Legislature(1995 - 1996)

03/24/1995 01:35 PM TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
 CHAIR GARY DAVIS noted that committee members would arrive                    
 throughout the meeting.  This work session, a continuation of a               
 prior meeting, was called primarily to take additional testimony on           
 HB 260.  Chair Davis reminded participants that during the work               
 session there could be discussion but no action taken.  However, he           
 hoped to put final touches on some aspects of the legislation.                
 Committee members present at the beginning of the work session were           
 Representatives Davis and James.  Members absent were                         
 Representatives Masek, Williams, Brice, Sanders and MacLean.                  
                                                                               
 CHAIR DAVIS welcomed Benee' Braden, who was present via                       
 teleconference.                                                               
                                                                               
 Number 029                                                                    
                                                                               
 BENEE' S.  BRADEN, Western Alaska Pilots Association (WAPA),                  
 related via teleconference WAPA's concerns not raised at the                  
 previous Wednesday's session.  One concern was the amount of                  
 litigation against the 1991 act.  She asked the committee members             
 to review the legislative audit report prepared the previous                  
 session.  Issues of particular interest to WAPA included conflict             
 of interest, lack of objectivity in the testing process for new               
 pilots, and the board's tendency to take anti-competitive action              
 despite the intent of the Alaska State Legislature and the                    
 realities of the marketplace.                                                 
                                                                               
 MS. BRADEN raised the issue of cross-regional licensing.  She                 
 indicated WAPA viewed the prohibition against such licensing as a             
 barrier to competition.  She wondered whether it would be possible            
 for pilots to be fully licensed in more than one region.                      
                                                                               
 Number 089                                                                    
                                                                               
 MS. BRADEN conveyed WAPA's opposition to the language relating to             
 dispute resolution.  First, WAPA was troubled by the potential for            
 price fixing.  Second, in Region 3, industry already had a balance            
 of power and distribution of work to be dispatched; WAPA's concern            
 was that a conflict over fees could be thrown into binding                    
 arbitration, financially demolishing a small group like WAPA.                 
                                                                               
 MS. BRADEN further testified WAPA thinks improper the potentially             
 significant delay between the time a pilot wants to provide                   
 services and the time the board finally approves that pilot.  WAPA            
 suggested requiring a pilot to first obtain a license to begin                
 services, and then - within a specified amount of time - to either            
 join an approved organization or seek approval of the board.                  
                                                                               
 Number 128                                                                    
                                                                               
 CHAIR DAVIS advised Ms. Braden that neither he nor Representative             
 James, the only other committee member present, had questions.                
 Chair Davis mentioned Mike Spence from Alaska Coastal Pilots had              
 been present earlier, but Doug MacPherson would speak instead.                
                                                                               
 DOUGLAS MacPHERSON, Alaska Coastwise Pilots Association, stated his           
 intention of going through the committee substitute line by line.             
 Referring to Section 2, page 1, he suggested the regional concept             
 is here to stay, with the judicial district concept not being                 
 responsive to actual need.  For example, if there were two pilots             
 on the board and two industry members, one of the three major                 
 regions in Alaska would not be represented.  The Alaska Coastwise             
 Pilots would like to see both industry and pilot representation for           
 each of the three major districts.  Mr. MacPherson indicated he did           
 not wish to offend the Kuskokwim district, but it was a one-man               
 operation handling much less traffic than other regions.                      
                                                                               
 MR. MacPHERSON referred to Section 6, page 2, and said it was O.K.            
 with him.  However, he felt the terms "actual", "imminent" and                
 "chronic" could lead to numerous disputes because of their                    
 vagueness.                                                                    
                                                                               
 Number 175                                                                    
                                                                               
 MR. MacPHERSON expressed concern with the wording on page 3, "and             
 concurrence by the recognized pilot organizations", placed public             
 policy in the hands of private entities.  As for Section 8, he                
 commented that specific requirements of prior experience and                  
 licensing might create artificial barriers to otherwise-qualified             
 pilots wishing to enter the profession.  For example, a person                
 serving two years as a chief officer who subsequently obtained a              
 master's license would have the necessary experience to be a pilot            
 yet not technically qualify under Section 8, item 3.  He suggested            
 substituting "while holding" with "and hold a United States Coast             
 Guard license" throughout this section.                                       
                                                                               
 REPRESENTATIVE WILLIAM K. "BILL" WILLIAMS arrived at 1:49 p.m.                
                                                                               
