The Observer, January 2008

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New legislative committee is formed, already faces fishing vessel problem

The council’s Legislative Affairs Committee for 2008, formed in December, is already focusing on what could become a major council issue: a state requirement that fishing vessel captains pay unemployment taxes for crew members during oil-spill response training.

The six-seat committee, made up of council board members, monitors action in Juneau during the legislative session, advising the full council as needed. This year’s members are Patience Andersen Faulkner of Cordova, Steve Lewis of Seldovia, Blake Johnson of Kenai, John Velsko of Homer, John French of Seward, and Walt Parker of Anchorage. Velsko and Johnson are the chair and vice chair. The committee is supported by the council’s legislative monitor, Juneau attorney Douglas Mertz.

The issue of unemployment insurance for fishing vessel crews surfaced in July, when the state Department of Labor began notifying vessel captains they were liable for the tax. In the past, participants in Alyeska’s fishing vessel program believed crews were exempt during oil-spill training, as they are when fishing.

But Erna Sturman, a field auditor for the labor department, wrote in the July 20 letter that “Alaska law does not exempt wages or shares paid to your employees while working in . . . oil spill drill operations.”

Alyeska’s program involves about 350 fishing vessels that would be available for cleanup operations in the event of a major oil spill. Alyeska pays the captains via contract, and the captains pay the crews. Those vessels are kept under contract and receive regular training so they can respond immediately to spills.

As the state’s letter began circulating, the council started hearing concerns that captains might drop out rather than put up with the unemployment insurance paperwork for just a few days a year of oil-spill training.

The council conducted a survey of fishing vessel captains about the problem. Some said the paperwork was manageable; others were upset and said it could deter participation. “It’s a royal pain,” one of the captains complained. “It sure adds a lot of extra to a simple drill.”

Because of the potential for disrupting the fishing vessel program, the council began looking into possible fixes, such as a change to state law. A bill has been introduced by Reps. John Harris of Valdez and Paul Seaton of Homer to exempt crews from the unemployment tax while in the fishing-vessel program.

But it’s not clear that changing state law would be a complete solution. Unemployment insurance is governed by the Federal Unemployment Tax Act, which may not allow the exemption envisioned in the Harris-Seaton bill.
That’s according to Mertz, the legislative monitor. In a legal analysis, he wrote that “none of the exemptions in the federal law would exempt fishing vessels or their crew while acting as spill responders.”

The state Department of Law is reportedly reviewing the state-federal jurisdictional issue, but no opinion had been released by Observer press time.

“We’d hate to see the fishing vessel program fall apart because of this problem,” said John Devens, the council’s executive director. “We’ll do everything we can to help fix it, including taking it to the federal level if that turns out to be necessary.”