Legislature(1995 - 1996)
03/24/1995 01:35 PM TRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE TRANSPORTATION STANDING COMMITTEE WORK SESSION ON HB 260 March 24, 1995 1:35 p.m. MEMBERS PRESENT Representative Gary Davis, Chair Representative Beverly Masek, Vice Chair Representative Jeannette James Representative William K. "Bill" Williams Representative Tom Brice Representative Jerry Sanders Representative Eileen MacLean MEMBERS ABSENT All members were present. COMMITTEE CALENDAR HOUSE BILL NO. 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." - WORK SESSION ONLY ON HB 260 WITNESS REGISTER BENEE' S. BRADEN Western Alaska Pilots Association P.O. Box 792 Unalaska, Alaska 99685 Telephone: (907) 235-5167 POSITION STATEMENT: Commented via teleconference on HB 260. DOUGLAS MacPHERSON Alaska Coastwise Pilots Association P.O. Box 6337 Ketchikan, Alaska 99901 Telephone: (907) 225-7245 POSITION STATEMENT: Commented on HB 260. RONALD W. LORENSEN, Attorney Law Offices of Simpson, Tillinghast, Sorensen and Lorensen Northern Transportation Co. Limited One Sealaska Plaza, Suite 300 Juneau, Alaska 99811 Telephone: (907) 586-1400 POSITION STATEMENT: Commented on HB 260. 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: Commented on HB 260. MICHAEL O'HARA, Pilot Southwest Alaska Pilots Association; and Board Member, Alaska Marine Pilots Association P.O. Box 1443 Palmer, Alaska 99645 Telephone: (907) 235-8783 POSITION STATEMENT: Commented on HB 260. ALAN F. WALKER, Lobbyist Northern Transportation Co. Limited 10665 Jasper Avenue, Suite 1000 Edmonton, Alberta, Canada T5J 322 Telephone: (403) 423-9201 POSITION STATEMENT: Commented on HB 260. PAUL FUHS, Lobbyist Southwest Alaska Pilots Association 10652 Porter Lane Juneau, Alaska 99801 Telephone: (907) 790-3030 POSITION STATEMENT: Commented on HB 260. STUART MORK, Representative Alaska Marine Pilots Association (AMP) P.O. Box 730 Dutch Harbor, Alaska 99192 Telephone: (907) 581-1240 POSITION STATEMENT: Commented on HB 260. KATE TESAR, Lobbyist Alaska Coastwise Pilots Association Alaska Services Group P.O. Box 22754 Juneau, Alaska 99802 Telephone: (907) 463-5657 POSITION STATEMENT: Commented on HB 260. GAYLE HORETSKI, Assistant Attorney General Civil Division Department of Law P.O. Box 110300 Juneau, Alaska 99811-0300 Telephone: (907) 465-4123 POSITION STATEMENT: Commented on HB 260. GINNY FAYE Prince William Sound Regional Citizens' Advisory Council 9850 Ninemile Creek Road Juneau, Alaska 99801 Telephone: (907) 586-2465 POSITION STATEMENT: Commented on HB 260. RAYMOND A. GILLESPIE, Lobbyist Alaska Steamship Association 9478 Riverbend Court Juneau, Alaska 99801 Telephone: (907) 463-3375 POSITION STATEMENT: Commented on HB 260. JOE KYLE, Representative Alaska Steamship Association 234 Gold Street Juneau, Alaska 99801 Telephone: (907) 586-3107 POSITION STATEMENT: Commented on HB 260. HANS ANTONSEN, Representative Southeastern Alaska Pilots Association P.O. Box 6100 Ketchikan, Alaska 99901 Telephone: (907) 225-9696 POSITION STATEMENT: Commented on HB 260. ROBERT A. EVANS, Lobbyist Alaska Marine Pilots 2822 Iliamna Avenue Anchorage, Alaska 99517 Telephone: (907) 364-3360 POSITION STATEMENT: Commented on HB 260. GEORGE UTERMOHLE, Attorney Legislative Research and Legal Services Legislative Affairs Agency Goldstein Building, Room 408 Juneau, Alaska 99801 Telephone: (907) 465-2420 POSITION STATEMENT: Commented on HB 260. PREVIOUS ACTION BILL: HB 260 SHORT TITLE: MARINE PILOTS SPONSOR(S): TRANSPORTATION JRN-DATE JRN-DATE 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 03/22/95 (H) MINUTE(TRA) 03/24/95 (H) TRA AT 01:00 PM CAPITOL 17 ACTION NARRATIVE TAPE 95-11, SIDE A Number 000 CHAIR GARY DAVIS noted that committee members would arrive throughout the meeting. This work session, a continuation of a prior meeting, was called primarily to take additional testimony on HB 260. Chair Davis reminded participants that during the work session there could be discussion but no action taken. However, he hoped to put final touches on some aspects of the legislation. Committee members present at the beginning of the work session were Representatives Davis and James. Members absent were Representatives Masek, Williams, Brice, Sanders and MacLean. CHAIR DAVIS welcomed Benee' Braden, who was present via teleconference. Number 029 BENEE' S. BRADEN, Western Alaska Pilots Association (WAPA), related via teleconference WAPA's concerns not raised at the previous Wednesday's session. One concern was the amount of litigation against the 1991 act. She asked the committee members to review the legislative audit report prepared the previous session. Issues of particular interest to WAPA included conflict of interest, lack of objectivity in the