BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1264 (Leno/Simitian)
Hearing Date: 05/27/2010 Amended: 04/26/2010
Consultant: Mark McKenzie Policy Vote: T&H 6-2
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BILL SUMMARY: SB 1264 would require a commercial airline to
provide adequate food and refreshment, waste removal service,
and sufficient electrical service to provide passengers with
fresh air and light when there are tarmac delays of more than
two hours. The airlines would be required to provide
conspicuous notice regarding passenger rights and complaint
information, as specified. SB 1264 would also authorize the
Public Utilities Commission (PUC) to levy a civil penalty of up
to $27,500 per passenger for violations of these provisions if
the federal government discontinues levying fines on air
carriers for violations of federal regulations.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
PUC enforcement staffing costs of $250-$500 in a future
fiscal Special*/
year if the U.S. DOT discontinues
enforcement General
(contingent upon future appropriation)
Civil penalty revenues unknown, potentially significant penalty
General
revenue gains in a future fiscal year if
the
federal DOT discontinues enforcement
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* Public Utilities Commission General Transportation
Reimbursement Account or General Fund (see staff comments)
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Federal law, the Airline Deregulation Act of 1978, prohibits a
state or political subdivision of a state from enacting or
enforcing a law, regulation, or other provision related to the
price, route, or service of an air carrier. Federal law also
preempts the entire field of aviation safety from state
regulation. Federal regulations, effective as of April 29,
2010, require air carriers to provide adequate food, water,
sanitation, and necessary medical attention to passengers
detained on the tarmac for more than two hours. If a tarmac
delay is more than three hours, the U.S. Department of
Transportation (DOT) may levy a fine of $27,500 per passenger
upon the air carrier.
This bill is intended to ensure that air carriers follow all of
the recently-enacted federal regulations if the federal
government discontinues enforcement of the regulations. The PUC
would only be authorized to levy civil penalties on air carriers
for violations of the bill's provisions if the federal
government discontinues levying fines related to tarmac delays.
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SB 1264 (Leno/Simitian)
The PUC does not currently regulate the airline industry. In
the event that the U.S. DOT discontinues levying fines against
air carriers pursuant to the body of federal regulations
regarding airline passenger protections, this bill would impose
enforcement burdens on the PUC. For example, the PUC would
establish procedures for recording and maintaining passenger
complaints, investigate complaints, conduct airport site visits
to ensure consumer rights and complaint information is properly
posted, develop and administer an enforcement program, and
conduct investigations and hearings on enforcement cases
referred to the PUC. SB 1264 would need to hire administrative,
investigative, and legal staff to perform these functions. The
comprehensive staffing requirements are unknown and would depend
upon when or if the U.S. DOT discontinues enforcement, the
number of complaints received, and the number of cases referred
to the hearing process. Staff estimates that the bill could
impose staffing costs of at least $250,000 and up to $500,000
annually in future fiscal years.
Generally, the PUC regulatory functions are funded by special
funds that receive revenues from the industries that it
regulates. Any new staffing or increases in operations costs
would be approved through the state budget process that approves
PUC spending authority. PUC would then make adjustments to the
surcharges it imposes on industries it regulates to pay for the
new staffing and operational cost increases. Staff notes that
since the PUC does not currently regulate or impose surcharges
on the airline industry to support its regulatory functions, it
may not be appropriate to fund the new staffing costs resulting
from SB 1264 from one of the special funds that support its
operations budget. Therefore, this bill may ultimately result
in General Fund costs.
Staff notes that all civil penalty and interest revenue
collected pursuant to this bill would be deposited into the
General Fund, potentially resulting in unknown but likely
significant revenue gains to the extent the U.S. DOT
discontinues enforcement in a future year. The amount collected
would depend upon the number of successful enforcement actions
that are adjudicated and the number of passengers affected.
Staff notes that issues related to whether the bill is
preemptive of federal law would likely be decided through
litigation should this bill be enacted and subsequently
challenged.
Proposed amendments would make PUC enforcement contingent upon a
future legislative appropriation after PUC determines that the
U.S. DOT no longer has the authority to levy fines upon air
carriers. The amendments would also authorize PUC to undertake
preliminary steps to preserve the enforcement authority of the
commission utilizing existing resources.