decisiondocs.cpuc.ca.gov/.../published/g000/m214/k452/214452453.docx · web viewpub. util. code...

ALJ/HYS/avs Date of Issuance 5/15/2018

Decision 18-05-005 May 10, 2018

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of Proper Sightseeing Corporation, a California corporation, for Authority to Operate as a Scheduled Passenger Stage Corporation with Hop On/Hop Off Service on Fixed Routes Between Points in Hollywood, California and Santa Monica, California; and to Establish a Zone of Rate Freedom.

Application 17-04-012

DECISION GRANTING AUTHORITY TO OPERATE AS A SCHEDULED PASSENGER STAGE CORPORATION AND TO ESTABLISH A ZONE OF RATE FREEDOM

SummaryThis decision grants Proper Sightseeing Corporation a certificate

of public convenience and necessity to operate as a scheduled passenger stage corporation with hop on/hop off service on fixed routes between points in Hollywood and Santa Monica, and to establish a zone of rate freedom. The proceeding is closed.1. Procedural Background

Proper Sightseeing Corporation (Proper) currently holds a charter party Class A permit (TCP-A). Proper now seeks passenger stage carrier (PSC) authority to allow it to provide scheduled hop on/hop off bus tours and a zone of rate freedom (ZORF) in which to charge rates. Proper proposes to operate hourly round trips from the Hollywood Welcome Center from 10:00 a.m. to 5:00 p.m., and round

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A.17-04-012 ALJ/HSY/avs

trips from 3rd Street in Beverly Hills at 10:45 a.m., 1:45 p.m. and 4:45 p.m., seven days a week. The proposed fare is free for ages six and under, $19 for ages six through 12, $29 for ages 13 through 22, $49 for ages 23 through 64, and $39 for ages 65 and up. Proper proposes a ZORF of $24 above and below the proposed fares, with a minimum fare of $15.

Screamline Investment Corporation dba Tour Coach Transportation (Screamline) filed a protest to the application asserting that Proper failed to establish financial and operational fitness for undertaking the proposed service, that Screamline and other carriers will be economically harmed if the requested authority is granted, and that Proper had already been operating the proposed service illegally without authority for which it should be sanctioned.

Proper filed a reply to the protest stating, among other things, that it had operated the hop on/hop off service from July to September 2016 upon the advice of its consultant that it was permitted under its TCP-A authority, and that it immediately ceased the service after being informed that it was not authorized. After the conduct of a prehearing conference on July 24, 2017, Proper filed an amended reply clarifying that it had ceased its hop on/hop off service as of its own volition in December 2016, and that it learned of the need for PSC authority in order to conduct hop on/hop off service in February 2016 at a summit meeting with the Commission’s Consumer Protection and Enforcement Division (CPED), at which time Proper undertook to apply for that authority.

The assigned Commissioner’s August 8, 2017, Scoping Memo identifies the following issues to be determined:

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1. Has Proper established reasonable fitness and financial responsibility to initiate and conduct the proposed services and meeting all of the requirements set forth under Section 1032(b)(1)?

2. Is there competition for Proper’s proposed passenger stage transportation service? If so, will the competition together with the proposed ZORF result in reasonable rates and charges for the Applicant’s proposed passenger stage transportation service?

An Evidentiary hearing was conducted on October 4, 2017. Opening briefs were filed on December 15, 2017, and reply briefs were filed on January 16, 2018, upon which the matter was submitted.2. Financial Fitness

Pub. Util. Code § 1032(b) (1) provides:Before a certificate is issued or transferred, the commission shall require the applicant to establish reasonable fitness and financial responsibility to initiate and conduct, or continue to conduct, the proposed or existing transportation services. The commission shall not issue or transfer a certificate unless the applicant meets all of the following requirements:(A) The applicant is financially and organizationally

capable of conducting an operation that complies with the rules and regulations of the Department of the California Highway Patrol governing highway safety.

(B) The applicant is committed to observing the hours of service regulations of state and federal law, where applicable, for all persons, whether employees or subcarriers, operating vehicles in transportation for compensation under the certificate.

(C) The applicant has a preventive maintenance program in effect for its vehicles used in transportation for compensation that conforms to

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regulations of the Department of the California Highway Patrol, as described in Title 13 of the California Code of Regulations.

(D) The applicant participates in a program to regularly check the driving records of all persons, whether employees or subcarriers, operating vehicles used in transportation for compensation requiring a Class B driver’s license under the certificate.

(E) The applicant has a safety education and training program in effect for all employees or subcarriers operating vehicles used in transportation for compensation.

(F) The applicant agrees to maintain its vehicles used in transportation for compensation in safe operating condition and in compliance with applicable laws and regulations relative to motor vehicle safety.

