Legislature(1995 - 1996)
04/27/1995 03:05 PM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 130
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.
Co-chair Halford directed that SB 130 again be brought on
for discussion. Citing tramper shipping into Chignik and
Larson Bay as examples, Senator Zharoff attested to problems
with arrangements in coastal areas whereby a different pilot
is needed for adjoining ports. DALE COLLINS, Southeast
Alaska Pilots Association, acknowledged that in many cases
two pilots are needed when the regional line is drawn
between ports. He stressed that in creating the regions,
the intent was not to place undue economic pressure on any
one region or port. For pilots, the intent was that they
have a large enough region to make a living. Mr. Collins
noted that the standards are set by the federal government
rather than the state. He said that using a pilot to
overlap between the two regions can be addressed by the
Board of Marine Pilots. If industry or the pilots can
demonstrate an economic hardship, the board can work with
the communities. The purpose of established regions is to
keep pilots from bouncing from one area of the state to
another. There was considerable discussion about buffer
zones or inter-regional zones. Mr. Collins defended the
Board of Marine Pilots action in creation of regional zones
that take both safety and economic considerations into
account.
Kate Tesar, Alaska Coastwise Pilots from Ketchikan, next
spoke before committee, voicing wholehearted support for the
legislation. She associated her comments with earlier
remarks made by Senator Pearce and expressed hope that
proposed changes to the rewrite in 1991 would eliminate many
of the problems and lessen the chance of litigation.
Referencing provisions for dispute resolution or mediation,
Ms. Tesar advised that ACP has incorporated similar
provisions into many of its contracts.
Speaking to a tariff, Ms. Tesar said that the group she
represents is pleased with the way things are going since
the maximum tariff was sunset last year. She advised that
if a tariff is going to be discussed as part of the proposed
bill, the ACP would support a maximum tariff over a fixed
tariff. The ACP supports competition. The group is neutral
on cross regionalization.
Paul Fuhs, representing the Southwest Pilot Association,
testified in support of the legislation in its current form.
He attested to need to ensure safety in large geographical
areas with dynamically changing water and shoal conditions.
He noted that the U.S. Coast Guard can go anywhere in the
state, but it often checks with local pilots prior to
proceeding. Necessary information and local knowledged is
provided to the Coast Guard without cost. He acknowledged
industry testimony expressing a preference for binding
arbitration first, or a maximum tariff, and cross
regionalization only as a last resort. The reason for that
is practical problems associated with cross regionalization
in terms of having a central dispatch station. Industry
does not want to call 30 different pilots in a region to get
a dispatch. Mr. Fuhs asked how a tariff could be set if
service is broken up by cross regionalization.
He next addressed support for the apprenticeship program and
spoke to a willingness to take on more pilots and welcome
people into piloting. The apprenticeship will enable
trainees to commit to the program and a particular region.
Pilot groups are also making a commitment to them. He noted
that every year, Alaska's congressional delegation gets two
appointments to the Maritime Academy. That represents a
good beginning for those who seek to become pilots.
Speaking to actual training, Mr. Fuhs noted that there is no
school. Training occurs aboard various ships, including
foreign vessels. It involves not only local knowledge but
ship handling as well.
Eric Eliasson, President of the Southwest Pilots, and
Chairman of the Alaska State Pilots Alliance, next
testified. He voiced support for the bill as presently
written, explaining that the Alliance was responsible for
drafting the legislation. He acknowledged discussion of
cross regionalization and a possible amendment relating
thereto and expressed strong opposition.
Mr. Eliasson advised that in region 2, over 50% of the
income comes from Valdez. The tariff in Valdez is
approximately 80% higher than other ports such as Kodiak or
Seward. Service to Valdez, in effect, subsidizes outport
work. He related past experience and stressed need for
pilots to serve only one area. Speaking to regional
borders, Mr. Eliasson noted that until 1991, regions 2 and 3
were one region. Region 2 pilots realized they were unable
to service the entire area. With the help of the Marine
Pilot Board, it was split into two regions. Mr. Eliasson
acknowledged talk of four, non-resident individuals who
broke away from the original region 2 who are supportive of
cross regionalization. Existing pilot groups consist of
all except four pilots in the state. None of the groups are
proposing cross regionalization. Only those four pilots
support the idea.
