BILL ANALYSIS                                                                                                                                                                                                    

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          1432 (Bonta)

          As Amended  May 11, 2016

          Majority vote

          |ASSEMBLY:  |      |               |SENATE: |29-7  |(May 26, 2016)   |
          |           |      |               |        |      |                 |
          |           |      |               |        |      |                 |
                      (vote not relevant)

          Original Committee Reference:  HEALTH

          SUMMARY:  Establishes a navigation technology surcharge for  
          commercial vessels calling on ports (inbound and outbound  
          transits) in San Francisco, San Pablo, Suisun, and Monterey  
          Bays, including the Sacramento River to the Port of Sacramento  
          and the San Joaquin River to the Port of Stockton.

          The Senate amendments delete the Assembly version of the bill  
          and instead:

          1)Reinstitute, until January 1, 2021, a navigation technology  
            surcharge for the purchase or lease by the pilots of new  
            navigation hardware and software to enhance navigation safety.


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          2)Prohibits the cumulative amount of the surcharge collected  
            from exceeding $1.2 million.

          EXISTING LAW:  

          1)Provides for the regulation and licensure of pilots for  
            Monterey Bay and the Bays of San Francisco, San Pablo, and  
            Suisun by the Board of Pilot Commissioners (Board) within the  
            California State Transportation Agency.

          2)Specifies that the Board shall consist of seven members  
            appointed by the Governor and one ex-officio non-voting member  
            (the Secretary of the Transportation Agency).  Two members are  
            pilots licensed by the Board; two are industry members (one  
            from the tanker industry and one from the dry cargo industry);  
            and, three public members who are neither pilots nor work for  
            companies that use pilots.

          3)Prescribes the rates of pilotage fees required to be charged  
            by pilots and paid by vessels.  

          4)Requires that the Board recommend that the Legislature, by  
            statute, adopt a schedule of pilotage rates providing fair and  
            reasonable return to pilots engaged in ship movements or  
            special operations.

          5)Provides for a movement fee as necessary and authorized by the  
            Board to recover a pilot's costs for the purchase, lease, or  
            maintenance of navigation software, hardware, and ancillary  
            equipment purchased after November 5, 2008 and before January  
            1, 2011.  

          AS PASSED BY THE ASSEMBLY, this bill required the State  
          Department of Health Care Services (DHCS) to submit an  
          application to the federal Centers for Medicare and Medicaid  


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          Services for a waiver to implement a demonstration project to  
          accomplish specified goals and requires DHCS to submit an  
          implementation plan to the Legislature prior to implementing an  
          approved waiver.  

          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, no direct state impacts, but the bill would result in  
          unknown indirect surcharge revenue gains to the Board of Pilot  
          Commissioners' Special Fund.  

          COMMENTS:  Bar pilots have been guiding ships into San Francisco  
          Bay, one of the most treacherous passages in the world, since at  
          least 1835.  The work that bar pilots performed was so important  
          that one of the first legislative enactments by the newly formed  
          California Legislature that met in San Jose in 1850 was to  
          address the regulation of bar pilots.

          California's history of piloting parallels to a large extent the  
          history of pilotage throughout the United States.  Prior to the  
          American Revolution, pilotage was regulated by colonial  
          legislatures.  They generally provided for the commissioning of  
          pilots, apprenticeship requirements to become a pilot, specified  
          the type and size of pilot boats used in the service, and  
          established fees to be charged.  When the United States  
          Constitution was adopted, it recognized that pilotage fell  
          within the domain of the federal government because it involved  
          regulation of instruments of foreign commerce.  One of the first  
          acts of the newly formed Congress in 1789 was to recognize the  
          existing state laws regulating pilots and delegate to the states  
          the authority to continue to regulate pilotage because of its  
          unique character.

          Bar pilots are responsible for steering an arriving vessel  
          through the Golden Gate of San Francisco Bay, the Bay waters and  
          adjoining navigable waters, which include San Pablo Bay, Suisun  
          Bay, the Sacramento River and its tributaries.  When a vessel  
          approaches the "SF" buoy several miles west of the Golden Gate  
          Bridge, a bar pilot boards the ship and takes navigational  


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          control.  (Pilots in San Francisco are called "Bar Pilots"  
          because they board and disembark ships just beyond a treacherous  
          sand bar which provides a natural obstacle to shipping.)  It  
          becomes the pilot's responsibility to guide the ship to its  
          berth.  The bar pilots provide service to all types of vessels,  
          from 100-foot tugs to 1000-foot supertankers.

          Pilots are generally mandatory in every major port throughout  
          the world and their pilotage service is paid for by the vessel  
          owner/agent.  As noted above, the San Francisco Bar Pilots have  
          been state regulated and licensed since 1850 to pilot vessels to  
          various ports in the Bay Area such as San Francisco, Oakland,  
          Redwood City, Martinez, Richmond, Pittsburgh, Vallejo, Rodeo,  
          Antioch, Stockton, Sacramento and more recently including  

          This bill reinstitutes a navigation technology surcharge for the  
          purchase or lease by the pilots of new navigation hardware and  
          software to enhance navigation safety.  This surcharge was  
          initially used from 2010 to 2011 to upgrade pilots' navigation  
          safety equipment in the wake of the Cosco Busan oil spill.   
          Under this bill, the Board would have a window of time to  
          approve new equipment for purchase or lease by pilots that would  
          be paid for by the surcharge, which would then sunset in 2021.   
          The surcharge and the cap on how much may be collected are the  
          result of negotiations between the pilots and the shipping  
          industry and reflect a safety issue that both groups agree is  
          worth paying for.

          Analysis Prepared by:                                             
                          Justin Behrens / Victoria Alvarez / TRANS. /  
          (916) 319-2093    FN: 0002970


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