Legislature(2003 - 2004)

03/10/2003 03:16 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          HOUSE LABOR AND COMMERCE STANDING COMMITTEE                                                                         
                         March 10, 2003                                                                                         
                           3:16 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Tom Anderson, Chair                                                                                              
Representative Bob Lynn, Vice Chair                                                                                             
Representative Nancy Dahlstrom                                                                                                  
Representative Carl Gatto                                                                                                       
Representative Harry Crawford                                                                                                   
Representative David Guttenberg                                                                                                 
MEMBERS ABSENT                                                                                                                
Representative Norman Rokeberg                                                                                                  
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 36                                                                                                               
"An  Act  relating  to  electronic  mail  activities  and  making                                                               
certain electronic mail activities  unfair methods of competition                                                               
or  unfair  or   deceptive  acts  or  practices   under  the  Act                                                               
enumerating unfair trade practices and consumer protections."                                                                   
     - MOVED CSHB 36(L&C) OUT OF COMMITTEE                                                                                      
CS FOR SENATE BILL NO. 20(FIN)                                                                                                  
"An Act relating to the Board of Marine Pilots and to marine                                                                    
pilotage; extending the termination date of the Board of Marine                                                                 
Pilots; and providing for an effective date."                                                                                   
     - MOVED CSSB 20(FIN) OUT OF COMMITTEE                                                                                      
HOUSE BILL NO. 111                                                                                                              
"An Act extending the termination date of the Regulatory                                                                        
Commission of Alaska; and providing for an effective date."                                                                     
     - HEARD AND HELD                                                                                                           
PREVIOUS ACTION                                                                                                               
BILL: HB 36                                                                                                                   
SHORT TITLE:ELECTRONIC MAIL                                                                                                     
SPONSOR(S): REPRESENTATIVE(S)GARA                                                                                               
Jrn-Date   Jrn-Page                     Action                                                                                  
01/21/03     0041       (H)        PREFILE RELEASED (1/10/03)                                                                   
01/21/03     0041       (H)        READ THE FIRST TIME -                                                                        
01/21/03     0041       (H)        L&C, JUD                                                                                     
01/27/03     0079       (H)        COSPONSOR(S): FOSTER                                                                         
02/12/03     0201       (H)        COSPONSOR(S): HEINZE, MEYER,                                                                 
02/12/03     0201       (H)        KOOKESH, CROFT, CRAWFORD,                                                                    
02/12/03     0201       (H)        STEVENS, CISSNA, MCGUIRE,                                                                    
02/12/03     0201       (H)        GRUENBERG, WILSON, LYNN,                                                                     
02/18/03     0232       (H)        COSPONSOR(S): DAHLSTROM                                                                      
02/19/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
02/19/03                (H)        Heard & Held                                                                                 
02/19/03                (H)        MINUTE(L&C)                                                                                  
03/10/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
BILL: SB 20                                                                                                                   
SHORT TITLE:BOARD OF MARINE PILOTS                                                                                              
SPONSOR(S): SENATOR(S) THERRIAULT, DYSON                                                                                        
Jrn-Date   Jrn-Page                     Action                                                                                  
01/21/03     0019       (S)        PREFILE RELEASED 1/10/03                                                                     
01/21/03     0020       (S)        READ THE FIRST TIME -                                                                        
01/21/03     0020       (S)        L&C, FIN                                                                                     
02/06/03                (S)        L&C AT 1:30 PM BELTZ 211                                                                     
02/06/03                (S)        Heard & Held                                                                                 
02/06/03                (S)        MINUTE(L&C)                                                                                  
02/13/03                (S)        L&C AT 1:30 PM BELTZ 211                                                                     
02/13/03                (S)        Moved Out of Committee                                                                       
02/13/03                (S)        MINUTE(L&C)                                                                                  
02/14/03     0185       (S)        L&C RPT 4DP                                                                                  
02/14/03     0185       (S)        DP: BUNDE, DAVIS, FRENCH,                                                                    
02/14/03     0185       (S)        FN1: (CED)                                                                                   
02/20/03                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
02/20/03                (S)        Heard & Held                                                                                 
02/20/03                (S)        MINUTE(FIN)                                                                                  
03/05/03     0353       (S)        FIN RPT CS 6DP 1NR NEW TITLE                                                                 
03/05/03     0353       (S)        DP: GREEN, WILKEN, OLSON,                                                                    
03/05/03     0353       (S)        STEVENS B, TAYLOR; NR:                                                                       
03/05/03     0354       (S)        FN1: (CED)                                                                                   
03/05/03                (S)        FIN AT 9:00 AM SENATE FINANCE                                                                
03/05/03                (S)        Moved CSSB 20(FIN) Out of                                                                    
03/05/03                (S)        MINUTE(FIN)                                                                                  
03/06/03     0416       (S)        RULES TO CALENDAR 3/6/2003                                                                   
03/06/03     0416       (S)        READ THE SECOND TIME                                                                         
03/06/03     0416       (S)        FIN CS ADOPTED UNAN CONSENT                                                                  
03/06/03     0416       (S)        ADVANCED TO THIRD READING                                                                    
                                   UNAN CONSENT                                                                                 
03/06/03     0416       (S)        READ THE THIRD TIME CSSB                                                                     
03/06/03     0417       (S)        PASSED Y18 N- E1 A1                                                                          
03/06/03     0417       (S)        EFFECTIVE DATE(S) SAME AS                                                                    
03/06/03     0421       (S)        TRANSMITTED TO (H)                                                                           
03/06/03     0421       (S)        VERSION: CSSB 20(FIN)                                                                        
03/07/03     0459       (H)        READ THE FIRST TIME -                                                                        
03/07/03     0459       (H)        L&C, FIN                                                                                     
03/10/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
BILL: HB 111                                                                                                                  
SHORT TITLE:EXTEND REGULATORY COMMISSION OF ALASKA                                                                              
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR                                                                                      
Jrn-Date   Jrn-Page                     Action                                                                                  
02/19/03     0250       (H)        READ THE FIRST TIME -                                                                        
02/19/03     0250       (H)        L&C, FIN                                                                                     
02/19/03     0250       (H)        FN1: (CED)                                                                                   
02/19/03     0250       (H)        GOVERNOR'S TRANSMITTAL LETTER                                                                
02/19/03     0250       (H)        REFERRED TO LABOR & COMMERCE                                                                 
03/10/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
WITNESS REGISTER                                                                                                              
REPRESENTATIVE LES GARA                                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Spoke as the sponsor of HB 36 and presented                                                                
Version V.                                                                                                                      
SENATOR FRED DYSON                                                                                                              
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    As  cosponsor,  presented  CSSB  20(FIN),                                                               
urging  the  committee to  extend  the  Board of  Marine  Pilots;                                                               
explained how  a U.S.  Coast Guard  commander opposes  granting a                                                               
exemption to foreign-flagged yachts.                                                                                            
RICK URION, Director                                                                                                            
Division of Occupational Licensing                                                                                              
Department of Community & Economic Development                                                                                  
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Spoke  in support  of CSSB  20(FIN), noting                                                               
the bill addresses  the recommendations of a recent  audit by the                                                               
Division of Legislative Audit.                                                                                                  
PAT DAVIDSON, Legislative Auditor                                                                                               
Division of Legislative Audit                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   In testimony  on  CSSB 20(FIN),  discussed                                                               
drug testing  and exemptions for foreign-flagged  vessels, issues                                                               
raised in the recent audit of the Board of Marine Pilots.                                                                       
KATE TESAR, Lobbyist                                                                                                            
for Alaska Yacht Services and Provisioning Company                                                                              
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Testified  in support  of CSSB  20(FIN) but                                                               
advocated for  a conceptual  amendment to  exempt foreign-flagged                                                               
yachts from the bill.                                                                                                           
CAPTAIN ROBERT WINTER, Marine Pilot                                                                                             
Southeast Alaska Pilots' Association                                                                                            
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Spoke in support of  CSSB 20(FIN), praising                                                               
Alaska's  marine pilotage  law;  suggested  identifying ships  by                                                               
length rather than tonnage.                                                                                                     
CAPTAIN DALE COLLINS, President                                                                                                 
Southeast Alaska Pilots' Association                                                                                            
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Answered  questions about dispatching marine                                                               
pilots  on  yachts  and  described   the  exemption  of  Canadian                                                               
warships in CSSB 20(FIN).                                                                                                       
AMY WACHMANN, Owner                                                                                                             
Alaska Yacht Services and Provisioning                                                                                          
Fort Lauderdale, Florida                                                                                                        
POSITION STATEMENT:   Testified in  favor of a waiver  for yachts                                                               
in  CSSB 20(FIN),  describing the  growth of  the visiting  yacht                                                               
industry in the past years.                                                                                                     
GRAHAM HAYES, Yacht Captain                                                                                                     
Seattle, Washington                                                                                                             
POSITION  STATEMENT:    During   the  hearing  on  CSSB  20(FIN),                                                               
described how yachts spend large  sums of money for provisions in                                                               