(G) The applicant has filed with the commission a certificate of workers’ compensation insurance coverage or statement required by Section 460.7.

(H) The applicant has provided the commission an address of an office or terminal where documents supporting the factual matters specified in the showings required by this subdivision may be inspected by the commission and the Department of the California Highway Patrol.

The Commission no longer assesses “reasonable fitness and financial responsibility” by reference to a carrier’s risk for financial loss. As Decision (D.) 15-05-029 reaffirms, a carrier’s ability and commitment to meeting insurance and safety standards are now paramount.1 Proper has demonstrated its ability to comply with the

1 D.15-05-029 at 3. See also D.01-05-001, granting a PSC notwithstanding the “multiple problems” and “less than admirable” financial showing, and D.99-10-068, granting authority to expand services notwithstanding “a weak showing of financial fitness and customer demand for expanded service.” (“Although we intend to continue to oversee carrier safety, we do not intend

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requirements of Section 1032(b)(1)(A) through (H) by virtue of having complied with the identical requirements in the exercise of its TCP-A authority,2 as confirmed by the Commission’s CPED.3 We find that Proper has therefore established reasonable fitness and financial responsibility to initiate and conduct the proposed services and meet all of the requirements set forth under Section 1032(b)(1).

Screamline asserts that Proper nevertheless fails to meet the standard of reasonable fitness and financial responsibility for its lack of moral trustworthiness, reliance, and dependability in its representations regarding its business operations, and for its failure to present financial documents in compliance with Rule 2.2 that conform to generally accepted accounting standards.

Screamline points to Proper’s inconsistent statements regarding its prior operation of a hop on/hop off tour without a PSC license: Proper’s application did not identify its temporary tour operation in late 2016 until after Screamline’s protest to the application asserted that Proper had been improperly offering the tour, and attached a September 22, 2016, printout from Proper’s website advertising the tour. Proper filed a reply admitting to having offered the tour between July and September 2016 on its consultant’s advice that it had authority to do so, but asserting that Proper ceased operations and ticket sales in September 2016 immediately upon learning that it did not hold such authority.4 Proper subsequently amended its reply to use the resources of the state and legitimate businesses to provide a forum for protests that offer little or no prospect of addressing the broader public interest.”)2 See Section 5374(a)(1).3 See November 3, 2017, Declaration of Albert Giang, Attachment A, “Declaration of Don A. Wise.”4 Proper reply at 7-8.

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to correct the sequence and dates of events, to state that it offered the tour from the end of June 2016 to mid-December 2016, but asserting that it “independently decided to temporarily cease operating the hop-on hop-off tours, to be relaunched in 2017.”5 This statement was contradicted by Proper’s Chief Operating Officer Scott Sanchez, who initially testified that Proper had applied for the PSC license before CPED informed it that it was not authorized to operate the tour, until admitting that Proper received notice from CPED on February 27, 2017, in advance of filing this application.6 In addition, the evidence shows that three tickets for Proper bus tours were sold by a third-party ticket seller in March 2017.7

Similarly, Screamline points to Proper’s failure to identify the preparer of Proper’s balance sheet and profit and loss statement, Jeffrey Hefner, as an owner, and to Jeffrey Helfer’s representation of himself on his letterhead as a certified public accountant, even though he has not held a license in Maryland since 1994 or in California since 1997.8 Furthermore, Hefner was wholly unable to explain the bases for the entries in the documents.9

And, Screamline points to Proper’s inconsistent statements of ownership. Proper’s application names Brandon Helfer as Proper’s Chief Executive Officer and Chief Financial Officer and 50% owner,

5 Proper amended reply, at 8. Screamline further argues that testimony shows that 6 Proper/Sanchez, RT 200:3-8, 202-203.7 Ex. A to Ex. 1.8 Screamline’s December 15, 2017, request for official notice of these facts is granted. 9 Proper/Hefner, RT 139-146, 158-163.

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and Scott Sanchez as Proper’s Secretary and 50% owners.10 However, Proper’s witnesses Jeffrey Helfer and Scott Sanchez testified that Jeffrey Helfer and Dr. Bobby Day are also owners, and that the four owners have equal shares in the company.11

Also, Screamline questions Proper’s arrangement with respect to its buses. Proper’s witness Jeffrey Helfer testified that the buses to be used in its operation are owned by the Chilee Corporation, a corporation that Proper wholly owns, but that Proper pays all expenses related to the buses,12 and Screamline suggests that this arrangement and other financial dealings between Chilee Corporation and Proper may be intended to escape potential liability related to Proper’s bus service or for other improper purpose.13 Screamline offers no legal basis for its suggestion, and none is apparent. We give no weight to Screamline’s speculation.