 Number 213                                                                    
                                                                               
 MR. MacPHERSON addressed Section 14, item (c), "A person licensed             
 under this chapter who is not a member of a pilot organization                
 shall provide pilotage services".  He commented that the language             
 is confusing, because piloting is not something a person is                   
 entitled to do if not a member of a pilot organization.                       
                                                                               
 REPRESENTATIVE TOM BRICE arrived at 1:50 p.m.                                 
                                                                               
 Number 236                                                                    
                                                                               
 MR. MacPHERSON referred to Section 13, page 5, "The board may                 
 impose a civil fine and also suspend or revoke the recognition of             
 a pilot organization", and emphasized that regulation 56.320                  
 already addressed this matter in identical language.  He indicated            
 problems could arise in areas with a single pilot organization,               
 because if an organization were suspended for a violation, there              
 would be no legal pilot service in that region.  In addition, in              
 areas having two pilot organizations, a monopoly might be created             
 if one were suspended.  As for Section 17, that subsection (d)                
 already existed, and he wondered whether the writer had intended to           
 make that subsection (e) instead.  Furthermore, the subsection                
 seemed redundant, and the legislative intent unclear.  Mr.                    
 MacPherson concluded by saying the Alaska Coastal Pilots stood                
 neutral on the issue of dispute resolution, but only because of               
 lack of sufficient data.                                                      
                                                                               
 Number 273                                                                    
                                                                               
 CHAIR DAVIS responded to Mr. MacPherson's concerns, adding that               
 while most of the issues had been aired before, in Mr. MacPherson's           
 absence, having a consensus was important.  He clarified that                 
 "concurrence" was a drafting error.  He said he understood                    
 MacPherson's concerns on page 1 about the makeup of the board.  He            
 further indicated some of the issues regarding "actual", "imminent"           
 and "chronic" on page 2 had already been addressed, and the                   
 committee would consider them.  Section 8 was a new concern for               
 review.  Regarding Section 14, if he remembered right, there was a            
 consensus to delete that.  Section 13 the committee would work on.            
 In Section 17, the concerns had been addressed by several.  And               
 finally, Chair Davis noted the issue of binding arbitration for               
 conflict resolution was the "big gorilla."                                    
                                                                               
 Number 302                                                                    
                                                                               
 CHAIR DAVIS thanked Mr. MacPherson and indicated Representatives              
 Tom Brice and Bill Williams had joined the meeting.  He discussed             
 the agenda, including the proposed amendment by Representative                
 MacLean.  He indicated the Department of Commerce and Economic                
 Development had a concern about exclusions, and he himself thought            
 it a valid amendment from his own research.                                   
                                                                               
 Number 320                                                                    
                                                                               
 REPRESENTATIVE BRICE asked what would prevent Canadian tugboats               
 hauling fuel from continuing to "creep on further down the coast,"            
 chasing off American business.                                                
                                                                               
 CHAIR DAVIS responded he had considered that as well, but the                 
 economy being on a bid basis would preclude that from happening,              
 because the closer the tugboats got to developed areas of our                 
 industry, the less competitive they would be.                                 
                                                                               
 Number 330                                                                    
                                                                               
 RONALD W. LORENSEN, Attorney, Law Offices of Simpson, Tillinghast,            
 Sorensen and Lorensen, spoke on behalf of Northern Transportation             
 Co. Limited (NTCL).  He explained the present law provides an                 
 exemption for United States vessels in Alaska waters, but not for             
 Canadian vessels.  He asserted this is an impermissible                       
 discrimination against foreign commerce, which must pay costs that            
 United States commerce does not have to pay.  Another approach,               
 which he was not advocating for NTCL, would be to remove the                  
 exemption for United States vessels.  He clarified that NTCL's                
 interest is in leveling the playing field, not avoiding the use of            
 pilots.                                                                       
                                                                               
 REPRESENTATIVE MASEK arrived at 1:58 p.m.                                     
                                                                               
 Number 358                                                                    
                                                                               
 DAN TWOHIG, Marine Pilot Coordinator, Board of Marine Pilots,                 
 Division of Occupational Licensing, Department of Commerce and                
 Economic Development, responded at Chair Davis's request.  He,                
 Captain Michael O'Hara, and Deputy Commissioner Jeff Bush had                 
 discussed the matter that morning.  Mr. Twohig understood that from           
 the viewpoint of the Department of Commerce and Economic                      
 Development, the amendment might not be a bad idea.                           
                                                                               
 CHAIR DAVIS asked for any other comments about the issue.                     
                                                                               