testing process for new pilots, and the board's tendency to take anti-competitive action despite the intent of the Alaska State Legislature and the realities of the marketplace. MS. BRADEN raised the issue of cross-regional licensing. She indicated WAPA viewed the prohibition against such licensing as a barrier to competition. She wondered whether it would be possible for pilots to be fully licensed in more than one region. Number 089 MS. BRADEN conveyed WAPA's opposition to the language relating to dispute resolution. First, WAPA was troubled by the potential for price fixing. Second, in Region 3, industry already had a balance of power and distribution of work to be dispatched; WAPA's concern was that a conflict over fees could be thrown into binding arbitration, financially demolishing a small group like WAPA. MS. BRADEN further testified WAPA thinks improper the potentially significant delay between the time a pilot wants to provide services and the time the board finally approves that pilot. WAPA suggested requiring a pilot to first obtain a license to begin services, and then - within a specified amount of time - to either join an approved organization or seek approval of the board. Number 128 CHAIR DAVIS advised Ms. Braden that neither he nor Representative James, the only other committee member present, had questions. Chair Davis mentioned Mike Spence from Alaska Coastal Pilots had been present earlier, but Doug MacPherson would speak instead. DOUGLAS MacPHERSON, Alaska Coastwise Pilots Association, stated his intention of going through the committee substitute line by line. Referring to Section 2, page 1, he suggested the regional concept is here to stay, with the judicial district concept not being responsive to actual need. For example, if there were two pilots on the board and two industry members, one of the three major regions in Alaska would not be represented. The Alaska Coastwise Pilots would like to see both industry and pilot representation for each of the three major districts. Mr. MacPherson indicated he did not wish to offend the Kuskokwim district, but it was a one-man operation handling much less traffic than other regions. MR. MacPHERSON referred to Section 6, page 2, and said it was O.K. with him. However, he felt the terms "actual", "imminent" and "chronic" could lead to numerous disputes because of their vagueness. Number 175 MR. MacPHERSON expressed concern with the wording on page 3, "and concurrence by the recognized pilot organizations", placed public policy in the hands of private entities. As for Section 8, he commented that specific requirements of prior experience and licensing might create artificial barriers to otherwise-qualified pilots wishing to enter the profession. For example, a person serving two years as a chief officer who subsequently obtained a master's license would have the necessary experience to be a pilot yet not technically qualify under Section 8, item 3. He suggested substituting "while holding" with "and hold a United States Coast Guard license" throughout this section. REPRESENTATIVE WILLIAM K. "BILL" WILLIAMS arrived at 1:49 p.m. Number 213 MR. MacPHERSON addressed Section 14, item (c), "A person licensed under this chapter who is not a member of a pilot organization shall provide pilotage services". He commented that the language is confusing, because piloting is not something a person is entitled to do if not a member of a pilot organization. REPRESENTATIVE TOM BRICE arrived at 1:50 p.m. Number 236 MR. MacPHERSON referred to Section 13, page 5, "The board may impose a civil fine and also suspend or revoke the recognition of a pilot organization", and emphasized that regulation 56.320 already addressed this matter in identical language. He indicated problems could arise in areas with a single pilot organization, because if an organization were suspended for a violation, there would be no legal pilot service in that region. In addition, in areas having two pilot organizations, a monopoly might be created if one were suspended. As for Section 17, that subsection (d) already existed, and he wondered whether the writer had intended to make that subsection (e) instead. Furthermore, the subsection seemed redundant, and the legislative intent unclear. Mr. MacPherson concluded by saying the Alaska Coastal Pilots stood neutral on the issue of dispute resolution, but only because of lack of sufficient data. Number 273 CHAIR DAVIS responded to Mr. MacPherson's concerns, adding that while most of the issues had been aired before, in Mr. MacPherson's absence, having a consensus was important. He clarified that "concurrence" was a drafting error. He said he understood MacPherson's concerns on page 1 about the