Likewise, we reject Screamline’s implication that Proper’s arrangement with respect to its buses raises the specter of financial unfitness or that further disclosure is required regarding it. Specifically, Proper’s witnesses testified that the buses to be used in its operation are owned by the Chilee Corporation, a corporation that Proper wholly owns, and that Proper pays all expenses related to the buses. (Proper/Helfer, RT 120-122; Proper/Sanchez, RT 207-208.) Although Screamline questions this arrangement, it offers no legal reason why this arrangement would prevent Proper from complying with insurance and safety requirements, and none is apparent.10 Proper application, at 2.11 Proper/Helfer, RT 120:25-28, 122:19-24; Proper/Sanchez, RT 207:27-208:13.12 Proper/Helfer, RT 166-167, 178-179; Proper/Sanchez, RT 216.13 Screamline opening brief at 8-9.

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To be sure, the record shows that Proper’s principals are inattentive to details regarding its ownership, finances, and operations. However, such inattention is immaterial to Proper’s ability to adhere to insurance and safety requirements. Although there may be circumstances in which an applicant’s misrepresentations rise to the level of a Rule 1.1 violation meriting the rejection of an application for a PSC license, that is not the case here. We do, however, remind Proper that we take violations of Rule 1.1 very seriously, and expect Proper to take seriously its responsibility not to mislead the Commission by artifice or false statements of fact or law.

Screamline points to Proper’s prior unauthorized tour operations as evidence of Proper’s lack of moral fitness. We do not hold Proper’s prior unauthorized tour operations to bar it from receiving a PSC. Our aim is compliance with insurance and safety requirements. Proper promptly ceased its unauthorized operations as soon as became aware of them.

Screamline questions whether Proper is in compliance with the requirement to pay PUC Transportation Reimbursement Account fees and file an annual fee statement in connection with its TCP-A permit, based on witness Sanchez’s testimony that Proper had not paid the fees and on Proper’s failure to provide Screamline with a receipt in response to Screamline’s post-hearing request, and requests further hearing to determine this fact. That testimony is contradicted by CPED’s declaration that Proper had in fact paid those fees.14 The record sufficiently resolves the issue. Proper is in compliance with its

14 See November 3, 2017, Declaration of Albert Giang, Attachment A “Declaration of Don A. Wise.”

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TCP-A requirements, and we have no basis to anticipate that it will attempt to avoid compliance with its PSC requirements.

Screamline asserts that Proper has not displayed its TCP-A number on its buses and on its advertising, without citation to any evidence. We give it no weight.3. ZORF

Proper proposes $49 for an adult hop on/hop off ticket with a variance of $24 and a minimum fare of $15. Screamline is a competitor for Proper’s proposed service, and Proper’s proposed rates are within the range of prices charged by Screamline. On this basis, we find that the competition together with the proposed ZORF result in reasonable rates and charges for Proper’s proposed service.4. Comments on Proposed Decision

The proposed decision of the ALJ in this matter was mailed to the parties in accordance with Section 311 of the Public Utilities Code and comments were allowed under Rule 14.3 of the Commission’s Rules of Practice and Procedure. Screamline filed comments on April 17, 2018, identifying the proposed decision’s erroneous citation to Rule 2.2 for the proposition that an applicant for a certificate to operate as a passenger stage corporation must provide a financial statement. The Administrative Law Judge (ALJ) revised the proposed decision to correct the citation to Rule 3.3.5. Assignment of Proceeding

Clifford Rechtschaffen is the assigned Commissioner and Hallie Yacknin is the assigned ALJ in this proceeding.Findings of Fact1. Proper has demonstrated its ability to comply with the requirements of Section 1032(b)(1)(A) through (H) by virtue of having

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complied with the identical requirements in the exercise of its TCP-A authority,15 as confirmed by the Commission’s CPED.2. Proper has established reasonable fitness and financial responsibility to initiate and conduct the proposed services and meet all of the requirements set forth under Section 1032(b)(1).3. Screamline is a competitor for Proper’s proposed service.4. Proper’s proposed rates are within the range of prices charged by Screamline.5. The competition between Proper and Screamline together with the proposed ZORF result in reasonable rates and charges for Proper’s proposed service.Conclusions of Law1. Proper’s application for a certificate of public convenience and necessity for authority to operate as a PSC should be granted.2. Proper’s request for a ZORF with a variance of $24 above and below its proposed fares and a minimum fare of $15 should be granted.3. This proceeding should be closed.

