01/23/2008 08:30 AM House FISHERIES
| Audio | Topic |
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| Start | |
| HB289 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 289 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON FISHERIES
January 23, 2008
8:36 a.m.
MEMBERS PRESENT
Representative Paul, Chair
Representative Kyle Johansen
Representative Craig Johnson
Representative Gabrielle LeDoux
Representative Bryce Edgmon
Representative Lindsey Holmes
MEMBERS ABSENT
Representative Peggy Wilson
COMMITTEE CALENDAR
HOUSE BILL NO. 289
"An Act exempting employers from paying unemployment tax for
crewmembers on fishing vessels that respond or prepare to
respond to, or that prepare for or engage in an emergency or
practice drill response to, an oil spill; and providing for an
effective date."
- HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: HB 289
SHORT TITLE: EMPLOYMENT TAX EXEMPTION: SPILL RESPONSE
SPONSOR(s): REPRESENTATIVE(s) HARRIS, SEATON
01/04/08 (H) PREFILE RELEASED 1/4/08
01/15/08 (H) READ THE FIRST TIME - REFERRALS
01/15/08 (H) FSH, L&C
01/23/08 (H) FSH AT 8:30 AM BARNES 124
WITNESS REGISTER
REPRESENTATIVE JOHN HARRIS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As co-prime sponsor, presented HB 289, and
responded to questions.
PAULA SCAVERA, Special Assistant
Office of the Commissioner
Department of Labor & Workforce Development (DLWD)
Juneau, Alaska
POSITION STATEMENT: Testified with neutrality on behalf of DLWD
for HB 289, and responded to questions.
BILL KRAMER, Chief, Unemployment Insurance
Division of Employment Security
Department of Labor & Workforce Development (DLWD)
Juneau, Alaska
POSITION STATEMENT: Responded to questions on HB 289.
JERRY MCCUNE, Lobbyist
President, Cordova District Fishermen United (CDFU)
Cordova, Alaska
POSITION STATEMENT: Testified in support of HB 289.
DOUGLAS MERTZ, Legislative Monitor
Prince William Sound Regional Citizens Advisory Council
Juneau, Alaska
POSITION STATEMENT: Testified on HB 289.
TRACEY MAYHEW, Representative
Seafarers International Union (SIU)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 289.
MIKE MUNGER, Executive Director
Cook Inlet Regional Citizens' Advisory Council
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 289
JOHN VELSKO, Board Member
City of Homer Prince William Sound Regional Citizens Advisory
Committee (PSWRCAC)
Chairman, PWSRCAC Legislative Affairs Committee
Homer, Alaska
POSITION STATEMENT: Testified in support of HB 289.
ACTION NARRATIVE
CHAIR PAUL SEATON called the House Special Committee on
Fisheries meeting to order at 8:36:36 AM. Representatives
Seaton, Johansen, Johnson, and Edgmon were present at the call
to order. Representatives LeDoux and Holmes arrived as the
meeting was in progress.
8:36:48 AM
HB 289-EMPLOYMENT TAX EXEMPTION: SPILL RESPONSE
8:37:01 AM
CHAIR SEATON announced that the only order of business would be
HOUSE BILL NO. 289, "An Act exempting employers from paying
unemployment tax for crewmembers on fishing vessels that respond
or prepare to respond to, or that prepare for or engage in an
emergency or practice drill response to, an oil spill; and
providing for an effective date."
8:37:35 AM
REPRESENTATIVE JOHN HARRIS, Alaska State Legislature, as co-
prime sponsor, introduced HB 289, paraphrasing from the sponsor
statement, which read as follows [original punctuation
provided]:
HB 289 encourages participation in the state's oil
spill response program by exempting fishing vessel
owners and crew who participate from having to pay
unemployment taxes while they are performing oil spill
response duties.
Vessel owners and crew members undergo oil spill
response training to be prepared to respond to state
disasters as a service to the state on a voluntary
basis. Training for the program and responding to
small spills only takes a few days at a time, filing
paperwork and paying unemployment taxes for such a
short period of service is unreasonably burdensome.
