BILL ANALYSIS Ó 1
SENATE ENERGY, UTILITIES AND COMMUNICATIONS COMMITTEE
ALEX PADILLA, CHAIR
AB 1524 - Allen Hearing Date:
May 15, 2012 A
As Introduced: January 19, 2012 FISCAL B
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DESCRIPTION
Current law exempts commercial balloon operators from regulation
by the California Public Utilities Commission (CPUC), and
instead requires commercial balloon operators to maintain a
minimum of $1 million of liability insurance for a balloon
carrying up to ten passengers, with additional liability
coverage of $100,000 for every additional passenger. When a
local government requires a business license, a commercial
balloon operator is required to provide evidence of such
insurance to the local government. These provisions sunset on
January 1, 2013 which would return the regulation of commercial
balloon operators to the CPUC.
This bill strikes all sunset clauses thereby permanently
exempting commercial balloon operators from regulation by the
CPUC and maintaining local oversight and mandatory insurance
requirements.
BACKGROUND
According to legislative history suggests that there are or were
40 to 50 commercial balloon operators which are primarily
located in the Napa and Sonoma Valleys, Palm Springs/Palm
Desert, and the San Diego areas. Because they are now regulated
only at the local level (business license and proof of
insurance) exact numbers are not known. All pilots of hot air
balloons, whether they carry passengers or not, are required to
secure a pilot certificate from the Federal Aviation
Administration (FAA). To carry passengers for hire the pilot
must have a commercial pilot certificate. Airworthiness
standards are also set by the FAA for "manned free balloons"
which include flight requirements, strength requirements, and
design construction. Until 2004 the CPUC also had regulatory
authority over commercial balloon operators the impact of which
was nothing more than mandatory liability insurance
requirements.
In 2004 balloon operators expressed concerns about the
ballooning cost of liability insurance, the lack of availability
of such insurance, and frustration with the regulatory
mechanisms of the CPUC which treated balloon operators the same
as operators of other aircraft. Balloon operators argued that
California was the only state to establish minimum liability
requirements for commercial ballooning and that California had
the lowest accident rate among the major ballooning states.
Recognizing these concerns, the Legislature passed, without
dissent, AB 2430 (Wiggins), which established minimum insurance
requirements in statute, required notification to passengers of
the operator's liability coverage, required proof of coverage to
the local government entity granting the ballooning company a
business license, and removed the CPUC's jurisdiction. These
changes were made effective for four years to allow experience
with the new rules and extended in 2008 through 2013.
The National Transportation and Safety Board is responsible for
investigating accidents and incidents involving hot air
balloons. Its database reports 66 accidents and incidents since
1961 in California. Since 2000 there have been 12 ballooning
accidents in California, two of which resulted in two
fatalities.
COMMENTS
1. Author's Purpose . The author intends to permanently
remove the hot air balloon industry from the CPUC's
jurisdiction and protect small business owners from any
future unnecessary and cost prohibitive regulations. To
date the CPUC has reported no negative consequence caused
by the shift from state to local regulation. Additionally,
since 2005, as several new insurance companies started
offering liability insurance for commercial operators of
hot air balloons, the price of this insurance has declined,
and the industry's overall safety record has not
significantly changed. Further, the author's office
indicates that, since 2008, there have only been a few
accidents with none resulting in fatalities.
2. Value Added by CPUC Regulation ? Historically the CPUC
appears to have offered little in its oversight. The
CPUC's prior insurance mandates are now directly mandated
by statute and specifically crafted for hot air balloon
operators. According to the CPUC the "Consumer Protection
and Safety Division (CPSD) is not aware of any negative
consequences to the public caused by the shift from state
to local regulation. Moreover, CPSD believes that local
authorities are in a better position to enforce the
insurance requirements."
3. If This Bill Doesn't Become Law? In the absence of this
bill, regulation of commercial balloon operators will
revert back to the CPUC which reports that it has no staff
assigned to this industry at the current time.
ASSEMBLY VOTES
Assembly Floor (70-0)
Assembly Appropriations Committee (15-0)
Assembly Utilities and Commerce Committee
(14-0)
POSITIONS
Sponsor:
Author
Support:
Balloons Above the Valley
California Public Utilities Commission
Napa Valley Balloons, Inc.
Professional Balloon Pilot's Association
Up & away Ballooning
Oppose:
None on file
Kellie Smith
AB 1524 Analysis
Hearing Date: May 15, 2012