Alaska  ports  and are  currently  tracked  by the  U.S.  Customs                                                               
Service and the U.S. Immigration and Naturalization Service.                                                                    
DEREK SMITH, Safety Manager                                                                                                     
Fraser Yachts Worldwide                                                                                                         
Fort Lauderdale, Florida                                                                                                        
POSITION  STATEMENT:   As  manager of  a  yacht management  firm,                                                               
testified during  the hearing  on CSSB  20(FIN) about  the safety                                                               
standards  of the  yachting industry,  yacht  owners' desire  for                                                               
privacy,  and the  awkward logistics  of housing  a marine  pilot                                                               
during an Alaskan cruise.                                                                                                       
NAN THOMPSON, Commissioner                                                                                                      
Regulatory Commission of Alaska (RCA)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 111.                                                                            
WESLEY E. CARSON                                                                                                                
Alaska Communications Systems (ACS)                                                                                             
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Emphasized the importance  of deferring any                                                               
action to  re-authorize the RCA  until the state has  developed a                                                               
clear   set  of   telecommunications   policies   to  guide   the                                                               
JIMMY JACKSON, Attorney                                                                                                         
General Communications Incorporated (GCI)                                                                                       
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:   Supported the  four-year extension  of the                                                               
RCA in HB 111.                                                                                                                  
KRISTI CATLIN, Director                                                                                                         
Governmental Affairs                                                                                                            
AT&T Alascom                                                                                                                    
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Testified  that AT&T Alascom  could support                                                               
legislation extending the  RCA for another 2-4 years  only if the                                                               
RCA commits to regulatory reform.                                                                                               
JIM ROWE, Executive Director                                                                                                    
Alaska Telephone Association (ATA)                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Supported  the extension of  the RCA  in HB                                                               
111 with reservations.                                                                                                          
H.A. RED BOUCHER, Vice Chairman                                                                                                 
Board of Directors                                                                                                              
Chugach Electric Association, Inc.                                                                                              
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    Made   four  recommendations  during  the                                                               
hearing on HB 111.                                                                                                              
EVAN J. GRIFFITH, General Manager                                                                                               
Chugach Electric Association, Inc.                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified on HB 111.                                                                                       
ERIC YOULD, Executive Director                                                                                                  
Alaska Rural Electric Cooperative Association (ARECA)                                                                           
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Expressed concerns with HB 111.                                                                            
ACTION NARRATIVE                                                                                                              
TAPE 03-18, SIDE A                                                                                                            
Number 0001                                                                                                                     
CHAIR TOM ANDERSON  called the House Labor  and Commerce Standing                                                             
Committee  meeting  to  order  at   3:16  p.m.    Representatives                                                               
Anderson,  Dahlstrom,   Gatto,  Crawford,  and   Guttenberg  were                                                               
present at  the call  to order.   Representative Lynn  arrived as                                                               
the meeting was in progress.                                                                                                    
HB  36-ELECTRONIC MAIL                                                                                                        
Number 0065                                                                                                                     
CHAIR ANDERSON announced  that the first order  of business would                                                               
be  HOUSE  BILL NO.  36,  "An  Act  relating to  electronic  mail                                                               
activities and  making certain electronic mail  activities unfair                                                               
methods of competition  or unfair or deceptive  acts or practices                                                               
under  the Act  enumerating unfair  trade practices  and consumer                                                               
Number 0083                                                                                                                     
REPRESENTATIVE LES GARA, Alaska  State Legislature, sponsor of HB                                                               
36, reminded  the committee  that Representative  Rokeberg wanted                                                               
to insure  that the person  sending out improper junk  e-mail was                                                               
held responsible,  not than the  Internet service  provider whose                                                               
equipment was  used.   He explained that  this language  has been                                                               
clarified in  the proposed  committee substitute  (CS) on  page 3                                                               
and 4.                                                                                                                          
Number 0223                                                                                                                     
REPRESENTATIVE CRAWFORD  moved to  adopt the  proposed CS  for HB                                                               
36,  Version  23-LS0224\V,  Bannister, 3/10/03,  as  the  working                                                               
document.   There being  no objection, Version  V was  before the                                                               
REPRESENTATIVE  GARA reiterated  that  Version  V specifies  that                                                               
only the  person or  business initiating the  e-mail can  be held                                                               
liable  for sending  out improper  junk  e-mail.   In an  earlier                                                               
version, there was  language that could have  been interpreted as                                                               
making an Internet  service provider a liable party.   On page 4,                                                               
line 5 of Version V, the  bill refers to the person who initiates                                                               
the sending of  an unsolicited e-mail; all  the language relating                                                               
to the  liability of Internet  service providers  was eliminated.                                                               
Referring to Version S, Representative  Gara said that on page 3,                                                               
line 12, everything  after the word "sender" was  deleted [in the                                                               
later version].   Therefore,  in Version  V the  Internet service                                                               
provider handling the e-mail bears no responsibility at all.                                                                    
REPRESENTATIVE GARA  reminded members  that at the  last meeting,                                                               
an assistant  attorney opined that HB  36 is a valid  approach to                                                               
regulating unwanted  e-mail and would pass  constitutional muster                                                               
as well.                                                                                                                        
Number 0456                                                                                                                     
REPRESENTATIVE  DAHLSTROM  moved to  report  the  CS for  HB  36,                                                               
Version 23-LS0224\V,  Bannister, 3/10/03,  out of  committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There  being no  objection, CSHB  36(L&C) was  reported from  the                                                               
House Labor and Commerce Standing Committee.                                                                                    
SB  20-BOARD OF MARINE PILOTS                                                                                                 
Number 0516                                                                                                                     
CHAIR ANDERSON  announced that the  next order of  business would                                                               
be CS FOR SENATE BILL NO.  20(FIN), "An Act relating to the Board                                                               
of  Marine   Pilots  and  to   marine  pilotage;   extending  the                                                               
termination date  of the  Board of  Marine Pilots;  and providing                                                               
for an effective date."                                                                                                         
Number 0549                                                                                                                     
SENATOR  FRED  DYSON,  Alaska  State  Legislature,  cosponsor  of                                                               
committee  substitute (CS)  for SB  20(FIN), presented  his bill.                                                               
He  explained  that  marine  pilots   with  local  knowledge  are                                                               
required by law  to board larger vessels when  they enter Alaskan                                                               
waters.   Marine  pilots guide  the ships  and advise  them about                                                               
anchorages,  local  tides, and  local  conditions.   Every  major                                                               
seaport  in the  world  has  a similar  arrangement.   This  bill                                                               
continues the Board  of Marine Pilots, which  has been successful                                                               
and trouble-free.                                                                                                               
SENATOR DYSON testified that the  bill cleans up several items in                                                               
the  marine  pilotage  law.     It  requires  drug  training  and                                                               
screening  for trainees,  clarifies  boundaries  in the  southern                                                               
part   of   Alaskan   waters,  and   establishes   a   reciprocal                                                               
relationship with the Canadian Navy  and the Canadian Coast Guard                                                               
Maritimes.  Under the bill,  if Canadian ships visit the southern                                                               
waters of  Alaska, they  can do  so without  a pilot,  allowing a                                                               
reciprocal  arrangement   for  U.S.   government  vessels.     He                                                               
encouraged the committee to pass CSSB 20(FIN).                                                                                  
Number 0695                                                                                                                     
SENATOR DYSON said  a group that favors waivers  for large yachts                                                               
will  be  testifying  today;  he  encouraged  members  to  listen                                                               
closely   to  their   testimony.     He  said   it's  nearly   an                                                               
international standard that vessels over  300 tons carry a marine                                                               
pilot on board.   A 300-ton vessel is a ship.   He said those who                                                               
want large yachts exempted from  carrying a marine pilot on board                                                               
argue that  it inhibits wealthy  travelers from  visiting Alaska.                                                               
This  requirement  may  indeed discourage  people  from  spending                                                               
large  amounts  of  money  in  Alaskan  waters,  he  said.    The                                                               
committee's bill  packet includes a  [March 6, 2003]  letter from                                                               
J.W.  Underwood,  Rear  Admiral,  U.S.  Coast  Guard,  Commander,                                                               
Seventeenth Coast Guard District.   He said Admiral Underwood has                                                               
several good  reasons for continuing the  present requirement for                                                               
large  yachts to  have a  marine pilot  onboard.   Some of  those                                                               
vessels will have 20,000 to 100,000  gallons of fuel, and a spill                                                               
of that magnitude could cause  significant damage.  He noted that                                                               
Southeast Alaska has  difficult passages such as  the entrance to                                                               
Lituya Bay and Wrangell Narrows.                                                                                                
Number 0856                                                                                                                     
SENATOR DYSON  noted that  the U.S.  Coast Guard  ("Coast Guard")                                                               
has not supported  an amendment to allow the  exemption for these                                                               
large  foreign yachts.   In  his conversations  with Coast  Guard                                                               
officials,  Senator Dyson  said  he has  recommended that  yachts                                                               
carry  a  vessel tracking  transponder  on  board, that  they  be                                                               
inspected by  the Coast Guard,  that criteria be  established for                                                               
the knowledge and  expertise of the skipper, and  that possibly a                                                               
bond be required.                                                                                                               
SENATOR DYSON related that Admiral  Underwood anticipated that in                                                               
a year,  even within three months,  the scope of the  threat from                                                               
international terrorists will  be clearer.  For  the Coast Guard,                                                               
maritime security  is extraordinarily  important.   Senator Dyson                                                               
said  he  doesn't believe  that  Alaska  would  be a  target  for                                                               
terrorists, but  one can't  be sure.   In other  locations, large                                                               
cruise ships have been attacked.   Tankers moving through Alaskan                                                               
waters could be  a target, and the large freighters  that pick up                                                               
nitrates from  Nikiski and  that carry tons  of diesel  fuel have                                                               
the two  ingredients needed  for a  very large  bomb.   Under the                                                               
Homeland Security Act,  the Coast Guard is charged  with port and                                                               
maritime security,  and he  said the  agency is  overwhelmed with                                                               
that responsibility in Alaska.   In the future, Coast Guard staff                                                               
indicated they  would be amenable  to working out  something with                                                               
the legislature more favorable for the large yachts.                                                                            
Number 1017                                                                                                                     
SENATOR  DYSON,  replying  to   a  question  from  Representative                                                               
Crawford, said  the bill applies  to all commercial  vessels over                                                               
300 tons [including foreign-flagged yachts].                                                                                    
Number 1039                                                                                                                     
REPRESENTATIVE GATTO  asked two  questions about the  addition of                                                               
the term "inside water of  Southeastern Alaska", on page 2, lines                                                               
27-28.   He  questioned whether  the term  is defined  and if  it                                                               
includes waters three miles off the outer coast.                                                                                
SENATOR DYSON  replied that the  term "inside water"  is defined;                                                               
it means there is land on the  ocean side and that the waters are                                                               
Number 1080                                                                                                                     
REPRESENTATIVE  GUTTENBERG referred  to the  recommendations from                                                               
the Division  of Legislative Audit  report [Audit  control number                                                               
08-20015-02]  that addressed  drug testing.   One  recommendation                                                               
concerned   the   inconsistency    between   the   four   pilots'                                                               
associations [that  are responsible for administering  the random                                                               
drug-testing  requirements].     He  pointed  out   new  language                                                               
starting on  page 1, line  14, "and for trainees  and apprentices                                                               
seeking a  license or endorsement  under this chapter;"  he asked                                                               
whether it corrects the inconsistency between the groups.                                                                       
SENATOR DYSON said yes, that was his understanding.                                                                             
Number 1126                                                                                                                     
RICK  URION,   Director,  Division  of   Occupational  Licensing,                                                               
Department  of   Community  &  Economic  Development,   said  his                                                               
division supports  extending the  Board of Marine  Pilots another                                                               
four  years.   He  said  the  board  has addressed  the  problems                                                               
identified in  the recent legislative  audit.  He  concluded that                                                               
the  board  performs  a  valuable   service,  and  he  urged  the                                                               
committee to pass this version of SB 20.                                                                                        
Number 1159                                                                                                                     
REPRESENTATIVE  GUTTENBERG asked  about  the  uniformity of  drug                                                               
testing [among  the pilots' associations].   The Board  of Marine                                                               
Pilots  may  delegate  all  or  a  portion  of  the  drug-testing                                                               
programs.  He asked how that system works.                                                                                      
MR. URION  replied that the  marine pilot coordinator  who staffs                                                               
this board  could answer questions  on the  drug-testing program.                                                               
Mr.  Urion  said  he  was   assured  that  this  issue  has  been                                                               
Number 1219                                                                                                                     
PAT  DAVIDSON,  Legislative   Auditor,  Division  of  Legislative                                                               
Audit,  Alaska  State  Legislature,   answered  the  question  by                                                               
Representative  Guttenberg, noting  that recommendation  number 3                                                               
of the  audit asked that  the statutes  be tightened to  add both                                                               
trainees and apprentices to the  drug-testing program.  This bill                                                               
solves  that  problem, she  said.    Currently, the  drug-testing                                                               
program has been  delegated to the four  pilots' associations, as                                                               
allowed in  statute and regulation.   The Board of  Marine Pilots                                                               
also  has  the  responsibility  to review  the  bylaws  of  those                                                               
organizations.  She said Legislative  Audit is satisfied that the                                                               
drug-testing  issues  and  recommendation   number  3  have  been                                                               
addressed in CSSB 20(FIN).                                                                                                      
Number 1270                                                                                                                     
REPRESENTATIVE  GUTTENBERG   asked  about   audit  recommendation                                                               
number  4, waiving  pilotage  on  large foreign-flagged  pleasure                                                               
crafts.  He  asked how this recommendation  affects marine pilots                                                               
and whether these yachts are  currently allowed in Alaskan waters                                                               
without marine pilots.                                                                                                          
MS. DAVIDSON replied  that the auditors found  that either yachts                                                               
over a  certain size  were not  coming into  the waters,  or they                                                               
were coming  into the  waters and  not requesting  marine pilots.                                                               
She said the  300 gross-ton limit does not  easily translate into                                                               
a  visual assessment  of a  ship's  size because  tonnage is  not                                                               
particular to  length.  Therefore,  these vessels are  in Alaskan                                                               
waters,  and  there's  no quick  determination  of  whether  they                                                               
require  a marine  pilot.   This issue  was also  addressed in  a                                                               
prior  audit.   This  audit  recommended that  the  board seek  a                                                               
statutory  waiver   to  address  the  problem.     Senator  Dyson                                                               
underscored some security issues which  cannot be dismissed.  She                                                               
added that it's  important to look at what the  marine pilots can                                                               
add to security issues.                                                                                                         
Number 1384                                                                                                                     
KATE TESAR,  Lobbyist for Alaska Yacht  Services and Provisioning                                                               
Company,  explained that  this business,  owned by  Amy Wachmann,                                                               
assists  yacht   management  companies  and  yacht   owners  with                                                               
bookings to  bring yachts into  Alaska.  Ms. Tesar  described her                                                               
12-year  background in  marine  pilotage.   She  said her  client                                                               
supports the  legislation to  extend the  Board of  Marine Pilots                                                               
and is very  satisfied with the board's performance.   Her client                                                               
supports the  audit's recommendation  number 4, which  proposes a                                                               
statutory  waiver allowing  foreign-flagged vessels  of over  300                                                               
tons to  operate in  Alaska without marine  pilots onboard.   Ms.                                                               
Tesar reported  that her client learned  through booking agencies                                                               
and yacht  owners that  pleasure crafts  are not  visiting Alaska                                                               
because of  the current law.   She asked the committee  to take a                                                               
mandate off  the books that has  not being enforced since  it was                                                               
passed in 1995,  a mandate that only serves  to obstruct commerce                                                               
in Alaska.                                                                                                                      
Number 1505                                                                                                                     
MS.  TESAR explained  that there  was a  major rewrite  of marine                                                               
pilotage law in  1991, addressing many concerns  that arose after                                                               
the Exxon  Valdez oil spill.   She  said no one  advocates taking                                                               
pilots off  oil tankers or  large cruise  ships.  Prior  to 1995,                                                               
all  pleasure  craft,  whether U.S.-flagged  or  foreign-flagged,                                                               
were exempted from having a marine  pilot on board.  In 1995, the                                                               
legislature mandated  that a marine  pilot be on board  for these                                                               
foreign-flagged vessels  over 300  gross tons.   She said  no one                                                               
foresaw  the huge  increase  in the  yacht  cruising business  in                                                               
Alaska.   She said there  have been no major  legislative changes                                                               
relating  to  marine  pilotage  in   the  last  eight  years  but                                                               
mentioned that there  have been large changes in  the industry in                                                               
the same  time period.   Ms. Tesar said  she is pushing  for this                                                               
waiver because  the economic impact  on Southeast  communities is                                                               
Number 1600                                                                                                                     
MS.  TESAR   said  she  has   provided  committee   members  with                                                               
information about  Washington state  marine pilotage  laws, which                                                               
have been in place for many years  and have been working well.  A                                                               
yacht planning  to enter Washington  waters applies for  a waiver                                                               
from  the state's  marine pilot  coordinator.   The yacht  pays a                                                               
fee; a determination  is made based on information  in the waiver                                                               
application; and  the yacht goes on  its way.  She  encouraged an                                                               
amendment that would do the same  thing:  give a waiver to yachts                                                               
of 200  feet or  less or a  waiver based on  the weight  of these                                                               
vessels.  She  said British Columbia also has a  waiver system in                                                               
place for  foreign-flagged yachts.   Ships can cruise  the waters                                                               
