Legislature(1995 - 1996)
03/22/1995 01:48 PM TRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE TRANSPORTATION STANDING COMMITTEE March 22, 1995 1:48 p.m. MEMBERS PRESENT Representative Gary Davis, Chairman Representative Beverly Masek, Vice Chairman Representative Jeannette James Representative Tom Brice Representative Jerry Sanders Representative Bill Williams MEMBERS ABSENT Representative Eileen MacLean COMMITTEE CALENDAR * HB 260: "An Act relating to marine pilots and the Board of Marine Pilots; extending the termination date of the Board of Marine Pilots and providing for an effective date." HEARD AND HELD (* First public hearing) WITNESS REGISTER JEFF BUSH, Deputy Commissioner Department of Commerce & Economic Development P.O. Box 110800 Juneau, Alaska 99811 Telephone: (907) 465-2500 POSITION STATEMENT: Supported CSHB 260 (TRA) DAN TWOHIG, Marine Pilot Coordinator Board of Marine Pilots Division of Occupational Licensing Department of Commerce & Economic Development P.O. Box 110800 Juneau, Alaska 99811 Telephone: (907) 465-2548 POSITION STATEMENT: Provided technical information RON LORENSEN, Attorney Law Offices of Simpson, Tillinghast, Sorensen and Lorensen Northern Transport Canadian Limited One Sealaska Plaza, Suite 300 Juneau, Alaska 99811 Telephone: (907) 586-1400 POSITION STATEMENT: Provided legal information MICHAEL O'HARA, Pilot Southwestern Alaska Pilots Association; and Board Member, Alaska Marine Pilots Association P.O. Box 1443 Palmer, Alaska 99645 Telephone (907) 235-8783 POSITION STATEMENT: Supported CSHB 260 (TRA) STUART MORK, Representative Alaska Marine Pilots Association P.O. Box 730 Dutch Harbor, Alaska 99192 Telephone: (907) 581-1240 POSITION STATEMENT: Supported CSHB 260 (TRA) with concern HANS ANTONSEN, Representative Southeastern Alaska Pilots Association P.O. Box 6100 Ketchikan, Alaska 99901 Telephone: (907) 225-9696 POSITION STATEMENT: Supported CSHB 260 (TRA) with concern JOE KYLE, Representative Alaska Steamship Association 234 Gold Street Juneau, Alaska 99801 Telephone: (907) 586-3107 POSITION STATEMENT: Supported CSHB 260 (TRA) with concern ERIC ELIASSEN, President Southwestern Alaska Pilots Association P.O. Box 977 Homer, Alaska 99507 Telephone: (907) 346-1417 POSITION STATEMENT: Supported CSHB 260 (TRA with concern PREVIOUS ACTION BILL: HB 260 SHORT TITLE: MARINE PILOTS SPONSOR(S): TRANSPORTATION JRN-DATE JRN-PG ACTION 03/15/95 745 (H) READ THE FIRST TIME - REFERRAL(S) 03/15/95 745 (H) TRANSPORTATION, LABOR & COMMERCE 03/22/95 (H) TRA AT 01:00 PM CAPITOL 17 ACTION NARRATIVE TAPE 95-10, SIDE A Number 000 The House Transportation Committee was called to order by Chairman Gary Davis at 1:48 p.m. Members present at the call to order were Representatives Davis, Masek, Brice, and Williams. Members absent were Representative MacLean. HB 260 - MARINE PILOTS CHAIRMAN GARY DAVIS announced the agenda was to hear testimony on HB 260. He stated he had a Committee Substitute (CS) prepared for HB 260 and requested a motion to adopt the CS as the working document. REPRESENTATIVE BILL WILLIAMS made a motion to adopt the CS for HB 260(TRA). CHAIRMAN DAVIS asked if there was objection. Hearing none, CSHB 260(TRA) was adopted as the working document. Chairman Davis stated there were a few items within the CS that he wanted to point out. He said Section 14 introduces new language relating to the requirement for a marine pilot to pilotage services. Section 17 is new language relating to the requirement for a marine pilot to provide service, if requested by a representative of a vessel, and Section 18 introduces new language in paragraph (a), allowing binding arbitration between a pilot organization and a vessel when there is not an existing agreement. CHAIRMAN DAVIS stated it was his intention to hear debate and discussion on CSHB 260(TRA). Chairman Davis introduced Jeff Bush with the Department of Commerce and Economic Development. JEFF BUSH, Deputy Commissioner, Department of Commerce and Economic Development (DCED); and Commissioner's appointee to the Board of Marine Pilots, stated the department supports this legislation in general, particularly the extension of the board and its regulatory authority. He commented there were a few points he wanted to elaborate on, but his intentions were not to go through the entire bill in detail. MR. BUSH referred to Section 6, page 2, line 31, and expressed concern for the words "chronic shortage." He said this particular provision was designed to allow for, what has been referred to, as "cross regionalization." He explained this term indicates that generally a pilot can only be licensed in one region. This would allow for the situation where if there was a shortage of pilots in a particular region, the commissioner could determine the shortage and the board could make allowances for cross regionalization of the pilots. He indicated the department's concerns were with the words "chronic shortage." He said he was not sure exactly what this term implies, but suggested the intentions were for the allowance of pilots to be able to work in other regions whenever a shortage occurred, and not necessarily debating over what constitutes a chronic shortage. MR. BUSH noted on page 3, several limitations as to how this shortage may occur and how it is subject to consultation with a pilot organization. MR. BUSH referenced Section 8 on page 4, paragraph (6), and remarked this section would allow for an apprenticeship program to allow pilots to obtain a pilots license through an apprenticeship program. He said the department is strongly in favor of this particular provision. In general, this particular idea will be supported by a majority of the people testifying. He added it was a situation consistent with most other jurisdictions that have apprenticeship programs. It also allows the licensing of pilots in situations where they can't otherwise get master time at sea. MR. BUSH referred to page 6, Section 14, lines 4 through 6 regarding the newly proposed subsection (c). He asked the committee members to consider deleting subsection (c). This section refers to a person licensed under the chapter who is not a member of a pilot organization. He said, in fact other statutes require all pilots to be members of an association in order to obtain a license. He indicated this particular subsection is inconsistent with the existing law. Number 164 MR. BUSH said he had some serious concerns regarding Section 18 on page 7. He said he did not want to get into a debate over the merits of binding arbitration; quite frankly, the Administration takes no position on the merits of binding arbitration and will leave it to the industry and the pilots, as well as the wisdom of the legislature, to decide whether or not it is appropriate. MR. BUSH stated concerns for the newly proposed subsection (a), of Section 18 on page 7, lines 16 and 17. He explained if there is going to be binding arbitration, he felt the state should not be involved in it. The way this particular subsection is written, it states that a pilot or pilot organization and the vessel owners or agents "may request the marine pilot coordinator to appoint an arbitrator." He said from an administrative and management standpoint, he did not feel it was appropriate for the marine pilot coordinator to be the one appointing arbitrators. He noted that