Mr. Eliasson next expressed concern regarding training,
citing both safety and economics. He voiced reluctance to
take on new trainees when the future appears so uncertain.
The Southwest Pilots' Association is totally opposed to
cross regionalization. The group does not oppose a maximum
tariff or dispute resolution.
Senator Zharoff proposed the following language change:
the Board shall provide for overlapping regions
when it is in the best interest of local
communities.
as a means of dealing with adjoining ports which fall in
different regions. Mr. Eliasson explained that trampers
often take on 50 tons of frozen fish at Larson Bay and then
proceed to Port Bailey and on to Seward. He acknowledged
questions concerning an appropriate cut-off line as pilots
take vessels from community to community. Overlapping
regions, however, would not solve the problem. The border
would merely shift. Mr. Fuhs interjected that communities
are not paying more because of need for more than one pilot.
Due to cost sharing between the pilot groups, they are not
charging more.
In response to a question from Co-chairman Halford, Mr.
Eliasson advised of three pilots who sought to corner the
lucrative piloting service to Valdez and purchased homes in
that community. The attempt represents an example of cherry
picking. The cost of bringing a tanker into Valdez is
$1300. The cost into Kodiak is $500-$600. Approximately
600 ships go into Valdez each year, whereas the number into
Kodiak is relatively few. If outports do not require
servicing (which they do now, because they are within a
region served by a specific association) pilots will pick a
port that is lucrative economically. To induce pilots to go
to Kodiak, the tariff would have to be raised. The three
above-mentioned pilots who purchased homes in Valdez sought
to position themselves for the oil shippers. They wanted to
be full-time employees available to the oil companies on
demand. The problem then is that pilots would not go to the
outports. Smaller communities will be hurt if economics
alone drives service. They are not big centers of commerce.
They are often production points, with annual fish pickups.
Co-chair Halford inquired regarding currency requirement for
taking tankers into Valdez? Mr. Eliasson advised of 60 days
per year. The association has four people, on a rotating
basis. Co-chairman Halford noted that the tariff out of
Valdez is part of the cost of Alaskan oil.
Ginny Faye, representing the Prince William Sound Regional
Citizen's Advisory Council, located in Valdez, next came
before committee. She attested to considerable concern
regarding traffic in and out of Valdez. The membership is
acutely aware of what happens when there is a change in
marine pilotage. The Council questions whether the
competitive model is the safest way to operate. It focuses
attention on economic as opposed to safety issues. The
Council's only concern is safety. Ms. Faye voiced
opposition to cross regionalization. She expressed concern
that if it were allowed, when the cruise ship season ends in
Southeast and fishing ends in Southwest, pilots from those
regions would begin to compete with pilots in Valdez. She
questioned whether the state should encourage competition
among pilots.
Senator Rieger asked if cross regionalization would give the
right to the lower bidder to pilot in the most desirable
area? Ms. Faye responded that according to her
understanding of the amendment, a licensed pilot could take
the necessary trips to have a license in another region.
Under "port-specific" licensing, considering the dynamics of
the Alaska landscape, it seems unlikely a pilot could ever
have enough experience to cover two whole regions. The
tendency would be to go after the lucrative ports in a
region. She reiterated concern that such pilots would
underbid local Valdez pilots. There was considerable
further discussion regarding this point. Ms. Faye stressed
that a pilot who spends much time operating in a specific
region would be a safer pilot. Co-chairman Halford
suggested that licensing for a specific port would provide
the maximum safety. Ms. Faye concurred that that would be
the safest if Alaska had many pilots and much more shipping
activity. That is not the case. She expressed support for
division of the initial region 2 into two separate regions,
and again stressed that cross regionalization would move
further away from safety by allowing a pilot to operate in
more than one region.