makeup of the board. He further indicated some of the issues regarding "actual", "imminent" and "chronic" on page 2 had already been addressed, and the committee would consider them. Section 8 was a new concern for review. Regarding Section 14, if he remembered right, there was a consensus to delete that. Section 13 the committee would work on. In Section 17, the concerns had been addressed by several. And finally, Chair Davis noted the issue of binding arbitration for conflict resolution was the "big gorilla." Number 302 CHAIR DAVIS thanked Mr. MacPherson and indicated Representatives Tom Brice and Bill Williams had joined the meeting. He discussed the agenda, including the proposed amendment by Representative MacLean. He indicated the Department of Commerce and Economic Development had a concern about exclusions, and he himself thought it a valid amendment from his own research. Number 320 REPRESENTATIVE BRICE asked what would prevent Canadian tugboats hauling fuel from continuing to "creep on further down the coast," chasing off American business. CHAIR DAVIS responded he had considered that as well, but the economy being on a bid basis would preclude that from happening, because the closer the tugboats got to developed areas of our industry, the less competitive they would be. Number 330 RONALD W. LORENSEN, Attorney, Law Offices of Simpson, Tillinghast, Sorensen and Lorensen, spoke on behalf of Northern Transportation Co. Limited (NTCL). He explained the present law provides an exemption for United States vessels in Alaska waters, but not for Canadian vessels. He asserted this is an impermissible discrimination against foreign commerce, which must pay costs that United States commerce does not have to pay. Another approach, which he was not advocating for NTCL, would be to remove the exemption for United States vessels. He clarified that NTCL's interest is in leveling the playing field, not avoiding the use of pilots. REPRESENTATIVE MASEK arrived at 1:58 p.m. Number 358 DAN TWOHIG, Marine Pilot Coordinator, Board of Marine Pilots, Division of Occupational Licensing, Department of Commerce and Economic Development, responded at Chair Davis's request. He, Captain Michael O'Hara, and Deputy Commissioner Jeff Bush had discussed the matter that morning. Mr. Twohig understood that from the viewpoint of the Department of Commerce and Economic Development, the amendment might not be a bad idea. CHAIR DAVIS asked for any other comments about the issue. Number 369 REPRESENTATIVE BRICE requested an explanation of "the department doesn't think it's a bad idea." MR. TWOHIG expressed that although he had no problem speaking for the Department of Commerce and Economic Development, he was hesitant to answer because he was the investigator in the case. He deferred to Captain O'Hara for an answer. CAPTAIN MICHAEL O'HARA, Pilot, Southwest Alaska Pilots Association, and a board member of Alaska Marine Pilots Association, commented the people involved were competent and the amendment suitable. The concern, he said, was in trusting a foreign company to operate in an environmentally safe manner, not in trusting this particular company. REPRESENTATIVE EILEEN MacLEAN arrived at 2:00 p.m. REPRESENTATIVE BRICE asked whether the Canadian Coast Guard standards are the same as the American standards, and whether there was reciprocity. Number 392 MR. LORENSEN interjected that the issue is not reciprocity. It is the absence of a requirement, because there is no requirement for the use of pilots on the Canadian Arctic shore. Number 409 REPRESENTATIVE MacLEAN extended her apologies for arriving late. She explained she had offered the amendment because she believes it to be an excellent economic opportunity for Alaska and Canada to import and export trade. Number 422 REPRESENTATIVE JAMES questioned where the amendment fits, with the exemption being for certain vessels under 300 gross tons and towboats. She understood that in the existing draft, as long as a boat was of United States registry or owned by the state of Alaska, it was exempt. She wanted to confirm the amendment would include Canadian vessels as well, as long as they fit within the "less-than -300-gross-tons and towboats" classification. Her concern was the effect of this amendment on southern waters, as opposed to northern waters. REPRESENTATIVE BRICE clarified the question: At what point south should pilotage be provided on foreign vessels? REPRESENTATIVE JAMES agreed and added in the situation Representative MacLean discussed, pilotage should not be an issue. However, it might be different statewide. Number 441 MR. TWOHIG commented that AS 08.62.180, item 5, states vessels in Canada, built in Canada and manned by Canadian