of  the Pacific  Northwest but  are unable  to come  into Alaskan                                                               
waters  without  a pilot.    In  Washington, authorities  decide,                                                               
based  on the  experience of  the  captain, whether  they want  a                                                               
marine pilot  onboard for  the first  day of a  voyage.   Some 90                                                               
percent  of the  foreign-registered yachts  are flagged  in Great                                                               
Britain and have either American  or British captains.  There are                                                               
strict international licensing laws for these captains.                                                                         
Number 1730                                                                                                                     
MS. TESAR  said that many  yachts do request marine  pilots; they                                                               
must call 48  hours in advance to schedule a  marine pilot.  Many                                                               
yachts stay  in Southeastern  waters all  summer, and  family and                                                               
guests fly up  and back.  The major clients  of marine pilots are                                                               
the cruise industry, for which  the cruise ship schedule is known                                                               
months  in advance.   She  said  this problem  of scheduling  was                                                               
discussed in detail during the Senate finance committee hearing.                                                                
Number 1774                                                                                                                     
MS.  TESAR explained  that last  year in  Juneau, there  were 430                                                               
dockings  of large  cruise ships.   There  are two  pilots aboard                                                               
each vessel,  and each vessel cruises  for seven days.   She said                                                               
this illustrates  the huge volume  of traffic that  marine pilots                                                               
service.  Ms. Tesar said she  has been working the last few weeks                                                               
with the  Coast Guard on  security issues.  Currently,  she said,                                                               
the  U.S.  Customs  Service  ("Customs  Service")  and  the  U.S.                                                               
Immigration  and  Naturalization  Service  board  each  of  these                                                               
foreign-flagged vessels  the moment  they come into  U.S. waters.                                                               
Yachts have to get a cruising  permit from the Customs Service if                                                               
they intend to stay  in U.S. waters for any period  of time.  She                                                               
pointed  out  that  the federal  government  has  an  application                                                               
process in  place, and  the Coast  Guard is  able to  track these                                                               
Number 1887                                                                                                                     
REPRESENTATIVE LYNN  asked what flags these  large foreign yachts                                                               
sail under and the origin of the crews.                                                                                         
MS. TESAR  replied that  the majority of  the yachts  are flagged                                                               
under Great  Britain.  The  crews come  from all over  the world,                                                               
but  about  90 percent  are  from  Great  Britain or  the  United                                                               
MS.  TESAR  answered  two  questions  from  Representative  Lynn,                                                               
saying  she  did not  know  how  many  foreign yachts  come  into                                                               
Alaskan waters  but estimated  two to  three dozen  a year.   She                                                               
said she did not know if marine pilots have security clearances.                                                                
Number 1936                                                                                                                     
REPRESENTATIVE  CRAWFORD questioned  how  a  waiver for  foreign-                                                               
flagged  yachts  would  impact  the  existing  number  of  marine                                                               
pilots.   He asked if  there was a  waiver, would some  pilots be                                                               
put out  of work,  and if  the current  law were  enforced, would                                                               
there be a demand for more marine pilots.                                                                                       
MS.  TESAR replied  that no  marine  pilots would  lose any  jobs                                                               
because  of this  proposed waiver.   The  question about  whether                                                               
there  are  enough  marine  pilots  to serve  this  part  of  the                                                               
industry  needs  further  discussion.     She  said  people  have                                                               
testified at  hearings that pilots  have been requested  but were                                                               
CHAIR  ANDERSON  estimated that  if  three  dozen yachts  entered                                                               
Alaskan waters but had waivers  from pilotage, 36 ships would not                                                               
use marine pilots.                                                                                                              
Number 2007                                                                                                                     
REPRESENTATIVE LYNN  asked why yachts aren't  using marine pilots                                                               
MS.  TESAR replied  the real  reason is  not the  marine pilotage                                                               
fee, which  can run  several thousand  dollars a  day.   She said                                                               
yachts  are  not  using  pilots because  U.S.  laws  limit  these                                                               
vessels to  12 passengers,  and so  a marine  pilot on  board for                                                               
many  weeks might  take a  spot  otherwise occupied  by a  family                                                               
member or a  guest.  Yacht owners object to  having a person they                                                               
don't know  on board for  long periods of  time, she noted.   She                                                               
said the  money is  probably an  issue, but it's  not as  great a                                                               
concern as privacy.                                                                                                             
REPRESENTATIVE  GUTTENBERG asked  how  many  requests for  marine                                                               
pilots on yachts went unfilled last year.                                                                                       
MS. TESAR said  she has asked the marine  pilot coordinator [with                                                               
the Board of Marine Pilots] but there is no way of knowing.                                                                     
Number 2080                                                                                                                     
CAPTAIN  ROBERT WINTER,  Marine Pilot,  Southeast Alaska  Pilots'                                                               
Association, explained that he is  a retired Coast Guard officer,                                                               
and has been  going to sea for  over 37 years, 25  of those years                                                               
in Alaska.   Because  Alaska has more  coastline than  the entire                                                               
United States  combined, regulation of marine  pilotage in Alaska                                                               
is  an  important  responsibility.   He  said  the  Alaska  State                                                               
Legislature has crafted  a marine pilotage act that  is second to                                                               
none in  the country.   Alaska marine  pilots are on  the cutting                                                               
edge  of  training and  recurrent  training,  assuring that  they                                                               
remain at  the top of  their profession.   He said  marine pilots                                                               
have  an interest  in the  integrity of  the system  that governs                                                               
them.  He said that CSSB  20(FIN) extends this proven system, and                                                               
on behalf  of the Southeast  Alaska Pilots Association,  he urged                                                               
the committee to pass the bill.                                                                                                 
REPRESENTATIVE  LYNN  asked  his  opinion  about  the  increasing                                                               
number of yachts visiting Alaska.                                                                                               
Number 2139                                                                                                                     
MR. WINTER  replied first with  an explanation of  gross tonnage.                                                               
He said  gross tonnage is  not a weight  measure; it is  a volume                                                               
metric measure; one  hundred cubic feet is a gross  ton.  He used                                                               
the example of  the Yorktown Clipper, which is 235  feet long and                                                               
99  gross tons.   He  explained that  the ship  is called  a rule                                                               
beater [because  at less than 100  tons, the ship is  governed by                                                               
less  stringent inspection  standards].   He named  several other                                                               
vessels around  200 feet in  length that  are less than  99 gross                                                               
tons.  He opined that those  ships are not little private yachts.                                                               
He  said that  marine  pilots favor  removing  the gross  tonnage                                                               
standard from the  law, if the committee were to  amend the bill.                                                               
He said  he would be  able to estimate the  length of a  boat and                                                               
make a  good guess about whether  it would require a  pilot; now,                                                               
he said, there's no way to tell.                                                                                                
Number 2197                                                                                                                     
MR. WINTER  said his  job as  a state-licensed  pilot is  to move                                                               
commerce safely on the waters of  Southeast Alaska.  He said he's                                                               
anxious  about  meeting  a  300-foot  ship  without  a  pilot  in                                                               
Wrangell  Narrows  in  the  fog,  and  he's  certain  that  ferry                                                               
captains have  the same concern.   If  a ship is  a U.S.-enrolled                                                               
vessel, such as a ferry, it has a federal pilot on board.                                                                       
Number 2241                                                                                                                     
MR. WINTER replied to a  question from Representative Gatto about                                                               
the change in  latitude on page 2,  line 28.  Mr.  Winter said he                                                               
had noticed the  typo and pointed it out to  the bill's sponsors.                                                               
The change allows a ship to sail  as far north as Skagway, and it                                                               
only applies to Canadian vessels.                                                                                               
Number 2266                                                                                                                     
REPRESENTATIVE DAHLSTROM  asked whether  there are  enough pilots                                                               
available to handle the requests  for yachts and about the number                                                               
of unfilled requests.                                                                                                           
Number 2289                                                                                                                     
CAPTAIN  DALE   COLLINS,  President,  Southeast   Alaska  Pilots'                                                               
Association, said to  his knowledge, there have  been no unfilled                                                               
requests  for marine  pilots  by  yachts.   He  checked with  his                                                               
office staff  and with the  Alaska Coastwise  Pilots Association,                                                               
which recently merged  with his agency.  He said  between the two                                                               
organizations, whenever there was a call  for a pilot, one or the                                                               
other was able to  fill the request in a timely  manner.  He said                                                               
he  suspects yachts  have  entered Alaskan  waters  but have  not                                                               
requested a marine pilot.                                                                                                       
Number 2352                                                                                                                     
REPRESENTATIVE   GUTTENBERG  asked   about   the  two   different                                                               
assignments  for  marine  pilots  - whether  they  preferred  the                                                               
prescheduled, weeklong work  on a cruise ship  or the unscheduled                                                               
assignment on a pleasure craft.                                                                                                 
MR.  COLLINS replied  that  a  preference for  one  or the  other                                                               
assignment depended  on the  pilot.  Some  pilots might  prefer a                                                               
yacht as a break from being on  a cruise ship.  He explained that                                                               
usually, when a marine pilot goes  on a yacht, the pilot stays in                                                               
the crew quarters; there wouldn't  be a stateroom available as on                                                               