is provided for in current statute, and all of subsection (b) relates to those sections relating to arbitration and an arbitration provision allowing for arbitration to be done between parties, if arbitration is appropriate. MR. BUSH requested the deletion of subsection (a), and the situations that subsection (a) applies to be rolled into subsection (b). Therefore, in all cases where arbitration is going to be held, it would be done under the provisions provided under the current subsection (b), on page 7 of CSHB 260(TRA). MR. BUSH stated his final point referred to page 3, Section 6, line 3, relating to shortages in particular regions and once the commissioner determines there is a shortage of pilots in a region, it states the board may "after consultation with and concurrence by the recognized pilot organizations." Mr. Bush noted the Department of Commerce and Economic Development (DCED) has been advised that "concurrence" cannot be required as a legal issue by a private organization for state action. He explained they do not have a problem with the wording of "consultation," but there is a legal problem in that before a state agency can take action that is delegated to it administratively by statute, requiring that they have the approval of the private entity. He stated the committee may wish to take this matter up with the Department of Law or their legal representatives. Mr. Bush asked if there were questions. Number 197 CHAIRMAN DAVIS stated that he, too, has concern with most of the issues raised by Mr. Bush. He indicated some of those concerns are in the drafting and working back and forth with the drafting office. He noted a couple of those points were not intended to be in this draft. The word "chronic" was one of them and Section 14, subsection (c) was another he did not feel was needed. REPRESENTATIVE JEANNETTE JAMES indicated she did not have a problem with the word "chronic" because it has a meaning which implies a situation is ongoing as opposed to "acute" which implies initial action. Number 224 CHAIRMAN DAVIS concurred with Representative James and indicated this would determine what sort of latitude we, the legislature, wants to give the department. He agreed it was important to let the department determine the "shortage" so they could make the determination of dispatching a pilot to a specific region. MR. BUSH responded to Chairman Davis's remarks by stating this was the situation they are concerned with. He noted they do not want to have to wait for the third incidence, for example, because they have requirements by law that every ship entering the waters within the regulated regions has to have a pilot on board. He indicated from a safety perspective, we don't want to have to wait to react to something that we see as a forthcoming problem, but we want to be able to react when the shortage first occurs. MR. BUSH mentioned there are safeguards built in the bill, because first the commissioner has to determine the existence of a shortage, and second, the board has to meet presumably, if in the event a problem arises. The board would then have to organize a special session and recognize the fact there is a shortage and make the decision to allow "cross regionalization" for that particular case. He remarked they would like to be able to react as quickly as possible when the problem first arises. Number 248 REPRESENTATIVE BILL WILLIAMS asked if Mr. Bush was familiar with a report that was put out by the Office of Management and Budget, (indisc.) Alaska Marine Pilot. MR. BUSH indicated he was familiar with the report. REPRESENTATIVE WILLIAMS asked if Mr. Bush had any comments on this report. MR. BUSH stated this particular report was discussed at length, at the last Board of Marine Pilots meeting. He indicated as a member of the board, he felt compelled to agree with the conclusions of the board and this was also his position on that report. Mr. Bush indicated the conclusions of the report were not necessarily supported by the evidence presented; however, they were not taking positions on whether or not the conclusions were valid, but more of the approach utilizing the report which raised a question. He indicated there was a position directly counter to that taken by the Federal Trade Commission (FTC). They made basically the same comment to the FTC's report. He said his position, with respect to the ideas raised in that report, was that they are currently working under a Marine Pilot Act, and this Administration would like to move ahead under the existing Act and accept the Act as the way the industry will be regulated and make changes to that act to improve it, but not completely dismantle the system and start all over. He stated these were the implications raised by that report. He stated they would not support that at this time. Mr. Bush stated this particular board has been under a great deal of litigation and controversy. He felt he could speak for the board in that there seems to be a consensus for moving ahead and to spend less time arguing over how we should be regulated, but rather concentrate on what improvements could be made to the regulatory system. Number 260 REPRESENTATIVE WILLIAMS inquired as to the outcome of that particular board meeting. He said he had heard there was supposed to be a bill presented, but no one was specific about the contents of that bill. He said the word he got from some people was that everyone accepted what was in the bill. MR. BUSH explained this particular board meeting Representative Williams referred to, was his first board meeting and he had only been on the job two days. He stated he could not explain the background previous to that meeting, but he did mention that the pilots and the industry converged on numerous occasions. He added these meetings were not the actual board meetings, they were side groups that were meeting. He said there were discussions on what could be incorporated into a proposal that would be accepted by everyone involved. He indicated at least 90-95 percent of the CSHB 260(TRA) is the result of those efforts to some extent. He added there were people in the room that will disagree with particular sections, but 90 percent of this act is what everyone has agreed to as a good approach. Mr. Bush commented to expect an industry with the amount of money and diverse interests at stake as this one, to all agree 100 percent would be unrealistic. He concluded this is why CSHB 260(TRA) has been brought before the legislature to decide what is appropriate and what is not. Number 320 CHAIRMAN DAVIS commented on the binding arbitration section being the most controversial section of the bill. Chairman Davis stated from "his viewpoint it appears a conflict resolution, should a conflict arise where the state's safety, the purpose of the marine pilots legislation altogether is for the safety of the state." He stated he wanted to get a historic perspective from the need for that conflict resolution. He asked if there has been an instance that can be cited to further justify the inclusion of a conflict resolution. MR. BUSH stated he could not answer Chairman Davis's question because he does not have enough of the history. He acknowledged that up until last summer, there was a maximum tariff in the law and that ended up precluding the need for this. It essentially set