Legislature(1995 - 1996)
04/05/1995 01:11 PM House TRA
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE TRANSPORTATION STANDING COMMITTEE
April 5, 1995
1:11 p.m.
MEMBERS PRESENT
Representative Gary Davis, Chairman
Representative Jeannette James
Representative Eileen MacLean
Representative Tom Brice
Representative Jerry Sanders
Representative Bill Williams
MEMBERS ABSENT
Representative Beverly Masek, Vice Chair
COMMITTEE CALENDAR
HB 260: "An Act relating to marine pilots and the Board of
Marine Pilots; extending the termination date of the
Board of Marine Pilots; and providing for an effective
date."
PASSED OUT OF COMMITTEE
WITNESS REGISTER
GEORGE UTERMOHLE, Attorney
Legislative Legal Services
Legislative Affairs Agency
130 Seward Street, Suite 400
Juneau, Alaska 99801-2105
Telephone: (907) 465-3808
POSITION STATEMENT: Provided technical information
JEFF BUSH, Deputy Commissioner
Department of Commerce and Economic Development
P.O. Box 110800
Juneau, Alaska 99811
Telephone: (907) 465-2500
POSITION STATEMENT: Supported CSHB 260(TRA) with concern
MICHAEL O'HARA, Ship Pilot
Southwestern Alaska Pilots Association; and
Member, Board of Marine Pilots
P.O. Box 1443
Palmer, Alaska 99645
Telephone: (907) 745-3518
POSITION STATEMENT: Supported CSHB 260(TRA) with concern
TEX EDWARDS, Executive Committee Member
Prince William Sound Regional Citizens' Advisory Council
750 W. 2nd Avenue, Suite 100
Anchorage, Alaska 99501-2168
Telephone (907) 277-7222
POSITION STATEMENT: Testified on CSHB 260(TRA)
HANS ANTONSEN, Pilot
Southeast Alaska Pilots Association
P.O. Box 6100
Ketchikan, Alaska 99901
Telephone:(907) 225-9696
POSITION STATEMENT: Supported CSHB 260(TRA) with concern
GAYLE HORETSKI, Assistant Attorney General
Civil Division
Department of Law
P.O. Box 110300
Juneau, Alaska 99801
Telephone: (907) 465-3600
POSITION STATEMENT: Provided legal information for CSHB 260(TRA)
DOUG MACPHERSON, President
Alaska Coastal Pilots Association
P.O. Box 6337
Ketchikan, Alaska 99901
Telephone: (907) 225-7245
POSITION STATEMENT: Supported CSHB 260(TRA)
LARRY COTTER, Representative
Alaska Steamship Association
234 Gold Street
Juneau, Alaska 99801
Telephone: (907) 586-3107
POSITION STATEMENT: Supported CSHB 260(TRA) with concern
PETER GARAY, Pilot
Alaska Marine Pilot
P.O. Box 730
Dutch Harbor, Alaska 99692
Telephone: (907) 581-1240
POSITION STATEMENT: Supported CSHB 260(TRA) with concern
DAN TWOHIG, Marine Pilot Coordinator
Board of Marine Pilots
Department of Commerce & Economic Development
P.O. Box 110806
Juneau, Alaska 99811-0806
Telephone: (907) 465-2548
POSITION STATEMENT: Supported CSHB 260(TRA) with concern
PREVIOUS ACTION
BILL: HB 260
SHORT TITLE: MARINE PILOTS
SPONSOR(S): TRANSPORTATION
JRN-DATE JRN-PG ACTION
03/15/95 745 (H) READ THE FIRST TIME - REFERRAL(S)
03/15/95 745 (H) TRANSPORTATION, LABOR & COMMERCE
03/22/95 (H) TRA AT 01:00 PM CAPITOL 17
03/22/95 (H) MINUTE(TRA)
03/24/95 (H) TRA AT 01:00 PM CAPITOL 17
04/05/95 (H) TRA AT 01:00 PM CAPITOL 17
ACTION NARRATIVE
TAPE 95-13, SIDE A
Number 000
The House Transportation Committee was called to order by Chairman
Gary Davis at 1:11 p.m. Members present at the call to order were
Representatives Davis, James, MacLean, Brice, Sanders and Williams.
Members absent were Representative Masek.
HB 260 - MARINE PILOTS
CHAIRMAN GARY DAVIS announced the agenda was to hear testimony on
HB 260 and to review testimony for the amendments. He introduced
Mr. George Utermohle from Legislative Legal Services and drafter of
the legislation.
CHAIRMAN DAVIS referred to a memo from Mr. Utermohle and asked for
confirmation that the amendments contained in the letter will
automatically be corrected within the legislation.
Number 038
GEORGE UTERMOHLE, Legislative Counsel, Legislative Legal Services,
Legislative Affairs Agency, explained the amendments before the
committee were two typos which occurred in the bill and would be
corrected without further action from the committee.
CHAIRMAN DAVIS referred to amendment one, which he said seemed to
be "boiler plate" language. He stated he wanted to go through some
of these "boiler plate" amendments that were discussed previously.
He said even though amendment one on page 3, line 19, looks
innocuous, he would rather wait to address this amendment to ensure
that everyone wishing to testify was present. Chairman Davis
thanked Mr. Utermohle and introduced Mr. Jeff Bush.
JEFF BUSH, Deputy Commissioner, Department of Commerce and Economic
Development; and Commissioner's Designee for the Board of Marine
Pilots, explained the department essentially agrees with amendments
one, two, four, five, and six which have been described as
technical changes. However, he stated the department is "mildly
opposed" to amendment seven, which increases the size of the board
from seven to nine, by adding an additional pilot member and
industry member. He explained a board of nine members is more
unwieldy than a board of seven and costs more to have the meetings.
This would result in increased fees as the pilots themselves have
to pay the cost for maintaining their board. He added the
department has had complaints from the pilots that the fees are too
high. He noted although the additional cost is not large, there
will be a cost associated with it.
Number 129
REPRESENTATIVE TOM BRICE stated he understood the pilots, through
their license fees, pay for this board. He asked what contribution
to the board is made by the industry.
MR. BUSH explained the industry does sit on the board and agents
pay a licensing fee, as well. He said he could request Mr. Dan
Twohig, the Marine Pilot Coordinator, to present specific numbers.
Number 141
REPRESENTATIVE BRICE asked for confirmation that the increase would
be appropriately spread out for each of the...
MR. BUSH interjected it was difficult to apportion accurately
because when it comes to costs, the pilots receive more service
from the board and the activities of the department, than the
agents do. The pilots are paying for their own licensing and
examinations. He explained the costs cannot be apportioned
directly; however, an additional cost which could be factored
directly to this increase of board members, theoretically could be
split 50/50, since in fact, if all we were talking about is
increased board costs for industry and pilot increase, they could
be split.
MR. BUSH referenced the amendments proposed by Representative
Sanders and said if he understands them correctly, one part calls
for the removal of the arbitration clause. He stated it does
remove the requirements for essentially mandatory service by pilot
associations as he understands it...
Number 191
REPRESENTATIVE EILEEN MACLEAN asked for clarification on which one
of Representative Sanders' amendments Mr. Bush was referring to.
MR. BUSH commented that Representative Sanders' amendments were not
numbered.
CHAIRMAN DAVIS said page 6, lines 4 through 9 of the amendment
submitted by Representative Sanders would be amendment eight; page
6, lines 26 through 30, will be amendment nine, also submitted by
Representative Sanders; and page 7, lines 7 through 30, will be
amendment ten, also by Representative Sanders.
REPRESENTATIVE MACLEAN asked for clarification on a letter from Mr.
Utermohle regarding the drafting of some amendments.
CHAIRMAN DAVIS asked if she was referring to the letter dated April
4, 1995.
REPRESENTATIVE MACLEAN responded, yes.
CHAIRMAN DAVIS stated the letter had been addressed, and those
amendments were drafting errors that have been corrected.
REPRESENTATIVE MACLEAN asked if we are working with Version M of
the bill.
CHAIRMAN DAVIS responded in the affirmative.
Number 260
MR. BUSH noted he has not had the opportunity to consider the
implications of no longer mandating pilotage, if in fact, that is
what these amendments do. He said he would rather reserve comment
until later. He reiterated his comments from previous testimony
regarding the state's concern to ensure that there are pilots on
board the vessels from a safety perspective. If, in some way this
could be interpreted as allowing vessels to operate without pilots,
or could in some way create a situation where pilots would refuse
to serve, thereby necessitating an emergency situation where a
pilot would not be on board a vessel, the department would oppose
it from that perspective. He said he was not sure of the
implications of the amendments.
MR. BUSH expressed concern for amendments eight, nine, and the
first half of amendment ten, referencing Section 17 (d). He stated
they all addressed the same issue.
CHAIRMAN DAVIS felt from the discussions the committee has had,
Section 14 (c) is clear; it was paragraph (d) that raised concern.
He explained the (d) paragraph which reads, "a person licensed
under this chapter who is a member of a pilot organization, shall
provide pilotage services to a vessel upon being dispatched by the
pilot organization." He asked Mr. Bush if he interpreted this
section as the guts of mandating pilotage services.