Senator Pearce advised that 18 pilots are presently licensed
to bring tankers into and out of the port of Valdez. Cross
regionalization was examined in 1991, and statutes created a
system that would provide for overlapping. The board has
chosen not to incorporate that system for good safety
reasons. Since 1991, the industry, particularly the cruise
ship industry, has wanted cross regionalization. The intent
was to use the same pilot coming across the gulf of Alaska
and in and out of Prince William Sound and Cook Inlet.
There is now more cruise ship trade in Cook Inlet than in
1991, and more ships are coming in the future. Pilots in
Prince William Sound and Cook Inlet all know each other.
They work together every day. They provide pilotage 365
days a year no matter what the weather. Cruise ships and
their captains only come into those waters for a short
period of time in the summer. Pilots who work together know
and understand how each one works, and that knowledge
prevents an incident from happening. The board has
continued to avoid cross regionalization. There have been
numerous litigations. Every action the board has taken over
the past four years has ended up in court. The situation
became so heated that a board member from Sitka was
threatened and ended up resigning his seat because he did
not vote the way industry wanted him to vote. If the
legislature allows cross regionalization, pressure from
industry will become incredibly intense. That is the kind
of heavy handedness the board has been dealing with.
Senator Pearce suggested that present language providing for
"emergency allowances" would take care of the problem.
Bruce Weyhrauch, representing the Southeast Pilot
Association, next came before committee to speak in
opposition to a proposed amendment relating to the handling
of disputes and to present an alternative therefor. He
explained that under the amendment, when parties go to
mediation, the state requires the cost of the mediator to be
borne equally by the parties. If the parties cannot reach
an agreement over the price of the pilot service, the issue
goes to Superior Court. The Superior Court then appoints an
arbitrator. If the arbitrator reaches a decision, it can be
appealed to the Superior Court, and the ruling by that court
can be appealed to the Supreme Court. Eventually, someone
will fix the amount of that pilot's service. The process is
lengthy and cumbersome. In essence, the amendment does not
fix the problem. The state does not want to fix the tariff
because it wants an arbitrator and mediator to decide. Mr.
Weyhrauch suggested that the tariff must be fixed or a
tariff and competitive pilotage should be imposed. Co-chair
Halford inquired concerning a maximum tariff. Mr. Weyhrauch
said it would not help. He stressed it would promote price
collusion, between competitors, to charge the maximum. The
competitive system invokes anti-trust laws, and competitors
are subject to those laws. A maximum tariff only works
where there is no competition, but the legislature wants to
promote competition.
Joe Kyle, representing the Alaska Steamship Association,
stated that the membership pays for pilotage in Southeast
and the Gulf of Alaska. The Association is supportive of
the amendment because, as customers, they foresee a problem
if there is not something in the act that provides for
dispute resolution when shippers and pilots cannot agree on
price. Mr. Kyle reiterated his prior comment that the
number of pilots has decreased at the same time that traffic
has increased. Industry is faced with pilotage that barely
meets demand. Considerable discussion of this point
followed. Mr. Kyle said the Association is looking for a
rational, methodical way to settle disputes so that commerce
moves with state licensed pilots aboard.
Mr. Kyle suggested that the proposed bill had consumed much
legislative time on behalf of 68 pilots. He then attested
to difficulties associated with attempts to include dispute
resolution such as binding arbitration, money placed in
trust, trial mediation, etc., in the bill. Senator Pearce
advised that the pilots did not work against binding
arbitration. She said she was the one who would not include
binding arbitration in the bill. She attested to working
with other legislators to keep it out. She suggested that
Mr. Kyle was mischaracterizing what happened in
negotiations.
Further lengthy discussion followed regarding proposed
amendment no 1.
