BILL ANALYSIS
AB 2430
Page 1
Date of Hearing: April 19, 2004
ASSEMBLY COMMITTEE ON TRANSPORTATION
Jenny Oropeza, Chair
AB 2430 (Wiggins) - As Amended: April 21, 2004
SUBJECT : Commercial air carriers: hot air balloons.
SUMMARY : Removes hot air balloon owners from the jurisdiction
of the Public Utilities Commission (PUC) and releases them from
specific insurance requirements. Specifically, this bill :
1)Exempts hot air balloons from PUC regulations that require
accident liability insurance by excluding any person owning,
controlling, operating, renting, managing, furnishing, or
otherwise providing transportation by hot air balloon for
entertainment or recreational purposes from the definitions of
"commercial air operator," and "aircraft."
2)Requires hot air balloon owners and operators to provide
passengers with proof of liability insurance, a document that
identifies both the insurer and the amount of insurance
coverage.
3)Deletes the requirement that hot air balloon owners and
operators must provide passengers with a copy of a release
from liability form.
EXISTING LAW :
1)Provides, pursuant to federal law, that balloonists are
regulated by the standards set by the Federal Aviation
Administration.
2)Authorizes PUC to regulate public utilities including highway
carriers, household goods carriers and charter-party
(passenger) carriers in order to ensure that carriers which
operate in California have adequate insurance, provide
workers' compensation coverage, and operate safely.
3)Defines a "commercial air operator" as any person owning,
controlling, operating, renting, or managing aircraft for any
commercial purpose for compensation, and "aircraft" as any
contrivance used for navigation of, or flight in, the air.
AB 2430
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4)Requires, pursuant to PUC General Order 120-C (GO 120-C), that
an "aircraft" maintain $100,000 per passenger in passenger
liability, $100,000 in non-passenger liability for a minimum
of three non-passengers, and $100, 000 minimum in third-party
property damage.
FISCAL EFFECT : Unknown
COMMENTS : Currently, there exist 40 companies in California
that offer balloon rides for compensation. Most of these
companies are located in Napa Valley, Sonoma Valley, Palm
Springs, Temecula, and San Diego (Del Mar and Escondido).
The author provides that a convergence of issues, some of, which
are common to the rest of the country, and some, which are
unique to California, has brought about this measure. During
the past decade, commercial balloon operators have had a choice
of several insurance companies to meet their needs. The
companies were admitted to: a) write insurance in the State of
California; b) provide the required proof to PUC; and, c)
provide that insurance at acceptable rates.
Since September 11, not only has aviation insurance taken a big
hit, but also all insurance, including the reinsurance industry.
Additionally, the stock market and falling interest rates have
negatively affected investments by this industry. As a result,
insurance companies have raised premiums and tightened
underwriting procedures. Smaller specialty markets such as the
ballooning industry were particularly vulnerable to these
events. In 2002, the author points out that two insurance
companies stopped writing policies for balloonists.
Simultaneously, at a time when specialty insurance had been the
most difficult to obtain, PUC started to strictly enforce its GO
120-C, a regulation that stipulates liability insurance coverage
limitations to be carried by "aircraft," as defined (See
Existing Law). The PUC had begun strict enforcement actions
against balloon operators who have insurance at the required
limits but who obtain their insurance from a non-admitted
carrier. As a result of the above, there are only two insurance
companies writing hot air balloon insurance in California and
one of the two is not recognized by PUC.
The author states that the root of the problem is PUC GO 120-C.
The hot air balloon industry believes the regulations under this
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law were not meant for them. Balloonists explain that GO 120-C
existed before they arrived in California as an industry in the
mid-1980s and accordingly were not intended to be included.
The PUC takes no position on whether or not the Commission
should or should not regulate insurance limits, but it noted
that the obligation to regulate exists and has been carried out
for more than 20 years. The PUC admits that commercial balloon
flights could not have been intended when the law was passed in
1963 and adds that balloonists are free to ask the Legislature
to exclude them from the code sections that subject them to that
law. However, PUC adds that they are not prepared to endorse
that request absent another government agency to take their
place to ensure enforcement of the minimum insurance
requirements.
The Consumer Attorneys of CA (CCA) were officially opposed to
this bill on the grounds that the April 12 amendment adding a
release of liability waiver form placed unacceptable burdens on
the California consumer. CCA argued that it was difficult to
see how balloonists would be motivated to obtain adequate
insurance when they mandate that every passenger sign a waiver
of liability. A subsequent amendment on April 21 removed the
waiver provision from the bill and with it the opposition. In
addition, the author added a requirement that balloonists
provide proof of liability insurance to their passengers.
REGISTERED SUPPORT / OPPOSITION :
Support
Aerostat Services, Inc.
Airship and Balloon Company
Balloon Above the Desert, Inc.
Balloon Excelsior
Balloon Federation of America
California Dreamin'
Calistoga Balloons of Napa Valley
Delta Relocation Services, Inc.
Merryvale Vineyards
Napa Valley Aloft
Napa Valley Balloons, Inc.
Professional Balloon Pilots Association of Napa County, Inc.
Up & Away Ballooning, Inc.
AB 2430
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Individual letters (9)
Opposition
Consumer Attorneys of California
Analysis Prepared by : Frances Chacon / TRANS. / (916)
319-2093