MR. BUSH said yes, and combined with page 7, Section 17, which
states that "a pilot organization shall dispatch a person who is
licensed under this chapter and who is a member under the
organization to provide piloted services upon the request of a
representative of a vessel required to employ a pilot." The
association is required to dispatch under Section 17, and under
Section 14, the person who is dispatched is then required to serve.
Number 248
CHAIRMAN DAVIS expressed concern with Section 14 (d). He indicated
the intent is that a pilot will provide service to a vessel. He
explained those services are as mandated and does not require the
pilot to move the ship if he deems it unsafe.
MR. BUSH stated that Chairman Davis was correct...this was the
department's interpretation. They interpret it that the pilot has
to provide reasonable pilotage services and use his best judgment
as to what the reasonable actions of the ship should be under
particular circumstances.
CHAIRMAN DAVIS said, "in previous discussions, there was concern
that it was a maneuver to move the ship or take direction from the
owners if it is not in the best interest of the ship."
Number 285
REPRESENTATIVE SANDERS felt the reason they would like to see this
omitted is because it is viewed as an anti-competitive clause and
the idea is to have competition. He said if you can't compel or
mandate that an individual has to show up - if it is a competitive
situation - if he doesn't show up, you just go on to the next pilot
or the next organization and get a different one at a different
price.
MR. BUSH stated they do not have true competition. He explained
what they have is essentially a quasi-competitive system, where
currently there are six pilot associations covering four regions.
In two of those regions they only have one pilot association. To
assume that competition exists in this area would be erroneous. He
mentioned in the other two regions there are two pilot associations
in a competitive situation. On the other hand, he felt it was
important to recognize even when there are only two competitors in
a closed market such as this, the level of competition is less than
perfect.
REPRESENTATIVE SANDERS suggested perhaps it should be changed so
where there is no competition, the pilots are compelled to provide
service; however, where there is competition, they should not be.
CHAIRMAN DAVIS stated that often, even in an area where there is
competition, there are still agreements and contracts signed. This
would come into play even in cases such as the one mentioned.
MR. BUSH stated that was correct. He added it is obvious that we
have a system that is not perfect. He said it was difficult for
him to dictate what exactly is the best way to solve the myriad
positions of the various parties.
Number 303
REPRESENTATIVE MACLEAN made reference to amendment three, which
would delete parts of Section 14, and add a new Section (c). She
said she did not understand the difference between this amendment
and Representative Sanders' amendment.
CHAIRMAN DAVIS suggested that the amendments should be discussed in
an orderly manner and the issues should focus mainly on the
concerns of the department. He indicated he did understand the
connection with the section under that amendment, but commented
that it could get complicated because different amendments seem to
affect similar areas.
REPRESENTATIVE MACLEAN stated since Section 14 was being discussed
she was requesting clarification on the amendments.
CHAIRMAN DAVIS indicated that would be fine because Mr. Bush had
concerns with amendment three, as well. Chairman Davis asked Mr.
Bush if he would address Representative MacLean's question.
MR. BUSH said with respect to that particular change in amendment
3 as it relates to Section 14, as he understood it, the existing
Section (c) in the work draft is being removed and what is
currently subsection (d) in the work draft will be made the new
subsection (c). From a substantive standpoint, subsection (c) in
the work draft is being deleted at the request of the department.
He explained that subsection relates to "a person licensed under
this chapter, who is not a member of a pilot organization, and in
fact, it is a requirement of the chapter to be a member of a pilot
organization in order to obtain a license." He indicated there was
no reason for that particular subsection; that is why they
requested subsection (c) be deleted.
CHAIRMAN DAVIS suggested rolling amendment three up into an area of
"nonobjection" by the department.
MR. BUSH stated this was true, but noted just the first part of
amendment three. The rest of amendment three relates to the
dispute resolution provisions. He indicated rather than comment
directly on these provisions, which appear to be technical changes
to the proposed work draft dispute resolution sections covered in
Section 18, he said he would speak on behalf of the Administration,
but would defer responsibility for his testimony to the Department
of Law and have them available to answer any legal questions. He
explained lawyers in the Attorney General's Office, particularly
Mr. Forbes, who is the state's antitrust attorney, are raising
issues on dispute resolution systems proposed in this bill. These
systems more than likely will not survive scrutiny under the
federal antitrust law, under the Sherman Act. He said he would try
to simplify this issue because he did not understand it
particularly well either. He explained the way that the
associations have in the past avoided antitrust concerns at the
federal level, is by designing a so-called "state action
exemption." He gave an example with public utilities, whereby if
the state determines a price through state action, then the Sherman
Anti Trust Act does not apply for federal antitrust purposes.
However, if the state does not set a price, then they're subject to
antitrust considerations. He explained in this particular case,
the associations would then be subject to antitrust considerations,
at the federal level, because there is no federal exemption for
marine pilots. He indicated there is a state antitrust exemption
for marine pilots, but not a federal exemption.
MR. BUSH said we come back to the state then, at least according to
the Department of Law, being required to either set price or a
maximum tariff, similar to what was imposed up until last summer
when it sunsetted, may be sufficient to overcome the Sherman Act
considerations. He explained this was the argument when there was
a maximum tariff and the Department of Law is still prepared to
stand by that argument; that a maximum tariff may be enough to
overcome federal antitrust concerns. But there has to be state
action when setting a price. Then it becomes a question of whether
or not a maximum tariff becomes a state action in setting the price
or not. He said that was something they could certainly argue.
ME. BUSH continued that a set tariff becomes even more of a clear
case issue where antitrust considerations would not come in to
play. He remarked from the state's perspective, quite honestly,
this issue is not particularly a concern because as he testified
earlier, he and the state are not concerned with the pricing issues
with respect to the pilot organizations. He stated his concerns
were with making sure pilots were available, making sure they're
well-trained and that there is a safety factor involved. Those are
the state's interests. He added when it comes to pricing that was
a matter, in his opinion, between the industry and the pilots. He
noted he was raising this concern because the state's antitrust
specialists have said the associations may be subject to antitrust
litigation and penalties, if a price is not set at the state level
in some way.
CHAIRMAN DAVIS said it was his understanding that the remaining
sections of amendment three deleted references to Section 14 (c).
He added this is currently in the dispute resolution section in
conjunction with a few minor word changes that have come up as
being problematic during past debates.
Number 403
REPRESENTATIVE MACLEAN inquired as to why Section 18 was not
deleted, on the issue of dispute resolution?
CHAIRMAN DAVIS explained there had been some other discussion as to
possible changes to it. He indicated this would be discussed with
the Department of Law. Chairman Davis then introduced Mr. Mike
O'Hara.
MIKE O'HARA, Member, Board of Marine Pilots; and ship pilot from
Region 2, stated both as a member of the board and the Southwestern
Alaska Pilots Association (SWAPA) they support all the amendments
to the work draft. He referred to the "inspected" part of
amendment 1, and said the reason that's important is because from
a 1,000 to 1,600 gross ton uninspected vessel is essentially a
large fishing boat Whereas, if it is inspected, it could be a
ferry. He added it is U.S. Coast Guard inspected and includes all
the safety requirements taken care of by the Coast Guard as opposed
to a fishing vessel which does not have the same criteria for
safety. He indicated he was in agreement with the terms "chronic"
and "concurrence."
CHAIRMAN DAVIS asked for clarification with the word "inspected"
inserted, would this include the fishing vessels?
MR. O'HARA said it would include fishing vessels over 1,600 tons.
Those would be classified as ships, such as the larger trawlers.
The smaller ones are considered boats and all are uninspected with
minimal licensing and safety requirements.
CHAIRMAN DAVIS asked if the purpose of adding the word "inspected"
is to broaden the area of ships that would be included.
MR. O'HARA stated Chairman Davis was correct. It would broaden the
area of the ships included, as well as the licenses for the people
on those ships. It would ensure that those ships are Coast Guard
inspected; for example the ferry boats in Southeast Alaska. He
indicated there was a letter to the board regarding regionalization
and cross regionalization and commented that the whole issue of
regionalization is safety. He mentioned that Mr. Tex Edwards will
testify on this subject and will indicate that it is a safety issue
and local knowledge of a particular area. He referred to the
letter recommending cross regionalization, and said in his opinion
it is bravado and "we just don't need cowboys driving tankers."
Number 455
REPRESENTATIVE JEANNETTE JAMES stated she understood the safety
issue of cross regionalization and asked if there was some sort of
testing procedure for a pilot to take to indicate their familiarity
with a specific area.
MR. O'HARA indicated there were a number of examinations that a
pilot must take in order for them to obtain a license. He
explained a federal license is the first step, which is a minimum
entry requirement for licensing. The federal pilotage test is
strictly a memorization of numerous books, coast pilot charts, a
light list, etc., but it does not take into account the things that
a pilot has to know for a particular area, because that is mostly
local knowledge; it is the entry level. He explained he had been
a pilot in Region 2 and Region 3, but he gave up his license in
Region 3 because he had not been out in the area for a number of
years, and no longer felt he was familiar with that area. He had
the license, but he felt he was just not up to speed in that
particular area. He stated he could at anytime go to Region 3 and
say, "I want to be a pilot in a different region" and he would
refamiliarize himself with that region. Any pilot who has a
license for another region may go and join that region. All they
have to do is become familiar with the particular region. He asked
Representative James if she was asking if it was possible for some
one to know exactly where all the reefs are, to which he answered
no, and not stay current. He stated in his opinion it could not be
done.
