BILL ANALYSIS                                                                                                                                                                                                    

                                                                    AB 1432

                                                                    Page  1

          1432 (Bonta)

          As Amended  May 11, 2016

          Majority vote

          |ASSEMBLY:  |      |(April 23,     |SENATE: | 29-7 |(May 26, 2016)   |
          |           |      |2015)          |        |      |                 |
          |           |      |               |        |      |                 |
          |           |      |               |        |      |                 |
               (vote not relevant)

          |                |     |                |                  |           |
          |                |     |                |                  |           |
          |COMMITTEE VOTE: |15-0 |(June 27, 2016) |RECOMMENDATION:   |Concur     |
          |                |     |                |                  |           |
          |                |     |                |                  |           |
          |                |     |                |                  |           |
          |                |     |                |                  |           |
          |                |     |                |                  |           |
          |                |     |                |                  |           |
          |                |     |                |                  |           |

          Original Committee Reference:  HEALTH

          SUMMARY:  Establishes a limited surcharge on vessels sailing  
          into and out of the San Francisco Bay (and its environs) to  


                                                                    AB 1432

                                                                    Page  2

          reimburse the San Francisco bar pilots for costs associated with  
          the purchase, lease, or maintenance of certain navigation  
          equipment.  Specifically, this bill:  

          1)Deletes language authorizing the Board of Pilot Commissioners  
            (BOPC) to establish and collect a movement fee on an ongoing  
            basis and in advance of expenditures related to the purchase,  
            lease, or maintenance of navigation equipment.

          2)Authorizes the BOPC to establish, and for San Francisco bar  
            pilots to collect, a movement fee to recover costs associated  
            with the purchase, lease, or maintenance of certain  
            navigational equipment on or after January 1, 2017.

          3)Requires that the specified navigational equipment be used  
            strictly and exclusively to aid San Francisco bar pilots  
            working in areas under their jurisdiction.

          4)Requires that the movement fee be identified as a navigation  
            technology surcharge on San Francisco bar pilot invoices and  
            accounted for separately.

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

          6)Requires the BOPC to conduct a quarterly review of the  
            surcharge and to adjust it, as needed. 

          7)Requires that the surcharge sunset on January 1, 2021.

          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.  


                                                                    AB 1432

                                                                    Page  3

          Pilotage fees and surcharges, including the "technology  
          navigation surcharge," are paid directly to the bar pilots and  
          are not deposited into the State Treasury.  Staff notes,  
          however, that specified surcharges for the operations of the  
          Board and for pilot training and continuing education programs  
          are transferred by the Board for deposit into the Board of Pilot  
          Commissioners' Special Fund.  Since the "board operations  
          surcharge" is based upon the pilotage fee rates, this bill would  
          technically make an appropriation by impacting the amount of  
          fees deposited into a continuously appropriated fund.  The Board  
          has the authority to reduce the rate of the surcharge, with the  
          approval of the Department of Finance, if revenues are out of  
          balance with expenditures.

          COMMENTS:  Prior to the American Revolution, pilotage was  
          regulated by colonial legislatures which generally provided for  
          the commissioning of pilots, apprenticeship requirements, and  
          establishing fees.  When the United States Constitution was  
          adopted, it recognized that pilotage fell within the domain of  
          the federal government because it involved foreign commerce.   
          One of the first acts of the newly formed Congress in 1789 was  
          to recognize state laws regulating pilotage and to delegate that  
          authority to the states.  In California, the San Francisco bar  
          pilots have been guiding ships into the San Francisco Bay since  
          at least 1835 and one of the first legislative enactments by the  
          newly formed California Legislature in 1850 was to address the  
          regulation of San Francisco bar pilots.

          Specifically, San Francisco bar pilots are responsible for  
          steering large commercial vessels through the Golden Gate of San  
          Francisco Bay and adjoining navigable waters, which include San  
          Pablo Bay, Suisun Bay, the Sacramento River, and associated  
          tributaries.  When a vessel arrives at a point eleven miles west  
          of the Golden Gate Bridge, a San Francisco bar pilot boards the  
          ship, takes navigational control, and guides the ship to its  
          berth.  The same process occurs in reverse as ships depart from  
          the San Francisco Bay.  The San Francisco bar pilot's primary  
          function is to ensure that large commercial vessels are  


                                                                    AB 1432

                                                                    Page  4

          navigated safely through the San Francisco Bay's confined  
          waters.  They provide service for all types of commercial  
          vessels, from 100-foot tugs to 1000-foot supertankers.

          This bill would allow the BOPC to impose a fee on vessels  
          entering the San Francisco Bay to recover costs incurred for the  
          purchase, lease, or maintenance of specified navigation  
          equipment such as software, hardware, and ancillary equipment  
          following a public approval process of the required technology  
          by the BOPC.  The navigation technology surcharge authorized by  
          this bill would sunset on January 1, 2021, and be capped at $1.2  

          Earlier versions of this bill would have authorized the  
          surcharge to be collected indefinitely which, opponents argued,  
          essentially amounted to a pilotage rate increase - an issue that  
          has been the subject of much debate between commercial vessel  
          owners and the BOPC for many years.  The parties agreed to  
          terms, reflected in the May 11, 2016, amendments of this bill,  
          and have agreed to continue discussions with regard to rate  
          increases in general in the coming months.  

          Writing in support of this bill, the Pacific Merchant Shipping  
          Association notes that it is extremely important that vessels  
          entering and exiting the San Francisco Bay be piloted safely and  
          they agree that providing San Francisco bar pilots with  
          state-of-the-art navigation technology would enhance safety and  
          reduce the risk of an accident or environmental catastrophe  
          (such as an oil spill).  

          There is no formal opposition on file.

          Please see the policy committee analysis for full discussion of  
          this bill.

          Analysis Prepared by:                                             


                                                                    AB 1432

                                                                    Page  5

                          Victoria Alvarez / TRANS. / (916) 319-2093  FN: