TAPE 94-58, SIDE A Number 000 Chairman Porter welcomed the sponsor of HB 360, Rep. Con Bunde. HB 360 - AIRCRAFT/WATERCRAFT GUEST PASSENGER LAW Number 031 REP. CON BUNDE: "This bill concerns the liability and the presumed shared liability in travelling in Alaska on both light aircraft or by small boat, that limits the civil liability that an owner or an operator of an aircraft or a watercraft would have for injuries to passengers when these aircraft or watercraft are not paid forms of transportation. This limited liability does not, however, cover gross negligence or reckless or intentional misconduct. It's simply an attempt to encourage folks to be able to take passengers along and share their recreational opportunities without jeopardizing their entire estate over what could be I guess called `Act of God' accidents. Though, certainly, as I have indicated, it does not disallow recovery for gross negligence or intentional misconduct." Number 064 REP. JIM NORDLUND requested a definition of compensation in this context; would it include, say, a token payment contributed up front for gas? REP. BUNDE replied that such a contribution would not be compensation, that is, would not be paying for transportation; rather, it would be sharing in expenses. REP. NORDLUND wondered if a definition of a token payment might be arrived at and concluded that would be up to the court. REP. BUNDE responded that, while he was not a lawyer, he would interpret it as there being no profit involved. REP. NORDLUND: "Okay." CHAIRMAN PORTER: "And there might not be anyway...but no intention of a profit." Chairman Porter invited the next person to testify. Number 094 MIKE SCHNEIDER, Alaska Academy of Trial Lawyers, testified via teleconference in Anchorage with regard to HB 360. "Looking at this bill, I think you have a clear choice between attempting to encourage people to take passengers in their vehicles for free versus encouraging people to operate aircraft and watercraft safely, and I would encourage the latter, not the former. I would discourage support for this bill. "The rest of my comments, though, are going to assume that this bill is going to move forward, and they are going to be directed to how I think this bill could be improved to address concerns of the very constituency that I assume Rep. Bunde is interested in dealing with. I happen to operate watercraft very occasionally, and aircraft, regularly. Under this bill I cannot, because nobody makes a market for this kind of coverage. There is no nonfault based coverage out there for anything except possibly medical expenses. I can't protect my family, and I can't protect my guest passengers, even if I want to, under this bill, if you pass it the way it is. "If you amend it such that I can be liable but only up to the extent of available insurance coverage, then I still get the immunity that Rep. Bunde is interested in. In other words, I don't subject my entire estate or any part of my estate to liability, I only subject my insurance carrier to exposure to the extent of that which I contracted for and paid a premium for. And then I can protect my family and my friends at least up to some minimal limit. And at the same time by this bill the balance of my estate will be protected. So if you pass this bill the way it is, not only are you discouraging people from being as careful as they possibly can when operating dangerous vehicles, but you're absolutely eliminating the ability of aircraft and watercraft operators to go out and protect their passengers, whom some of us would sure like to protect. "My other concern is, I think people should appreciate that this bill may be a trap for the unwary." Number 174 MR. JOHN GEORGE, lobbyist, National Association of Independent Insurers, testified regarding HB 360. Mr. George said he felt Mr. Schneider offered "an interesting idea, sort of a voluntary liability system...." He said he did not foresee objections to such a system. Mr. George discussed the overt and more subtle pressures on boat and plane owners from people wishing to just come along, or catch a ride... "And," Mr. George remarked, "you're just crazy to take someone along if you don't have specific insurance to cover that. Because in airplanes and boats, the potential for a serious accident is always there. Hypothermia and hitting the ground from 5,000 feet generally are fairly serious events. And so, you just can't take the chance. So you either have to go out and buy insurance - and then the question is, how much do I buy? If I buy $100,000 and they sue me for $500,000, I'm still $400,000 in the hole." MR. GEORGE concluded, "I think Mr. Schneider has an interesting and innovative idea, and I think we would have no objection to that concept... where, if you want to buy the coverage, you certainly can, but if you fail to, or you only buy, say, $25,000 worth, then that's the amount that you're exposed to. So you can protect your passengers if you deem that appropriate. If you don't, then tell them you don't have any and they take their own risk." REP. NORDLUND said he had prepared an amendment after speaking the previous day with Mr. Schneider and was prepared to pass it out when amendments were being entertained. REP. BUNDE: "I think Mike presents a reasonable alternative to all-or-nothing, and I believe the amendment would strengthen the bill." CHAIRMAN PORTER: "If there are no further questions, let's hear the amendment. For the purposes of identification let's mark this Amendment #1." Number 237 REP. NORDLUND: "Mr. Chairman, I move Amendment #1." CHAIRMAN PORTER: "Amendment #1 has been moved. Discussion?" REP. NORDLUND presented his amendment, which imposed a limit on the liability of private individuals with regard to accidents that might occur on their planes or boats. If the individual chose to buy insurance to cover guests or family members he would not be liable for civil damages exceeding the amount of insurance he had voluntarily purchased. CHAIRMAN PORTER: "Mike, are you still on the line? I'm a little confused. I thought that I heard you say that there was not insurance available." MR. SCHNEIDER explained that if HB 360 were to be passed as is, without Rep. Nordlund's amendment, there would be no appropriate insurance available to these boat or plane owners, because with the exception of medical insurance, coverage was fault-based. "But," he said, "with the amendment, I could still go buy my identical policy that gives me $200,000 a seat, inadequate though it may be; I could provide my passengers with that much protection and my estate would be immune from anything beyond that." CHAIRMAN PORTER: "Any further discussion on Amendment #1? Is there objection? Seeing none, Amendment #1 is adopted. What is the wish of the committee?" REP. JEANNETTE JAMES: "I would move that we pass out the Labor and Commerce committee substitute, as amended, which will then be the Judiciary CS, with zero fiscal note and individual recommendations." CHAIRMAN PORTER: "We have a motion to move, as amended, the bill with individual recommendation and zero fiscal note. Is there discussion? Objection? The bill is moved." REP. BUNDE thanked the committee. There was a brief discussion on how long it would take to prepare the CS and transmit the bill to the next committee; Chairman Porter assured Rep. Bunde this would be accomplished as soon as possible. Number 345 The next bill to have been considered was HJR 60; however, the sponsor, Rep. Vezey, was not yet present to present his testimony. The committee continued with SB 321.