REPRESENTATIVE JAMES asked if they had maps and charts.
MR. O'HARA said yes, they have charts which are, in most cases
accurate, and in many cases they are not. For example, he referred
to Region 3, the Togiak area, where the charts are very poor. This
is also the case with the Upper Cook Inlet Region where often, the
shoals have a tendency to shift. He remarked on a situation where
a federal ship pilot was surprised that the shoal had shifted, but
it was not a surprise to the pilots who frequented the area with
tankers. He explained that is why there is a mechanism for
"shifting regions," but that local knowledge has to be maintained.
REPRESENTATIVE JAMES asked for confirmation on whether or not there
is a test for pilots, insofar as their knowledge of that particular
region, or was this more of an honor system.
MR. O'HARA stated the minimal license is a federal license, then
the pilot must pass a state licensing examination. The state
license is a more detailed examination and covers the actual "real
life" job of piloting, such as the location of the shoals and where
they have shifted to, and the direction of that shift. He
explained it is information that the coast pilot is unable to keep
current on. Local knowledge and information that the local pilots
have acquired over the years is information not found in books,
such as natural ranges, things to watch out for in the fog, snow
and ice, and how to handle a ship in the ice. He explained these
were things that were region specific. A person can't come from
Ketchikan, which is essentially ice free, and go to Anchorage and
expect to know how to handle a ship in ice. He said it just can
not be done. He added the ice changes and within a week the
conditions can be entirely different. He exemplified the fact that
just a couple of weeks ago there was a cold spell, and within a
weeks time the sea ice was six feet thick. A person coming from
another area, cannot be familiar with that. He stated he lives in
the Anchorage area and knows what it is like.
REPRESENTATIVE JAMES asked for confirmation on the existence of a
test that presents all these aspects that would test the pilot on
their familiarity with a particular area. She asked Mr. O'Hara if
he chose to go back to Region 3, would he have to pass a test for
that area.
Number 515
MR. O'HARA said yes, he would. He would have to go and familiarize
himself with the area and pass an examination.
REPRESENTATIVE MACLEAN asked Mr. O'Hara how he felt about Sections
17 and 18, regarding arbitration dispute resolution.
MR. O'HARA explained as a member of Region 2, the official position
of SWAPA is that in regions having only one group, some sort of
conflict resolution would be appropriate. As a board member, he
felt there was a need for a conflict resolution, but could not say
this was the solution. He indicated he did not know what the
solution would be, but there has to be a way to enforce the
compulsory pilotage. He referred to Section 14 (c), stating "a
person licensed under this chapter who is not a member of a pilot
organization shall provide pilotage services..." and indicated if
a pilot goes to a ship and refuses to provide pilotage service
based on safety, he is still providing pilotage services. The
pilot is obligated to use his best judgment as to whether or not it
would be unsafe to move the ship due to a possible grounding or for
whatever reasons and said those are pilotage services; even if the
pilot doesn't work - he's working by saying "no, we're not going to
do it today, we'll wait for a couple hours." He felt as a board
member, he would like to see some legislation for enforcing the
compulsory pilotage.
REPRESENTATIVE MACLEAN asked how dispute resolutions were currently
handled.
MR. O'HARA indicated the board has not done a good job at handling
dispute resolutions. He noted that approximately two years ago,
they had to appear in court over what they thought was a dispute
resolution, and the judge dismissed the case. What the board
declared as an emergency, the judge said it was not. He added they
had no mechanism.
Number 543
REPRESENTATIVE JAMES stated in her opinion there were only two
solutions. One is to have true competition, which there is not;
the other is to set a tariff and not have competition.
MR. O'HARA explained Alaska is unique in that it is breaking
ground. Other states are looking at the progress that Alaska has
made. Other states have tried it, but have backed down. For
example, Connecticut re-instituted the regulated pilotage. He
mentioned from a safety standpoint, which is where their concerns
lie, it is currently working. He indicated there were high
standards for entry, and even though there is a lot of concern over
the cost, basically the safety aspect is working. He felt that the
1991 act has done the job, and whatever is done to this particular
legislation, whether it is kept quasi-competitive or goes to a
regulated or open market, that is the basis of whatever decision is
made. He reiterated his comments on safety issues and that the
safety aspect, as far as he was concerned, is currently working.
Number 566
REPRESENTATIVE JAMES asked if we still had the regions and did not
have competition and had only tariffs in the regions, would this
not work from a safety perspective as well?
MR. O'HARA said yes, it would work if.....
REPRESENTATIVE JAMES interjected that if safety is the issue, then
it would seem like the other problems would go away and the safety
issue is addressed to a greater extent.
MR. O'HARA indicated this was true and if there were fixed tariffs
in place or there were maximum tariffs as there was before, the
competition would be based on service.
REPRESENTATIVE JAMES asked if this was something Mr. O'Hara was
opposed to.
MR. O'HARA said as a board member or as a Region 2 pilot, he was
not opposed to it. He indicated he was not sure how this fit in
with the political attitude of the state for competition, but
safety-wise there was no conflict.
CHAIRMAN DAVIS asked for testimony from Benee Braden.
BENEE BRADEN indicated she would pass.
Number 586
CHAIRMAN DAVIS stated he would now take testimony via
teleconference from Valdez.
TEX EDWARDS, Executive Committee Member, Prince William Sound
Regional Citizens' Advisory Council (RCAC); and also representing
the city of Homer on that council, stated the RCAC's mission is
citizens promoting environmentally safe operations of the Alyeska
terminal and associated tankers. He said they are certified as an
alternative council under Section 5002 of the Oil Pollution Act of
1990. Their work is guided by their contract with Alyeska Pipeline
Service Company and with the Oil Pollution Act of 1990.
MR. EDWARDS indicated RCAC is an 18-member organization
representing communities and boroughs impacted by the 1989 Exxon
Valdez Oil Spill. Other areas include commercial fishing groups,
Alaska Native interest groups, environmental, aquaculture and
business organizations. He stated that safety, as Mr. O'Hara has
indicated, is RCAC's primary concern and should be the primary
concern regulating marine pilotage. Safe marine pilotage is of
critical importance to the residents of Prince William Sound. RCAC
has experienced the impact of minor adjustments to marine pilotage
with the Exxon Valdez oil spill. He indicated as stated in
legislative intent and findings, marine pilotage is to assure the
protection of lives, property and the marine environment of the
state.
MR. EDWARDS continued to explain that RCAC feels the licensed
marine pilots should have extensive local knowledge to pilot
certain vessels on inland and coastal waters. The safety concern
is the primary issue for the public and should be for the state of
Alaska. RCAC has no vested economic interest in pilotage. RCAC
urges the legislature to remain focused on the impacts dealing with
safety issues regarding the bill under consideration. During
recent years the Department of Commerce and Economic Development,
Division of Occupational Licensing, and the Marine Coordinator have
made significant improvements toward making licensing examination
and training more objective.
MR. EDWARDS agreed with Mr. O'Hara's statement. RCAC applauds and
supports the progress. However, the department has also been
hampered in their efforts to improve marine pilotage by the
constant litigation. RCAC hopes that the housekeeping portions of
this legislation will reduce the conflicts in the system and allow
the state to focus more clearly on the important issues affecting
safety. RCAC looks forward to constructive interaction and
continued improvement. He indicated RCAC is very appreciative of
the excellent safety record of SWAPA, which has avoided many of the
growing pains and accompanying problems occurring in Southeast and
Western Alaska. He stated he believed this is accredited to the
members and the training program of SWAPA and not so much how the
program is regulated by the state.
MR. EDWARDS commented that SWAPA has maintained high professional
standards in recruiting, training and licensing pilots. He added
Alyeska has also evaluated the qualifications of new pilots calling
at the Trans Alaska Pipeline System (TAPS) terminal, and the
combination of these two influences have helped to maintain
rigorous, professional standards for pilot services on TAPS trade
tankers. Introducing competition or cross regional pilotage in the
Prince William Sound area would be a gross error. The competition
that Holland American Line helped to create in Southeastern Alaska
may have contributed to the grounding of the New Amsterdam. He
indicated this situation is not what they want to achieve in Prince
William Sound or anywhere else. The state needs to be proactive in
ensuring the training, examinations, licensing and safe operating
standards are rigorously regulated. The state has usually taken a
"hands-off" approach toward regulating some of these areas and has
not intervened unless there was a problem. He said proponents of
competition advocating regulating safety directly into the public
needs to be assured that this will happen, whether it is within a
competition system or within a regulated monopoly.