citizens, were already exempt. This included Canadian cruise ships engaged in frequent trade between British Columbia and Alaska. Therefore, the amendment under consideration was to cover other situations. He pointed out there is no exemption for the ferries; they must get a waiver every six months. He added although Canadian traffic is already exempted in Southeast Alaska, the new amendment only talks about the North Slope and northern waters. Number 468 REPRESENTATIVE JAMES said the issue was safety, but she had insufficient information. CHAIR DAVIS agreed with Captain O'Hara's earlier statement that the Canadian cruise ship operations in question were probably as good as possible. He added that currently Alaska operations are exempt from the pilotage requirement. Number 475 ALAN F. WALKER, representing Northern Transportation Co. Limited (NTCL), explained he was also retired from the United States Coast Guard. To clarify the safety issue, he mentioned that the state's and Coast Guard's roles were key in inspection and oversight of operations. The Coast Guard inspected the vessels, and the Department of Environmental Conservation oversaw fueling, training and contingency plans. He noted that a foreign vessel wanting to operate in Alaska waters would have to meet all the requirements. Number 489 REPRESENTATIVE BRICE replied he was not opposed to the concept but wanted to clarify the issues. He said applying the scenarios from British Columbia and Southeast Alaska to more northern waters was comparing apples and oranges. There was no strong delineation when traveling from Canada to Southeast Alaska. He agreed Canadian vessels still must be inspected by the United States Coast Guard for clean engine room, et cetera. But competency was the issue, and the Coast Guard did not test for that. REPRESENTATIVE SANDERS arrived at 2:10 p.m. Number 515 MR. TWOHIG commented there was no reciprocal exemption for pilotage in British Columbia, but rather a waiver. He added the current statute did not allow the Board of Marine Pilots to grant a waiver for any of the provisions of the statute. He proposed waivers instead of exemptions. Because there was such a small window of good weather to navigate North Slope waters, a case-by-case waiver authority to the Board of Marine Pilots might solve the problem. Number 527 PAUL FUHS, Lobbyist, Southwestern Alaska Pilots Association, mentioned the lawsuit, which he thought could go either way. If the state of Alaska lost the litigation, some of the foundations of marine pilotage in Alaska might be endangered. He added people feel the current situation is safe, with the Canadian vessel operators knowing at least as much as Seattle operators coming to Alaska a couple of times a year. If there were problems in the future, the Alaska State Legislature could step in to fix them. Lastly, he concurred with an idea from the Senate to request letters from local governments in Alaska, indicating support for the amendment. This would preclude them blaming the Alaska State Legislature for fouling the environment should, for example, a fuel barge be wrecked on the beach at some future date. Number 538 REPRESENTATIVE MacLEAN said a letter of support from the North Slope Borough and Arctic Slope Regional Corporation had already been faxed. Additional letters from Canada were being requested. Number 540 MR. MacPHERSON remarked there was a practical answer to Representative Brice's concern about Canadian vessels from the North Slope navigating around the western and southern sides of Alaska. The summer window of opportunity was so short, there were practical limitations as to how far a vessel could realistically travel to deliver fuel. REPRESENTATIVE MacLEAN added the whaling season lasts until May, with a window of opportunity June through August. Number 557 CHAIR DAVIS referred committee members to a copy of a note in their possession. The note, to Chair Davis's staff from Dan Twohig, regarded a proposed amendment to Section 8. Chair Davis asked Mr. Twohig to present the amendment. Number 604 MR. TWOHIG explained the amendment to Section 8 concerns entry level requirements for a deputy marine pilot license. He and Captain O'Hara had discussed their concern that the amendment might degrade the entry level requirements, and were presenting their proposed amendment. The intent in section (b)(2) was to add the word "inspected" in front of "vessels of not more than 1000 gross tons". Section (a) enabled pilot associations to enter into apprenticeship programs. Mr. Twohig wanted to ensure these programs were optional, not mandatory. To this end, he suggested adding to Section 16, AS 08.62.175, the following: "promoting training programs for marine pilots