HB 127-AVIATION & AIRCRAFT EMERGENCY EQUIPMENT  CHAIRMAN COWDERY announced that the committee discussed the Senate version [SB 100] of HB 127 at a previous hearing. SENATOR WARD moved to adopt SCS CSHB 127(TRA), Version F, as the working document of the committee. There being no objection, the motion carried. The committee took a brief at-ease. CHAIRMAN COWDERY called the meeting back to order and took public testimony. MR. JOHN MANLEY, staff to Representative Harris, prime sponsor of HB 127, told committee members that Representative Harris's original intention was to make it easier for private pilots who take off from Alaska and land in Canada to do so legally. According to recent federal legislation in Canada, a person must get a permit to bring in a firearm, meaning a rifle or shotgun. Handguns are not allowed. Alaska statutes require private pilots to carry a firearm to take off from Alaska. The new Canadian legislation creates a situation where Alaskan pilots would be acting illegally if they took off without a firearm and illegally if they landed in Canada with one. HB 127 exempts private pilots flying under an FAA flight plan into Canada from carrying a gun. A few other changes regarding emergency equipment to be carried were made in the House. MS. JULI LUCKY, staff to Senator Rick Halford, sponsor of SB 100, explained that most of the provisions of SB 100 were added to SCS CS HB 127(TRA) but it differs from SB 100 in the following ways. A section regarding survival rations was removed; provisions related to communications were removed as no reference to communications was made in the title of HB 127; and new language was added to the civil liabilities section (Section 11), which Senator Taylor worked on. Number 2005 SENATOR TAYLOR expressed concern about lessening the life, health, and safety aspects of the law. He pointed out that a flight from Fairbanks to Dawson covers a significant distance and pilots will be less well-equipped to deal with difficulties with this bill. He said he understands the reasons for the compromise but he is frustrated that it has to be done. SENATOR DONALD OLSON told the committee that this bill will affect two air taxi businesses he owns. He has been a pilot since 1969 and has had to make about 14 or 15 forced landings during his flying career; he has needed the emergency gear he carries various times. He noted that during the past 30 years, the air taxi business has changed. Airlines used rudimentary Cessna 180s whereas now multi-engine turbine aircraft are used. Regarding searches, emergency locator transmitters were not required in the early 1970s so searches could take months. Now that they are required for air taxi businesses and private aircraft, search time has been dramatically reduced. For those reasons, he supports this bill. Senator Olson pointed out that some pilots are reluctant to carry all required emergency gear, such as handguns, because of vandalism. MR. PAUL BOWERS, Director of State Aviation for DOTPF, agreed that vandalism is a problem. He said that requiring pilots in Nome to carry firearms onboard a flight might cause problems if Russian airspace is opened up to private flights. He suggested making the firearm requirement an optional part of emergency equipment or rewording the bill so that it applies to any international flight instead of Canada only. Mr. Bowers also suggested exempting large airlines from Section 1 as they are already exempted by the FAA. Regarding signaling devices, he suggested listing a small mirror as an alternative device. CHAIRMAN COWDERY announced that an error was made when adopting the previous committee substitute and asked that a member move to adopt the correct version. SENATOR TAYLOR moved to adopt SCS CSHB 127(TRA), Version L, as the working document of the committee. There being no objection, the motion carried. CHAIRMAN COWDERY continued to take public testimony. MR. CARL SIEBE, airports engineer for the Statewide Aviation Division of DOTPF, made the following comments. The current statutes create enforcement problems for DOTPF by requiring it to do selective enforcement. Foreign pilots fly into Alaska every year and try to get their book rating, yet under federal law foreign visitors to the United States are prohibited from carrying weapons. In addition, licensed pilots with a felony conviction are prohibited by other statutes from carrying weapons. Last, business aircraft often stop in Alaska for a "pit stop" on their way to other countries. TAPE 01-14, SIDE B MR. SIEBE said an aircraft cannot land in those countries with a weapon so they typically do not carry weapons. He noted that clarification of the original legislative intent of that provision would help DOTPF to administer the statute. Regarding the survival gear statutes in general, he pointed out the U.S. Air Force survival school has excellent guidelines for survival gear, many