MR. EDWARDS continued to explain that by allowing training and
licensing standards to be eroded decreases public confidence. The
Board of Marine Pilots should set high professional training,
licensing and safety standards that cannot be lowered by shippers
or by competing pilot groups. He indicated in some of the hearings
there has been debate regarding competition and whether competition
exists. He explained true economic competition cannot exist in an
industry where the use of pilotage services are mandatory. Pilots
must belong to a pilot association and that association must
provide services. He said arguing over whether competition exists
is of little use. The larger issue is whether competition between
pilot groups and between pilots and shippers has a detrimental
impact on safety. More important, is the question of whether or
not competition would compromise the ability of pilots to make
professional decisions unencumbered by reprisal or the fear of
reprisal, either in the form of loss of market share to competing
pilot groups or reduction in negotiated fees.
MR. EDWARDS said RCAC questions whether there is sufficient
measures in state law to protect Prince William Sound and the
states' resources from the problems that appear to be the result of
competition. He stated RCAC believes that the pilot associations
should not be able to reduce training and licensing standards in
order to increase membership. He indicated it appeared to them
that the affect on safety by competition is negative and it seems
relevant that Alaska is one of the few states that provides for the
setting of pilot fees based on competition. He added it appears to
be a purely economic issue that continues to detract attention from
the more important issues of recruiting, licensing, training and
safety. In addition, because the supporters of competition are
advocating binding arbitration, one would question whether the
quasi-competition system for setting pilotage fees has worked.
MR. EDWARDS said competition has been used as leverage for the
shippers to keep pilotage rates at a minimum. It is understandable
that the shippers would seek reasonable pilot rates, but the
ultimate concerns should be safety assured by maintaining
professional standards and not balancing economic issues.
TAPE 95-13, SIDE B
Number 000
MR. EDWARDS addressed Section 2 pertaining to board membership. If
the board is not setting tariffs, RCAC questions the continued
requirement for industry representation. He indicated maybe the
board should be a safety, training and licensing board with pilot
and public members from the pilot regions. Currently, there are
only two members each for public, pilots and industry representing
Southeast and Southcentral Alaska. He suggested the purpose of the
marine board is to protect the public's interest. He stated RCAC
opposes any reduction in public members by number or by percentage
of the board.
Number 023
MR. EDWARDS referenced Section 8 regarding qualifications for the
deputy pilots license, and said RCAC supports the Department of
Commerce and Economic Development and Mr. O'Hara's amendments to
avoid reduction in training and entry standards. He then referred
to Section 13, regarding the rotation of recognition of a pilot
association where periods about the technical problem if a
membership in an association is required, and questioned what
happens if recognition is revoked and there is no legal mechanism
for pilots to offer services. Mr. Edwards then referred to Section
15 regarding sanctions against pilots for drug or alcohol use. He
indicated in previous hearings there was testimony that this new
section allows a pilot's liability to be unlimited in any situation
for which the board can sanction a pilot and is thus arbitrary and
too harsh. He stated if, in fact, the section provides for
unlimited liability in situations in which the pilot could be
sanctioned for drug or alcohol use, RCAC supports that because it
is a safety issue. He said he would be happy to answer any
questions.
Number 045
REPRESENTATIVE SANDERS strongly agreed with Mr. Edwards.
Representative Sanders indicated a mistake must have been made in
1991 and questioned the fact of ever getting it resolved. He asked
Mr. Edwards how he felt about amendment ten, regarding the deletion
of Section 17 (d) and Section 18 in their entirety.
MR. EDWARDS declined to answer Representative Sanders' question
because he was not familiar with that section and did not
understand the ramifications of the amendment.
CHAIRMAN DAVIS stated Section 18 is the dispute resolution and as
currently written is the binding arbitration language.
MR. EDWARDS said if we have a regulated monopoly, or like a
utility, or if we have the competition, either way it appears there
will be the need to take care of some of the disputes. He
indicated there does need to be a source of arbitration either way,
and agreed that the pilot board may not be the place to accomplish
this. Mr. Edwards suggested a single individual arbitrator,
perhaps a retired admiralty lawyer or someone with a marine
background. He also suggested the possibility of a separate three
person panel that would meet on rare occasions when needed; perhaps
a retired pilot or someone from the shipping community that is
retired, or a public member. He said if we are operating this from
a safety standpoint, then sooner or later these issues will resolve
themselves as far as fees. He hoped that there will be more talk
of a cost of living adjustment. He indicated the need for an
independent arbitrator, whether it be a three person panel or an
individual.
Number 112
HANS ANTONSEN, Member, Southeastern Alaskan Pilots Association
(SEAPA) in Region 1, commended Mr. Edwards on his insight towards
this issue. Mr. Antonsen stated he disagreed with Mr. O'Hara's
comments regarding a fixed or maximum tariff satisfying their needs
as well as the state's for protection from antitrust issues. He
felt SEAPA is the more appropriate association to speak on
antitrust issues because they have previously dealt with a couple
of lawsuits regarding antitrust issues; lawsuits that were involved
with the act as it was pre '91 and when we had even a stronger
degree of oversight, as we do now.
MR. ANTONSEN said he did not believe there was anything within the
state act that can provide the state or pilot associations with
protection from antitrust concerns. He stated they have been
involved to the extent of asking the state to do a amicus brief for
a case that was in federal court. He felt the department can speak
in regards to the lawsuit that was brought against them as well.
He noted the game plan, when it comes to antitrust and pilotage
issues, is to remove it to a federal court where there are triple
damages, antitrust, and no protection or specific language in
federal law that grants pilot organizations protection from
antitrust. Mr. Antonsen said we have that in state, but not in
federal. He indicated there is a conflict, and referred to either
Mr. Bush or Mr. O'Hara who stated Mr. Forbes did testify that a
maximum tariff may give some protection, a fixed tariff would give
better protection; but either way, "may" or "better" did not get
the lawsuit off their case when they applied to those grounds. He
explained they ended up having to deal with it on their own and
were let down by the state. The state indicated yes, this is what
pilots have as far as protection in the state ground (indisc.).
Mr. Antonsen indicated their attorney is present to address these
issues in more detail regarding antitrust.
MR. ANTONSEN agreed with the deletion of Section 17 and 18, and
remarked that we keep trying to solve hypothetical problems and not
real issues. He said there has been no tariffs since last year,
and since then, his association has been involved in negotiations
with various shipping companies and have negotiated contracts, some
dealing with conflict resolution and some that do not. He said he
found it interesting that on some occasions it was industry that
requested the omittance of binding arbitration or conflict
resolution on the grounds it was testified previously. He said we
have the courts, and if there is disagreement, we should be able to
resolve our differences that way. He said if they think there has
been some price fixing, the pilots by this time are scared to death
of the specter of antitrust with triple damages and with no support
from the state - no offense intended to this body.
MR. ANTONSEN said in response to Representative James' question
regarding the answer to their problem that either they have
competition or they go to a fixed tariff, perhaps committee members
were not familiar with the act that the Florida Legislature enacted
and signed into law sometime last year. He explained the state of
Florida was wrestling with the competition problem and finally
determined that competition was not the answer. Mr. Antonsen asked
to read into the record a brief preamble from the Journal of House
of Representatives dated April 4, 1994. This is stated in the
Florida statutes, which provides what he believes is a clearly
articulated position of a state that has dealt with competition and
perhaps had reached the point where Alaska is currently, as far as
where to go from here and how to solve these problems.
MR. ANTONSEN read into the record: "Under piloting regulation,
general provisions 310.0015, piloting is an essential service of
such paramount importance that its continued existence must be
secured by the state and may not be left opened to market forces.
Because safety is the primary objective in the regulation of
piloting by the state and because of the significant economies of
scale in delivering the service, the requirement of a large capital
investment in order to provide required service and the fact that
pilots are supplying services that are considered to be essential
to the economy and the public welfare, it is determined that
economic regulation, rather than competition in the market place
will better serve to protect the public health, safety, and
welfare. The rate setting process and the issuance of licenses
only in numbers deemed necessary or prudent by the board and other
aspects of the economic regulation of piloting established in this
chapter are intended to protect the public from the adverse effects
of unrestricted competition which would result from an unlimited
number of licensed pilots being allowed to market their services on
the basis of lower prices rather than safety concerns. This system
of regulation benefits and protects the public interest by
maximizing safety, avoiding uneconomic duplication of capital
expenses and facilities, and enhancing state regulatory oversight.
The system seeks to provide pilots with reasonable revenues, taking
into consideration the normal uncertainties of vessel traffic and
port usage sufficient to maintain reliable, stable piloting
operations. Pilots of certain restrictions and obligations under
this system including but not limited to the following; pilots may
not refuse to provide piloting services to any person or entity
that may lawfully request such services except for justifiable
concerns related to safety or in the case of a vessel planning a
departure, for nonpayment of piloting. Pilots may not unilaterally
determine the pilotage rates they charge, such pilotage rates shall
instead be determined by the pilotage rate review board in the
public interest as set forth in Section 310.151. Pilots shall
maintain or secure adequate pilot boats, office facilities,
equipment, dispatch systems, communication equipment and other
facilities and equipment in support services necessary for a modern
dependable piloting operation. The pilot or pilots in a port shall
train and compensate all member deputy pilots in that port.
Failure to train or compensate such deputy pilots shall constitute
a ground for disciplinary action under Section 310.101. Nothing in
this subsection shall be deemed to create an agency or employment
relationship between a pilot or deputy pilot in a pilot or pilots
in a port."