and deputy marine pilots which may include apprenticeship programs that are approved by the board". Number 623 CHAIR DAVIS asked if there was an objection to the proposal. Following Representative MacLean's request for further review, Chair Davis then asked Mr. Twohig to explain the changes line by line. MR. TWOHIG referred to Captain O'Hara's raising the issue of certain fishing vessels being uninspected up to 5,000 tons. The proposed solution was to add one word to CSHB 260, page 3, line 19, to say "master on inspected vessels", thereby upgrading the safety issue. An additional amendment was needed to AS 08.62.175, Section 17(d)(3)(c) - which section, he noted, did not appear in the committee substitute at that time. CHAIR DAVIS directed committee members to change Section 16 to be Section 17 on the amendment. He then asked for confirmation that the intended addition in Section 17 would be "which may include apprenticeship programs". MR. TWOHIG confirmed this was correct, and suggested he would be happy to work with the drafters on technical questions. MR. FUHS commented he felt the apprenticeship issue was important, because persons in several districts want to know how to enter the trade. The goal, he said, was not to lower the requirements but rather to help people become qualified. Number 623 STUART MORK, Alaska Marine Pilots Association (AMPA), asked to incorporate his comments in the section on Western Alaska. CHAIR DAVIS reminded the committee that during the previous meeting, Mr. Kyle had mentioned a problem in Dutch Harbor that had been interpreted as a work stoppage; Mr. Kyle wanted to make sure both sides of the issue were aired. The question involved conflict resolution. Chair Davis said literature on the issue had been distributed to the committee. Number 642 MR. MORK explained the incident in question occurred in early 1993, when the competing pilot group was first forming. Previous to that, AMPA had provided all pilotage service throughout the region and Dutch Harbor. When the Western Alaska Pilots formed, there was a period when AMPA pilots were not getting any work, yet were asked to stand by. TAPE 95-11, SIDE B Number 005 (Short section missing because of tape change) MR. MORK mentioned staying ashore. The state had stepped in and told them to return to work. The courts then directed them to return to work and be available. There were no agreements saying how much work they would get; they were just standing by. He said the situation was still occurring; they had one contract out of seven carriers. Number 039 REPRESENTATIVE MacLEAN asked whether the discussion was about binding arbitration, Sections 17 and 18. MR. MORK replied it played into those sections. He reiterated in his region, there are two competing pilot groups. He asserted any problem could be solved "tomorrow" by signing long-term contracts allocating the work. But at this point, he said, his organization is the safety net for pilotage in Western Alaska, having enough members to do all the work in the region at all times of the year. They did not get 100 percent of the work, but provided 100 percent of the pilots that could do the work. He felt government should not interfere with private contracts if pilotage could work under a competitive scheme, and binding arbitration in statute is unnecessary. Number 063 REPRESENTATIVE MacLEAN questioned whether binding arbitration was also addressed under Section 14 on page 6. CHAIR DAVIS responded it was not. Section 14 spoke to pilots who are not members of an association. The rationale for eliminating the section was that there are no such people. REPRESENTATIVE MacLEAN expressed she did not believe in binding arbitration. Number 087 KATE TESAR, Lobbyist, Alaska Coastwise Pilots Association, commented on the new language on page 2, line 4 regarding the change from judicial district representation to marine pilotage region representation. Under the current board set-up with judicial districts, there was always a representative from Southeast Alaska and one from the north. She related the way the language was currently worded, with only two member seats and four organizations, there was a chance a time could come when there would be no board representation for Southeast Alaska, which had the majority of pilotage in Alaska. She felt this was not the intention of the change in language. Number 134 GAYLE HORETSKI, Assistant Attorney General, Civil Division, Department of Law, clarified that no members of the Administration attended the pilots' meeting, which was fine. But some of the changes in this bill came from the Department of Commerce and Economic Development to fix what were perceived to be flaws or problems in the existing law. From