 Number 369                                                                    
                                                                               
 REPRESENTATIVE BRICE requested an explanation of "the department              
 doesn't think it's a bad idea."                                               
                                                                               
 MR. TWOHIG expressed that although he had no problem speaking for             
 the Department of Commerce and Economic Development, he was                   
 hesitant to answer because he was the investigator in the case.  He           
 deferred to Captain O'Hara for an answer.                                     
                                                                               
 CAPTAIN MICHAEL O'HARA, Pilot, Southwest Alaska Pilots Association,           
 and a board member of Alaska Marine Pilots Association, commented             
 the people involved were competent and the amendment suitable.  The           
 concern, he said, was in trusting a foreign company to operate in             
 an environmentally safe manner, not in trusting this particular               
 company.                                                                      
                                                                               
 REPRESENTATIVE EILEEN MacLEAN arrived at 2:00 p.m.                            
                                                                               
 REPRESENTATIVE BRICE asked whether the Canadian Coast Guard                   
 standards are the same as the American standards, and whether there           
 was reciprocity.                                                              
                                                                               
 Number 392                                                                    
                                                                               
 MR. LORENSEN interjected that the issue is not reciprocity.  It is            
 the absence of a requirement, because there is no requirement for             
 the use of pilots on the Canadian Arctic shore.                               
                                                                               
 Number 409                                                                    
                                                                               
 REPRESENTATIVE MacLEAN extended her apologies for arriving late.              
 She explained she had offered the amendment because she believes it           
 to be an excellent economic opportunity for Alaska and Canada to              
 import and export trade.                                                      
                                                                               
 Number 422                                                                    
                                                                               
 REPRESENTATIVE JAMES questioned where the amendment fits, with the            
 exemption being for certain vessels under 300 gross tons and                  
 towboats.  She understood that in the existing draft, as long as a            
 boat was of United States registry or owned by the state of Alaska,           
 it was exempt.  She wanted to confirm the amendment would include             
 Canadian vessels as well, as long as they fit within the "less-than           
 -300-gross-tons and towboats" classification.  Her concern was the            
 effect of this amendment on southern waters, as opposed to northern           
 waters.                                                                       
                                                                               
 REPRESENTATIVE BRICE clarified the question:  At what point south             
 should pilotage be provided on foreign vessels?                               
                                                                               
 REPRESENTATIVE JAMES agreed and added in the situation                        
 Representative MacLean discussed, pilotage should not be an issue.            
 However, it might be different statewide.                                     
                                                                               
 Number 441                                                                    
                                                                               
 MR. TWOHIG commented that AS 08.62.180, item 5, states vessels in             
 Canada, built in Canada and manned by Canadian citizens, were                 
 already exempt.  This included Canadian cruise ships engaged in               
 frequent trade between British Columbia and Alaska.  Therefore, the           
 amendment under consideration was to cover other situations.  He              
 pointed out there is no exemption for the ferries; they must get a            
 waiver every six months.  He added although Canadian traffic is               
 already exempted in Southeast Alaska, the new amendment only talks            
 about the North Slope and northern waters.                                    
                                                                               
 Number 468                                                                    
                                                                               
 REPRESENTATIVE JAMES said the issue was safety, but she had                   
 insufficient information.                                                     
                                                                               
 CHAIR DAVIS agreed with Captain O'Hara's earlier statement that the           
 Canadian cruise ship operations in question were probably as good             
 as possible.  He added that currently Alaska operations are exempt            
 from the pilotage requirement.                                                
                                                                               
 Number 475                                                                    
                                                                               
 ALAN F. WALKER, representing Northern Transportation Co. Limited              
 (NTCL), explained he was also retired from the United States Coast            
 Guard.  To clarify the safety issue, he mentioned that the state's            
 and Coast Guard's roles were key in inspection and oversight of               
 operations.  The Coast Guard inspected the vessels, and the                   
 Department of Environmental Conservation oversaw fueling, training            
 and contingency plans.  He noted that a foreign vessel wanting to             
 operate in Alaska waters would have to meet all the requirements.             
                                                                               
 Number 489                                                                    
                                                                               
 REPRESENTATIVE BRICE replied he was not opposed to the concept but            
 wanted to clarify the issues.  He said applying the scenarios from            
 British Columbia and Southeast Alaska to more northern waters was             
 comparing apples and oranges.  There was no strong delineation when           
 traveling from Canada to Southeast Alaska.  He agreed Canadian                
 vessels still must be inspected by the United States Coast Guard              
 for clean engine room, et cetera.  But competency was the issue,              
 and the Coast Guard did not test for that.                                    
                                                                               