MR. ANTONSEN summarized this report by stating the public is
determined that competition will not serve the state's needs. This
is what the state needs out of piloting to ensure that commerce
does not stop, training is not degraded and the job gets done. He
added what he keeps hearing from pilots and industry is that people
keep saying we are 90 percent there. He believed going the
remaining 10 percent will give the state what it needs for security
from antitrust concerns.
Number 259
CHAIRMAN DAVIS asked if there was any questions. He then announced
Ms. Gayle Horetski.
GAYLE HORETSKI, Assistant Attorney General, Civil Division,
Department of Law, said she was available for questions.
CHAIRMAN DAVIS referred to a comment made by Mr. Bush regarding the
question of the state action exemption in that "we could not escape
antitrust problems with the current language until we have the
ability to set a rate." He asked Ms. Horetski if this was correct.
MS. HORETSKI explained this issue has been looked at by the
Department of Law and by the Department of Commerce and Economic
Development. There have been some developments in this area since
the 1991 act was adopted. She explained one of the developments is
the U.S. Supreme Court decision dated June 1992. The name of that
particular case is the Federal Trade Commission v. TICOR Title
Insurance Company. Basically, the Federal Trade Commission (FTC)
filed a complaint against title insurance companies alleging that
they were price fixing such items as title searches. She explained
the states that were involved in this case went before the Supreme
Court, and had a mechanism where title insurance companies had a
rate bureau and would submit rates to the state. The state
legislature had 60 days or some period of time to accept or reject
those rates. She added there was state oversight of these rates.
MS. HORETSKI continued to explain the title insurance company
received this complaint from the FTC, they said "wait, we are
regulated by the state and are under the state action exemption to
federal antitrust liability." In the TICOR Title Insurance Company
case, the Supreme Court said "okay, we understand that there is a
state articulated policy in your state that allows for the setting
of these rates -- (indisc.) articulated rates, it was a statute is
what it was -- and we understand there is a mechanism that would
allow state oversight of these rates." However, the decision of
the Supreme Court was that in those cases, the state was "rubber
stamping" these rates and not checking them for any substantive
analysis as to whether or not it would be reasonable. She added it
benefitted the title insurance companies because they would set the
rates wherever they wanted. She explained the U.S. Supreme Court
said there was not sufficient active state regulation of that
industry to bring these companies under antitrust liability under
the state action exemption. She expressed concerns from the
Departments of Law and Commerce and Economic Development that the
state will not be liable for antitrust action under federal law.
She explained the pilots and the pilot associations have very real
potential liability if there is no mechanism for state oversight of
the provision of the services provided.
MS. HORETSKI stated there is some oversight in terms of licensing;
but the issue is, who sets the rates that the public pays and that
was the issue that was in the FTC v. TICOR case. She commented if
it is not being done by the state through a careful, rigorous,
thoughtful process, then the companies do not receive antitrust
protection. She added this was the concern of the pilot
associations. They are going to end up having this litigation if
there is no rate setting mechanism, whether that is accomplished
with a fixed tariff or a maximum tariff.
MS. HORETSKI continued to explain if there is no mechanism at all
then it would create serious concerns regarding possible liability.
She indicated under federal antitrust law, a private party may file
an action. If that action is successful the private party may
recover double damages; that is in the federal law. She said it
does not have to be the state attorney general or the FTC or
somebody pursuing the pilot associations. She felt this would not
happen, but one group can sue another or one person could sue the
association creating numerous lawsuits. She concluded that these
were their concerns.
Number 317
REPRESENTATIVE SANDERS stated "lets just throw this into Alaska
Public Utilities (APUC), they never have any problems over there."
MS. HORETSKI explained in the past there was some discussion of
having someone other than the board set the tariffs and
theoretically that would be acceptable. It does not have to be the
board. She commented it does make sense to have it be the board in
terms of expertise; however, it would be a perfectly legal option,
so long as the legislation was drafted that way. She noted there
was a maximum tariff that did expire. She said she had sample
language from the old maximum tariff language in existing statutes.
She indicated how this is drafted was as a fixed tariff. She
indicated it appears in descending order of protection, in that
where there is a fixed tariff, clearly there is state oversight of
the rates because the state, the board, the APUC or whoever, has
set these rates. She explained to go a step lower with the maximum
tariff issue, then it becomes unclear due to the possibilities of
private parties arguing with each other. She remarked there is
still some state oversight in the sense that the price cannot rise
above a certain level. Presumably, there would not be any gouging
of shipping companies because these rates would be set fairly. She
explained in further descending order, there is a proposal of an
alternate dispute mechanism, whether that be arbitration, mediation
or whatever. She noted it begins to resemble the issues that were
struck down in the FTC v. TICOR case. She added it is not
oversight in the sense of setting the rates ahead of time; it is if
there is argument over these issues and eventually reaching some
sort of conclusion. She added this was not good state control over
the prices.
Number 352
REPRESENTATIVE BRICE asked if arbitration could lead to a situation
similar to TICOR.
MS. HORETSKI stated their concern is that a dispute mechanism that
does not set a tariff would not provide the pilot associations with
the protection under federal antitrust law. She added under state
law it is acceptable because there is a specific exemption in AS
45, but that is not true under federal law.
Number 370
DOUG MACPHERSON, President, Alaska Coastal Pilots Association,
stated they are in support the bill and the amendments presented.
He said they were particularly supportive of the notion, primarily
of the additional pilots and industry members on this board. He
referred to the question of cost which had been brought up and
submitted that adding a pilot and industry member to this board
will not cost, rather it will pay. He explained the major costs of
this board have resulted from lopsided representation from pilots
and industry members, who are not represented on the board. He
indicated the pilots have had their interests trampled on and
subjected the board to litigation in defense of their rights. He
noted if they were represented, this would stop. He asked the
committee to take this into account.
MR. MACPHERSON referred to Mr. Edwards' comments and stated Mr.
Edwards seemed to know more than the National Transportation Safety
Board (NTSB) and the Coast Guard put together regarding how
accidents are generated and what causes them. Mr. MacPherson said
this distressed him greatly, since the New Amsterdam grounding was
mentioned prominently by Brad Pearce while he was working in the
Department of Management and Budget. Mr. MacPherson said it
bothered him to see these types of conclusions drawn when reports
have not yet been generated. He suggested a lot of money could be
saved by resorting to Mr. Edwards' methods and not have the NTSB or
the Coast Guard involved; he could do all the investigations for
us.
MR. MACPHERSON indicated that fixed tariffs would put an end to
competition and piloting, and would probably return us to the
situations in the past, which was not a good situation; it was an
unsafe situation. He said "if you were well connected and had all
your political ducks in a row, you could have all the accidents you
wanted and somehow no one would ever mention them, or if they did
get mentioned, it was in the most mild mannered sense." He stated
with competition, the pilots are under a microscope and the
competitors are not necessarily anxious to see an accident occur,
but they are anxious to see a person answer for one when one does.
MR. MACPHERSON indicated the Federal Trade Commission (FTC) has
concluded, on a nationwide study that there is no correlation
between competition and safety. He commented this was stated in a
report by Charles Harwood which has been distributed locally. He
indicated there is a fairly scholarly body of work from the NTSB
that suggests that there is no way to tell if a competitive pilot
is a unsafe pilot. He added with regards to the dispute resolution
issue, they are going to continue to take a neutral stance on that
issue because he felt there is a better way to solve the problems
at hand than to have the state intervene. He stated that pilot
organizations are joint ventures by nature, and it is not clear at
this time that any pilot organization has ever had an antitrust
action brought against the organization regarding tariffs.
MR. MACPHERSON explained when 20 people decide to join an
organization, they do so to lower prices to benefit the consumer.
Otherwise they would need to have 20 people with 20 pilot boats, 20
phone numbers, 20 offices and 20 secretaries and the prices would
increase. He said these joint ventures are usually not subjected
to antitrust action, the state exemption notwithstanding. He
indicated with regards to competition, it does exist in other
states. Alaska is not breaking any ground in that area.
Competition is widely held, throughout the Eastern Seaboard as well
as Honolulu and Oregon with state pilots. To say otherwise is not
true. He mentioned they were dealing with the issue of dispute
resolution. He suggested that since the idea of fixed tariffs has
been mentioned repeatedly, the standard could be easily accepted by
the industry. He commented he could not speak for industry, it
might be the maximum tariff but cautioned his suggestion. He
explained a fixed tariff is unacceptable to his organization and
would end competition which would result in the previous situation.
Number 477
REPRESENTATIVE JAMES asked Mr. MacPherson for clarification
regarding his statement on competition improving safety. She asked
if there was another mechanism that could guarantee safety.
MR. MACPHERSON explained safety is improved in a competitive
situation, because it is unacceptable to do unsafe things to a
ship, in other words shortcuts cannot be made. The consequences of
a minor accident are so severe, that for a person to compromise
their position, if someone agrees to do something unsafe because he
might say "I'm a competitor and do not want to lose any business."
This situation he stated is beyond his knowledge.
REPRESENTATIVE JAMES stated it appeared to her that with
competition, there would be more of an inclination to take action
than not, because competition establishes a relationship with the
pilot and industry that is different than what anyone else has.
She stated it was her belief that every marine pilot in the state
would not be of such a mind to do those things. She stated she
trusted them and believed their integrity is great. It appeared to
her that with competition, one would be depleting the ability to
ensure maximum safety because of the relationship with the industry
because of the competition.
MR. MACPHERSON said from a competitive stance and being in a client
relationship with a company, he could not see how that would
degrade a safety position. He explained a client cannot be placed
in an unsafe position; in fact, if you even make them feel
uncomfortable, they will look around for someone else to do the
work that won't make them feel uncomfortable. He said the facts
are not there to bear that out. He stated he has been faced with
this situation on a couple of occasions, and the client was
relieved not to take the chance. He gave an example where he had
requested not to sail the ship and the pilots would say "God, we
were hoping you would say that." to which he would reply "of course
I would say that if it is a bad situation." He analogized the
situation of a doctor telling a patient that he/she would operate
on the patient, but would do it some shortcut way, and the patient
responding that they wanted only the best and finest practices
employed on their body. The client's ships are the client's body,
and a doctor is as mandatory as a pilot.
REPRESENTATIVE JAMES asked for clarification on the fact, if we got
out of the competition area and went with fixed tariffs, would this
eliminate the pilot associations and the need for them. She stated
she saw a purpose for them because who then would do.......
MR. MACPHERSON interjected there would be one pilot association in
each region, ultimately.
REPRESENTATIVE JAMES indicated they would have to do the
dispatching.
MR. MACPHERSON said yes, they would.
Number 480
REPRESENTATIVE WILLIAMS asked Mr. MacPherson to elaborate on the
issue of maximum tariffs.
MR. MACPHERSON said he could not speak for whether the maximum
tariff is the answer or not, but it is preferable to a fixed
tariff. He explained a fixed tariff would "kill off" what we stand
for. He prefers the competitive situation as it is currently where
there is no maximum tariff. He stated the board may waste a lot of
time trying to work with the issues of maximum tariffs. It takes
an enormous amount of time and their attention away from more
important issues such as licensing and professional standards, as
well as enforcement of those standards. He indicated setting a
tariff can be an all-consuming proposition. He remarked that he
wished he could retract that statement because he only meant it as
a suggestion that was "out in left field," from his point of view.
He stated he was hoping to keep the tariff sunsetted and let the
parties work it out among themselves.
Number 510
LARRY COTTER, Representative, Alaska Steamship Association (ASA),
explained they represent virtually every shipping entity that
employs marine pilots in Alaska, with the exception of the Prince
William Sound area. He added ASA supports all of the amendments,
with the exception of Representative Sanders' amendments. He felt
it was inevitable that there will be discussion on the issues of
binding arbitration and competition. He stated the number one
priority is safety. He suggested although everyone that has
testified has indicated the importance of safety, it may be a
higher priority for ASA because in the event of a grounding, their
association members will end up incurring millions and millions of
dollars of expenses as a result.
MR. COTTER continued to explain aside from the public policy
perspective resulting from a safety problem, there is an enormous
economic incentive to ASA's companies to ensure that all the
vessels move as safely as possible. With regards to that issue, he
referred to Mr. O'Hara's comment on his belief that the safety
record in Alaska has been excellent. He felt that the Board of
Marine Pilots has improved training requirements and other aspects
that are designed to improve the safety of the pilots that are
licensed to operate in Alaska. ASA has been supportive of those
improvements and activities. He indicated the safety issues are
indeed paramount and that people are satisfied with safety
procedures. If they are not, then that should be worked at through
the training programs, licensing requirements and the skill levels
of the pilots. He stated along with all these issues, service is
also very important to ASA. He indicated ASA needs to be able to
provide excellent service to the state, the industry and the
public. This is the only way they survive in a competitive
atmosphere. He explained when service is considered, then the
dollar plays a role. He stated in this case the dollar bill is
called "the cost."
MR. COTTER referred to a previous question regarding whether or not
the shipping companies would absorb some of the cost associated
with adding a couple of new pilot board members; the answer is,
yes. He suggested the answer lies with the industry generally
paying for everything that is associated with pilot associations.
He referred to the language under the expired act, and said the
maximum tariff can take into account dispatch expenses,
transportation expenses and other associated expenses directly
related to the provision of pilotage services. He explained these
costs that result from whatever tariff is applied, ASA absorbs
those costs and to some extent, will pass them on to their
customer. He indicated with their competitive atmosphere, they
cannot pass them on to the consumer because they have to compete
and essentially swallow the expenses themselves. He stated it
seems only fair to them that to the extent that the number one
issue--safety--is addressed to everyone's satisfaction, they then
have some latitude to deal with the issue of cost. This should
allow it to be affordable in the sense that if there is more than
one pilot association, they are free to compete with each other as
long as they can meet the safety and public service standards.
CHAIRMAN DAVIS said his question would be in relation to the
Department of Law's comments relating the antitrust regulations and
the existing language under conflict resolution.
MR. COTTER stated they were supportive of conflict resolution.
This was not their first choice, but they were willing to support
it. If conflict resolution is not going to pass muster in the
event that it can't satisfy antitrust concerns that the
associations have, then their fall back position will be to support
the continuation of the maximum tariff language that was in the
bill which expired a year ago. He noted that the assistant
attorney general said for the occurrence of state oversight
activity, substantive analysis needs to be undertaken as regards to
the setting of the tariff. He referred to the old statute and
stated it does require a number of findings regarding costs and how
those costs are directly related to providing various services. He
stated if the Board of Marine Pilots has reviewed the required
analysis relative to those requirements, then substantive analysis
has occurred.
Number 584
REPRESENTATIVE BRICE asked who would be paying for the dispute
resolution. Would it be the person bringing the dispute to the
table asking for binding arbitration or would it be decided during
the resolution or an even split?
MR. COTTER indicated it was his opinion, there would be a 50/50
split. This was typical in arbitration disputes or dispute
resolution where both parties absorb half the cost associated with
the arbitration.
REPRESENTATIVE BRICE expressed concern for pilot associations that
are very small, and if they went to arbitration, this would result
in taking all possible profits that the associated people might
have been able to receive. He then questioned the cost regarding
the fact that if pilot associations are going to have costs hanging
over their heads, he felt it would have a "chilling effect" on
their ability to address disputes in an economical and reasonable
manner.
MR. COTTER remarked the idea is that you do not get to arbitration.
He added "good efforts by good people result in good agreements."
He hoped dispute resolution is a rare case, and noted in the past
he was the president of a labor union in Alaska. It was a small
union but they did not hesitate to pay for their half of
arbitration, if that was necessary. He suspected this was true of
the pilot associations.
Number 618
PETER GARAY, Alaska Marine Pilot in Region 3, which encompasses
everything west of Kodiak, the Aleutians, the peninsula, and
Bristol Bay and northward to the Canadian Arctic. He supported
Section 2, line 4, regarding the regions being represented on the
board versus judicial districts. He noted pilots on the board
should be from the particular area they are working in. He said in
their situation in Region 3, and the judicial district of Region 2,
which canvasses the entire area, so if there is only one pilot from
the judicial district and two as it is currently with the Southwest
pilots, when there is an opening on the board they would not, at
this time be able to take advantage of that opening due to the fact
there is already a judicial seat taken.
MR. GARAY explained there should be pilots from their particular
region who can bring the problems that are affecting their region
to the attention of the state. He felt they would be able to
articulate the arguments best to the people involved, rather than
sitting out in the audience, lobbying the particular board members
regarding what is right or wrong with the various problems in that
particular region. Region 3 is a large region and there are a
number of problems in Region 3 that they ultimately come back to
the state with, and attempt to resolve.
MR. GARAY disagreed with Mr. O'Hara's statement regarding his
perspective on safety issues with the system of pilotage and how it
is working. He noted he had examples to show from a safety
standpoint, it is not working and stated it was "dirty laundry."
He stated he was prepared to give examples on why safety is not
being served out there well. He said several concerns regarding
safety were brought up to the Board of Marine Pilots last year and
from a board member's point of view, things appeared fine out in
this region. Mr. Garay emphasized the fact this was not true.
MR. GARAY asked to address some of the tools of the competitive
system of pilotage. He sees it as service and price. He explained
last year they had their first victory when the maximum tariff
"went away," in that they finally had a tool they could use where
they could go with a price. He noted if they did not feel they
were getting their fair share of the work or were asked to perform
some service out in the Aleutians that would not be profitable,
they would have the option to charge whatever they had to in order
to make it profitable. He emphasized it was a tool and indicated
he did not think that anyone could point to an Alaska marine pilot
and say they have used that tool irresponsibly.
TAPE 95-14, SIDE, A
Number 000
MR. GARAY continued to explain, there is fair amount of allocation
of the work in this competitive environment to ensure his group of
pilots can cover the entire region. He stated they would like to
hang on to that tool, and if not, then the next step would be to go
to a fixed tariff. He agreed that a fixed tariff is a step in the
right direction, as long as they continue to economically regulate
the entire system of pilots. He indicated there were other steps
necessary, because if just the tariff is fixed, particularly in
Region 2, then we are competing for service. He noted this was a
"gray" area because of service/safety, and when they say they are
not going to do a job or they can't do a job for whatever reason,
somewhere incorporated, is the issue of safety. He indicated if
they don't do it, the option will be given to the other group.
