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Thanks to PUC, State Is Safer for Hot Air

July 23, 2003|James S. Granelli | Times Staff Writer

With only a modicum of hot air of their own, regulators gave a lift Tuesday to California's tiny hot-air balloon industry.

Tethered to a state law that requires them to have insurance in order to carry passengers, the state's 50 hot-air balloon companies had been in trouble: Their lone carrier stopped offering policies after the Sept. 11 terrorist attacks.

As policies lapsed this year, the state's Public Utilities Commission, which regulates the $30-million-a-year industry, began deflating business with orders to stay grounded.

With no options -- except for the one followed by at least one balloonist who defied the law and took passengers up without insurance -- the mostly mom-and-pop operations turned to the PUC to save their livelihood and 1,000 to 2,000 jobs, a fraction of the state's 14.5 million jobs.

"We had to act immediately because the summer season is when they get 70% of their revenue," said Commissioner Susan P. Kennedy, who didn't know the PUC regulated hot-air balloons until the issue fell in her lap.

Saying she wanted to save jobs, she prodded the PUC two weeks ago to approve a rule to allow balloonists to skirt state laws requiring insurers to be licensed in California to do business here. The agency voted 3 to 2 for the rule even though the panel's own lawyer warned it would violate state law.

So on Tuesday, the commissioners reconsidered. In a 4-0 vote, they quickly approved an interim plan they said they believed complies with state law.

The difference? Kennedy got on the phone with Insurance Commissioner John Garamendi, who had his staff jawbone the insurer to resume offering $1-million policies to hot-air balloon companies -- enough to cover six passengers.

Said Napa Valley balloonist Don Surplus, "This is a good ending to a good story."

Meantime, the PUC will work on more permanent rules.

"The question I have," said Kennedy advisor Ross La Jeunesse, "is what are we doing regulating balloonists?"

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