04/12/1995 03:40 PM Senate RES

                      SB 130 MARINE PILOTS                                    
                                                                              
 SENATOR LEMAN announced SB 130 to be up for consideration.                    
                                                                               
 SENATOR LEMAN announced an at ease from 5:10 p.m. - 5:15 p.m.                 
 JEFF BUSH, Deputy Commissioner, Department of Commerce and Economic           
 Development, said he was a member of the Marine Pilots Board and              
 supported SB 130 in its current form.  He didn't have any                     
 recommended changes.  He said their position on maximum tariffs is            
 that they take no position on it.  He thought there might be some             
 anti-trust concerns if there is no maximum tariff, but he had meant           
 with the association's attorneys and they felt confident there were           
 no anti-trust problems.                                                       
                                                                               
 RICHARD MONKMAN, Alaska Coastwise Pilots Association, said he was             
 available for questions.  He supported Mr. Bush's comments about              
 the maximum tariffs saying it did not affect his client in                    
 Southeast.                                                                    
                                                                               
 DOUG MCPHERSON, President, Alaska Coastwise Pilots Association,               
 supported SB 130 in its current form.  He didn't see where the                
 protection of a maximum tariff is required.  The track record of              
 the state's involvement in maximum tariffs tends to be very                   
 involved and somewhat costly.  There is the question of whether it            
 is in the public's best interest to be involved.                              
                                                                               
 LARRY COTTER, Alaska Steamship Association, supported a maximum               
 tariff.  The law requires use of pilots and that sets up a                    
 situation where they use pilots and it is absolutely critical that            
 they develop a relationship with the pilots that allows for the               
 commerce to flow freely and on time.  He thought the proposed                 
 amendment limiting the maximum tariff to only areas where there is            
 one association should be applied to all areas regardless of the              
 number of associations that are in that area.  The role of the                
 state is to ensure that commerce flows.  That is best accomplished            
 by having some state oversite regarding the maximum tariff that can           
 be charged by any association.                                                
                                                                               
 TAPE 95-44, SIDE A                                                            
 Number 001                                                                    
                                                                               
 He noted that people who live in Juneau have discovered that two              
 airlines can operate a monopoly almost as effectively as one                  
 company.  Maximum tariff language has been in existence for the               
 last four years and there have been no problems with it.                      
                                                                               
 STEPHAN MORENO, Alaska Marine Pilots, said they support the bill as           
 it is.  In the western region things have stabilized without the              
 maximum tariff.  He couldn't think of an example of where anyone              
 has charged an exorbitant amount for a particular pilot move.                 
                                                                               
 HANS ANTONSON, Southeast Alaska Pilots Association, supported SB
 as it came out of the subcommittee and said they don't have a             
 problem with the maximum tariff in a region that doesn't have                 
 competition, but not in an area that has competition where market             
 factors are working.                                                          
                                                                               
 Number 115                                                                    
                                                                               
 PETER LEE NIELSEN, representing himself, said he works for Alaska             
 Coastwise Pilots.  In 1991 when the legislature provided for                  
 competition in marine piloting he thought it was good for Alaska              
 and marine piloting.  Having observed first hand the management               
 dynamics of both SEPA as a guild and ACP as an aggressive                     
 competitor, he thought there were advantages to both methods.                 
 However, competition has sharply divided and alienated southeast              
 pilots as a peer group, resulting in litigious actions costing                
 individuals and the Board of Marine Pilots considerable effort,               
 time, and expense, increased pilot license fees, raised concerns              
 and questions about pilot training, qualifications, and marine                
 safety issues.  As a result, he thought the guild system provided             
 for stability, better trained pilots, and more qualified pilots,              
 and keeps safety of lives, vessels, and our shorelines and wildlife           
 foremost.                                                                     
                                                                               
 A true guild system of pilotage cannot exist in a competitive                 
 market place, MR. NIELSEN said.  Competition drives tariffs.  A               
 maximum tariff pushes competing pilot associations into difficult,            
 and at times, last minute tariff negotiations with their principals           
 in order for them to stay in business and ensure employment for               
 their members.  It's common knowledge that the low bidder in tariff           
 and contract negotiations usually gets the business.  Therefore,              
 industry is in a favorable position.  A state-fixed tariff                    
 periodically visited by an appointed rate review commission would             
 bring structure and stability to a chaotic situation.                         
                                                                               
 SENATOR LEMAN asked him to explain the guild system.  MR. NIELSEN             
 explained it's the historical system of pilotage where people join            
 together to benefit themselves and it's become accepted that it               
 also benefits an area.  When it first started there was pure                  
 competition.  His great-great-grandfather was one of those in                 
 Norway who lost his life doing that.  Later, because competition              
 disrupted commerce, pilots banded together for their own safety,              
 for their countries' commerce in a peer-guild system.  Members of             
 the guild join together for the betterment of pilotage, the skills            
 and safety concerns of the state, and environmental concerns.                 
                                                                               
 SENATOR LEMAN asked if he knew of an area where there was a true              
 guild system.  MR. NIELSEN said there are true guild systems in the           
 United States, one is in Florida.                                             
                                                                               
 Number 237                                                                    
                                                                               
 ERIC ELIASSEN, President, Southwest Alaska Pilots Association, said           
 this bill incorporates the recommendations of the Alaska State                
 Pilots Alliance draft.  In Southcentral they would accept the                 
 maximum tariff amendment as opposed to fixed tariffs.  He said they           
 could go either way and they were willing to go with arbitration in           
 those regions that did have competition.