 REPRESENTATIVE SANDERS arrived at 2:10 p.m.                                   
                                                                               
 Number 515                                                                    
                                                                               
 MR. TWOHIG commented there was no reciprocal exemption for pilotage           
 in British Columbia, but rather a waiver.  He added the current               
 statute did not allow the Board of Marine Pilots to grant a waiver            
 for any of the provisions of the statute.  He proposed waivers                
 instead of exemptions.  Because there was such a small window of              
 good weather to navigate North Slope waters, a case-by-case waiver            
 authority to the Board of Marine Pilots might solve the problem.              
                                                                               
 Number 527                                                                    
                                                                               
 PAUL FUHS, Lobbyist, Southwestern Alaska Pilots Association,                  
 mentioned the lawsuit, which he thought could go either way.  If              
 the state of Alaska lost the litigation, some of the foundations of           
 marine pilotage in Alaska might be endangered.  He added people               
 feel the current situation is safe, with the Canadian vessel                  
 operators knowing at least as much as Seattle operators coming to             
 Alaska a couple of times a year.  If there were problems in the               
 future, the Alaska State Legislature could step in to fix them.               
 Lastly, he concurred with an idea from the Senate to request                  
 letters from local governments in Alaska, indicating support for              
 the amendment.  This would preclude them blaming the Alaska State             
 Legislature for fouling the environment should, for example, a fuel           
 barge be wrecked on the beach at some future date.                            
                                                                               
 Number 538                                                                    
                                                                               
 REPRESENTATIVE MacLEAN said a letter of support from the North                
 Slope Borough and Arctic Slope Regional Corporation had already               
 been faxed.  Additional letters from Canada were being requested.             
                                                                               
 Number 540                                                                    
                                                                               
 MR. MacPHERSON remarked there was a practical answer to                       
 Representative Brice's concern about Canadian vessels from the                
 North Slope navigating around the western and southern sides of               
 Alaska.  The summer window of opportunity was so short, there were            
 practical limitations as to how far a vessel could realistically              
 travel to deliver fuel.                                                       
                                                                               
 REPRESENTATIVE MacLEAN added the whaling season lasts until May,              
 with a window of opportunity June through August.                             
                                                                               
 Number 557                                                                    
                                                                               
 CHAIR DAVIS referred committee members to a copy of a note in their           
 possession.  The note, to Chair Davis's staff from Dan Twohig,                
 regarded a proposed amendment to Section 8.  Chair Davis asked Mr.            
 Twohig to present the amendment.                                              
                                                                               
 Number 604                                                                    
                                                                               
 MR. TWOHIG explained the amendment to Section 8 concerns entry                
 level requirements for a deputy marine pilot license.  He and                 
 Captain O'Hara had discussed their concern that the amendment might           
 degrade the entry level requirements, and were presenting their               
 proposed amendment.  The intent in section (b)(2) was to add the              
 word "inspected" in front of "vessels of not more than 1000 gross             
 tons".  Section (a) enabled pilot associations to enter into                  
 apprenticeship programs.  Mr. Twohig wanted to ensure these                   
 programs were optional, not mandatory.  To this end, he suggested             
 adding to Section 16, AS 08.62.175, the following:  "promoting                
 training programs for marine pilots and deputy marine pilots which            
 may include apprenticeship programs that are approved by the                  
 board".                                                                       
                                                                               
 Number 623                                                                    
                                                                               
 CHAIR DAVIS asked if there was an objection to the proposal.                  
 Following Representative MacLean's request for further review,                
 Chair Davis then asked Mr. Twohig to explain the changes line by              
 line.                                                                         
                                                                               
 MR. TWOHIG referred to Captain O'Hara's raising the issue of                  
 certain fishing vessels being uninspected up to 5,000 tons.  The              
 proposed solution was to add one word to CSHB 260, page 3, line 19,           
 to say "master on inspected vessels", thereby upgrading the safety            
 issue.  An additional amendment was needed to AS 08.62.175, Section           
 17(d)(3)(c) - which section, he noted, did not appear in the                  
 committee substitute at that time.                                            
                                                                               
 CHAIR DAVIS directed committee members to change Section 16 to be             
 Section 17 on the amendment.  He then asked for confirmation that             
 the intended addition in Section 17 would be "which may include               
 apprenticeship programs".                                                     
                                                                               
 MR. TWOHIG confirmed this was correct, and suggested he would be              
 happy to work with the drafters on technical questions.                       
                                                                               
