing a method for resolving consumer complaints also serves a genuine public need, but there is no reason this need must be met by the PUC. Despite moving industry claims that the public needs special protection from unethical moving companies, there is no persuasive evidence that the problems of customers of moving companies -- or passenger buses -- could not be addressed by another governmental entity or by the same remedies afforded in any other business transaction. The president of the California Moving and Storage Association (CMSA), acknowledged in a letter to the Little Hoover Commission that consumer protection related to the moving industry could be provided by another agency:

Another agency, a restructure CPUC and/or a combination of the above could possibly perform the necessary regulatory functions. However, CMSA would strongly suggest that nothing less than the existing level of expertise be utilized. ⁽⁹⁸⁾

Transportation deregulation offers the State the opportunity to realign its regulatory programs to provide the greatest possible benefit to the public interest and safety. Seven other states provide a model. All of these states rely on transportation agencies outside their public utilities commissions to perform the transportation oversight responsibilities assigned in California to the California Public Utilities Commission.⁽⁹⁹⁾

Recommendations

Recommendation 9-A: The Legislature and the Governor should enact legislation transferring the safety and liability regulation of all commercial highway carriers to the California Highway Patrol and the Department of Motor Vehicles.

Common sense and economic realities prompted the Legislature in 1996 to move safety and licensing of truckers to the CHP and the DMV. Common sense dictates that the same functions for other transportation providers be transferred to those agencies as well.

Recommendation 9-B: The Legislature and the Governor should enact legislation putting minivans that are used to carry passengers commercially under the same safety oversight as larger passenger vehicles.

Shuttle vans represent an area where economics and convenience actually work in favor of the State's policies of discouraging single occupancy vehicles. The State should take advantage of this trend by providing shuttle passengers the same level of safety as in other commercial passenger carriers.

Recommendation 9-C: The Governor and the Legislature should enact legislation moving the PUC's consumer protection functions concerning household movers to the Department of Consumer Affairs. A sunset review should be performed to determine if there is a continuing need for this specialized oversight.

The State has an enduring interest in making sure its citizens are not cheated or victimized by thieves. The State pursues this interest daily with generalized law enforcement and consumer protection agencies. There is nothing to indicate that a similar level of state involvement on household moving issues will prove inadequate.