SENATE BILL NO. 29 "An Act extending the termination date of the Board of Marine Pilots; and providing for an effective date." 1:30:52 PM DAVID SCOTT, STAFF, SENATOR BERT STEDMAN, had finished his presentation during an earlier meeting [May 7, 2019 9:00 A.M.]. KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF LEGISLATIVE AUDIT, reviewed the audit findings for the Board of Marine Pilots. The audit recommended the maximum eight-year extension. She referenced the audit report [A Sunset Review of the Department of Commerce, Community, and Economic Development, Board of Marine Pilots (board) April 20, 2018 Audit Control Number 08-20112-18] dated April 20, 2018 (copy on file). She read sections from the audit report: The audit concludes the board is serving the public's interest by effectively licensing marine pilots and deputy marine pilots and approving trainees and apprentices. Board meetings were conducted in compliance with laws, investigations were processed timely, and the board actively changed regulations to improve the industry and better protect the public. Ms. Curtis turned to licensing activity displayed on a table titled Exhibit 2 on page 12 of the audit. She reported that the total number of licenses as of January 31, 2018 was 103. She moved to a table titled "Exhibit 4 on page 14 of the audit showing the Schedule of Revenues and Expenditures, FY 14 through March 31, 2018. She indicated that the board had a surplus balance of over $229 thousand. She added that the board fees were listed on page 13. Ms. Curtis continued with the recommendations on page 15 of the report. She read the following: Recommendation 1: The Board of Marine Pilots (board) should ensure all applicable documents are aboard foreign pleasure crafts in accordance with regulatory requirements. Specifically, 12 AAC 56.115 requires an operator of a pleasure craft applying for a pilotage exemption to ensure the pleasure craft has aboard documents such as nautical charts, current tidal tables, and other guides. Auditors found five of the seven applications indicated that required documents were not on the vessel. According to the MPC, the operators can obtain these documents at port or electronically while at sea. It has been standard procedure for the board to approve the exemptions with the understanding that the applicant will follow through and obtain the required documents later. The board did not consider the need for or importance of verifying that the documents were actually obtained. Additionally, the exemption does not include a stipulation that the applicant obtain the required documents prior to entering the applicable area. Issuing foreign pleasure craft exemptions without verifying required documents are aboard the vessel increases the risk to public safety. Ms. Curtis moved to Recommendation 2 on page 16 and read the following: Th e board should ensure the Southeast Alaska Pilots' Association improves procedures for tracking drug test notifications. In a sample of nine drug test donors from the Southeast Alaska Pilots' Association, the audit found three donors5 notified by mail were not tracked by date and recipient. Therefore, the timeliness of the drug tests could not be confirmed. The Southeast Alaska Pilots' Association relied on a third party contractor to notify selected donors that were out-of-state or out-of-town. The association was not aware the mail notifications were not adequately tracked. Drug test requirements under 46 CFR 16.230(h) specify that each marine employer shall ensure random drug tests are unannounced. Inadequate procedures for tracking drug test notifications limit the ability to verify timeliness of drug tests and increase the risk to public safety. We recommend the board ensure the Southeast Alaska Pilots' Association improves procedures for tracking drug test notifications. Ms. Curtis noted that the responses to the audit began on page 25, from both the Department of Commerce, Community and Economic Development (DCCED) and board and relayed that both agreed with the recommendations. She added that the boards chair at the time was also the commissioner of DCCED [Mike Navarre]. 1:34:50 PM Co-Chair Wilson OPENED and CLOSED public testimony. Co-Chair Wilson asked to hear from the department on the fiscal note. CHARLES WARD, MARINE PILOT COORDINATOR, DIVISION OF CORPORATIONS, BUSINESS AND PROFESSIONAL LICENSING, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, was available for questions. Co-Chair Wilson discussed a fiscal note attachment titled Board of Marine Pilots Schedule of Revenues and Expenditures (copy on file)that was included in the members packets that contained the boards expenses and fees. 1:36:14 PM AT EASE 1:37:20 PM RECONVENED Co-Chair Wilson noted that the fiscal note reported the use of Designated General Funds (DGF) only, which meant the boards expenses were paid by licensing fee receipts. Representative Knopp referenced hearing concern expressed by the marine pilots over the size of one the new largest cruise ships maneuvering in high winds. He wondered how the issue was addressed. Mr. Ward answered that the topic of VLS (Very Large Cruise Ships) had been discussed at board meetings for the past year. He relayed that the board was aware of the navigational concerns raised. The Southeast Alaska Pilots Association would be piloting the ships and had been working with the cruise agencies on how to bring ships into ports. The entities were developing best practices with the ship captains and Coast Guard on how to navigate the ships safely into Southeast Alaska and Alaskan waters. Representative Knopp inquired whether the ships would be allowed to dock if any uncertainties remained due to high winds. Mr. Ward answered in the affirmative. He indicated that the pilot and the ships captain would confer on a navigation plan. If conditions prohibited a safe approach, a safe port would be found for docking. 1:40:17 PM Vice-Chair Ortiz interjected that there was a recognition amongst the pilot association that larger tugs were necessary to provide service to the VLS coming into ports. The larger tugs meant a larger investment in the support infrastructure. The discussions were ongoing with the pilots, cruise lines, and local communities. He offered that the local communities had a vested interest in assuring that the expensive port facilities were protected in high wind situations. The issues regarding VLS were a significant concern. Representative Merrick looked at the fiscal note analysis and noted that total revenue collected from the fees equated to the regulatory costs. She cited a balance from the scheduled revenues and expenditures of close to $300 thousand. She wondered whether there was something else the money was used for. She noted that the pilot's fees were $2.5 thousand each year. She thought that the fees were too high. Mr. Ward answered that the board had a significant fee reduction in 2018. The new pilots fee was $1.5 thousand and agent fees were reduced from $1 thousand to $5 hundred and test and application fees were reduced. The board and division were aware of the healthy surplus and was engaged in lowering fees and using some of the surplus to offset any other board costs that arose. He noted that investigations were costly, and the board wanted a reserve to cover the costs in the event of an investigation. A costly investigation with a small board membership could quickly increase licensing fees and the reserve would offset the situation. Co-Chair Wilson asked if the money could be utilized for anything other than what the board was authorized to do. Mr. Ward replied in the negative. Co-Chair Wilson set an amendment deadline of 9:00 am the following day. SB 29 was HEARD and HELD in committee for further consideration.