a  cruise ship  because of  its much  smaller size.   He  said he                                                               
personally likes being  on yachts because they  go on interesting                                                               
routes, visit  interesting ports, and  they're a nice  break from                                                               
the cruise ships.                                                                                                               
TAPE 03-18, SIDE B                                                                                                            
Number 2395                                                                                                                     
MR. COLLINS  explained that his  association is required  to keep                                                               
extra pilots for the 48-hour  notice from cargo ships and yachts.                                                               
He said his agency does not get many calls for yachts.                                                                          
REPRESENTATIVE  GUTTENBERG asked  whether  the association  could                                                               
handle  as  many as  three  dozen  calls  for marine  pilots  for                                                               
pleasure cruises.                                                                                                               
MR. COLLINS replied  yes, as long as the calls  for marine pilots                                                               
were spread over  a three-month period; if the  requests all came                                                               
on  the 4th  of July,  they would  probably overload  the system.                                                               
Tuesdays and  Wednesday are  peak days  in Southeast  Alaska when                                                               
the maximum  number of pilots are  out and the maximum  number of                                                               
cruise ships are in.  He  said the association keeps four or five                                                               
marine pilots available for cargo and for the unexpected yacht.                                                                 
Number 2328                                                                                                                     
REPRESENTATIVE LYNN  asked why Canadian  vessels are  exempt from                                                               
the pilotage requirement on page 2, lines 25 and 26.                                                                            
MR. COLLINS replied  by describing the current  practices of U.S.                                                               
and  Canadian government  ships.   He said  that U.S.  Navy ships                                                               
visiting Alaskan waters are not  subject to state pilotage but as                                                               
a matter  of good seamanship,  voluntarily take  a pilot.   It is                                                               
standard practice for  U.S. ships to pick up a  pilot in any port                                                               
that isn't a homeport.                                                                                                          
MR.  COLLINS  said there  is  some  interest in  giving  Canadian                                                               
government ships a  waiver [on page 3, lines 5-7]  if Canada were                                                               
to  offer the  same  waiver  for U.S.  Navy  ships.   While  some                                                               
Canadian   ships  would   not  take   a  pilot   voluntarily,  he                                                               
anticipated  that many  would take  a pilot  even if  the statute                                                               
were amended.   Some smaller  Canadian ships,  like minesweepers,                                                               
travel extensively in  the Canadian inside waters  and could sail                                                               
successfully  in  Southeast,  while the  larger  frigates,  light                                                               
cruisers,  or  destroyer would  probably  elect  to take  pilots.                                                               
Marine pilots  have worked on  small Canadian oil  tankers, fleet                                                               
tankers, and frigates in the past, he said.                                                                                     
Number 2201                                                                                                                     
AMY  WACHMANN, Owner,  Alaska  Yacht  Services and  Provisioning,                                                               
said she started her business two  years ago; she has spent eight                                                               
years in  the Alaska yachting  industry and has worked  on yachts                                                               
in  the  Caribbean, the  Mediterranean,  and  the Pacific.    She                                                               
explained  that  she  has  noticed  more  yachts  coming  through                                                               
Alaska.   She  said the  amount of  money they  spend in  port is                                                               
tremendous, a great opportunity for Alaskan communities.                                                                        
MS. WACHMANN said yachts owners  don't object to having pilots on                                                               
board; that's the procedure wherever  they travel.  She said that                                                               
[the problem  is that] Alaska  law requires the marine  pilots to                                                               
be on  board the  entire time  that the  yachts are  traveling in                                                               
Alaskan waters.  If a yacht  spends an entire summer visiting the                                                               
different bays and  communities, it's very difficult  for some of                                                               
these owners to  accommodate a pilot for three months  at a time.                                                               
That is  why she is  advocating for  a waiver process  similar to                                                               
those used by the State of Washington and Canada.                                                                               
Number 2110                                                                                                                     
GRAHAM HAYES,  Yacht Captain, explained  that he has 15  years of                                                               
experience, with 6  summer seasons in Alaska  on commercial ships                                                               
and 7  years on private  yachts all around  the world.   He urged                                                               
the committee to  consider an alternative to  the requirement for                                                               
pilotage  for foreign-flagged  yachts over  300 tons.   Presently                                                               
the yacht he's sailing  is 171 feet and 680 gross  tons.  He said                                                               
this is a  good size boat, but it's much  smaller than a 600-foot                                                               
ship.  He said it is  difficult to gauge tonnage, a very limiting                                                               
MR.  HAYES said  his employer,  the owner  of the  yacht, is  not                                                               
planning on  sailing in Alaska, even  though he would like  to go                                                               
there.  The  problem is the requirement that a  pilot be on board                                                               
for the entire time the yacht is  in Alaskan waters.  He said the                                                               
yacht may  sit in one  spot for four days  before it moves  a few                                                               
miles away.   The cost of  the pilot and accommodating  the pilot                                                               
are contributing factors to the yacht owner's decision.                                                                         
MR. HAYES  continued by  saying that each  year the  yacht spends                                                               
nearly $1  million for items  such as moorage,  fuel, provisions,                                                               
parts, and  hotels -- all items  that are typically spent  in the                                                               
area  the  yacht  visits.     There  are  additional  operational                                                               
expenditures  for  the  private  jet  and  the  helicopters  that                                                               
sometimes serve  a yacht.  He  said these yachts meet  all safety                                                               
and  environmental requirements  and  often  exceed the  industry                                                               
standards for  a commercial ship.   Every owner and  guest clears                                                               
through U.S. Customs and the  U.S. Immigration and Naturalization                                                               
Service.  He said this  excessive pilotage requirement denies the                                                               
local communities the economic benefits  of visiting yachts.  His                                                               
[employer's] yacht  is foreign-flagged but  American-owned, which                                                               
is very common, he  said.  Most of the crew  are U.S. citizens or                                                               
British, and all speak English.                                                                                                 
Number 2012                                                                                                                     
REPRESENTATIVE GUTTENBERG  asked where a  yacht takes on  most of                                                               
its provisions.                                                                                                                 
MR. HAYES  said yachts take  on provisions  in the area  they are                                                               
visiting.   For  example, if  yachts are  in the  Ketchikan area,                                                               
they take  on most  of their  provisions there.   In one  case, a                                                               
yacht stopped at  Elfin Cove and spent $15,000  on local artwork.                                                               
He  said  visiting yachts  are  a  big business  for  communities                                                               
around the world.                                                                                                               
Number 1975                                                                                                                     
MR. HAYES answered a question  from Representative Crawford about                                                               
whether  he  had ever  experienced  delays  in getting  a  marine                                                               
pilot.  He replied  that he has not operated a  yacht of the size                                                               
that requires  a marine pilot  in Alaskan waters.   When entering                                                               
ports in other areas,  he has picked up pilots at  a station or a                                                               
dock after  24-hour notice.   He recommended doing pick-ups  at a                                                               
pilots' station rather than where the yacht is anchored.                                                                        
Number 1936                                                                                                                     
DEREK SMITH, Safety Manager,  Fraser Yachts Worldwide, introduced                                                               
himself  as  an  associate  member of  the  Institute  of  Marine                                                               
Engineering,  Science and  Technology, an  incorporated engineer,                                                               
and a  small ship surveyor.   Fraser Yachts Worldwide  manages 30                                                               
yachts, about 15 of which are  over 500 gross tons.  The standard                                                               
of construction  for yachts  is covered by  the Code  of Practice                                                               
for  Safety  of  Large  Commercial  Sailing  and  Boating  Yachts                                                               
published by MCA,  the United Kingdom's Maritime  and Coast Guard                                                               
Agency.   He said the  standards and qualifications for  the crew                                                               
are very high.  Next year,  the ISPS (International Ship and Port                                                               
Security) Code will also be  implemented on yachts over 500 gross                                                               
tons and  voluntarily on almost  all of  the other yachts  in the                                                               
Fraser fleet.                                                                                                                   
MR. SMITH assured  the committee that concerns  over security may                                                               
be real but the  threat from a yacht is small.   Most of Fraser's                                                               
large  yachts,  when  the  principals are  on  board,  will  have                                                               
security guards.   His company  carries out background  checks on                                                               
all  the crewmembers,  and said  that some  owners might  request                                                               
that the marine pilot submit to  a background check.  He said the                                                               
money for employing  marine pilots is not the  issue; the problem                                                               
rises more  in the principal's  desire for  privacy.  There  is a                                                               
problem with accommodating the pilot on  board a yacht that has a                                                               
maximum of 12 guests and 12 crew.   If the yacht only has 24 life                                                               
saving  appliances, one  of the  crew has  to get  off the  boat.                                                               
Owners don't  stick to  a schedule because  they can  go wherever                                                               
they wish.  He explained that  the position of a yacht is tracked                                                               
by  satellite and  other technologies.   He  noted that  he would                                                               
like to submit written testimony.                                                                                               
Number 1777                                                                                                                     
CHAIR ANDERSON  said written  testimony can  be submitted  to the                                                               
House finance  committee, the bill's next  committee of referral.                                                               
There being no other witnesses, he closed the public hearing.                                                                   
Number 1752                                                                                                                     