of which differ from Alaska's statutes. The Air Force requires that survival gear be simple enough to be carried on the person. He informed the committee the revised [1999] Canadian aviation regulations require pilots to carry shelter, signaling equipment and equipment to make potable water. He asked that whatever is put forth in statute be reasonable and enforceable. CHAIRMAN COWDERY said when he was flying in Alaska he carried a sealed metal container filled with survival gear that could only be used, under penalty, for an emergency. He asked if that same concept could be applied to this bill. MR. SIEBE said his first concern with that approach would be enforceability. DOTPF aviation staff are extremely limited and the State Troopers are also limited as far as what they can do. CHAIRMAN COWDERY said most pilots want to conform so a random check should suffice. MR. SIEBE said the FAA doesn't want to get into the requirement for carrying survival gear on small aircraft. If an annual inspection was required, someone in DOTPF would have to enforce that statute. CHAIRMAN COWDERY asked the next testifier his opinion of the concept of a sealed packet of survival gear. MR. BUTCH HALFORD said he is not well-versed on that element of the proposed legislation. SENATOR TAYLOR asked Mr. Halford to comment on the need for a proposed amendment regarding occupancy related contracts and leases at airports. MR. HALFORD said the issue is one of liability. The Division of Risk Management has recently required that anyone who enters into an agreement with the state, whether it be through a contract or a lease, must indemnify the state against any liability less than 100 percent of sole responsibility of the state. He pointed out if the state was 99 1/2 percent responsible for a problem, the person who entered into the lease would have to assume 100 percent of the liability. He felt that is not reasonable and it is not common. It would be far more reasonable to adopt a position of comparative fault so that each party shares in the liability to the degree of fault. Number 1984 SENATOR TAYLOR informed committee members he has submitted a proposed amendment (Amendment 1) to take care of part of that problem. The amendment does not cover as broad a scope as Mr. Halford would like on all liability issues, but it does adopt a comparative fault policy on DOTPF-owned airports with lessees, permittees and concession owners. He moved to adopt Amendment 1. There being no objection, the motion carried. CHAIRMAN COWDERY proposed to delete on page 5, line 17, of SCS CSHB 127(TRA) the reference to AS 02.35.110(b). SENATOR TAYLOR so moved Chairman Cowdery's proposed amendment as Amendment 2. There being no objection, the motion carried. MR. TOM CRAFFORD, representing the Alaska Miners Association (AMA), made the following comments about the civil liability provisions in SCS CSHB 127(TRA). He noted he is a geologist by training. The concerns of the AMA relate to the civil liability exposure of a miner who, out of necessity, maintains an airstrip to support his operations in rural Alaska. Under existing law, the miner may not close the airstrip for public use, even though it is intended solely for the support of the mining operations. As a consequence, this opens the miner up to certain liability issues. The provisions of Section 11 seek to provide some limitations of that liability exposure to the operator of the airstrip but it still leaves a paid employee, perhaps a grader operator, open to liability. He pointed out that section does extend liability protection to damage to an aircraft, which was suggested by the AMA. He felt it would be appropriate to further extend that protection to the contents of the aircraft. MR. CRAFFORD explained that Section 11(b) extends the right to the owner or operator of an airstrip located on private land to close that airstrip by placing a large X on it that is readily visible from the air. The AMA supports the concept but would like that provision to apply to airstrips on public land also. Most miners operate on mining claims and leases from either the federal government or the state so the airstrips associated with those operations are not located on private land. In addition, the limitation on liability in subsection (b) should also be extended to the contents of the aircraft. Number 1730 SENATOR TAYLOR commented that, in his opinion, there is no risk of liability whatsoever because no one has ever been sued in the history of the state for negligence on the maintenance of one of these remote airstrips. He explained that one lawsuit was brought against a person who parked a large vehicle in the middle of a runway and did not move when told to do so. A pilot had to make a landing and damaged the aircraft. The pilot sued the vehicle owner and won. SENATOR TAYLOR said that since there is no risk of liability, he structured this section so