the viewpoint of the Department of Law and the Department of Commerce and Economic Development, she believed, this change to pilotage regions made good sense. From the Administration's point of view, it was never tied to any agreement on increasing the membership. Two policy decisions needed to be made; from the Administration's viewpoint, these decisions were not necessarily tied together. Number 144 MR. TWOHIG responded he had originated the amendment. He knew pilots throughout the state, and where they lived. For example, he said, there were few pilots for Region 3 who actually lived in the region. Therefore, he observed, under the judicial district concept, there would be no representation from their pilot group because pilots lived in a districts removed from the regions where they worked. CHAIR DAVIS said the wording relates to licensing, not residence. UNIDENTIFIED SPEAKER (Female) replied one must be a state resident to be on the board. Number 185 GINNY FAYE, Prince William Sound Regional Citizens' Advisory Council, said they have not yet formed a formal position regarding this matter. She said, however, they would strongly oppose any measure reducing public members on the board, which was supposed to be a safety board. She asserted the public is the only body without an economic interest in this, and their interest in safety should not be watered down. Number 200 CHAIR DAVIS agreed with Ms. Faye's comments. RAYMOND A. GILLESPIE, Lobbyist, observed that two of his own clients might have an interest in examining the ramifications of Representative MacLean's amendment. He represented Petro Marine Services, which hauled refined fuel products from Cook Inlet and Prince William Sound throughout the state. Petro Marine Services had just purchased the White Pass facilities in Southeast Alaska. Another client, Delta Western, had similar activities statewide. The amendment exempted certain activities, and was designed to facilitate North Slope activities. Mr. Gillespie was concerned about activity from British Columbia coming north to compete with the local distributors. He offered it for thought and said he would consult with his clients within a day or two. REPRESENTATIVE JAMES said she agreed; that was her point. Number 225 CHAIR DAVIS indicated agenda item 4 was discussing the potential for implementing language in the board to declare an emergency situation and find a solution to a problem. He wondered if there was mechanism other than binding arbitration. He explained binding arbitration was already in statute and an approved method in general. Although it was not the only solution, coming up with a vehicle in statute for conflict resolution was important, and the reason the binding arbitration language was under consideration. Number 266 JOE KYLE, Representative, Alaska Steamship Association, explained they suggested binding arbitration not because they liked it per se, but because in meetings and conversations with pilots, there seemed to be somewhat of a consensus on it; people were not adamantly opposed to it at the time. Binding arbitration itself was not as important as having conflict resolution. He felt the state's interests should be protected, with some mechanism to keep commerce moving safely, with pilots aboard, when industry and pilots argue over money. CAPTAIN O'HARA agreed with Mr. Kyle's sentiment that conflict resolution must exist. However, he asserted past conflicts had not normally been over money. Because of two lawsuits involving the board, he hesitated to get involved again, but he suggested the legislature might grant the board authority to develop a protocol for conflict resolution, without putting the board members at risk for being personally sued. They were not sure what solution would be best, whether arbitration, fee mediation, or some other means of settling disputes. It would have to go through a public process and the Department of Law. Number 308 CHAIR DAVIS asked whether in one case the court had ruled a board's action invalid. CAPTAIN O'HARA replied that the board had declared an emergency, and the judge then decided no emergency existed. Number 316 MR. MORK remarked that the Alaska Marine Pilots Association (AMPA) had never believed competition to be either the best or the most efficient way to safely provide pilotage services. He said pilots can only compete by providing service at a lower cost. These proposals were anti-competitive, because they required pilots to provide service whenever they were called. He asserted arbitration would essentially fix the price, which can only fluctuate a small percentage under an arbitration situation. The AMPA would live with competition if they had to, but this bill would