End : Tape SFC-95, #48, Side 2
Begin: Tape SFC-95, #50, Side 1
Captain Michael O'Hara, Member of the Board of Marine Pilots
and a Pilot in region 2, voiced support for the bill as
written. He advised that he does not support cross
regionalization, but would like to see some way of resolving
disputes.
Senator Zharoff asked where the maritime academies are
located. Captain O'Hara advised of five in the United
States. Two in New York, and one in Maine, Texas, and
California. The Marine Pilots Association has discussed
sponsoring a student in an academy. The institutions are
four-year colleges offering a B.S. degree in nautical
science or engineering and a license to work as a junior
mate on a ship. That is one way to accomplish the
apprenticeship program. Senator Zharoff suggested that it
is ultimately too difficult for Alaskans to enter the
program. Captain O'Hara advised of six trainees in his
organization. He also noted that the cost of a pilot
license increased from $800 to $3500. Many non-active
pilots resigned because they did not want to pay the higher
licensing fee. The fee was raised because of all the
litigation. The loss amounted to 15-20 pilots. Captain
O'Hara said that the basic criteria for licensing is need to
obtain a federal license. The only way to achieve federal
licensing is by working on boats or ships. The Coast Guard
license is the initial criteria for obtaining a state
license. The apprenticeship program incorporated within
legislation now before committee is five years. The board,
along with the marine pilot coordinator, would design a
system whereby a candidate could become a pilot.
Co-chairman Halford inquired concerning litigation giving
rise to the increased licensing fee. Captain O'Hara advised
that the board is winning cases. Payments for legal
services have been made to the Dept. of Law.
Discussion followed between Captain O'Hara and Co-chairman
Halford regarding currency requirements for a specific port.
Captain O'Hara advised of 60 days per region. He added that
the proposed bill would increase it to 120 days within the
biennial license renewal period. There was further
discussion of present law and the dispatching of pilots to
ports to which they rarely go. Co-chairman Halford
suggested use of currency requirements as a hedge against
arguments in opposition to cross regionalization. Captain
O'Hara advised that a pilot organization would not dispatch
a pilot to a port he has not been to for some length of
time.
Senator Rieger asked Captain O'Hara to comment on pressures
placed upon the board and where they are coming from.
Captain O'Hara advised of a board members in Sitka who
operates a charter fishing company. He was economically
threatened by the cruise ship industry and resigned. He had
received a letter from a steamship company that told him he
would not be on their approved list. The threat was a
result of his not voting the way they wanted him to vote
with regard to tariffs.
In response to a question from Senator Rieger, Captain
O'Hara said that present law allows for cross
regionalization when it is "in the best interest of the
state". The proposed bill gives an adequate definition of
the "best interest of the state".
Speaking to the apprenticeship program, Captain O'Hara said
that if he were to set it up, it would be a regional
concept. The regions are significantly different.
Anchorage has ice and extreme tides; Kodiak has high tides;
Larsen Bay is very difficult with both a high current and
high tides. The program should design an apprenticeship
which meets the needs of the individual region. As an
example, the Kuskokwim has only small tugs and Japanese
trampers. An apprentice would have to ride five years. He
noted that the Kuskokwim is only navigable three months a
year when it is ice free. That would necessitate a 15-month
training program. During the time that the pilot is not on
the Kuskokwim, he or she would be in another region or
another part of the world, training, watching, and doing a
job until the Kuskokwim is again open. In region 2, the
five-year program would include riding the cruise ships and
tankers. Maritime schools are available, and the program
could be written to include the school. There was some
discussion regarding qualifying for the various areas. In
the future, regions will be sliced smaller. Regions are now
so large that it is impossible to gain proficiency in more
than one region.
Co-chairman Halford asked if lack of multiple region
licensing is a restriction on Alaskans. He asked if it is
possible for a non-Alaskan to be licensed in another state
and in a region in Alaska as well.