that it would only apply to a person who had grossly acted. That section applies to the boss and any employees, even though an employee was paid. The boss was not being compensated for operating the airfield. Regarding the ability to close the runway, that subsection was structured to be limited to private landowners with the understanding that there are operators who work off of public land that do not have the authority to close a runway on public land. That is why two separate subsections were created. CHAIRMAN COWDERY asked Mr. Crafford if Senator Taylor's explanation satisfied his concerns. MR. CRAFFORD said it does in large part but the AMA is also concerned about whether painting an X on a runway is sufficient to close a runway. He noted the placer miners want to be able to restrict access to a runway when they are absent during the winter season to prevent vandalism. He agrees that it is arguable that closing a runway with an X will be an effective deterrent. SENATOR TAYLOR responded that litigation against private landowners on access roads and trails did not occur until private landowners tried to close them off. Instead of closing them off in a reasonable fashion, 99 percent of those landowners strung a 1/2 inch diameter steel cable across the road and someone hit the cable. He suggested that putting an X on the runway should keep 99 percent of pilots from landing. He added that this section will not provide protection if a runway operator set up a "booby" trap. MR. CRAFFORD said the AMA does not believe any operators should obstruct a runway in a dangerous fashion but with this bill a miner is prohibited from closing a runway with an X because the runway is not on private land. CHAIRMAN COWDERY asked if this bill has a referral to another committee. MS. LUCKY answered this is the last committee of referral before the Senate Rules Committee. She explained that the previously mentioned topics were considered by the sponsor. Regarding closing a runway on public lands, the public's right to access must be balanced with the problem of private property being vandalized. The problem with obstructing runways on public lands is that they may need to be used for emergency access. Another concern is that people are not charting these runways because of the fear of liability. Senator Halford wanted to give those people who are maintaining runways but have not charted them because of the fear of liability a little more incentive to do so. SENATOR TAYLOR said he knows there was some concern about Amendment 1 and he hopes it does not burden the problem. MS. LUCKY said the sponsor has no problem with Amendment 1. SENATOR TAYLOR said one issue remains that could be addressed by this legislation, and that is the Lake Hood/DOTPF problem of who gets tie-downs. He hopes that Commissioner Perkins will address that problem through regulation but, if not, this would be an appropriate vehicle to deal with it. SENATOR WILKEN noted that Amendment 1 seems to be a common sense thing that people take at face value. He asked that someone from the Division of Risk Management address Amendment 1 and tell the committee why it has not been done before. He also asked to hear from aircraft owners on Amendment 1. CHAIRMAN COWDERY said due to a lack of time, he would hold the bill and asked Mr. Thompson to address the committee. MR. BRAD THOMPSON, Director of the Division of Risk Management, said his division advises DOTPF as to contract terms of insurance and indemnity. He noted he has been involved in negotiations for the user agreement at the Anchorage international airport, as well as the rural airports. Many discussions have taken place over the allocation of fault. Comparative fault was a term used at the Anchorage international airport negotiations. The state attempted to revise and follow a form that was used by other airports in other jurisdictions. The insurance requirements are very difficult in Alaska today because of problems with the availability and affordability of insurance for air carriers. The state has negotiated a user agreement with comparative fault at the Anchorage international airport and he intends to do the same at the rural airports. SCS CSHB127(TRA) will force the state to do so. The second section of the bill will require the state to evidence, in regulation, the type and limit of insurance coverage required of each class of aviation-related lease, permit and concession contract. That's a difficult challenge. It is not something he is trying to avoid, but the differences and disparity between the users of the Anchorage international airport and lessees at the rural airports is large. The state has tried to use general terms in the past on comprehensive public liability so that it can tailor the specific lease contract or the certificate of insurance used as evidence for public liability to respond to individual activities. There is