REPRESENTATIVE  Lynn   moved  to  report  CSSB   20(FIN)  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  note.    There  being no  objections,  CSSB  20(FIN)  was                                                               
reported from the House Labor and Commerce Standing Committee.                                                                  
HB 111 - EXTEND REGULATORY COMMISSION OF ALASKA                                                                               
Number 1733                                                                                                                     
CHAIR ANDERSON announced  that the final order  of business would                                                               
be HOUSE BILL NO. 111, "An  Act extending the termination date of                                                               
the  Regulatory  Commission  of  Alaska;  and  providing  for  an                                                               
effective date."                                                                                                                
Number 1715                                                                                                                     
NAN  THOMPSON,  Commissioner,  Regulatory  Commission  of  Alaska                                                               
(RCA), informed the committee that the  RCA supports HB 111.  She                                                               
explained  that   the  RCA's  mission  is   to  protect  consumer                                                               
interests  by  ensuring  affordable   and  reliable  utility  and                                                               
pipeline  services  as well  as  ensuring  that the  utility  and                                                               
pipeline  infrastructures  are   adequate  to  support  community                                                               
needs.   The agency  has come  a long way  since its  creation in                                                               
1999 and has  reduced the notorious backlog to  a manageable open                                                               
caseload of several  hundred cases.  The RCA hopes  to spend time                                                               
focusing  on  some of  the  important  policy issues  facing  the                                                               
market.   Ms.  Thompson  submitted her  written  comments to  the                                                               
Number 1609                                                                                                                     
WESLEY E.  CARSON, Alaska  Communications Systems  (ACS), stated,                                                               
"My  reason for  being here  is  to emphasize  the importance  of                                                               
deferring any  action to  re-authorize the  Regulatory Commission                                                               
of  Alaska  until  the  state  has articulated  a  clear  set  of                                                               
telecommunications  policies  to  guide  the  commission."    Mr.                                                               
Carson also provided the committee with his written testimony.                                                                  
REPRESENTATIVE GUTTENBERG  asked if Mr. Carson  believes that the                                                               
RCA needs more guidance from the legislature.                                                                                   
MR.  CARSON replied  yes and  related his  belief that  a lot  of                                                               
discretion    is   afforded    to    the    states   under    the                                                               
Telecommunications  Act of  1996.   As  the RCA  is charged  with                                                               
implementing   the  law,   there  is   an  opportunity   for  the                                                               
legislature to clarify, by statute  and policy, the direction for                                                               
the commission.                                                                                                                 
Number 1510                                                                                                                     
JIMMY  JACKSON,  Attorney,  General  Communications  Incorporated                                                               
(GCI) informed the  committee that he has worked with  GCI for 10                                                               
years and for  the 10 years before that he  worked for the Alaska                                                               
Public Utilities  Commission (APUC), the predecessor  of the RCA.                                                               
Mr. Jackson related GCI's support  for the four-year extension as                                                               
proposed in  HB 111.   He recalled that  four years ago  five new                                                               
commissioners were confirmed by the  legislature when the RCA was                                                               
established.   Recently,  two of  those  commissioners have  been                                                               
replaced  and  the  current legislature  has  confirmed  two  new                                                               
commissioners.    During last  year's  special  session, the  RCA                                                               
legislation   amended  timelines   and   time   limits  for   the                                                               
proceedings.  He related that GCI  believes that it's now time to                                                               
trust the RCA to deal with  the very complex issues before it and                                                               
for  the  legislature  to  allow  the RCA  to  get  on  with  its                                                               
business.   Mr.  Jackson  said  that it's  not  possible for  the                                                               
legislature to  become experts in the  area of telecommunications                                                               
and electrical utilities.                                                                                                       
Number 1450                                                                                                                     
MR. JACKSON  estimated that the  RCA has spent hundreds  of hours                                                               
dealing with  the issues  about which ACS  has complained.   When                                                               
cases come  before the  RCA they are  usually held  in trial-like                                                               
settings and  one of  the parties  often goes  away disappointed.                                                               
Therefore, GCI isn't satisfied with  all of the decisions the RCA                                                               
has made over the last few  years.  However, GCI understands that                                                               
the commissioners are doing their  job in a professional and fair                                                               
way.  Stability would be  beneficial to the agency, and therefore                                                               
GCI supports the four-year extension.                                                                                           
Number 1371                                                                                                                     
KRISTI  CATLIN,  Director,  Governmental Affairs,  AT&T  Alascom,                                                               
provided the following testimony:                                                                                               
     As you  know, AT&T  Alascom, and before  that, Alascom,                                                                    
     has  a  long  history of  providing  telecommunications                                                                    
     services to the  state of Alaska.  In fact,  it has the                                                                    
     longest history  of any  inter-exchange carrier  in the                                                                    
     state today.   It is from those very  roots, and having                                                                    
     witnessed the  broad changes  in technology  and market                                                                    
     shift over the  years, that we would like  to offer our                                                                    
     perspective  and respectfully  make  some requests  for                                                                    
     the legislature to consider.                                                                                               
     We  believe that  both  telecom  service providers  and                                                                    
     policymakers   have  a   two-fold  obligation   to  the                                                                    
     constituents of this state.   Those are:  ensuring that                                                                    
     basic  telecom services  remain affordable  to everyone                                                                    
     in the  state; and  providing a  regulatory environment                                                                    
     that fosters continued investment  in the state telecom                                                                    
     infrastructure,   thereby    ensuring   that   advanced                                                                    
     services will reach to all parts of the state.                                                                             
     In the early  days, Alascom was the  only long distance                                                                    
     carrier in  Alaska, and as such,  a regulated monopoly.                                                                    
     Regulations were  put in place  to ensure  that Alascom                                                                    
     did  not  misuse  its monopoly  power  in  pricing  its                                                                    
     services  to consumers.   In  addition,  in 1991,  when                                                                    
     intrastate  long  distance competition  was  initiated,                                                                    
     additional  regulations were  developed to  ensure that                                                                    
     Alascom did  not misuse its  monopoly power  to subvert                                                                    
     competition.   At the  same time,  new entrants  to the                                                                    
     long   distance   market   were   granted   broad   and                                                                    
     significant freedoms.   And even though  the market was                                                                    
     highly competitive  in 1995  when AT&T  bought Alascom,                                                                    
     for the  most part,  it bought  a company  regulated as                                                                    
     though  it  were a  monopoly.    As  we all  know,  the                                                                    
     regulations governing  utilities with a  legal monopoly                                                                    
     work  in  two  directions:   first,  they  protect  the                                                                    
     consumer from  unreasonable prices  on the one  side of                                                                    
     the  equation, and  second,  they  ensure a  reasonable                                                                    
     return  for the  regulated utility  on the  other side.                                                                    
     Without a  reasonable return,  companies do  not invest                                                                    
     and services, therefore, do not advance.                                                                                   
     Many  of the  regulations which  restrict AT&T  Alascom                                                                    
     today are  vestiges of that monopolistic  environment I                                                                    
     spoke  of   previously.     However,  in   this  highly                                                                    
     competitive  marketplace,  they  do  not  serve  as  an                                                                    
     incentive for investment - they  only serve to add cost                                                                    
     and thereby provide a disincentive  for investment.  As                                                                    
     far as  protection of the  consumer on prices,  we have                                                                    
     almost  20  years of  empirical  evidence  in the  long                                                                    
     distance market  in the U.S.  to show  that competition                                                                    
     serves  the consumer  well.   In  1984,  when AT&T  was                                                                    
     first  broken  up,  the  average  discounted  corporate                                                                    
     minute was around $.45.   Today, the average discounted                                                                    
     corporate  minute is  under [$.045].    That's a  whole                                                                    
     order of  magnitude swing.   And  yet, during  the same                                                                    
     time  period,  the  long distance  industry  went  from                                                                    
     approximately   $9-$10   billion  to   about   $90-$110                                                                    
     billion.  It  was deregulation of the  industry and the                                                                    
     management  of  competition  that  spurred  investment.                                                                    
     And in  1995, when  AT&T fell  below 60  percent market                                                                    
     share in the  Lower 48, the FCC  ceased regulating AT&T                                                                    
     as  the "dominant  carrier" and  deemed the  market for                                                                    
     long distance as "competitive".                                                                                            
     And yet, here in Alaska,  where AT&T Alascom now has 42                                                                    
     percent of  the long  distance business  and shrinking,                                                                    
     and our  largest competitor, GCI, has  46-48 percent of                                                                    
     the long  distance business  and growing,  AT&T Alascom                                                                    
     is  still considered  the dominant  carrier, despite  a                                                                    
     four-year attempt  to get  relief from  this regulation                                                                    
     at the  RCA.  This  regulation adds substantial  to our                                                                    
     cost  structure   for  tracking,   journalization,  and                                                                    
     reporting.   It also  adds regulatory process  that our                                                                    
     competitors  don't  have  that   keeps  us  from  being                                                                    