Because commercial fisherman are not covered by
unemployment insurance when they engage in commercial
fishing, most will not be in a position to have enough
service time accrued to collect unemployment after
having only worked a handful of qualified days in the
oil spill response program.
In the unfortunate event of a large spill (such as the
Exxon Valdez), if vessels spend seven or more
continuous days responding to an oil spill vessel
owners would be required to participate in the
unemployment system and their crew would be covered.
In summary, HB 289 encourages fisherman to continue to
participate in the state's oil spill response program
by removing burdensome unemployment requirements. The
state needs more vessels willing and able to respond
to such disasters and must work to remove barriers to
their participation.
8:39:47 AM
REPRESENTATIVE HARRIS stressed that it is important to not loose
the oil spill response "vehicle" that has been assembled since
the Exxon Valdez oil spill, trained, and is currently available.
He paraphrased from an Anchorage Daily News article published
November 1, 2007, which read [original punctuation provided]:
Some fishermen have vowed to quit the industry-funded
oil spill response program due to the paperwork and
costs involved with unemployment insurance.
REPRESENTATIVE HARRIS named the various organizations that
support this legislation, which include major fishing industry
entities, pipeline organizations, and the maritime shippers.
8:41:50 AM
REPRESENTATIVE JOHANSEN asked if fishermen enter into the
program via the Department of Labor.
REPRESENTATIVE HARRIS deferred.
8:43:46 AM
CHAIR SEATON opened public testimony
8:44:50 AM
PAULA SCAVERA, Special Assistant, Office of The Commissioner,
Department of Labor & Workforce Development (DLWD), pointed out
that this bill is specific to oil spills, and oil spill drills;
non inclusive of other disaster response. She noted that DLWD
does not run the oil spill response program, which is overseen
by the Department of Environmental Conservation (DEC). The DLWD
is represented at this meeting to respond to questions regarding
unemployment insurance (UI).
8:45:36 AM
CHAIR SEATON stated that current law provides for various
exemptions; this is not a new rule, but a clarification of what
exists in statute.
MS. SCAVERA said that this has been in place since the Exxon
Valdez spill. At that time, crew members paid into the UI
program.
8:46:29 AM
REPRESENTATIVE EDGMON asked for an estimation of the oil spill
response training's annual contribution to the UI program.
MS. SCAVERA explained that the employer and employee both pay
contributions to the unemployment tax, which is based on a crew
members wage/earnings. For an annual estimate she deferred.
8:47:53 AM
BILL KRAMER, Chief, Unemployment Insurance, Division of
Employment Security, Department of Labor & Workforce Development
(DLWD), said that an accurate number would be difficult to
estimate. The attached fiscal note indicates that, in
comparison to the UI trust fund total, the amount that this bill
reflects is insignificant.
CHAIR SEATON, as co-sponsor, pointed out that the bill lists a
series of exemptions from the UI tax. He directed attention to
the current statute exemption for commercial fisherman, page 5,
lines 12-16, paragraph (17), and paraphrased the language; which
read [original punctuation provided]:
(17) service performed by an individual on a boat
engaged in catching fish or other forms of aquatic
animal life under an arrangement with the owner or
operator of that boat under which
(A) that individual does not receive any cash
remuneration except as provided in (B) of this
paragraph;
CHAIR SEATON said the intent is to ensure that anyone being
trained/drilled for spill response doesn't "throw this into a
non exempt category." He paraphrased the proposed new language,
which read [original punctuation provided]:
(ii) for remuneration for service performed
while the boat responds or prepares to respond to, or
prepares for or engages in an emergency or practice
drill response to, an oil spill;
CHAIR SEATON said that, in accordance with the program, each
member of the crew undergoes an annual, land based, eight hour,
hazardous materials training course. Once every three years,
the crews practice the annual skills under simulated conditions,
at sea. Barring an actual incident, this represents the level
of employee activity that the bill targets.
8:50:50 AM
CHAIR SEATON if there were another spill, requiring a lengthy
commitment of time, the owners of a vessel would be able to opt
into the program; the exemption does not preclude that action.