prices in most cases. CHAIRMAN DAVIS indicated the tariff provision sunsetted. REPRESENTATIVE TOM BRICE referred to the tariff provision sunsetting and asked why this was brought around to replace it. He asked if the department knew of other states that are addressing dispute resolution between the pilots and industry through binding arbitration. Number 346 MR. BUSH replied no, the department was not aware of any that use this method and stated he confirmed this with the marine pilot coordinator. CHAIRMAN DAVIS acknowledged there was a meeting with all persons involved and binding arbitration was mentioned in that meeting as being acceptable; then at a later date it was determined to be unacceptable. He indicated that the legislation came mostly from that particular meeting, and if there are changes and arguments against it, then that's where it came from. CHAIRMAN DAVIS stated for the record Representative Jerry Sanders arrived at 1:52 p.m. Chairman Davis then introduced Dan Twohig. Number 361 DAN TWOHIG, Marine Pilot Coordinator, Division of Occupational Licensing, Department of Commerce and Economic Development, stated his position was created under statute, in the Pilot Act, to be hired by the Department of Commerce and Economic Development, to assist the Board of Marine Pilots with administering and enforcing the law. He explained aside from issuing licenses to pilots, he is also the Executive Secretary of the Marine Pilot Board as well as the state's investigator on Maritime incidents. He said based on that, he works for Mr. Bush and is in attendance to answer any technical questions the committee might have regarding the Pilot Act. REPRESENTATIVE BRICE inquired about an amendment for the expansion of Alaska Piloting licensing past the international border into Canada and said he would assume that's what we are talking about. He asked Mr. Twohig if he had the opportunity to comment on this. MR. TWOHIG stated that Representative Brice's comment was not correct. He explained the amendment creates an exemption specifically for Canadian flag vessels operating in the North Slope out of the Mackenzie River. He stated the current situation requires Canadian tugs and barges that provide fuel oil to communities on the North Slope to use pilotage services. The Canadian pilots are asking for an exemption from the pilotage requirements. REPRESENTATIVE BRICE asked if the Department of Commerce and Economic Development has formulated any position regarding this issue. MR. TWOHIG stated he was not the appropriate person to address that question. He remarked this was an ongoing lawsuit and he is the investigator, so he would be unable to answer that question. Number 395 REPRESENTATIVE JAMES referred to the comment made by Mr. Bush regarding the marine pilot coordinator being the one to establish who would be the binding arbitrator. She acknowledged that she had serious problems with binding arbitration regarding this issue and it was difficult for her to understand the need for binding arbitration. She indicated the whole issue was complicated and difficult to understand "why we are, where we are with the marine pilots," and when there is competition, it seems very difficult that there would have to be binding arbitration. Representative James indicated it appears competition would exclude that. She referred to Mr. Bush's comment that he did not think the department ought to be involved at all in the binding arbitration and, therefore, it should not be the marine pilot coordinator that would designate who the binding arbitrator was. She asked Mr. Twohig what his thoughts were on that issue, and if not the marine pilot coordinator, then who would be the arbitrator. MR. TWOHIG stated he did not have a firm grasp on the issue of binding arbitration. He stated he had read the arbitration statutes and agreed with Mr. Bush and the department's position that the marine pilot coordinator should not be the person to arbitrate. Mr. Twohig indicated his position allows him to speak with everyone involved and, in turn, everyone speaks with him. He indicated he would rather not be in the middle of financial arguments in any way, shape or form. He added it was his understanding from his interpretation of the binding arbitration statute, that there is a mechanism incorporated for electing an arbitrator which is accomplished within the court system. Number 430 REPRESENTATIVE JAMES asked in the meantime do boats just sit there the entire time this is happening? MR. TWOHIG indicated he did not feel this would be the situation. He explained the pilots and pilot organizations are recognized by the Pilot Board to operate. He stated one of the requirements to be a recognized pilot organization is to promote a safe and efficient pilotage service. He stated he did not believe that a pilot would refuse to do a job over the question of how many dollars would be at stake. He added he could not imagine this happening because it would be too expensive to arbitrate things like that, but reiterated that he did not really understand arbitration, the need for it, or its function in this case. Mr. Twohig stated he was in agreement with Mr. Bush that the marine pilot coordinator should not get involved. REPRESENTATIVE JAMES concurred with Mr. Twohig's point and added she did not see the need for binding arbitration. REPRESENTATIVE JERRY SANDERS asked Mr. Twohig if he attended the meeting where the assumption was made that everyone agreed to binding arbitration. MR. TWOHIG stated that he was not invited to this meeting. REPRESENTATIVE SANDERS asked if Mr. Twohig felt that everyone was in agreement to binding arbitration at that time. MR. TWOHIG responded that he would rather let the people in the room speak their own minds. REPRESENTATIVE WILLIAMS asked Mr. Twohig if binding arbitration was discussed at this particular meeting prior to when he spoke on this bill? MR. TWOHIG asked for clarification on which meeting Representative Williams was referring to. REPRESENTATIVE WILLIAMS stated he was referring to the Pilot Board meeting. MR. TWOHIG stated the subject of binding arbitration did come up in public comment from a couple different sources. REPRESENTATIVE WILLIAMS asked what his feelings were on how everyone in the room felt about the issue of binding arbitration. MR. TWOHIG stated to his recollection, it was discussed as Mr. Bush had said, more outside the meeting than inside the meeting. He was not privileged to a lot of those meetings and indicated there was a pilot alliance meeting that occurred which he did not attend. He acknowledged that he was not the appropriate person to address the contents of those meetings. Number 449 REPRESENTATIVE BRICE referred to the term "cross regionalization," and asked Mr. Twohig if he could explain that issue and how it relates to current statute and how the bill addresses that. MR. TWOHIG explained the Marine Pilot Act of 1991 stated that a licensed pilot may not pilot in more than one pilotage region unless the board made the determination that it would be in the best interest of the state. He said the question that kept surfacing was that the board never was able to put anything together stating these are the circumstances that would be in the best interest of the state. There has been several cases of litigation involving cross