no such animal as a comprehensive public liability insurance policy. That term was used in a prior regulation but the diversity of operations at a state airport in Alaska is so great that it is a difficult challenge to put into regulation something that will apply to everyone. Number 960 SENATOR WILKEN asked if some airports in Alaska are maintained by DOTPF. MR. THOMPSON said they are. SENATOR WILKEN asked if a grader was left on a runway and caused an accident, whether DOTPF would be responsible for any portion of the liability under current law. MR. THOMPSON said it would. SENATOR WILKEN asked for clarification as he thought Amendment 1 allowed for apportionment of liability where there is none today. MR. THOMPSON explained that the former use agreement at the Anchorage international airport did have a comparative fault allocation as a term of the contract. Typically, the state does not identify in detail in statute or regulation the terms and conditions that will be used in negotiated contracts. The state has responded to events when it is legally liable. If the state has a contract with comparative fault, the state will participate to the extent of its fault. He noted the state did suggest and propose language so that the state would not begin to participate unless it was at least 60 percent at fault. Many times the proximate cause of an accident is the use and operation of aircraft. Often, through creative pleading, allegations are made against any party involved, including the state. SENATOR WILKEN asked if Amendment 1 will have a fiscal impact. MR. THOMPSON said any change to the state's risk is incorporated into the overall state risk management program. The Division of Risk Management does not submit a fiscal note when it has a slight variation. The division is funded on a pay-as-you-go basis on its self insured program because it too speculative to suggest a fiscal note. SENATOR WILKEN asked Mr. Thompson if he would like more time to analyze the impact of Amendment 1. MR. THOMPSON said Amendment 1 will create a significant challenge since the Division of Risk Management will have to specify, in regulation, the type and limit of insurance coverage required of each class of aviation-related lease, permit and concession contract. SENATOR WILKEN questioned the need for Amendment 1. Number 564 SENATOR TAYLOR asked if the lessee is now asked to indemnify the state for all risk. MR. THOMPSON answered that in a rural airport lease, the language in regulation in the past required the lessee to assume liability for certain things resulting from or arising out of any act, commission, or omission by the lessee, his agents, employees, or customers arising from or out of lessee's occupation or use of the premises or privileges granted. SENATOR TAYLOR asked if the lessee had to indemnify the state against any liability for any of his activities. MR. THOMPSON said yes, for any activities arising from the lessee's use and operation. SENATOR TAYLOR clarified that this legislation will only require the Division of Risk Management to identify levels of risk against levels of aircraft, users or lessees and to provide that the division provide for apportionment of fault, as opposed to saying the state will only step up to the plate and be responsible if, after the lessee has gone to court, the lessee can prove that the state is more than 60 percent liable. MR. THOMPSON said the 60 percent apportionment was a proposed allocation method in a contract negotiation that was not adopted. He noted that most international airports require the users to have strict indemnity and that major airlines that land in Alaska sign similar terms and conditions in other locations. That is why the division tried to pattern the proposed language in the Anchorage international airport use agreement with provisions used in other locations. Number 295 SENATOR WILKEN said his concern lies with the smaller airports, such as Fort Yukon. MR. THOMPSON said if there is a loss involving the use of aircraft arising from the state's responsibility, the state has paid for its responsibility. The state is liable for activities performed by its own employees and its contractors. SENATOR TAYLOR noted the real issue is what the division requires users of state airports to have in insurance policies regarding state indemnification. He noted the state is self-insured while the users have to buy an insurance policy. He said the level of the risk the state is requiring the user to indemnify the state for is what is in question. MR. THOMPSON said the state does purchase airport insurance. It self-insures for the first $250,000, but purchases excess liability coverage to protect the state's assets and operations for a large loss in excess of that amount. In the past, the regulation for a lessee at a rural airport required: property damage coverage arising from one accident in a sum of not