The intent is to ensure that the state has an adequate number of
contracted vessels, with trained crews, available to provide a
high quality, volunteer, response to oil spills. He directed
attention to the committee packet, and read from the David
Blossom letter [no date provided; FAX dated 1/08/08]:
Many fishermen have indicated that if they have to do
all this paperwork and pay this tax, they will
probably drop out of the oil spill vessel response
program.
8:52:13 AM
REPRESENTATIVE JOHNSON asked if the tax was paid by the Exxon
Valdez spill responders.
MS. SCAVERA said that it was required. To a follow-up question,
she explained that under existing state law, the only time
employers and crew members are exempt, from paying UI tax, is
when they are commercial fishing. When responding to the oil
spill, crews were working on boats under contract, but were not
exempt from the tax.
8:53:26 AM
REPRESENTATIVE JOHNSON gathered that the responders were not
employees of Alyeska Pipeline Service Company, but rather
contract labor responsible for their own taxes.
MS. SCAVERA pointed out that, during the Exxon spill response,
there were many contractors, sub contractors, and sub-sub
contractors, however, exemption only applies for crews that are
commercial fishing.
REPRESENTATIVE JOHNSON stated that his interest is in
establishing how these groups of people are categorized by the
state: as employees, on retainer, or contractors.
MS. SCAVERA stated that the exemption is based on what service
the employee is performing.
8:55:55 AM
MR. KRAMER said that the fishermen who are engaged in oil spill
response training/drills are viewed as employees covered under
the UI program, and taxes should be paid. If they are private
contractors, it constitutes self employment, self employment is
not covered under the program.
8:56:39 AM
REPRESENTATIVE LEDOUX attempted to clarify the question, and who
should be filling out the paperwork.
8:57:24 AM
REPRESENTATIVE JOHNSON recalled the earlier comment that
"fishing boat captains, and fishermen, don't like to do
paperwork," however, if they are employees they simply receive a
paycheck; the paperwork is handled by the employer. A
contractor would need to fill out his/her own paperwork. He
questioned whether the issue is about paperwork, or money.
8:58:20 AM
CHAIR SEATON provided a perspective from his experience as a
vessel owner, and spill response operator. Anyone under the
direct supervision of an employer cannot be considered an
independent contractor. However, an exemption does exist for an
independent contractor who is engaged in the commercial catching
of fish, or other forms of aquatic animal life. The bill
expands that exemption to include crew undergoing training to
respond to an oil spill. On a fishing boat the crew is under
the supervision of the captain at all times.
REPRESENTATIVE JOHNSON asked who handles the paperwork: the
company, the captain, is the employee responsible. Who actually
handles the deduction, and writes a check to the state.
MS. SCAVERA responded that it is the responsibility of the
vessel captain.
9:01:30 AM
REPRESENTATIVE LEDOUX asked, "Do you really mean, when you say
it's the vessel captain, [that] it's the vessel owner."
MS. SCAVERA clarified that her answer was based on the
assumption that most captains are the owner of the vessel, and
she said, "I stand corrected."
9:02:11 AM
REPRESENTATIVE EDGMON asked whether the department supports this
legislation.
MS. SCAVERA answered that the department is neutral on the bill.
9:02:38 AM
JERRY MCCUNE, Lobbyist, President, Cordova District Fishermen
United (CDFU), said that until the training program was
implemented, fishermen were unable to respond to an oil spill.
Money is a concern, he said. The training exercises are
attended 2-3 times a year, at a per person cost of approximately
$200 a day. CDFU has a contract with Alyeska to provide
response, and it is a challenge to maintain a trained fleet.
The captains are balking at the paperwork involved, along with
the cost and time involved. He expressed concern that many of
the long time, well trained, participants may drop out of the
program. He explained how the contract with Alyeska began.
9:06:55 AM
REPRESENTATIVE JOHNSON asked how many volunteers and boats are
involved.
MR. MCCUNE said that Cordova maintains the primary core fleet,
which is the largest in the state. These are the larger
vessels, that undergo drills 2-3 times per year. The smaller
backup fleets train annually, as mentioned. He was unable to
provide a number of participants, but suggested that perhaps 50
boats are active in Cordova. He offered to provide accurate
numbers for Kodiak, and other areas.