 MR. FUHS commented he felt the apprenticeship issue was important,            
 because persons in several districts want to know how to enter the            
 trade.  The goal, he said, was not to lower the requirements but              
 rather to help people become qualified.                                       
                                                                               
 Number 623                                                                    
                                                                               
 STUART MORK, Alaska Marine Pilots Association (AMPA), asked to                
 incorporate his comments in the section on Western Alaska.                    
                                                                               
 CHAIR DAVIS reminded the committee that during the previous                   
 meeting, Mr. Kyle had mentioned a problem in Dutch Harbor that had            
 been interpreted as a work stoppage; Mr. Kyle wanted to make sure             
 both sides of the issue were aired.  The question involved conflict           
 resolution.  Chair Davis said literature on the issue had been                
 distributed to the committee.                                                 
                                                                               
 Number 642                                                                    
                                                                               
 MR. MORK explained the incident in question occurred in early 1993,           
 when the competing pilot group was first forming.  Previous to                
 that, AMPA had provided all pilotage service throughout the region            
 and Dutch Harbor.  When the Western Alaska Pilots formed, there was           
 a period when AMPA pilots were not getting any work, yet were asked           
 to stand by.                                                                  
                                                                               
 TAPE 95-11, SIDE B                                                            
 Number 005                                                                    
                                                                               
 (Short section missing because of tape change)                                
 MR. MORK mentioned staying ashore.  The state had stepped in and              
 told them to return to work.  The courts then directed them to                
 return to work and be available.  There were no agreements saying             
 how much work they would get; they were just standing by.  He said            
 the situation was still occurring; they had one contract out of               
 seven carriers.                                                               
                                                                               
 Number 039                                                                    
                                                                               
 REPRESENTATIVE MacLEAN asked whether the discussion was about                 
 binding arbitration, Sections 17 and 18.                                      
                                                                               
 MR. MORK replied it played into those sections.  He reiterated in             
 his region, there are two competing pilot groups.  He asserted any            
 problem could be solved "tomorrow" by signing long-term contracts             
 allocating the work.  But at this point, he said, his organization            
 is the safety net for pilotage in Western Alaska, having enough               
 members to do all the work in the region at all times of the year.            
 They did not get 100 percent of the work, but provided 100 percent            
 of the pilots that could do the work.  He felt government should              
 not interfere with private contracts if pilotage could work under             
 a competitive scheme, and binding arbitration in statute is                   
 unnecessary.                                                                  
                                                                               
 Number 063                                                                    
                                                                               
 REPRESENTATIVE MacLEAN questioned whether binding arbitration was             
 also addressed under Section 14 on page 6.                                    
                                                                               
 CHAIR DAVIS responded it was not.  Section 14 spoke to pilots who             
 are not members of an association.  The rationale for eliminating             
 the section was that there are no such people.                                
                                                                               
 REPRESENTATIVE MacLEAN expressed she did not believe in binding               
 arbitration.                                                                  
                                                                               
 Number 087                                                                    
                                                                               
 KATE TESAR, Lobbyist, Alaska Coastwise Pilots Association,                    
 commented on the new language on page 2, line 4 regarding the                 
 change from judicial district representation to marine pilotage               
 region representation.  Under the current board set-up with                   
 judicial districts, there was always a representative from                    
 Southeast Alaska and one from the north.  She related the way the             
 language was currently worded, with only two member seats and four            
 organizations, there was a chance a time could come when there                
 would be no board representation for Southeast Alaska, which had              
 the majority of pilotage in Alaska.  She felt this was not the                
 intention of the change in language.                                          
                                                                               
 Number 134                                                                    
                                                                               
 GAYLE HORETSKI, Assistant Attorney General, Civil Division,                   
 Department of Law, clarified that no members of the Administration            
 attended the pilots' meeting, which was fine.  But some of the                
 changes in this bill came from the Department of Commerce and                 
 Economic Development to fix what were perceived to be flaws or                
 problems in the existing law.  From the viewpoint of the Department           
 of Law and the Department of Commerce and Economic Development, she           
 believed, this change to pilotage regions made good sense.  From              
 the Administration's point of view, it was never tied to any                  
 agreement on increasing the membership.  Two policy decisions                 
 needed to be made; from the Administration's viewpoint, these                 
 decisions were not necessarily tied together.                                 
                                                                               