They may or may not elect to do it, but the option is there. He
said the next step to be addressed would be the need for service.
He indicated there was testimony given on the issue of competition.
He stated this was interesting because someone earlier spoke of
having a "quasi-competitive" situation and if we truly want to
break new ground in this state of Alaska, then there should be a
competitive system that is completely unregulated. He said this
would be a real experiment and indicated he would hate to see it go
that way, but he would do okay. He added there would definitely be
different prices charged for different customers. He stated he
would just as soon continue to go toward regulation. There often
is an analogy drawn that they are like doctors and lawyers. They
compete and everyone gets band-aids put on their kids' thumbs and
indicated pilots should be like doctors and lawyers and when it
suits people, they make the argument that we are like fireman and
policeman. He asked the committee if they would like to have a
fireman or policeman come to your house who is the low ball bidder.
He suggested the pilots were like fireman or policeman because they
are a necessary service. He asked the committee to consider the
question of the pilots being doctors or lawyers or fireman and
policeman and if we are doctors and lawyers, then we should compete
like doctors and lawyers and get rid of all the regulation and let
us fight it out. If we are to be like fireman and policeman, then
regulate us. Mr. Garay asked for questions.
Number 075
CHAIRMAN DAVIS indicated that was all the people signed up to
testify. He asked Dan Twohig to approach the table for further
questioning as the amendments are addressed. He asked for a motion
to move amendment one.
REPRESENTATIVE JAMES made a motion to move amendment one, and asked
for unanimous consent.
CHAIRMAN DAVIS asked if there was any objection. He asked Mr.
Twohig to comment on this amendment.
Number 095
DAN TWOHIG, Marine Pilot Coordinator, stated that he and Mr. O'Hara
constructed amendment one. After having consulted with the
Department of Law, he suggested inserting "Coast Guard" in front of
the word "inspected."
CHAIRMAN DAVIS indicated this would be regarded as a friendly
amendment. He noted the friendly amendment would read "Coast Guard
inspected." He asked if there was any objection to amendment one.
Hearing none, amendment one passed.
REPRESENTATIVE MACLEAN made a motion to move amendment two and
asked for unanimous consent
CHAIRMAN DAVIS asked if there was objection to amendment two. He
indicated there was discussion and debate as far as the deletion of
the word "chronic" on page 2, lines 30 and 31. Hearing no
objection, amendment two passed.
REPRESENTATIVE MACLEAN made a motion to divide amendment three.
She explained lines 1 through 6 would be amendment three (a).
Lines 7 through 20 would be amendment three (b).
CHAIRMAN DAVIS asked if there was objection to dividing the
amendment. Hearing none, the motion passed.
REPRESENTATIVE MACLEAN made a motion to move amendment three (a).
CHAIRMAN DAVIS stated amendment three (a) deletes subsection (c) of
Section 14, on page 6. Chairman Davis asked if there was
objection. Hearing none, amendment three (a) passed.
Number 142
CHAIRMAN DAVIS indicated amendment three (b) which would also be
deleted along with Section 14, but noted the substance of amendment
three (b) is further discussed. He stated with the concurrence of
the committee, amendment three (b) would be held as opposed to
discarding it completely at this time. He announced amendment
four, on page 7, line 6.
REPRESENTATIVE MACLEAN made a motion to move amendment four.
CHAIRMAN DAVIS asked if there was objection. Representative James
objected.
REPRESENTATIVE JAMES asked for clarification on amendment four.
MR. TWOHIG explained that Section 8 of CSHB 260 adds a new
subsection (6) which creates the opportunity for pilot associations
to develop an apprenticeship program. He stated a concern that
some of the pilot associations had is that the apprenticeship
program would be mandatory upon them. He referred to AS 08.62.175
(d)(3)(C), adds a section under....175 has to do with regional
marine pilot organizations and it creates a clause stating these
training programs "may" include deputy marine pilot apprenticeship
programs; thus making it not mandatory upon each pilot association.
He explained if they don't need this program because of the way
their training program currently operates, then they should not be
mandated to have one because there are other methods of entering
the program.
REPRESENTATIVE JAMES asked if some of the pilot organizations would
be without a training program by doing this.
MR. TWOHIG stated no, it would not.
Number 193
REPRESENTATIVE MACLEAN asked for unanimous consent for amendment
four, because it was a good amendment for the inclusion of training
programs for the marine pilot apprenticeship program.
REPRESENTATIVE JAMES stated she would withdraw her objection.
CHAIRMAN DAVIS asked if there was objection. Hearing none,
amendment four passed. He announced amendment five.
REPRESENTATIVE MACLEAN asked to move amendment five, which again
deals with the apprenticeship program. She indicated the amendment
does not require the pilot organizations to establish an
apprenticeship program, but suggests they may establish a deputy
marine pilot apprenticeship program.
CHAIRMAN DAVIS asked if there was objection to amendment five.
Hearing none, amendment five passed.
REPRESENTATIVE MACLEAN asked to move amendment six and strongly
recommended the amendment be passed. She explained the purpose of
this amendment was that it makes allowances for the vessels to
travel to the destination closest to Point Hope.
CHAIRMAN DAVIS explained it limits the authorization in statute.
He asked if Mr. Twohig would care to comment.
Number 221
MR. TWOHIG stated he "drew those lines" and the actual boundary is
a place called Cape Thompson, which is up to and including Point
Hope. He noted the line was drawn for safety reasons, considering
the local knowledge involved in different parts of that region.
REPRESENTATIVE BRICE asked if the area is north of Red Dog
MR. TWOHIG stated yes, it was north of Red Dog.
CHAIRMAN DAVIS asked if there was objection to amendment six.
Hearing none, amendment six passed.
REPRESENTATIVE MACLEAN asked to divide the question on amendment
seven. Lines 1 through 6, would be amendment seven (a) and lines
7 through 16 would be amendment seven (b). She explained the
reason for this was because she did not understand why there are
three industry representatives. She inquired as to the marine
pilot representatives. She said lines 7 through 16 do not deal
with lines 1 through 6. She stated this was why she divided the
question.
CHAIRMAN DAVIS suggested before we act on a motion to divide the
question, he asked Mr. Utermohle to explain the inclusions in line
7 through 16. It appeared to him that this was strictly relating
to the selection of the additional members.
MR. UTERMOHLE explained the second half of amendment seven,
provides for the initial terms of the appointment of the new
members. In order to maintain a staggered system whereby a new
member will be appointed each year, this provides that the first
pilot member be appointed for a three year term in order that he
may fit into a gap between the two members currently sitting on the
board. He explained one member is currently on the board for
another two years, and the other one is on the board for four
years. This would put another member's term to expire in three
years. Regarding the industry representative, he said this would
provide for an initial term of four years. He referred to the
language on lines 4 through 6 of the amendment and stated this
provides that the board would consist of three industry
representatives. He noted they were replacing the agent and
manager members of the board with industry representatives, and
would provide there be three of them, which would be an increase
over the two.
REPRESENTATIVE MACLEAN said the reason for her concern was the
creation of membership on the board. Under this particular work
draft, there are two pilots licensed under this chapter who may be
on the board, but the industry representatives are being increased
to three. She indicated there would be three industry
representatives and two pilots.
CHAIRMAN DAVIS corrected Representative MacLean's comments and
referred to page 1, line 9, which provides for three pilot
representatives and the other part gives the selection times to
continue the proper rotation of the appointments.
REPRESENTATIVE MACLEAN withdrew her motion to divide the amendment.
She added she was just concerned about the possibility of creating
an uneven board.
CHAIRMAN DAVIS stated currently there are two pilots, two industry
representatives and two public members. This amendment would
establish provisions for three pilots, three industry members and
maintain the two public members. He indicated there has been
discussion regarding this issue from the alliance group that
attempted to come to terms with a lot of this legislation. He said
this amendment was strongly considered, but a consensus was not
reached. He stated it was his understanding there was not a lot of
strong objection to these issues.
REPRESENTATIVE WILLIAMS made a motion to move amendment seven.
CHAIRMAN DAVIS asked if there was objection.
REPRESENTATIVE JAMES objected for discussion. She stated with her
experience with boards, a nine member board is verging on an
unworkable board. She expressed concern for the larger these
boards get, the more chance there is for misrepresentation when
there is not a full board and there is only a quorum, because the
quorum is not identified as to who has to be present. She
expressed there being an imbalance of people as far as the
representation to a certain degree of influence. She noted if
they're not getting the proper recognition on the board, it would
be her personal opinion to make it smaller, rather than bigger.
She added cost is not the issue. She reiterated her concerns that
the bigger the board, the more problems there are. The smaller the
board, the better opportunity and less chance for one side to have
a stronger input, especially if there are specifically designated
seats. Representative James withdrew her objection.
CHAIRMAN DAVIS asked if there was objection on amendment seven.
Hearing none, amendment seven passed.