REPRESENTATIVE JOHNSON stressed that these citizens are standing
in reserve, to act on behalf of the state, in the event of an
oil spill.
9:08:51 AM
DOUGLAS MERTZ, Legislative Monitor, Prince William Sound
Regional Citizens Advisory Council, explained the difference
between the Federal Unemployment Tax Act (FUTA), and the state
UI tax requirements. State law must be consistent with federal
statute, and the question is if HB 289, as written, is in accord
with federal law. A response has, thus far, not been received,
he reported. It would be important to have this answered prior
to proceeding with HB 289.
9:12:22 AM
REPRESENTATIVE JOHANSEN asked how long ago Mr. Mertz was in
contact with DLWD to resolve this question.
MR. MERTZ said the question was submitted 2-3 weeks ago.
9:12:40 AM
REPRESENTATIVE LEDOUX said that it has been stated that this law
has been on the books since the Exxon spill. She asked, "Up
until now people haven't been filling out this paperwork. What
did the feds do?"
MR. MERTZ speculated that the federal government may not have
been aware of the situation. For a more direct answer, he
deferred to other speakers present.
9:14:55 AM
MS. SCAVERA stated that she has not received a request from Mr.
Mertz requesting a response. The question has been put to the
U.S. DOL and a response has been received.
9:16:04 AM
MR. KRAMER paraphrased from the U.S. DOL e-mail, which read:
Excluding workers from state unemployment insurance
coverage would not cause a federal issue, as long as
they were not excluded, if they worked for government,
non-profit, or, in Alaska, Native American tribes. We
said we could not speak to the Internal Revenue
Service, but that if the Internal Revenue Service
found them to be employees, they could be required to
pay the full federal unemployment tax act without the
credit for paying the state tax. Requesting a revenue
service, from the Internal Revenue Service was
suggested as a possibility. The fishing boats might
opt out of the training, if they do not treat their
workers as employees and do all the paperwork
associated as being classified.
CHAIR SEATON surmised that the federal government will not have
an issue, as these people are not government workers.
REPRESENTATIVE HOLMES requested a copy of the federal response.
9:18:47 AM
TRACEY MAYHEW, Representative, Seafarers International Union
(SIU), stated support for HB 289, paraphrasing from a written
statement, which read as follows [original punctuation
provided]:
The Seafarers International Union represents merchant
mariners working onboard large ocean going vessels.
In Alaskan waters this would be companies like Alaska
Tanker Company, Seabulk, Tote, and Horizon Lines.
The SIU is in favor of passing this bill. Should this
bill not pass and the fishermen pull out of
participating in the oil spill response teams, then
the Prince William Sound contingency plan could be in
non-compliance which will threaten the livelihood of
our members working onboard these vessels.
It is important to ensure that a consistent well
trained local response team be maintained, after all
who best to protect Alaska waters than Alaskans. Our
interest is in seeing that there are steady hands
among the fishing crews who drill with the tanker
crews as this type of training and familiarity between
responders and crews help ensure that the best system
of spill response and clean-up is undertaken by the
parties involved. Not passing this bill will create a
disincentive for Alaskan fishing crews to participate
in this vital program and put other Alaskan
livelihoods at risk.
9:20:21 AM
CHAIR SEATON asked if the voluntary fishing vessel program is an
integral part of the oil spill contingency response plan, and
if, without their participation, the contingency plan would be
compromised, and consequences incurred.
MS. MAYHEW responded, "Yes."
9:21:13 AM
MIKE MUNGER, Executive Director, Cook Inlet Regional Citizens'
Advisory Council, stated support for HB 289. He said that
anything that diminishes the spill response program is a step
backwards.
9:22:20 AM
CHAIR SEATON asked for the approximate number of participating
response vessels in the Cook Inlet area.
MR. MUNGER estimated approximately 100. The Cook Inlet spill
response co-op goes to great lengths to provide "vessels of
opportunity" on contract, knowing that at any time some vessels
may be out of service.