regionalization of licenses where people wanted to work in one port, only in a different region. He felt with the opportunity that this bill opened up, the various factions, mostly the pilots who are concerned about it, have been trying to fix that problem by defining what's the best interest of the state and for the board. He noted what they are doing is defining instances where there is a shortage. He said the way the legislation is currently written might answer the problems involved with the exception of the statement "in concurrence by the associations." Number 471 CHAIRMAN DAVIS recognized that there were quite a few pilots from out of town. He wanted to ensure plenty of time for them to testify. Chairman Davis requested the remainder of the meeting be dedicated to hearing testimony from the pilots. He then introduced Mr. Ron Lorensen. RON LORENSEN, Attorney, Law Firm of Simpson, Tillinghast, Sorensen and Lorensen, indicated he represents a Canadian shipping company known as Northern Transportation Company, Ltd. (NTCL). Mr. Lorensen explained that for the past couple of years NTCL has been delivering fuel by tug and barge to a number of communities on the North Slope. The deliveries come out of the Mackenzie River as soon as the ice breaks up, ultimately traveling to the Arctic Ocean and along the coast making deliveries to both Alaska and Canada. MR. LORENSEN explained the way the Pilotage Act is currently set up, there is an exemption created for United States tugs under 300 tons. He explained a tug that is under 300 tons is not required to use a pilot in North Slope operations or elsewhere. He indicated this exemption was currently specific to U.S. tugs only and does not apply to Canadian tugs. He mentioned that Representative MacLean may be presenting a proposed amendment to "level the playing field" in this regard for Canadian tugs of the same weight class to also be exempt from the requirement of using marine pilots. Mr. Lorensen added there is litigation underway that he filed on behalf of NTCL last year, based on the U.S. Commerce Clause and a notion called "discrimination against foreign commerce." He stated that he would be able to establish that requiring pilots to be used for foreign vessels in exactly the same conditions and exactly the same operations that a U.S. vessel is not required, acts as a discrimination against foreign commerce. He remarked NTCL used a pilot in its operations at Point Hope last summer and indicated the cost of that operation totaled $6,000. He indicated this was not an insignificant financial requirement being imposed. He emphasized this proposal would level that playing field by making both Canadian and U.S. tugs of the same class, conducting the same types of operations, exempt from the pilotage requirement. Mr. Lorensen noted he had prepared some briefing material for the committee. Number 516 REPRESENTATIVE BRICE referred to the licensing standards between Canada and the U.S., and asked whether these standards such as obtaining a captain's license, were fairly equitable. MR. LORENSEN stated he was not in a position to answer that question. He explained the captains of the NTCL vessels have substantially more experience navigating in the arctic waters and are more familiar with the conditions of the North Slope than the typical tug captain coming in from Seattle on a Crowley tow, for instance. He stated given the arctic conditions, the requirements are fairly stringent, but stated he could not confirm this. Number 532 MICHAEL O'HARA, Pilot, Southwestern Alaska Pilots Association; and Board Member, Alaska Marine Pilots Association, indicated he was in attendance to speak on behalf of himself, not the board. He acknowledged his support for the continuation of the Marine Pilot Board as (indisc.) it sunsetted. He said in his opinion, it has upgraded the licensing standards of pilots in the state over the last four years. He disagreed with Mr. Bush on the word "chronic" and felt it was a situation that should be open for the commissioner to scrutinize as far as whether that situation exists or not. MR. O'HARA referred to page 3, Section 8, AS 08.62.093 (b) (2) which states, "two years of service as a master on vessels of not less than 1,000 gross tons," and said in his opinion this is a severe degradation of the entry level standards. He indicated he has spoken with the marine pilot coordinator regarding this issue and has recommended the insertion of the word "inspected" so the statement read, "on inspected vessels." He noted the inspected vessels have a higher threshold of safety and remarked this was a concern of the state. MR. O'HARA referred to page 4, Section 8, paragraph (6) which states, "five years of experience gained in a board approved deputy marine pilot apprenticeship program." He said he had written a letter to Representative Davis regarding the value of command experience. He explained a 1,600 gross ton license is essentially a one-year-at-sea, on-an-ocean-license. If a graduate from maritime school sails for one year as third mate and then obtains a second mates license, he can get a 1,600 ton master license. He stated it was an equal license and this is commonly done. So, essentially the candidate would have one year sea experience with no command experience and would then enter the apprenticeship program. He said he understood the department's desire to have an apprenticeship program, but suggested to the committee that this apprenticeship program be included as a possibility as another method rather than having it as a way of becoming a deputy marine pilot. He explained this would enable the pilot association to have an apprenticeship program and train an applicant to the current standards, so that person could meet the requirements of Section 8, AS 08.62.093. MR. TWOHIG asked if he could interject and explain that what Mr. O'Hara was referring to was an amendment to AS 08.62.175 (d) (3) (C) which says, "promote training programs for deputy marine pilots which may include an apprenticeship program" which does not make it mandatory for all associations to have one. CHAIRMAN DAVIS said he would make note of that. Number 552 MR. O'HARA concurred with Mr. Bush regarding Section 14, AS 08.62.157 (c) which states, "a person licensed under this chapter, who is not a member of a pilot organization..." He felt this was not a good idea and stated the entire statute was designed for pilot associations for services in a (indisc.) type region. He referred to Representative Brice's question about the concept of cross regionalization and asked if Representative Brice had a feeling for the concept of regions and why they exist. Number 591 REPRESENTATIVE BRICE stated not being a pilot himself, it would be difficult for him to say, but he indicated he was aware of the distinction between Southeast waters and Northwestern waters, and Bristol Bay waters are a lot different than Shelikoff Straits. MR. O'HARA commented that it was a safety issue and it is local knowledge. CHAIRMAN DAVIS referred to Section 8 regarding the determination of requirements to become a deputy marine pilot, and said it gets fairly complicated and there is a flow chart included in committee members packets that explains how some of these experience modes fit together. MR. O'HARA stated with regards to the conflict