severely regulate economic conditions for pilots. This bill mandated that pilots provide the service, and at a certain price, without any assurance of obtaining work other than that dispatched by the agency. Missing from the equation was some guarantee that pilots would have jobs. MR. MORK continued, saying binding arbitration was usually used between public bodies, and sometimes in contracts. He stated he wanted to do further research, but to the best of his knowledge, this was the first time the state would have required binding arbitration between two private parties. Indeed, as far as he knew, this was also the first time the state had insisted upon contracts between private parties. If the state insisted on binding arbitration, he wondered who would pay. MR. MORK explained many pilotage jobs are low paying; $316 is AMPA's lowest cost move, and the cost of arbitration would exceed the value of the job. He said AMPA had contracts with one shipper only, representing 21 percent of the business in their region. All other jobs were on a case-by-case basis, and going to arbitration on each would be prohibitive. In the absence of contracts, AMPA did not feel they could be forced into it. Signing contracts would solve potential problems, because a clause including means of conflict resolution could be included in the contracts. MR. MORK concluded by saying they could have it one way or the other. With competition, pilots needed the tools with which to compete. With economic regulation of pilotage, pilots needed more protection. Number 387 CHAIR DAVIS asked whether there was further discussion. He then asked Representative James for her comments on binding arbitration, noting that this situation was "hybrid," differing from school districts and other public employee situations. REPRESENTATIVE JAMES explained her problem with the issue was: How can there be binding arbitration and competition simultaneously? She felt they were mutually exclusive. REPRESENTATIVE MacLEAN said she felt that down the road the legislation would force businesses to binding arbitration, just like state agencies. Number 409 HANS ANTONSEN, Southeastern Alaska Pilots Association, expressed interest in addressing conflict resolution within the context of contracts. His association has had problems with claims of anti- trust violations. While state law addressed the issue of pilot associations being able to negotiate contracts between independent contractors and industry, federal law did not offer pilot groups the same protection. Pilot groups needed to be able to predict pilot need in order to train people. For that reason, he liked page 6, Section 16, item 3, specifying a pilot organization shall enter into agreements. He approved the idea of including wording in contracts regarding conflict resolution. He also agreed with Representative James that competition and forced binding arbitration are incompatible. CHAIR DAVIS asked Mr. Antonsen to explain the procedure included in the concept of entering into agreements. MR. ANTONSEN informed the committee his association signed contracts for a specified number of years. As a contract came within a year of expiring, the organization began negotiating to extend it. Since the previous summer, language had been included to cover situations where negotiations had begun but not been completed because of lack of agreement. In those cases, Southeastern Alaska Pilots Association continued to provide service, sometimes with a slight fee increase, in the interim. He wanted to see a deadline for this interim period so it was not open-ended. CHAIR DAVIS asked whether there were a binding aspect in the arrangement with their one contract. MR. ANTONSEN responded they had binding arbitration language in the contract, but the shipping company refused to sign until it was removed. Some of their current customers were saying they did not want binding arbitration. What they were really looking at was going back to a maximum tariff. The pilot organization did not favor maximum tariffs for the reasons Captain Mork stated; they wanted either the tools to compete or fair regulation. Number 468 MR. KYLE, representing the shippers, reported that the maximum tariff that had "sunsetted" the previous spring was the ceiling on rates which could be charged in any one pilotage region. Responding to a question by Chair Davis, Mr. Kyle affirmed the ceiling was an amount, not a percentage, and was approved by the pilot board. His organization had tried to get it "rolled over" by the legislature but had met opposition from some other pilot organizations. He explained although there is competition, for example, between the two pilot groups in Southeast Alaska, the only reason competition