     competitive in  the marketplace.   The  whole situation                                                                    
     begs  the definition  for  "dominance".   Additionally,                                                                    
     with  the  increased  costs and  inability  to  compete                                                                    
     effectively  because   of  outdated   regulations,  our                                                                    
     ability to  attract capital and  invest in  the network                                                                    
     is severely "hamstrung".                                                                                                   
Number 1167                                                                                                                     
     I believe that  over the next 12-18  months, this state                                                                    
     must  wrestle with  some  difficult  issues of  telecom                                                                    
     regulation.    At stake  is  the  very survival  of  an                                                                    
     infrastructure that's  struggling to  keep up  with the                                                                    
     rest of the  country.  In a true free  market, there is                                                                    
     less  regulation,  not  more.    And  competition,  not                                                                    
     regulation, becomes the force to shape the market.                                                                         
     I would ask you  to carefully and thoughtfully consider                                                                    
     the market  dynamics at work here,  and the definitions                                                                    
     of  broader  market  issues  such  as  "dominance"  and                                                                    
     "competition".    I would  also  ask  you to  carefully                                                                    
     consider  your role  in mandating  an environment  that                                                                    
     has less regulation,  not more, in order  to create and                                                                    
     maintain   incentives   to   invest   in   the   modern                                                                    
     telecommunications  infrastructure  that  all  Alaskans                                                                    
     As you  consider House Bill 111  reauthorizing the RCA,                                                                    
     please   know   that   AT&T   Alascom   could   support                                                                    
     legislation which would extend  the RCA for another 2-4                                                                    
     years, however,  as we stated  last year - only  if the                                                                    
     RCA  is truly  committed to  bringing about  regulatory                                                                    
     reform.  Status  quo is not an option if  you intend to                                                                    
     have   a  healthy,   competitive  telecom   market  and                                                                    
     infrastructure in Alaska.   We have drafted appropriate                                                                    
     language   to  assist   the  legislature   in  defining                                                                    
    "dominance",   and   are   submitting   it   for   your                                                                     
Number 1099                                                                                                                     
REPRESENTATIVE  GUTTENBERG requested  that Ms.  Catlin expand  on                                                               
the issue of disincentives for investment.                                                                                      
MS. CATLIN  informed the committee  that the  current regulations                                                               
cost the  company between  $2-$5 million  annually.   The company                                                               
also has  a difficult time due  to the high costs  of serving the                                                               
Bush regions of the state.   It's difficult to attract investment                                                               
from AT&T  unless [AT&T Alascom] is  free from some of  the costs                                                               
associated  with the  existing regulation,  she said.   One  step                                                               
toward  being free  from some  of the  costs associated  with the                                                               
existing  regulation  would  be   release  from  the  "dominance"                                                               
regulation.  Ms. Catlin pointed  out that AT&T must keep separate                                                               
books for Alaska, which amounts to about $2 million a year.                                                                     
REPRESENTATIVE GUTTENBERG  asked what  it would  take to  get the                                                               
RCA to respond to the market dynamics.                                                                                          
MS.  CATLIN responded  that  she believes  the  RCA needs  policy                                                               
direction from the legislature to  [encourage] investment in Bush                                                               
Number 1007                                                                                                                     
REPRESENTATIVE   CRAWFORD   inquired    about   the   "dominance"                                                               
MS.  CATLIN  specified  that  [AT&T Alascom]  is  looking  to  be                                                               
relieved from  an annual report  filing, which is related  to the                                                               
journalization  issue.    She  explained  that  AT&T  Alascom  is                                                               
required   to  perform   certain  network   reporting  that   the                                                               
competitors aren't  required to do.   She informed  the committee                                                               
that AT&T Alascom is required to  file a 25 percent outage report                                                               
daily  as well  as  a  quarterly report.    Furthermore, if  AT&T                                                               
Alascom wants  to make  any rate  increases, it  must file  on 45                                                               
days notice to the public  with cost justification.  For example,                                                               
if the  company had a  $.15 per  minute plan and  AT&T eliminates                                                               
the plan,  then [AT&T Alascom]  would need to move  its customers                                                               
to  a $.14  per minute  plan with  a $4.99  monthly charge.   She                                                               
explained that  AT&T Alascom  could end up  in a  proceeding that                                                               
could be protracted  to answer the question as to  whether it was                                                               
a rate  decrease or increase,  although it isn't necessary  or to                                                               
the benefit  of AT&T Alascom's  consumers.  Ms. Catlin  said, "It                                                               
isn't really  that we want  to raise our  rates, but we  need the                                                               
flexibility in the marketplace to be competitive."                                                                              
MS.  CATLIN,  in  further response  to  Representative  Crawford,                                                               
clarified  that  there  are  three   things  required  under  the                                                               
dominance  regulation:   journalization, competitive  flexibility                                                               
with tariffs, and network reporting.                                                                                            
Number 0886                                                                                                                     
JIM  ROWE,  Executive   Director,  Alaska  Telephone  Association                                                               
(ATA), informed  the committee that  ATA is available to  all the                                                               
incumbent local exchange  carriers in the state.   The members of                                                               
ATA are regulated utilities.  Mr.  Rowe said that in general, ATA                                                               
is  in  support of  the  four-year  reauthorization of  the  RCA.                                                               
However, ATA  does have  some concern with  the operation  of the                                                               
RCA.   He  pointed out  that with  one term  of the  commissioner                                                               
expired, the government put forward  two names for the commission                                                               
seat.    Additionally, a  recent  executive  order addressed  the                                                               
staffing  of the  public  advocacy section.    He explained  that                                                               
[ATA] believes  that those actions  demonstrate that the  RCA has                                                               
the attention  of the administration.   In deference  to Governor                                                               
Murkowski's  attention, prudence  dictates  that  the actions  of                                                               
this  commission  be  monitored.     With  regard  to  the  staff                                                               
changing,  there  is  the  belief  that  other  things  might  be                                                               
happening and  ATA is waiting to  see.  Mr. Rowe  stated that ATA                                                               
is  concerned  with  some  orders  that  have  come  out  of  the                                                               
commission.  He  recalled that an earlier  witness testified that                                                               
some party before the commission  is always displeased.  However,                                                               
Mr.  Rowe suggested  that there  are some  parties that  are more                                                               
regularly pleased than others and  ATA's members are in the group                                                               
that is not as regularly pleased.   Mr. Rowe said, "At this point                                                               
we're not anxious, Mr. Chairman, to  say please go ahead and pass                                                               
this  bill today,  but we  are  concerned.   We're watching  very                                                               
carefully."   He mentioned  that ATA  has particular  interest in                                                               
investment and infrastructure.                                                                                                  
Number 0730                                                                                                                     
H.A.  RED BOUCHER,  Vice Chairman,  Board  of Directors,  Chugach                                                               
Electric Association, Inc., informed the  committee that he is an                                                               
elected board member and responsible  to the 60,000 member owners                                                               
of  Chugach  Electric,  which is  Alaska's  largest  provider  of                                                               
electric  energy.    He  noted  that  he  is  the  chair  of  the                                                               
Government   and  External   Affairs  Committee   and  also   the                                                               
Technology  Committee.   He explained  that the  committee should                                                               
have his  written testimony.   Mr. Boucher noted that  from 1984-                                                               
1990  he  served  on  the   House  Labor  and  Commerce  Standing                                                               
Committee,  and  although  the  faces  have  changed,  the  issue                                                               
remains the  same.  He did  note that one difference  now is that                                                               
Alaska is competing in a global economy.                                                                                        
MR. BOUCHER  recalled that  in 1999  the Alaska  Public Utilities                                                               
Commission  (APUC)   was  reorganized   under  AS   46.42.04,  AS                                                               
46.42.05, and  AS 46.42.06 in  order to improve  it's efficiency.                                                               
The  newly-formed  RCA was  charged  with  the responsibility  to                                                               
ensure the furnishing of safe  and adequate service to all public                                                               
utility patrons  without discrimination and at  reasonable rates,                                                               
consistent with the interest of  both the public and the utility.                                                               
Last year Chugach Electric testified  before the Senate Judiciary                                                               
Standing Committee  about the effectiveness  of the  newly formed                                                               
commission in  carrying out its  mandates.  He said  that Chugach                                                               
Electric  was concerned  that the  regulatory  process takes  too                                                               
long and if the additional  staff was necessary, Chugach Electric                                                               
more than  supported it.   In fact, Chugach  Electric contributes                                                               
$400,000 to RCA's budget.   During the testimony [last year], the                                                               
Chugach   Electric   board   president   had   recommended   four                                                               
improvements.    They included  (1)  the  need for  an  oversight                                                               
committee  to  work with  the  RCA  and  utilities to  seek  best                                                               
practices  and  benchmark  performance;  (2)  the  need  for  the                                                               
commission  chair to  have a  senior level  staff person  to help                                                               
carry the  large workload; (3)  the need  for the RCA  to lighten                                                               
its caseload; and  (4) the need for a better  method of resolving                                                               
disputes between parties.                                                                                                       
Number 0374                                                                                                                     
MR.  BOUCHER   stated  that  these  recommendations   [have  been                                                               