less than $50,000; and personal injury or death liability insurance not less than $100,000 per person and $300,000 per accident. Those sums were revised in a regulation requiring limits of $1 million for each occurrence. He pointed out there is subjective language for additional limits to be required, depending upon the level of activity and the location. MR. THOMPSON said the division is asking for a greater sum at the Anchorage international airport. The insurance required in 1986 for all users was characterized on a per seat basis and was set at $1,000,000. Minimum limits for propeller aircraft were set at $10 million and for jet aircraft at $20 million. Those requirements were for Anchorage only. SENATOR WILKEN asked if this bill with the amendment will help the small air carriers and, if so, whether it will cost the state anything to help them. MR. THOMPSON said he does not think it will significantly affect the state's risk or the state's cost. It may in the future with a comparative situation. Regarding whether it helps the small operator, he thought the division will be challenged with the task of developing a matrix to address, in regulation, all of the types and varied operations. SENATOR WILKEN asked if an air cargo business will be able to show this new law to its insurance company and expect its rates to be lowered. MR. THOMPSON said he does not believe any relief will be provided to the aircraft owner/operator because of this bill. The division checked with the markets as to the difference in rates depending upon the use agreements; the users will get no extra premium or relief if they sign something with a less favorable location. SENATOR TAYLOR said with the exception of those that may be large enough to be self insured. MR. THOMPSON responded that is true of anyone who insures for the first layer. SENATOR TAYLOR said what they are talking about is that the state self insures to $250,000, but it is requiring the other parties it is dealing with to indemnify the state to $1 million. That also provides another layer between the state and the liability. He asked if that becomes another step between the state and the potential claimant that the state will have to pay. MR. THOMPSON said he thought Senator Taylor was confusing the indemnity and the insurance. The indemnity is the hinge pin as to allocating responsibility between two defendants. Whether one of the defendants does or does not have the ability to pay their obligation is a separate issue. TAPE 01-15, SIDE A MR. KIP KNUDSEN, ERA Aviation, informed the committee he sat on the negotiating committee for the operating agreement at the Anchorage and Fairbanks international airports. He said the issue of comparative versus sole proximate cause has been an ongoing one. The airlines that operated at those two airports up until now have benefited from a comparative fault clause, which is fair. During the negotiations, the state's position has been that it will transfer all of its contracts over to a sole proximate cause standard. SENATOR WILKEN asked if all airports, other than Anchorage and Fairbanks, will be excluded. MR. KNUDSEN said regarding the rest of the state's airports, the same language, regarding sole proximate cause, is contained in draft regulations for Title 17. If those regulations are promulgated, an operator working out of Venetie, for example, will have to bear the financial burden of sole proximate cause if the state is 99 percent responsible for that airport. Currently, most leases contain an apportioned or comparative fault clause. He explained that the Anchorage and Fairbanks airports are self- financed; airlines pay the fees to pay the bill. If going to a comparative fault system costs the airport system more money, the airlines will pay it. Every one of the airlines involved in the negotiations has come to the table saying it wants comparative fault and will pay the burden because it will give them a break on their insurance rates. Some airlines sign sole proximate cause contracts at other airports but a majority of them have comparative fault contracts. Number 322 SENATOR WILKEN asked if the state will change the contracts from comparative fault to sole proximate cause, which is the reason for Amendment 1. MR. THOMPSON said his role with DOTPF is advisory. His understanding is that the state is trying to be consistent in both the rural and Anchorage and Fairbanks airports. The state did attempt to move to a stricter indemnity standard but he was told the state is now moving to a comparative standard, which is effectively the same standard that is proposed in the bill. SENATOR WILKEN questioned whether the state will have to use the apportioned standard under Amendment 1. MR. THOMPSON said that is correct. There being no further testimony, SENATOR TAYLOR moved SCS CSHB 127(TRA) as amended from committee. There being no objection, the motion carried.