resolution, the board has been hamstrung by the whole issue of tariffs for the last five years that he has been on the board. He commented that whatever it is, there has to be some way to resolve conflicts. He added he liked the idea of arbitration, but that's not necessarily the way to do it, but emphasized the need for some sort of method to settle these issues. He added the state is now out of the tariff regulation business. He reiterated his concerns and problems with the issue of conflict resolution. REPRESENTATIVE SANDERS asked Mr. O'Hara if he was at the meeting where everyone assumed that everyone agreed on the issue of binding arbitration. MR. O'HARA stated he attended one meeting between industry and pilots and asked Representative Sanders if that was the meeting he was referring to. He added he did not attend any meetings where legislators were present regarding this issue. REPRESENTATIVE SANDERS said he was referring to the meeting where the issue of binding arbitration was originally discussed. MR. O'HARA stated he did attend that meeting. REPRESENTATIVE SANDERS asked if Mr. O'Hara was under the impression there was total agreement on the binding arbitration issue. MR. O'HARA directed attention to Captain Eliassen who could explain in detail, about the subject. Mr. O'Hara said it was made clear that certain associations could easily support the issue of binding arbitration and others would not. CHAIRMAN DAVIS clarified that the meeting he was talking about which helped result in this resolution, there were legislators present and a representative of what they referred to as an alliance, a group that had been put together to try and incorporate all the inclusions in legislation that would work together and everyone could agree on. It was that meeting he had referred to. He added there had been a lot of meetings among the pilots and industry prior to that. REPRESENTATIVE SANDERS asked Chairman Davis if there were pilots at the meeting he attended and was there agreement on the binding arbitration issue. CHAIRMAN DAVIS stated it was his understanding when he left the meeting that there was agreement. Number 635 STUART MORK, Representative, Alaska Marine Pilots Association, stated that Alaska Marine Pilots has never supported the issue of binding arbitration. He explained out west there is competition and it has always been our feeling that in a situation where competition exists, if an agent or someone comes to us and says they have job for a marine pilot for a certain price, if we are not able to accept the job they would simply go to their competitors, and if they refuse then the agent would return and eventually the issue would be resolved. He explained by going to binding arbitration, this is not compatible with a competitive situation in regard to our experiences in the Western region. Mr. Mork indicated the National Research Council (NRC) did a study called "Minding The Helm." He stated one of their conclusions was that the states that have tried competitive pilotage schemes are all backing away from it. He referred to a situation in Florida, where they wrote in their policy and intent, that competition was not compatible with safety and efficiency. He referred to the proposed legislation, Sections 14 and 17. Section 14 states that pilots must accept any dispatch given by any agent. Section 17 states if a price cannot be negotiated, then they will go to binding arbitration. He stated they have done some preliminary research and were unable to find an incidence where the state has said two private parties must go to binding arbitration. TAPE 95-10, SIDE B Number 000 MR. MORK continued...that pilots must take every job and then settle the price through arbitration. That's essentially setting a fixed tariff. So the state is saying, if this goes through, the pilots will do the work, they'll do it for a fixed amount of money. We don't see where the competitive nature lies in this. The shippers are asking for guaranteed service from the pilots, at a guaranteed price and the pilots do not profit from this; therefore, they are just standing by. He noted the pilots would not have the same protection and benefits that the industry people are asking for in this case. He commented that before they could sign on to this program, they would like to see it carried further and say, "if you are going to take every job that comes your way, it will have to be an equitable dispatch among all the pilots in the region." Mr. Mork declined to comment anymore, but added from a philosophical perspective, it has to be able to work both ways for the pilots or else it can't work. He then asked if there were any questions. Number 030 CHAIRMAN DAVIS asked for clarification from Mr. Mork that his intentions were to connect Sections 17 and 18, which indicates when a representative of a vessel requests that a pilot is mandated to do the work. He remarked this is sort of a binding situation. MR. MORK clarified that they only have one contract and seven shippers that they deal with in their region. He said they currently have one contract with one shipper and this accounted for 21 percent of the work in the region. Everything else is on a job- by-job basis. He stated he potentially foresees they could go to binding arbitration on every job. Mr. Mork gave an example of receiving a request to go to Atka and they make the determination that this would not be cost effective for them, but because of legislation, they have to accept the job. He added their lowest priced ship move is $316, and if they have to go to binding arbitration over $300, they would stand to lose a great deal. He indicated he was not sure who would pay, but more than likely it would be both parties involved. He remarked the cost of the arbitration alone would be more than the value of that shipment. He added he was not talking about contracts in their particular case, but rather shipments. Number 061 CHAIRMAN DAVIS asked if there were any questions for Mr. Mork. He then introduced Mr. Hans Antonsen. HANS ANTONSEN, Representative, Southeastern Alaska Pilots Association (SEAPA), referred to page 2, Section 3, line 12, paragraph (2) with regards to (indiscernible) drug testing. He stated they did not have a problem with random drug testing. He stated he was aware that the intent of the board was to eliminate the wording "random alcohol testing." He indicated a lot of time was spent last year at pilot board meetings discussing the logistics of "random alcohol testing" and found this could not be done. He acknowledged this was an effort to eliminate the "random alcohol testing" from this legislation and make it mandatory drug and alcohol testing, but not necessarily "random alcohol testing." He thought it might be unintended wording on the part of the department that they included "test based upon reasonable cause," on page 2, line 13, Section 3, AS 08.62.040 (b) (2), and then later on line 14 which states, "the Board may delegate responsibility for administration of all or a portion of a testing program to pilot organizations," or essentially, that the pilot organizations are to test for probable cause and be self-policing. He stated he did not see this as a realistic scenario to expect of any pilot association to self-police themselves accurately, to represent the safety for the state. He added