O R D E R

IT IS ORDERED that:1. Proper Sightseeing Corporation is granted a certificate of public convenience and necessity authorizing it to operate as a scheduled passenger stage corporation with hop on/hop off service on fixed routes between points set forth in Appendix PSC-33575, subject to the conditions contained in the following paragraphs.2. Proper Sightseeing Corporation shall:15 See Section 5374(a)(1).

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a. File a written acceptance of this certificate within 30 days after this decision is effective.

b. Establish the authorized service and file tariffs and timetables within 120 days after this decision is effective.

c. File tariffs on or after the effective date of this decision. The tariff shall include a description of all the stop points and the arrival and departure times from such points. The tariff shall become effective ten days or more after the effective date of this decision, provided that the Commission and the public are given not less than 10 days’ notice.

d. Comply with General Orders Series 101 and 158, and the California Highway Patrol safety rules.

e. Comply with the Commission’s controlled substance and alcohol testing certification program pursuant to Pub. Util. Code § 1032.1 and General Order Series 158.

f. Remit to the Commission the Transportation Reimbursement Fee required by Pub. Util. Code § 423 when notified by mail to do so. Failure to comply with this filing will result in suspension and/or revocation of authority.

g. Comply with Pub. Util. Code §§ 460.7 and 1043, relating to the Workers’ Compensation laws of this state.

h. Enroll all drivers in the Pull Notice System as required by Vehicle Code § 1808.1.

3. In addition to posting and filing tariffs, Proper Sightseeing Corporation shall post notices explaining fare changes in its terminals and passenger-carrying vehicles. Such notices shall be posted at least ten days before the effective date of the fare changes and shall remain posted for at least 30 days.4. Proper Sightseeing Corporation is authorized to begin operations on the date that the Consumer Protection and Enforcement

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Division mails a notice to applicant that its evidence of insurance and other documents required by Ordering Paragraph 2 have been filed with the Commission and that the California Highway Patrol has approved the use of Proper Sightseeing Corporation vehicles for service.5. Stop points established by Proper Sightseeing Corporation to load and discharge passengers shall conform to all applicable parking or passenger loading zone regulations adopted by local authorities.6. The Certificate of Public Convenience and Necessity to operate as Passenger Stage Corporation - 33575 granted herein, expires unless exercised within 120 days after the effective date of this decision.7. Application 17-04-012 is closed.

This order is effective today.Dated May 10, 2018, at Fontana, California.

MICHAEL PICKER PresidentCARLA J. PETERMANLIANE M. RANDOLPHMARTHA GUZMAN ACEVESCLIFFORD RECHTSCHAFFEN

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Appendix PSC-33575Proper Sightseeing Corporation Original Title Page

(a California Corporation)

CERTIFICATE

OF

PUBLIC CONVENIENCE AND NECESSITY

AS A PASSENGER STAGE CORPORATION

PSC-33575

-------------------------------

Showing passenger stage operative rights, restrictions,limitations, exceptions, and privileges.

-------------------------------

All changes and amendments as authorized bythe Public Utilities Commission of the State of California

will be made as revised pages or added original pages.

-------------------------------

Issued under authority of Decision 18-05-005, of the Public Utilities Commission of the State of California in Application 17-04-012.


Appendix PSC-33575Proper Sightseeing Corporation Original Page 1(a California Corporation)

I N D E X

Page

SECTION I. GENERAL AUTHORIZATIONS, RESTRICTIONS, LIMITATIONS, AND SPECIFICATIONS........................2

SECTION II. SERVICE AREA ............................................................3

SECTION III. ROUTE DESCRIPTIONS................................................3

Issued by California Public Utilities Commission.Decision 18-05-005, Application 17-04-012


Appendix PSC-33575Proper Sightseeing Corporation Original Page 2 (a California Corporation)

SECTION I. GENERAL AUTHORIZATIONS, RESTRICTIONS,

LIMITATIONS, AND SPECIFICATIONS.

Proper Sightseeing Corporation, a California Corporation, by the certificate of public convenience and necessity granted by the decision noted in the foot of the margin, is authorized to transport passengers and their baggage on a scheduled basis with hop on/hop off service between the points described in Section II, over the routes described in Section III, subject, however, to the authority of this Commission to change or modify this authority at any time and subject to the following provisions:

a. Service shall be operated only at the points described in the tariff filed with the Commission.

b. Stop points established by the carrier to load and discharge passengers shall conform to all applicable parking or passenger loading zone regulations adopted by local authorities.



Appendix PSC-33575Proper Sightseeing Corporation Original Page 3(a California Corporation)

SECTION II. SERVICE AREA.

Points in Hollywood and Santa Monica, California.

SECTION III. ROUTE DESCRIPTIONS

Round trips through the each of the points described in the tariff filed with the Commission, over the most convenient streets and highways between those points.


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