ignored].   He  noted  that the  Joint  Committee on  Legislative                                                               
Budget and  Audit (BUD) recommendation  for an extension  to June                                                               
30, 2005, points  out the need for these [changes].   There is no                                                               
easy   solution,   he  remarked.      However,   the  RCA   needs                                                               
commissioners and staff who fully  understand the complexities of                                                               
rate  regulation,   the  Alaska  marketplace,  and   balance  the                                                               
financial help  of the utilities  with the needs of  their owners                                                               
and  consumers.    Mr.  Boucher  related  that  Chugach  Electric                                                               
supports  either  approach,  the  governor's  proposed  four-year                                                               
extension of  the RCA  or BUD's  June 30,  2005, extension.   The                                                               
question  isn't whether  the legislature  should extend  the RCA,                                                               
because  that's  a matter  of  law.   However,  Chugach  Electric                                                               
strongly  recommends an  amendment to  [HB 111]  providing for  a                                                               
government-appointed   panel  of   industry   experts  with   the                                                               
authority and  obligation to  work jointly with  the RCA  and the                                                               
regulated community  in order to improve  the regulatory process.                                                               
Currently the  Chugach Electric  Board spends  50 percent  of its                                                               
time dealing with regulatory matters.   Mr. Boucher stressed that                                                               
Chugach Electric would like to  get onto the business of building                                                               
an  electric  energy  and transmission  company  that  meets  the                                                               
challenges  Alaska  will face  in  a  globalizing economy.    The                                                               
Murkowski administration and the  legislature have emphasized the                                                               
need  to expand  Alaska's economy  in order  to face  the state's                                                               
financial challenges.   Mr. Boucher said  Chugach Electric shares                                                               
that vision.                                                                                                                    
Number 0146                                                                                                                     
MR. BOUCHER, in response to  a question from Representative Lynn,                                                               
confirmed that the recommendation  was for a government oversight                                                               
committee of the  RCA.  In fact, there was  supposed to have been                                                               
a committee  appointed by the  legislature so that  this wouldn't                                                               
be  an  issue.    However,   that  didn't  happen  and  thus  the                                                               
recommendation is suggested again, he added.                                                                                    
REPRESENTATIVE  LYNN questioned  how  far  such a  recommendation                                                               
would be  taken.   If there's  a panel to  watch the  RCA, should                                                               
there be a panel to watch the panel, he asked.                                                                                  
MR.  BOUCHER emphasized  that  this  type of  issue  can only  be                                                               
debated  during   the  RCA's  sunset  time   period  because  the                                                               
utilities have  no other  forum in which  to air  their problems.                                                               
He pointed out  that these types of problems can't  be brought up                                                               
when an entity has a case before the RCA.                                                                                       
Number 0035                                                                                                                     
EVAN J. GRIFFITH, General  Manager, Chugach Electric Association,                                                               
Inc., noted  that the committee  should have a handout  from him.                                                               
He relayed  Chugach Electric's  view that  the RCA  must consider                                                               
the  financial health  and utilities  in the  process [tape  ends                                                               
TAPE 03-19, SIDE A                                                                                                            
Number 0012                                                                                                                     
MR. GRIFFITH referenced an opinion  update from Moody's Investors                                                               
Service  and highlighted  the following  statement:   "This  rate                                                               
case  outcome is  in contrast  to  largely supportive  regulatory                                                               
treatment  provided to  Chugach in  the recent  past."   He noted                                                               
that  Standard &  Poor has  placed Chugach  Electric on  a credit                                                               
watch,  which isn't  good in  the investment  world.   Standard &                                                               
Poor  says   that  this  rating  action   reflects  the  expected                                                               
financial impact on  the utility of the latest rate  order by the                                                               
RCA.    In  addition  to  substantially  weakening  debt  service                                                               
coverage, the RCA's rate order  signals heightened regulatory and                                                               
refinancing risks  for the  utility and  may cause  [Standard and                                                               
Poor]  to apply  more stringent  guidelines in  assessing Chugach                                                               
Electric's credit quality, he said.   Mr. Griffith cited a letter                                                               
from David  Rose, Chairman  and CEO  of Alaska  Permanent Capital                                                               
Management Company,  which expressed  concern with regard  to the                                                               
impact of the  order on Chugach's bondholders.   The RCA's latest                                                               
ruling  has  placed  Chugach  Electric in  default  on  its  bond                                                               
requirements for 2002.  In fact,  Mr. Griffith related that he is                                                               
preparing  a   report  specifying   that  Chugach   Electric  has                                                               
sustained a $2 million loss in 2002.                                                                                            
Number 0112                                                                                                                     
MR. GRIFFITH  emphasized that this  was Chugach  Electric's first                                                               
request for  a rate  increase since  1994.   The order  said that                                                               
Chugach  Electric  had done  fairly  well  in the  presentations.                                                               
However, the  numbers didn't back  up what  was said and  no rate                                                               
stability was achieved.  He  noted that Chugach Electric actually                                                               
ended up with a 1.5 percent  rate decrease.  Mr. Griffith related                                                               
the [company's] belief  that there must be a  balance of consumer                                                               
protection and solid  economic base.  Furthermore,  he added, the                                                               
large businesses  in the Railbelt  have to be on  solid financial                                                               
ground;  otherwise  the  implications  for  economic  development                                                               
aren't good.                                                                                                                    
Number 0219                                                                                                                     
ERIC   YOULD,   Executive   Director,   Alaska   Rural   Electric                                                               
Cooperative  Association  (ARECA),  informed the  committee  that                                                               
members  of  ARECA  generate  approximately  90  percent  of  the                                                               
electricity  throughout  the  state.     He  noted  that  Chugach                                                               
Electric, Alaska Municipal Light  & Power, Golden Valley Electric                                                               
Association, and Homer  Electric are members of ARECA  as well as                                                               
many  medium and  smaller utilities.   He  has submitted  written                                                               
comments and a  resolution from ARECA's board of  directors.  Mr.                                                               
Yould commented  that Mr. Boucher  did a fine job  in summarizing                                                               
much of  the frustration  that the  [electric] industry  has with                                                               
the  RCA.   He related  that  ARECA's board  supports a  one-year                                                               
sunset  extension  as  well as  significant  changes  that  would                                                               
streamline the RCA's process.                                                                                                   
MR. YOULD testified that when  the RCA was reconstituted in 1999,                                                               
it inherited a tremendous backlog, some  700 cases.  The RCA also                                                               
gained 14 new  positions to address that backlog,  which has been                                                               
reduced  to about  200 cases.   Mr.  Yould pointed  out that  the                                                               
majority of the backlog reductions  occurred only within the last                                                               
year to year-and-a-half,  when the RCA was up  for sunset review.                                                               
Therefore, Mr.  Yould contended that if  the RCA had not  had its                                                               
"feet held to the fire" there  would be an even larger backlog of                                                               
cases.   The RCA has  a serious problem  with the amount  of time                                                               
and money it takes to perform  its work, he observed.  One recent                                                               
case took more  than two years and cost $5  million to adjudicate                                                               
between three utilities.  That  $5 million came out of everyone's                                                               
pocket in the Railbelt, he commented.                                                                                           
Number 0400                                                                                                                     
MR. YOULD pointed  out that last year the  legislature called for                                                               
a special subcommittee to propose  changes to streamline the RCA.                                                               
Although  the  legislative  subcommittee was  never  formed,  the                                                               
electric  utility industry  assembled its  own internal  group to                                                               
review the statutes  of the RCA.  Mr. Yould  noted that this list                                                               
of  recommendations was  originally submitted  to the  governor's                                                               
office.   The governor's staff  had indicated that it  could make                                                               
many of  the changes administratively,  and if ARECA  supported a                                                               
four-year  sunset extension,  the  administration  would fix  the                                                               
MR. YOULD  recounted that  ARECA had  determined that  there were                                                               
several  elements  of  the  RCA's  statutes  that  required  some                                                               
statutory changes.   ARECA  has submitted  a paired-down  list of                                                               
changes  for the  committee's consideration.    Mr. Yould  stated                                                               
that a  four-year extension  of the  RCA will  not result  in any                                                               
Number 0550                                                                                                                     
MR. YOULD concluded that ARECA  could support a two- to four-year                                                               
sunset  extension for  the  RCA  only if  there  were first  some                                                               
changes in the law that would  streamline the process.  Mr. Yould                                                               
said  that should  the  legislature decide  not  to proceed  with                                                               
these changes  recommended today, he  hoped that it  would listen                                                               
to  Mr.  Boucher's  recommendation  to establish  a  blue  ribbon                                                               
commission.     Such  a  commission  would   enable  all  utility                                                               
industries to  determine what streamlined changes  should be made                                                               
in order to best serve the public.                                                                                              
CHAIR  ANDERSON,  upon determining  there  was  no one  else  who                                                               
wished to testify, announced that HB 111 would be held over.                                                                    
There being no further business before the committee, the House                                                                 
Labor and Commerce Standing Committee meeting was adjourned at                                                                  
5:04 p.m.                                                                                                                       

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