 Number 144                                                                    
                                                                               
 MR. TWOHIG responded he had originated the amendment.  He knew                
 pilots throughout the state, and where they lived.  For example, he           
 said, there were few pilots for Region 3 who actually lived in the            
 region.  Therefore, he observed, under the judicial district                  
 concept, there would be no representation from their pilot group              
 because pilots lived in a districts removed from the regions where            
 they worked.                                                                  
                                                                               
 CHAIR DAVIS said the wording relates to licensing, not residence.             
                                                                               
 UNIDENTIFIED SPEAKER (Female) replied one must be a state resident            
 to be on the board.                                                           
                                                                               
 Number 185                                                                    
                                                                               
 GINNY FAYE, Prince William Sound Regional Citizens' Advisory                  
 Council, said they have not yet formed a formal position regarding            
 this matter.  She said, however, they would strongly oppose any               
 measure reducing public members on the board, which was supposed to           
 be a safety board.  She asserted the public is the only body                  
 without an economic interest in this, and their interest in safety            
 should not be watered down.                                                   
                                                                               
 Number 200                                                                    
                                                                               
 CHAIR DAVIS agreed with Ms. Faye's comments.                                  
                                                                               
 RAYMOND A. GILLESPIE, Lobbyist, observed that two of his own                  
 clients might have an interest in examining the ramifications of              
 Representative MacLean's amendment.  He represented Petro Marine              
 Services, which hauled refined fuel products from Cook Inlet and              
 Prince William Sound throughout the state.  Petro Marine Services             
 had just purchased the White Pass facilities in Southeast Alaska.             
 Another client, Delta Western, had similar activities statewide.              
 The amendment exempted certain activities, and was designed to                
 facilitate North Slope activities.  Mr. Gillespie was concerned               
 about activity from British Columbia coming north to compete with             
 the local distributors.  He offered it for thought and said he                
 would consult with his clients within a day or two.                           
                                                                               
 REPRESENTATIVE JAMES said she agreed; that was her point.                     
 Number 225                                                                    
                                                                               
 CHAIR DAVIS indicated agenda item 4 was discussing the potential              
 for implementing language in the board to declare an emergency                
 situation and find a solution to a problem.  He wondered if there             
 was mechanism other than binding arbitration.  He explained binding           
 arbitration was already in statute and an approved method in                  
 general.  Although it was not the only solution, coming up with a             
 vehicle in statute for conflict resolution was important, and the             
 reason the binding arbitration language was under consideration.              
                                                                               
 Number 266                                                                    
                                                                               
 JOE KYLE, Representative, Alaska Steamship Association, explained             
 they suggested binding arbitration not because they liked it per              
 se, but because in meetings and conversations with pilots, there              
 seemed to be somewhat of a consensus on it; people were not                   
 adamantly opposed to it at the time.  Binding arbitration itself              
 was not as important as having conflict resolution.  He felt the              
 state's interests should be protected, with some mechanism to keep            
 commerce moving safely, with pilots aboard, when industry and                 
 pilots argue over money.                                                      
                                                                               
 CAPTAIN O'HARA agreed with Mr. Kyle's sentiment that conflict                 
 resolution must exist.  However, he asserted past conflicts had not           
 normally been over money.  Because of two lawsuits involving the              
 board, he hesitated to get involved again, but he suggested the               
 legislature might grant the board authority to develop a protocol             
 for conflict resolution, without putting the board members at risk            
 for being personally sued.  They were not sure what solution would            
 be best, whether arbitration, fee mediation, or some other means of           
 settling disputes.  It would have to go through a public process              
 and the Department of Law.                                                    
                                                                               
 Number 308                                                                    
                                                                               
 CHAIR DAVIS asked whether in one case the court had ruled a board's           
 action invalid.                                                               
                                                                               
 CAPTAIN O'HARA replied that the board had declared an emergency,              
 and the judge then decided no emergency existed.                              
                                                                               
 Number 316                                                                    
                                                                               
 MR. MORK remarked that the Alaska Marine Pilots Association (AMPA)            
 had never believed competition to be either the best or the most              
 efficient way to safely provide pilotage services.  He said pilots            
 can only compete by providing service at a lower cost.  These                 
 proposals were anti-competitive, because they required pilots to              
 provide service whenever they were called.  He asserted arbitration           
 would essentially fix the price, which can only fluctuate a small             
 percentage under an arbitration situation.  The AMPA would live               
 with competition if they had to, but this bill would severely                 
 regulate economic conditions for pilots.  This bill mandated that             
 pilots provide the service, and at a certain price, without any               
 assurance of obtaining work other than that dispatched by the                 
 agency.  Missing from the equation was some guarantee that pilots             
 would have jobs.                                                              
                                                                               
