Kodiak fishermen anticipating reparation money from the Exxon Valdez oil spill may get some help once checks come through if a U.S. Senate bill wins approval and the fishermen keep their eyes on the best use of the money.

Those working to aid Exxon plaintiffs in the spill settlement lawsuit are pushing for passage of Senate Bill 3422, a bill introduced in the 109th Congress in June 2006 by Sen. Lisa Murkowski.

The bill was read in the Senate but died in committee.

Murkowski’s office said Friday the bill will be introduced again during the current congressional session.

“The Murkowski bill would solve a big problem,” said Matt Jamin, attorney for Kodiak plaintiffs.

What the bill would do is lift the cap on the amount of money a fisherman who is awarded a punitive damage check could invest in a retirement fund without tax liability.

Under the current law, the amount a person can invest in an IRA is $4,000 annually unless that person is over 50 years of age, when he can invest up to $5,000.

If the fishermen were given a chance to frontload an IRA with a contribution limited by the value of the settlement check, a retirement could be locked in for a lifetime income stream.

Kodiak fishermen expect average claims ranging from about $200,000 to more than $1 million, depending on whether the person was a crewmember or boat owner, the time fished and other factors.

Recent movement in an 18-year-old litigation in the Exxon-Valdez settlement case was signaled in January when a federal appeals court cut the punitive damages award in the lawsuit from $4.5 billion to $2.5 billion.

Attorneys, and those close to the case, interpret the latest court action as meaning settlement is closer than it has ever been, and plaintiffs could start receiving checks in 2007 or 2008.

In the meantime, Exxon is expected to file an appeal to the U.S. Circuit Court of Appeals and possibly to the U.S. Supreme Court, claiming plaintiffs have already been compensated for damages since the company paid claims within a year of the 1989 spill in Bligh Reef that traveled to the coastal Southeast through the Gulf of Alaska into Kodiak waters.

Exxon would ask the 9th Circuit for a review of the case “en banc,” meaning a 15-judge panel would hear the case.

There are now about 40,000 plaintiffs in the class-action suit.

In Kodiak, there are 387 salmon seines, 189 salmon set netters and 33 salmon beach seiners on the list for settlement money.

Jamin said that while the litigation must run its course, plaintiffs could still seek a larger settlement than the $2.5 billion.

SB 3422 is drafted to cover any possible settlement while the case is in litigation and any amounts received under the judgment if it is upheld.

Murkowski said, “It is imperative that we address this issue soon.”

If the bill becomes law, it would allow a fisherman to put the entire amount of his settlement check into an IRA or similar investment plan.

The bill gives the plaintiffs until the end of the taxable year in which they receive the settlement to transfer funds to a retirement plan.

The bill also allows a plaintiff to average his or her income between Dec. 31 of the year a check is received and Jan. 1, 1994, the year of the original court decision in Anchorage.

The bill also allows taking advantage of tax laws if settlement is in the form of periodic payments instead of lump sums.

The bill also is drafted so that any settlement or judgment payments would not be subject to the Self-Employment Contributions Act requiring taxes paid for Social Security and Medicare.

Bruce Schactler, who helped conceive the bill, said it is now vital that all fishermen start calling on their congressional delegation to get the bill passed into law.

“Start writing letters,” Schactler said.

Inga Seifert, financial adviser for Edward Jones Investments, said she has been receiving telephone calls from fishermen asking about retirement plans.

Seifert said as the law now stands, those who are not employed or who are retired without an income would not be able to take advantage of a plan to limit tax liability.

The Senate bill, however, allows contributions to any type of qualified retirement plan to the extent of the income received from the settlement.

Seifert said there are a number of ways a fisherman can invest including what is called a Defined Benefits Plan, a traditional IRA, a Roth IRA, estate planning, trust planning and charitable contributions.

She said Chad Swartz, and attorney and retirement plan specialist from Sacramento, Calif., who has been working on the Exxon case, would be in Kodiak in March to help fishermen make decisions on how to use the money.

Swartz is also making stops in Homer, Kenai and the Southeast to meet with the claimants.

“Fishermen need to do this sooner than later so that plans can be processed in time when a court settlement is reached,” Seifert said.

Mirror writer Bryan Martin can be reached via e-mail at bmartin@kodiakdailymirror.com.