Murkowski's push for Exxon Valdez tax treatment wins praise

December 27, 2007 at 10:49AM AKST

The leadership of United Fishermen of Alaska has thanked Sen. Lisa Murkowski for her work in introducing and working to pass legislation to help reduce the tax burden to Alaska fishermen and other plaintiffs who were affected by the Exxon Valdez oil spill in 1989.

The measure was included in an amendment to the Farm Bill, which was passed Dec. 14 on the Senate floor.

The legislation calls for plaintiffs to be able to contribute up to $100,000 to retirement plans, income averaging of any settlement payments over a three-year period, and exempts the payments from self-employment tax.

Settlement payments, if upheld by the U.S Supreme Court, represent punitive damages and the accumulated interest from 13 years since the original court decision in 1994.

The tax measure, originally envisioned as part of UFA's marketing plan drafted by board members Bruce Schactler and Scott McAllister, was adopted in 2001 and was the focus of an industry-wide effort.

"As this case has drawn on through every possible delay and appeal, the interest now approaches the settlement amount and may unfairly put many fishermen in much higher tax brackets than they would have been if the settlement had been paid or if the damage had not occurred," said Mark Vinsel, UFA executive director.

In this time, Alaska fishermen suffered severe financial hardships, and many have not been able to contribute adequately to retirement accounts, according to the group, which estimates that the deferment of these taxes represents about $200 million to plaintiffs.

"Murkowski worked diligently to get this measure and could not have delivered a better Christmas present to Alaska fishermen," UFA President Joe Childers said.

"We are very pleased with Senator Murkowski's ability to move this legislation, that she was able to gain the support of Oregon's Senator Gordon Smith and Washington State's Senators (Patti) Murray and (Maria) Cantwell as co-sponsors and move this forward. While there are Exxon plaintiffs from every U.S. state, the bipartisan support that Murkowski was able to create "is what got this done," Childers said.

"Having this legislation pass the U.S. Senate is noteworthy in showing the widespread concern for the plight of those who were so drastically affected by the oil spill, as this matter goes before the Supreme Court," he said.

The U.S. Supreme Court will take up the matter of possible limits to punitive damages awards in shipping cases in 2008.

The justices have "been urged by many business entities to take up the matter to update the law, now that ship captains can be in communication with vessel owners. Previous maritime law on this was based on the Amicable Nancy case from the early 1800s, when the situation was completely different than now," Childers said.

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