if they do, then we are opening ourselves up from a whole tangled liability issue from their own pilots for enforcing those procedures. He indicated this language is possibly suitable for a company/employee relationship but with an association of pilots, he felt it went far beyond the bounds of authority of an association to police its own members. MR. ANTONSEN indicated they spent a great deal of time with their attorneys to streamline their present random drug testing policy so that it is strictly between the program manager, administrator, which in their case is ALTEST (ph) laboratory in Anchorage and the pilot, and between the pilot and the state and the board. He remarked they were not involved in the policing aspect of it. He thought it was a safer way to go from a litigation standpoint. Mr. Antonsen then addressed page 4, line 3, paragraph (6), regarding the apprenticeship program. He stated SEAPA generally concurs with the desires of the department to at least consider being able to grant someone entry into the field, even if they have not held all the license requirements for the full duration of getting their experience. He emphasized they did not want to endorse watering down the entry level requirements either, and felt that commensurate with Mr. O'Hara's comments, they would be very desirous of entering into some process by which they could work out a resolution to include an apprenticeship program without watering down the entrance level requirement or experience requirements in the remaining portions of Section 8. MR. ANTONSEN referred to page 4, Section 10, line 15, and stated he believed this reference to allow deputy marine pilots to train, or supervise the training of other pilots, and not require a full license to do training, applies specifically to Region 4. If he remembered correctly, the department's suggestion dealt with the Kuskokwim region where there were no fully licensed pilots to do the training. He stated to the best of his knowledge, in the rest of the regions this was not a problem. There were many fully licensed pilots with many years of experience that could complete the training. He reiterated his point on there being no need to water down the training further by having less qualified pilots to do the training. He then referred to page 6, Section 14, paragraph (c). Mr. Antonsen concurred with the desires to delete paragraph (c). He further remarked that this was seen as part and parcel of their lack of understanding as to where binding arbitration would be necessary. If we're going to say pilots must serve and any pilot or pilot organization, if requested by a company, must dispatch and then we're going to tell you what it's going to charge, we're at a loss as to how that goes along the same direction that the legislature says, lets compete. He indicated they were more than happy to entertain the issue of binding arbitration, and compulsory services, but part and parcel to that, is going down the line towards a regulated profession. He indicated SEAPA's standpoint from the very beginning is the same as with 90 percent of other associations and organizations in the United States. He added this would be the way to go in the interest of the state. MR. ANTONSEN asked if he could address the question that many committee members had regarding a meeting that was held and what the understanding was. He said they had many meetings this last week with several Representatives and Senators concerning that meeting. Mr. Antonsen stated he was not present at that meeting but their President, Captain Gurry, was in attendance. Mr. Antonsen said it was Captain Gurry's understanding from that meeting, which he believed was in Speaker Phillip's office with legislators and representatives from The Alliance in attendance, that while binding arbitration was discussed, it was language that was given to the pilots at the last moment and Captain Gurry's response was, "thank you very much for sharing, but we'll need time to digest this. It's quite complicated and legalistic and we'll really need a chance to look at this." Mr. Antonsen noted he had just spoken with Captain Gurry hours ago and clarified the fact there was never any understanding that binding arbitration was something that is a great deal. Mr. Antonsen stated that Captain Gurry did mention that within the context of the existing contract, binding arbitration is simply one more way of contract resolution. Mr. Antonsen said that SEAPA has, in its contracts and its negotiations, at present time that are ongoing, addressed this issue for conflict resolution, addressed the issue of continuing to provide pilotage while a disagreement is there and even beyond the terms of the contract, when we cannot come to a decision to extend the contract beyond the term of the contract, to continue to provide service at no large increases. It's stability for us and stability for the industry, so we can work these things out. He added it was his understanding that if there is a safety problem where for example, a ship comes in unannounced and due to an inability to resolve a price with the pilot, the ship may not get serviced. He stated he did not see this situation occurring. He explained the cruise ships and shipping industry has always known ahead of time. He stated the situation of unannounced ships might be the cargo industry, but he stated they always deal and have contracts with the agents that represent those shipping companies for accomplishing a job, for a price. Mr. Antonsen reiterated his observation of not seeing where this presents a safety issue. He added SEAPA has never turned down or not served an assignment. Number 212 CHAIRMAN DAVIS stated he, too, spoke with Captain Gurry for verification of their viewpoints on not favoring binding arbitration. He announced Mr. Joe Kyle. JOE KYLE, Representative, Alaska Steamship Association,(ASA) explained that every carrier in the state of Alaska is required to use the services of a state licensed pilot with the exception of the Prince William Sound oil carriers. He said in terms of total ship moves in the state, their membership represents the vast majority of ship movements requiring the services of a state licensed pilot. He said some of the testimony already presented indicated that the trades in the state are very diverse and at times have conflicting needs in terms of the piloting. He explained in Southeast Alaska, the cruise ship industry tends to be very predictable. They know up to a year in advance how many pilots will be required, when they will be needed and where. There is a similar situation in Cook Inlet with the oil carriers. He said the problem arises out in the Western region where the traffic of ships is dependent upon the Bering Sea fisheries. He noted because they are unable to predict the time and quantity of the salmon and herring runs, as well as not knowing what impacts the fishery management scheme will have on the Bering Sea federal fisheries, it was a lot less predictable to determine pilot needs in the Bering Sea. Nevertheless, there was one pilot act that encompassed the entire state. Mr. Kyle reiterated his comments made earlier regarding conflicting interests with the industry and various regions having peculiar needs. It becomes difficult to satisfy and hammer all the needs into a single