REPRESENTATIVE JERRY SANDERS made a motion to move amendment eight.
REPRESENTATIVE MACLEAN objected. She said the reason was because
we just adopted amendment three (a) and we incorporated subsection
(d) to (c) and stated she was satisfied with this. It recognizes
that a person licensed under this chapter is a member of a pilot
organization. She indicated the amendment seemed harmless and
would maintain her objection.
CHAIRMAN DAVIS stated he, too, would speak against the deletion of
subsection (d). As indicated, amendment three (a) did delete
Section 14 (c) and (d) is now (c).
REPRESENTATIVE MACLEAN explained the language of the new subsection
(c), under Section 14, states "a person licensed under this
chapter, who is a member of a pilot organization shall provide
pilotage services to a vessel upon being dispatched by the pilot
organization of which is a member." She indicated this was
Representative Sanders' amendment.
CHAIRMAN DAVIS explained that on page 6, currently in Section 14
(d) remains in the bill; it has just been re-lettered (c), since
(c) was deleted.
REPRESENTATIVE SANDERS asked if (c) was deleted.
CHAIRMAN DAVIS stated "if you take (d) and make it a (c) that is
what we currently have."
REPRESENTATIVE MACLEAN said the original (c) was deleted, so (d)
became a (c) and the new (c) reads "a person licensed under this
chapter shall provide pilotage services to a vessel upon being
dispatch by the pilot organization of which is a member."
Number 380
REPRESENTATIVE BRICE explained that Representative Sanders'
amendment is still necessary, because we are still mandating that
a pilot has to go out regardless of the standards or the situation
in which the negotiation between industry and the pilot
organization exists. He thought this caused some concern in that
it is neither fish nor fowl as far as whether or not it is going to
be fixed rate versus some other type of maximum tariff rate.
REPRESENTATIVE MACLEAN referred to amendment ten which deletes
Section 17 (d) and 18 in their entirety, which she supports. She
added there should be some guidelines for the pilots and this is
the lesser of the sections.
CHAIRMAN DAVIS indicated this just falls under the entire act
regarding that the state wants to mandate that pilotage services be
provided. He indicated this is what amendment ten is stating.
REPRESENTATIVE BRICE disagreed with Chairman Davis, and indicated
it was stating that the pilot would be mandated to serve.
CHAIRMAN DAVIS asked Representative Brice what would be the problem
with that. He added we are mandating that pilotage services will
be provided.
REPRESENTATIVE BRICE said no, and explained what we are mandating
is that, regardless of the situation relating to contracts and
negotiations, we would compel a pilot to possibly go without a
contract, without knowing the limits of the tariff, and regardless
of the payment situation.
REPRESENTATIVE SANDERS asked if the pilot's organization would
dispatch him under those conditions?
MR. TWOHIG stated in order to make Sections 17 and 18 work, there
has to be a requirement of a pilot to accept the job when he's
called. He explained from the state's perspective, it is a policy
call as to whether or not the legislature wants to have competition
or not. He noted the requirement of the pilot to respond when
dispatched also is dependent on if the pilot looks out the window
and say "hey, the weather is bad, we're not going." He indicated
there has been testimony presented today where Captain MacPherson
said this would not happen. Mr. Twohig stated unfortunately it has
happened. He explained a pilot organization was requested to move
a vessel, the wind was blowing 40 to 60 knots, the pilot looked out
the window and made the decision not to provide service because it
was not safe. The industry went to the other pilot organization
and asked for their opinion; the guy flipped a coin and said okay
I will do it....
CHAIRMAN DAVIS interjected that was hearsay.
REPRESENTATIVE SANDERS acknowledged there was a pilot that wanted
to testify on this particular amendment.
Number 451
MR. ANTONSEN, pilot, Southeast Alaska Pilots Association explained
they were not being asked...that when the association is requested
that they have to dispatch, I think the (indisc.) of the amendment
has already been addressed and currently reads, when an association
is dispatching to a ship, a pilot will be dispatched. He said they
were not talking about industry saying "we want to use your
services, even though we do not have a contract, you have to go."
He stated this has been amended to clarify that if an association
is providing dispatch to that particular ship, the pilot when
dispatched shall serve.
CHAIRMAN DAVIS asked to clarify that Mr. Antonsen had no objection
to the inclusion of subsection (d) that is now (c).
MR. ANTONSEN stated that was correct.
Number 463
REPRESENTATIVE BRICE asked if this is what the new Section 14
states?
MR. UTERMOHLE explained the amendment would delete the requirement
that a pilot has to provide pilotage services when dispatched by
his pilot organization. He thought the larger issue is whether or
not the pilot organization is required to dispatch a pilot
regardless of whether or not they have an agreement with the
vessel. He explained as this bill is currently drafted, it is
envisioned that such a situation may arise. This is why the
binding arbitration requirements are there, to ensure once the
services are provided in the absence of an agreement, arbitration
will occur and the pilots do get paid, if there is not a previous
agreement.
Number 479
REPRESENTATIVE SANDERS made a motion to withdraw amendment eight.
REPRESENTATIVE JAMES questioned whether the state should be telling
an association what their association members should do.
CHAIRMAN DAVIS asked if there was objection on the withdrawal of
amendment eight. Hearing none, amendment eight was withdrawn.
REPRESENTATIVE SANDERS made a motion to move amendment nine.
CHAIRMAN DAVIS asked if there was objection.
REPRESENTATIVE MACLEAN objected for discussion and asked for
clarification regarding the deletion of subparagraph (3), lines
26-30, on page 6. Then moving it to page 7, with the same language
and insert paragraph (d). She asked if shouldn't it read (7)?
CHAIRMAN DAVIS asked Mr. Utermohle to respond to Representative
MacLean's comment. He indicated currently it reads (c) (3).
Number 491
REPRESENTATIVE MACLEAN suggested that the amendments needed to be
renumbered accordingly. She explained amendment three is now
deleted, amendment four would become amendment three and amendment
five would become amendment four, and amendment six would become
amendment five.
CHAIRMAN DAVIS asked for clarification on these issues from Ms.
Horetski.
Number 509
MS. HORETSKI said she would just explain what the amendment did and
the reason for moving it from paragraph 3 to (d) and the operative
language is "shall" versus "may." She referred to the lead in
language on page 6, line 21, Section 16 (c) states, "a pilot
organization recognized by the Board shall...." Ms. Horetski
emphasized this implied it is mandatory and existing law. She
stated there was concern that paragraph (3) as proposed to be
amended, required the association to enter into agreements. She
indicated if it is moved to subsection (d) then there is going to
be different lead in language where it states "may" instead of
"shall" and indicated this was the operative changes.
CHAIRMAN DAVIS asked for clarification that the intent was to have
a paragraph (d).
Number 561
REPRESENTATIVE MACLEAN withdrew her objection, but requested to
renumber the amendments accordingly.
MR. UTERMOHLE explained this amendment will require some
restructuring of the language of the bill. He commented the
appropriate changes will be made as a new subsection.
CHAIRMAN DAVIS withdrew his objection as well. He stated without
any objection, amendment nine passed.
REPRESENTATIVE SANDERS made a motion to move amendment ten and
stated the following sections need to be renumbered.
CHAIRMAN DAVIS objected for discussion. He expressed concern for
the section regarding binding arbitration. He felt it necessary
that there should be some sort of procedure in statute to indicate
an "emergency situation" because the state is concerned most with
safety issues. He stated part of the concerns have been the
legality of the approach taken. He stated he would not object to
the amendment. He noted through the debate and discussion today,
additional complications have arisen. He stated because of the
need for legislation and because of additional committees where
specific items can be addressed and further expounded upon, it was
not his intent to pass anything on to another committee at this
time. He stated it was his intent to complete the groundwork here
and hopefully come to some sort of consensus. He felt the
committee did what it could. He asked if there was objection to
amendment ten.
REPRESENTATIVE MACLEAN supported amendment ten and the deletion of
Section 17 (d) and 18 in their entirety. She explained that
currently, the state laws indicate that the courts are the entities
that decide the disputes between the marine pilots association and
any other disputes that may arise.
REPRESENTATIVE WILLIAMS stated he also supported amendment ten.
REPRESENTATIVE JAMES stated she supported the amendment as well.
She believed there was language that could be incorporated into the
bill that would meet the desired effect without having this
particular language.
CHAIRMAN DAVIS asked if there was objection. Hearing none,
amendment ten passed.
MR. TWOHIG stated from the turmoil he created a moment ago, he
misunderstood amendment eight; he thought it was tied into
amendment ten and misspoke.
CHAIRMAN DAVIS announced without objection, amendment three (b)
will be withdrawn.
REPRESENTATIVE JAMES made a motion to move CSHB 260(TRA) as amended
out of the House Transportation Committee with individual
recommendations and attached fiscal notes.
CHAIRMAN DAVIS asked for objection. Hearing none, CSHB 260(TRA) as
amended, is passed out of the House Transportation Committee.
ADJOURNMENT
There being no further business to come before the House
Transportation Committee, Representative Davis adjourned the
meeting at 3:26 p.m.
| Document Name | Date/Time | Subjects |
|---|