 MR. MORK continued, saying binding arbitration was usually used               
 between public bodies, and sometimes in contracts.  He stated he              
 wanted to do further research, but to the best of his knowledge,              
 this was the first time the state would have required binding                 
 arbitration between two private parties.  Indeed, as far as he                
 knew, this was also the first time the state had insisted upon                
 contracts between private parties.  If the state insisted on                  
 binding arbitration, he wondered who would pay.                               
                                                                               
 MR. MORK explained many pilotage jobs are low paying; $316 is                 
 AMPA's lowest cost move, and the cost of arbitration would exceed             
 the value of the job.  He said AMPA had contracts with one shipper            
 only, representing 21 percent of the business in their region.  All           
 other jobs were on a case-by-case basis, and going to arbitration             
 on each would be prohibitive.  In the absence of contracts, AMPA              
 did not feel they could be forced into it.  Signing contracts would           
 solve potential problems, because a clause including means of                 
 conflict resolution could be included in the contracts.                       
                                                                               
 MR. MORK concluded by saying they could have it one way or the                
 other.  With competition, pilots needed the tools with which to               
 compete.  With economic regulation of pilotage, pilots needed more            
 protection.                                                                   
                                                                               
 Number 387                                                                    
                                                                               
 CHAIR DAVIS asked whether there was further discussion.  He then              
 asked Representative James for her comments on binding arbitration,           
 noting that this situation was "hybrid," differing from school                
 districts and other public employee situations.                               
                                                                               
 REPRESENTATIVE JAMES explained her problem with the issue was:  How           
 can there be binding arbitration and competition simultaneously?              
 She felt they were mutually exclusive.                                        
                                                                               
 REPRESENTATIVE MacLEAN said she felt that down the road the                   
 legislation would force businesses to binding arbitration, just               
 like state agencies.                                                          
                                                                               
 Number 409                                                                    
                                                                               
 HANS ANTONSEN, Southeastern Alaska Pilots Association, expressed              
 interest in addressing conflict resolution within the context of              
 contracts.  His association has had problems with claims of anti-             
 trust violations.  While state law addressed the issue of pilot               
 associations being able to negotiate contracts between independent            
 contractors and industry, federal law did not offer pilot groups              
 the same protection.  Pilot groups needed to be able to predict               
 pilot need in order to train people.  For that reason, he liked               
 page 6, Section 16, item 3, specifying a pilot organization shall             
 enter into agreements.  He approved the idea of including wording             
 in contracts regarding conflict resolution.  He also agreed with              
 Representative James that competition and forced binding                      
 arbitration are incompatible.                                                 
                                                                               
 CHAIR DAVIS asked Mr. Antonsen to explain the procedure included in           
 the concept of entering into agreements.                                      
                                                                               
 MR. ANTONSEN informed the committee his association signed                    
 contracts for a specified number of years.  As a contract came                
 within a year of expiring, the organization began negotiating to              
 extend it.  Since the previous summer, language had been included             
 to cover situations where negotiations had begun but not been                 
 completed because of lack of agreement.  In those cases,                      
 Southeastern Alaska Pilots Association continued to provide                   
 service, sometimes with a slight fee increase, in the interim.                
 He wanted to see a deadline for this interim period so it was not             
 open-ended.                                                                   
                                                                               
 CHAIR DAVIS asked whether there were a binding aspect in the                  
 arrangement with their one contract.                                          
                                                                               
 MR. ANTONSEN responded they had binding arbitration language in the           
 contract, but the shipping company refused to sign until it was               
 removed.  Some of their current customers were saying they did not            
 want binding arbitration.  What they were really looking at was               
 going back to a maximum tariff.  The pilot organization did not               
 favor maximum tariffs for the reasons Captain Mork stated; they               
 wanted either the tools to compete or fair regulation.                        
                                                                               
 Number 468                                                                    
                                                                               
 MR. KYLE, representing the shippers, reported that the maximum                
 tariff that had "sunsetted" the previous spring was the ceiling on            
 rates which could be charged in any one pilotage region.                      
 Responding to a question by Chair Davis, Mr. Kyle affirmed the                
 ceiling was an amount, not a percentage, and was approved by the              
 pilot board.  His organization had tried to get it "rolled over" by           
 the legislature but had met opposition from some other pilot                  
 organizations.  He explained although there is competition, for               
 example, between the two pilot groups in Southeast Alaska, the only           
 reason competition exists is pilots from the two groups cannot get            
 along at present.  Competition is not a given.  The pilots could              
 join into a single group in a region.  Mr. Kyle expressed that his            
 group was not pushing for binding arbitration in particular;                  
 mediation, fee arbitration or other means of resolving conflict               
 might be acceptable.                                                          
 Number 492                                                                    
                                                                               
