Legislature(1995 - 1996)
03/24/1995 01:35 PM House TRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= 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.
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