Dan Twohig, Coordinator, Board of Marine Pilots, Dept. of
Commerce and Economic Development, noted that state law
requires federal licensing before seeking state endorsement
for a region. Federal pilotage endorsements are relatively
common in the maritime industry. That licensing allows for
licensing anywhere in the country. Senator Donley
questioned whether non-Alaskans hold licensing outside the
state at the same time they are licensed to pilot a region
in Alaska. Mr. Twohig stressed that the position of the
department is that the purpose of the Marine Pilot Act of
1991 is to prevent the loss of lives and property in the
protection of the marine environment of Alaska. State
licensing standards are to ensure the very best possible
pilots for Alaska. What non-resident pilots do in their off
time, the Dept of Commerce and the State would consider
their affair. Senator Pearce noted that a pilot in training
is not paid. Most of them work on board other ships. She
stated that statutes could require that, "people who have an
Alaskan pilotage license cannot be licensed elsewhere."
Co-chair Halford stressed that currency ought to be the
concentration. Senator Pearce stated that the board sets
the regulations. She stated that currency in Alaska is
different than in other states. Mr. Twohig noted that
current regulations require 60 days per calendar year. Some
pilots are having a difficult time making the 60 days due to
vessel movements and the rotation process. If a pilot does
not achieve 60 days, he is required to conduct various
familiarization trips into and out of the ports in his
region before his license can be renewed. The proposed
change is for 120 days over 2 years. The intent is to
provide a 2-year span to gather the required days.
Senator Zharoff expressed concern regarding whether the
apprenticeship program will produce results. Senator Pearce
suggested that it is incumbent upon Alaskans to decide to do
what it takes to become a marine pilot.
In response to an earlier question, Captain O'Hara said it
would not be safe for one with pilotage knowledge in one
region to select a port in another region for service as
well. He reiterated that it would not be safe to hold both
a license in region 3 and a license for Valdez. A pilot
cannot come from Ketchikan or Dutch Harbor and work in the
ice in Anchorage and only do so once or twice a year. It is
not safe. The associations will not dispatch a pilot to
Valdez, for example, if he only works a couple months a
year. Pilots are on a regular rotation. They are there for
two weeks out of five or six, then they go to Cook Inlet and
work in the ice. Co-chair Halford suggested a scenario
whereby one would pilot cruise ships all summer and tankers
in the winter. Captain O'Hara said that licensing by vessel
type does not exist, with the exception of a Very Large
Crew Carrier (VLCC). VLCCs are different than all other
ships. The board has determined that various ships can be
learned, and what is important is the local knowledge and
ship handling ability. Licensing is by region. That is
true everywhere else in the country.
At this point in the meeting, Co-chairman Halford directed
that it be briefly recessed.
RECESS: 5:10 P.M.
RECONVENE: 5:35 P.M.
Senator Phillips offered an amendment on dispute resolution.
Senator Donley suggested that the current arrangement
represents a monopoly and further suggested that there must
be a way to bring finality. Co-chair Halford stated that
the bill needs either a maximum tariff or an arbitration
provision. He voiced his inclination to vote against the
amendment at this time. Upon a show of hands, amendment no.
1 was ADOPTED on a vote of 4 to 3.
End : Tape, SFC-95, #50, Side 1
Begin: Tape, SFC-95, #50, Side 2
Senator Rieger moved for adoption amendment no. 2, relating
to board issue of a temporary license for a region other
than the main region within which a pilot is licensed. He
then offered an amendment to the amendment which would
insert the word, "certain" in front of the word "vessels" on
line 20 of page 1 of the amendment. The Senator expressed
concern that, absent the amendment, the proposed bill would
create stringent law that excludes a very qualified person
from doing the job. Co-chairman Halford expressed a
preference for achieving a similar result through currency
requirements. He then called for a show of hands on
adoption of amendment no. 2. The amendment FAILED on a tie
vote of 3 to 3.
Senator Donley stated that the binding arbitration amendment
and a maximum tariff are not inconsistent. They can both
exist within the legislation. Co-chairman Halford voiced
need to review provisions that were recently sunset and
develop a "safety valve." He directed that the bill be held
for further study.
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