 MR. TWOHIG stated the Department of Commerce and Economic                     
 Development is officially neutral on the idea of binding                      
 arbitration.  They are concerned a conflict resolution mechanism              
 might not go far enough to provide the state action exemption from            
 federal anti-trust problems, which exemption supposedly is given to           
 pilot organizations under 45.50.  He explained economic regulation            
 "brings in" this state action exemption from anti-trust.  If there            
 were competing pilot organizations, he posed the question of what             
 would happen if a shipper came in and one pilot organization quoted           
 one price, then the shipper went to the other organization and the            
 price were the same. The shipper might claim price collusion.                 
                                                                               
 MR. TWOHIG added that he understood arbitration better than he                
 understood anti-trust.  The drafter of the bills, George Utermohle,           
 had analyzed the sunset of the maximum tariff and had said this               
 would remove any state action exemption, if it had ever existed,              
 that pilot organizations operated under, opening pilot                        
 organizations to federal anti-trust.  Mr. Twohig said that                    
 regardless of whether they returned to a fixed tariff, maximum                
 tariff or conflict resolution, they also must address whether or              
 not they met the requirements of providing the state action                   
 exemption for pilots.                                                         
                                                                               
 Number 519                                                                    
                                                                               
 ROBERT A. EVANS, Lobbyist, Alaska Marine Pilots, spoke about                  
 maximum tariff and binding arbitration, which he stated are efforts           
 to remove the tools by which pilots can compete.  He asserted the             
 problem could be easily resolved, as it has been in competitive               
 situations in the United States for 200 years, by negotiating a               
 contract.  For the state to step in and create leverage for                   
 industry, to tell pilots a price will be fixed at some level, was             
 inconsistent with the way industry and private business have dealt            
 with such issues.  Mr. Evans strongly suggested private interests             
 should take care of themselves and do their own negotiating.  If              
 for some reason the competitive scheme in place since 1991 were no            
 longer working, it could be altered in the future.                            
                                                                               
 MR. EVANS referred to previous comments by others about binding               
 arbitration already in statute, in Title 9.  He explained Title 9             
 talked about two instances in which binding arbitration occurred:             
 1) under collective agreements; and 2) when two parties went before           
 the court requesting it.  The current proposal would require                  
 amending Title 9.  Mr. Evans questioned whether if it were a                  
 mandate, state general fund money would be used to pay for it.  He            
 suspected not.  He suggested compelling the requesting party to               
 provide arbitration, and having that party bear the total cost.               
                                                                               
 Number 555                                                                    
                                                                               
 REPRESENTATIVE WILLIAMS said while he was in favor of conflict                
 resolution, he disagreed with Mr. Evans's views on binding                    
 arbitration and the need to return to Title 9.  He felt industry              
 would be in an excellent position if there were two piloting groups           
 in an area, with the possibility of playing one group against the             
 other.  As for conflict resolution, he proposed having a clause in            
 the contract that allowed the pilot to keep working while the                 
 problem was being resolved, with a provision paying the pilot,                
 including interest.  He thought mounting interest would act as                
 leverage to bring the parties to the table.                                   
                                                                               
 Number 576                                                                    
                                                                               
 GEORGE UTERMOHLE, Attorney, Legislative Research and Legal                    
 Services, Legislative Affairs Agency, commented there were two                
 pilot groups in his region.  The market share was not fixed; they             
 had 21 percent but could lose it all tomorrow.  Their group could             
 be forced into binding arbitration before taking on a job.  The               
 price would be set.  Industry could then approach the other group             
 and negotiate a lower price.  It could become a leverage for                  
 industry if both groups did not have to go to arbitration.                    
                                                                               
 REPRESENTATIVE JAMES referred to conflict resolution, and suggested           
 that because the committee appeared to be stalemated, they should             
 look at the whole issue again to evaluate the process thus far.               
                                                                               
 REPRESENTATIVE BRICE agreed, saying it was always good to take a              
 step back from the problem and perhaps take a different approach or           
 new look at it.                                                               
                                                                               
 CHAIR DAVIS asked the committee members to think about the issues             
 over the weekend, and added they would meet on Monday.                        

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