exists is pilots from the two groups cannot get along at present. Competition is not a given. The pilots could join into a single group in a region. Mr. Kyle expressed that his group was not pushing for binding arbitration in particular; mediation, fee arbitration or other means of resolving conflict might be acceptable. Number 492 MR. TWOHIG stated the Department of Commerce and Economic Development is officially neutral on the idea of binding arbitration. They are concerned a conflict resolution mechanism might not go far enough to provide the state action exemption from federal anti-trust problems, which exemption supposedly is given to pilot organizations under 45.50. He explained economic regulation "brings in" this state action exemption from anti-trust. If there were competing pilot organizations, he posed the question of what would happen if a shipper came in and one pilot organization quoted one price, then the shipper went to the other organization and the price were the same. The shipper might claim price collusion. MR. TWOHIG added that he understood arbitration better than he understood anti-trust. The drafter of the bills, George Utermohle, had analyzed the sunset of the maximum tariff and had said this would remove any state action exemption, if it had ever existed, that pilot organizations operated under, opening pilot organizations to federal anti-trust. Mr. Twohig said that regardless of whether they returned to a fixed tariff, maximum tariff or conflict resolution, they also must address whether or not they met the requirements of providing the state action exemption for pilots. Number 519 ROBERT A. EVANS, Lobbyist, Alaska Marine Pilots, spoke about maximum tariff and binding arbitration, which he stated are efforts to remove the tools by which pilots can compete. He asserted the problem could be easily resolved, as it has been in competitive situations in the United States for 200 years, by negotiating a contract. For the state to step in and create leverage for industry, to tell pilots a price will be fixed at some level, was inconsistent with the way industry and private business have dealt with such issues. Mr. Evans strongly suggested private interests should take care of themselves and do their own negotiating. If for some reason the competitive scheme in place since 1991 were no longer working, it could be altered in the future. MR. EVANS referred to previous comments by others about binding arbitration already in statute, in Title 9. He explained Title 9 talked about two instances in which binding arbitration occurred: 1) under collective agreements; and 2) when two parties went before the court requesting it. The current proposal would require amending Title 9. Mr. Evans questioned whether if it were a mandate, state general fund money would be used to pay for it. He suspected not. He suggested compelling the requesting party to provide arbitration, and having that party bear the total cost. Number 555 REPRESENTATIVE WILLIAMS said while he was in favor of conflict resolution, he disagreed with Mr. Evans's views on binding arbitration and the need to return to Title 9. He felt industry would be in an excellent position if there were two piloting groups in an area, with the possibility of playing one group against the other. As for conflict resolution, he proposed having a clause in the contract that allowed the pilot to keep working while the problem was being resolved, with a provision paying the pilot, including interest. He thought mounting interest would act as leverage to bring the parties to the table. Number 576 GEORGE UTERMOHLE, Attorney, Legislative Research and Legal Services, Legislative Affairs Agency, commented there were two pilot groups in his region. The market share was not fixed; they had 21 percent but could lose it all tomorrow. Their group could be forced into binding arbitration before taking on a job. The price would be set. Industry could then approach the other group and negotiate a lower price. It could become a leverage for industry if both groups did not have to go to arbitration. REPRESENTATIVE JAMES referred to conflict resolution, and suggested that because the committee appeared to be stalemated, they should look at the whole issue again to evaluate the process thus far. REPRESENTATIVE BRICE agreed, saying it was always good to take a step back from the problem and perhaps take a different approach or new look at it. CHAIR DAVIS asked the committee members to think about the issues over the weekend, and added they would meet on Monday. ADJOURNMENT There being no further business to conduct, CHAIR DAVIS thanked the committee members and adjourned the House Transportation work session at 3:08 p.m.