9:23:49 AM
JOHN VELSKO, Board Member, City of Homer Prince William Sound
Regional Citizens Advisory Committee (PSWRCAC), Chairman,
PWSRCAC Legislative Affairs Committee, pointed out that this
program is federally mandated. Currently three categories of
vessels exist: Tier one, the core fleet, is comprised of about
50 vessels, based out of Cordova, which participate in numerous
drills throughout the year; Tier two, comprised of about 220
vessels, based out of Kodiak and Seward, train annually, with
two crew members, at a cost of about $200 per day; Tier three
are vessels of opportunity, and the number is unknown. The tier
three vessels are not under contract, but would come under
contract in the case of a spill, within 1-2 days. He stressed
the importance for this legislation to pass, and he pointed out
that it pertains to training/drills only, and not continued
clean-up work. Additionally, a definitive legal opinion is
imperative to allow the bill to face a federal challenge.
Further, he said, if the DLWD wage reporting threshold was
raised from $250 up to $1,500, a vast number of tier two boats
would be in compliance without additional effort or concern.
Unfortunately, that will not be of help to the tier one fleet.
The total number of participating vessels varies, but the number
of available boats at any one time is targeted at 300-350.
9:30:39 AM
CHAIR SEATON suspended public testimony to the next hearing of
the bill.
9:31:22 AM
CHAIR SEATON offered Amendment 1, labeled 25-LS1182\C, Wayne,
1/22/08, which read:
Page 5, lines 16 - 20:
Delete all material.
Insert "except as provided in (B) of this
paragraph;"
Page 6, lines 25 - 28:
Delete all material and insert:
"(22) temporary services related to
emergency oil spill training and response activities
by an individual described in (17) of this
subsection."
9:31:53 AM
REPRESENTATIVE JOHNSON objected.
REPRESENTATIVE HOLMES objected for discussion, also.
9:32:01 AM
CHAIR SEATON directed attention to HB 289, page 6 and read
paragraph (22):
(22) service performed by a crewmember on a
fishing vessel, registered in the state under AS
16.05.475, for services performed while the vessel
responds or prepares to respond to, or prepares for or
engages in an emergency or practice drill response to,
an oil spill.
CHAIR SEATON stated that the intention of this bill is not to
expand the category of employees but to protect people who are
exempt. Paragraph (22) provided an unintentional expansion.
9:34:08 AM
REPRESENTATIVE HOLMES asked whether Amendment 1 would effect
paragraph (17).
CHAIR SEATON assured that it only amends section (22), and
minimizes any misunderstandings of who is covered.
REPRESENTATIVE HOLMES offered her understanding of the
amendment.
9:35:48 AM
The committee took an at-ease from 9:35 a.m. to 9:37 a.m.
9:37:43 AM
CHAIR SEATON clarified that the first part of the amendment
eliminates the changes that were listed in [paragraph] (17).
The change will now be made in [paragraph] (22) that allows the
exemption for oil spill training; by the people that are covered
under [paragraph] (17) of the current law.
9:38:01 AM
REPRESENTATIVE EDGMON pointed out that the amendment includes
the term "temporary," and asked if a definition would be
prudent, to avoid future argument.
9:38:47 AM
MS. SCAVERA responded that the word temporary is defined as
anyone who is employed full time, 12 months of the year, on a
fishing boat. She said, "Working on an oil spill, you may be
considered something other than a crewmember on a fishing boat."
CHAIR SEATON asked that DLWD provide a response for the next
hearing, and include whether a definition is necessary.
MS. SCAVERA agreed to provide additional information to the
committee to clarify the language in the amendment.
9:41:29 AM
REPRESENTATIVE JOHNSON withdrew his objection.
9:41:36 AM
REPRESENTATIVE JOHANSEN inquired whether the chair, as co-prime
sponsor, supports the amendment.
CHAIR SEATON said, "Yes."
9:41:51 AM
REPRESENTATIVE HOLMES withdrew her objection.
There being no further objection, Amendment 1 was adopted.
9:42:21 AM
CHAIR SEATON said that the bill would be held and a CS would be
forthcoming.
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Fisheries meeting was adjourned at 9:42
a.m.
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