act. He added the legislature tried this in 1991, and made the philosophical decision that there would be a competitive piloting situation in Alaska, rather than a regulated monopoly. He explained some of the testimony today stated "you gave us competition and we are telling you the problems and how to work it out." MR. KYLE remarked at least some pilot groups are willing to try and make the competitive situation work, whereas others are determined to show that it can't work and should be a regulated monopoly. Mr. Kyle stated this was the more common way piloting is administered throughout the U.S. - as a regulated monopoly rather than a competitive situation. He felt CSHB 260(TRA) was a good compromise in amending the 1991 Act. He added it took them a while to accept the idea of binding arbitration as a way to resolve conflict disputes. He stated this was not normally something the industry would be willing to support. MR. KYLE explained they compromised to this because they felt they could be faced with the situation where, since the maximum tariff has expired, there is no ceiling on what can be charged to us. He presented a scenario of showing up at the dock with a cargo hull full of fish or the sea buoy with a load of passengers, and if their contract has lapsed, they then ask what the tariff is. They are offered an exorbitant rate compared to what they were paid a week before. They would then go to the other pilot association in the area and are offered the same exorbitant rate. He explained they are then offered the choice of moving the ship into state waters without a pilot, at which time they have great liability from underwriters and note holders. He indicated they would lose insurance for that particular movement and would be against anybody who had a note on their ship. He explained when ships are moved into state waters, there is a requirement to have a pilot using (indisc.) commercial instruments. He summarized by saying they are looking for any mechanism that would protect them so they could have the services of the state pilot when a ship has to be moved into state waters. He felt this would be for the good of the state because the pilots serve a dual function; one for commerce and safety; and the other for the state to protect the environment, property and people when the ships are in state waters. He explained the maximum tariff put a ceiling on what people could charge. The rates beneath those ceilings were negotiable and if an agreement was not reached, the pilots could charge them that maximum tariff. He indicated despite their best efforts, the maximum tariff expired last session due to two pilot groups that strongly opposed the maximum tariffs. He added it is the same two groups that currently oppose binding arbitration. He indicated he attended all the meetings that the industry and legislators were included in approximately one month ago. MR. KYLE stated if anyone had any questions regarding the outcome of the meeting, he would be happy to present his perspective of those meetings. Mr. Kyle stated he agreed with Mr. Bush's comments regarding the words "chronic" and "concurrence" and the shortage of pilots. He also mentioned the pilots association and the industry should be consulted because they would know before the pilots in most cases, what the ship loads might be as well as the traffic loads, and help predict if in fact a shortage is eminent. He reiterated his feelings on binding arbitration being a compromise position for them, that they negotiated down to that mechanism in the interest of helping to formulate a consensus bill through the legislature so they would not have to have a big "Donney Brook" as they did several years ago. He added he would hold the rest of his comments in the interest of time. He also commended the committee for coming up with the best compromise bill they will see this year. Number 310 REPRESENTATIVE WILLIAMS asked if Mr. Kyle had read the "Brad Pierce" report. MR. KYLE stated he had read it. REPRESENTATIVE WILLIAMS asked if he had heard Mr. Bush's comments on the report. He then asked Mr. Kyle's comments on this report. MR. KYLE explained the same person that wrote that report also coauthored the "Cowper Study" back in the aftermath of the Exxon Valdez oil spill. He made reference to the New Amsterdam accident that occurred in the summer of 1994, which was used in that particular report as the author's "launch pad" to demonstrate that a regulated monopoly would be the best way to handle state piloting. REPRESENTATIVE WILLIAMS asked how often would an unannounced ship come in where the tariff was (indisc.) MR. KYLE stated their fear of this situation occurring, goes back to the summer of 1993, when out in the Western region they were told by one pilot association that if you don't sign written contracts with us, we'll no longer service your ships. He said the industry members rebelled at having to sign a written contract with one pilot association and refused. The pilots then stated they would no longer service the ships. This situation lead to the state having to declare an emergency and a temporary restraining order (TRO) was initiated and the Steamship Association wound up in superior court. He reiterated this was where their fear stems from on pilots not responding to a dispatch. REPRESENTATIVE WILLIAMS asked for clarification on when this took place. MR. KYLE stated it was the summer of 1993, for a chronic period of time. REPRESENTATIVE WILLIAMS inquired about the comments made by Mr. Antonsen stating they had provisions in their agreement protecting them from the above situation ever arising. MR. KYLE stated that most of the contracts, within the existing contracts, include binding arbitration provisions. He stated their concerns were what happens when a contract lapses. REPRESENTATIVE WILLIAMS asked for confirmation on what Mr. Antonsen's comments were regarding the fact there was no binding arbitration, but there was an agreement that organizations would service the ships at whatever the cost, and they would deal with it later. MR. KYLE commented that would be great if they would go without knowing what they ever get paid for. Number 364 ERIC ELIASSEN, President, Southwest Alaska Pilots Association (SWAPA), commented on the meeting which was held in Representative Phillips' office. He stated he did the majority of the speaking for the pilot alliance and stated he is also the chairman of the pilot alliance. He indicated to the best of his recollection, Mr. Antonsen stated Captain Gurry's position correctly. He indicated to Chairman Davis and Speaker Phillips, that there were two of their associations present at that meeting. SEAPA at the time was not on board because they wanted to read through the binding arbitration material and have it reviewed by a lawyer, and Alaska Marine Pilots did not have a delegate present. MR. ELIASSEN explained he was the chairman of the alliance and they were not on board with the arbitration issue. Mr. Eliassen stated to the best of his knowledge, if they pursued contract negotiations fruitfully, there would be the possibility of them coming on board later. He added he was not representing any of the other associations since there were representatives present. He indicated that he would represent Southwest Alaska Pilots Association which is a