Cal. Pub. Util. Code § 99241

(a) Except for allocations made for purposes of Section 99234 and subdivision (a) of Section 99400, which shall be subject to the rules and regulations adopted by the transportation planning agency, all matters necessary and convenient to the implementation of this chapter shall be subject to rules and regulations, consistent with statute, adopted by the department, with the advice and consent of the commission, and those rules and regulations may be revised from time to time.
(b) The rules and regulations shall specify the procedures by which evaluation and review by the transportation planning agency of public transportation claims shall be accomplished, and shall require submission of corresponding budgets or financial plans, certified financial statements, and other information required in connection therewith. The rules and regulations shall provide for the orderly and periodic distribution of moneys in the fund so that the areas served by the operator will be provided public transportation services on a continuing basis and so that there will be an orderly improvement and maintenance of the system of the operator. The rules and regulations shall provide for the approval of sufficient moneys from the fund to accomplish the intent of the Legislature as expressed in the findings and declarations in Section 99220.
(c) The rules and regulations may require that the transportation planning agency, in reviewing claims, give due consideration to the level of the operator’s passenger fares and charges, the efficiency of the operator’s operations and operating policies and practices, the extent to which the operator is meeting the transportation needs of the area served, and the extent to which the operator is making full use of other available revenues and funds, including federal transportation grants.
(d) The Controller shall annually review the rules and regulations adopted by the department with respect to reporting and auditing procedures and shall make written recommendations for revisions to the department. After consultation with the Controller, the director shall undertake to amend the rules and regulations in accordance with the recommendations.
(e) Rules and regulations adopted by the department with respect to reporting and auditing procedures shall apply to all expenditures of funds allocated pursuant to this chapter.
This section shall become operative on July 1, 1987.