BILL ANALYSIS
AB 2430
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CONCURRENCE IN SENATE AMENDMENTS
AB 2430 (Wiggins)
As Amended August 9, 2004
2/3 vote. Urgency
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|ASSEMBLY: |76-0 |(May 20, 2004) |SENATE: |36-0 |(August 19, |
| | | | | |2004) |
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Original Committee Reference: TRANS.
SUMMARY : Removes hot air balloon owners (owners) from the
jurisdiction of the California Public Utilities Commission (PUC)
and instead places them under the jurisdiction of local
governments, as specified, requires specified levels of
liability insurance, and sunsets these provisions on January 1,
2009.
The Senate amendments :
1)State that hot air balloon owners will now be under the
jurisdiction of their respective local governments and will be
required to do the following or be subject to a misdemeanor:
a) Obtain a business license from their respective local
governments and to prominently display that license at the
owner's primary place of business; and,
b) Provide to the local government, annually or whenever a
change occurs, a currently effective certificate of
insurance.
2)Require hot air balloonists for hire to maintain liability
insurance:
a) Of at least $1,000,000 for injury or wrongful death of
passengers or other persons, and for property damage; and,
b) $100,000 for each passenger for any balloon carrying
more than 10 passengers.
3)Allow local governments to charge a reasonable fee for
purposes of carrying out the new duties of issuing business
licenses, processing evidence of insurance, and notifying
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owners of insurance requirements through the business license
renewal.
4)Sunset all of the above provisions on January 1, 2009.
5)Expand the existing state mandated local program language.
6)Add a coauthor and an urgency clause.
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.
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.
AS PASSED BY THE ASSEMBLY , this bill:
1)Exempted 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)Required 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.
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3)Deleted the requirement that hot air balloon owners and
operators must provide passengers with a copy of a release
from liability form.
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). 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
law were not meant for them. Balloonists explain that GO 120-C
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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.
According to the Senate Energy, Utilities, and Communications
Committee, "The requirement to carry insurance isn't unique to
the hot air balloon industry. Amusement parks, everyone who
drives a car, and countless other people and businesses are
required to maintain liability insurance as a "cost of doing
business." The requirement to carry insurance assures those
injured or who have suffered a loss through no fault of their
own have some place to turn for compensation and payment of
medical bills. In the absence of insurance, the state may very
well become responsible for paying for any emergency medical
care." The Senate amendments require owners of hot air balloons
for hire to carry at least $1,000,000 of wrongful death and
property damage insurance, and $100,000 of insurance for each
passenger for any balloon carrying more than ten passengers.
Analysis Prepared by : Frances Chacon / TRANS. / (916) 319-2093
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