pilot association in region 2. He added it was the only state pilot association in region 2 and added there were two federal pilot associations that operate in the Cook Inlet area. MR. ELIASSEN stated their position on arbitration is they understand the industry's viewpoint that there should be some sort of capping mechanism. He explained in their situation they are one association, so there is in effect no competition and no maximum tariff. He stated theoretically, they could increase their rates one billion percent. He added this may be tempting in the short term, but we would be out of business very quickly. He added they have no intentions of doing that. They negotiate agreements with industry now. In order to get out of this impasse, he suggested arbitration could be included in those regions that have only one pilot association, because there is no competition. He indicated they would be amenable to that proposal in their region. He agreed with Mr. Bush's characterization of the process of working with the industry and other associations in formulating a compromise bill. However, although there was some disagreement, it appeared that for the most part, it was acceptable. MR. ELIASSEN referred to page 2 of CSHB 260(TRA) and concurred with Representative James on the term "chronic." He explained if a pilot is unable to meet the ship and that ship has anchored somewhere but has to sail, which as happened in the past, if there is a one time occurrence that triggers the pilot commissioner making a determination that there is a shortage, they felt this would not be appropriate, because it could be imminent. He said you have to look at actual imminence. He presented a scenario of the industry giving them notice that in six months or a year there will be twelve more ships to service. If there is not the capability to service those ships, this would be considered an imminent chronic shortage. He explained this situation would not happen if it was a one time occurrence. The idea of cross regionalization is anathema to the idea of state pilotage. He indicated that no where else in the country do they have pilots working from one region to another. He stated the whole idea of state pilotage is to obtain intimate knowledge with that particular local operating environment. He explained our regions are actually too big in the state of Alaska. However, the way we are set up and the way the trade is set up, it is the only way we have been able to work it out where due to the seasonal nature of the traffic and with the cruise ships and the fishing season, it becomes imperative to have the quality of pilots in that particular region, and be able to provide service to that entire region. He added this was a big enough responsibility. There is no need to go from region to region. He stated his desire would be, if the board or commissioner finds a shortage, then they would work with the consultation of that recognized pilot association and try to work up some internal mechanism to treat the shortage. MR. ELIASSEN made reference to the top of page 3, and stated he was in agreement with this statement, but expressed concern regarding page 3, lines 6 through 8, stating, "the Board shall ensure that sufficient pilots are available to provide pilotage services in the effected pilotage region to all vessels required to employ a pilot under this chapter." He questioned whether this statement would be specific enough where it would allow the board to work within that region. He did not agree with the idea of bringing the pilots from region to region. For example, in Miami which is 25 miles away from Fort Lauderdale, if a ship travels from Miami to Fort Lauderdale, the pilot does not go down there and take it in and out of there, being that it is only a few mile stretch. He stated it was a different group because they possess the intimate knowledge of that area. He questioned the exact purpose of this act and explained the intent was to try and assure the safe and efficient pilotage service in Alaska. He explained this was where the idea of regionalization becomes important. MR. ELIASSEN referred to CSHB 260(TRA), page 3, Section 8, paragraph (2), and stated he concurred with Mr. O'Hara regarding the degrading of the existing standards with this statement. He stated Mr. O'Hara had consulted with Mr. Twohig and suggested they might come up with something more appropriate. He suggested to either keep the existing wording--but he does not agree on how it is worded. He stated it was not clear. He then referred to page 4, Section (6), line 3, which states, "five years of experience gained in a board approved deputy marine pilot apprenticeship program," and questioned the purpose of this statement and indicated that the training committee has a file full of qualified applicants. He stated it was not that there were not enough applicants that satisfy the minimum entry requirements. He said if we're looking for Alaskans, I think there's a different way to resolve this. The state has it in their purview to sponsor two scholarships per year, or have the Senators sponsor people to the U.S. Merchant Marine Academy. And when they complete the academy, the state could place them with the state ferry system and work until they have upgraded their license and increased their ratings, and at the same time they would be obtaining their federal pilotage endorsements. This would satisfy the existing regulations without watering them down and would be able to apply them to the Pilot Associations.... CHAIRMAN DAVIS interjected and apologized for having to interrupt Mr. Eliassen. Chairman Davis asked if it would be an inconvenience for Mr. Michael Spence and Benee Braden to hold their testimony on CSHB 260(TRA) until the next meeting, due to the fact there was another meeting scheduled in this room at this time. BENEE BRADEN stated she would wait to testify at the next hearing on HB 260. MICHAEL SPENCE asked if he would have the opportunity at the next occasion to testify. CHAIRMAN DAVIS stated yes, of course. He then asked Mr. Eliassen to continue. MR. ELIASSEN continued and referred to page 6, Section 14, paragraph (c), and stated they were opposed to this section. He then referred to paragraph (d) of the same section and indicated the wording seemed vague. He questioned whether or not the pilot or association is individually susceptible, if he does not make his ship. He presented a scenario where the pilot is detained due to a car accident en route or a weather related situation. Mr. Eliassen reiterated the vagueness of that particular section. He questioned the occurrence of a situation where the pilot is unintentionally unable to service the vessel. He then referred to page 8, paragraph (5), Section 19, AS 08.62.180, line 15, which states, "vessels of Canada, built in Canada and manned by Canadian citizens including Canadian cruise ships..." and suggested the deletion of the words "including Canadian cruise ships." He felt this had the potential for becoming a major loophole. CHAIRMAN DAVIS thanked Mr. Eliassen and stated he would keep the committee members and others informed of when the next meeting would be held on CSHB 260(TRA) ADJOURNMENT There being no further business to come before the House Transportation Committee, Chairman Davis adjourned the meeting at 3:12 p.m.