BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: SB 1312 Hearing Date: 4/12/2016
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|Author: |Wieckowski |
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|Version: |4/4/2016 Amended |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Arthur Terzakis |
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SUBJECT: Bar pilotage rates
DIGEST: This bill revises and recasts certain provisions that
establish pilotage rates and surcharges that are paid to
licensed pilots by vessels that are piloted in Monterey Bay and
the Bays of San Francisco, San Pablo and Suisun; modifies the
pilotage rate-setting process by incorporating an administrative
law judge in those proceedings who will act as a finder of fact;
requires the clear publication of all rates and surcharges plus
an annual audit of all charges collected by pilots; and, imposes
on the industry a technology surcharge, as specified, for five
years, to recover pilots' costs for navigation software,
hardware and equipment.
ANALYSIS:
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
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);
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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. The rates involved are set
forth in Sections 1190 and 1191 of the Harbors and Navigation
Code. Section 1190 relates to bar pilotage for every vessel
inward or outward bound over the San Francisco Bar, which lies
west of the Golden Gate Bridge, and charges vary, depending on
a vessel's gross registered tonnage and draft. Section 1190
also authorizes an increase in the pilotage rates if the
number of pilots licensed to work on the Bays falls below a
specified number, or if the Board determines that there has
been a catastrophic cost increase to the pilots. Section 1191
of the Harbors and Navigation Code relates to charges for
transits that originate and are concluded inland of Golden
Gate Bridge - charges for these transits are flat amounts,
with the amounts varying with the places at which the transit
begins and ends.
4)Stipulates that the Board shall 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 if rates for those movements
or operations are not specified in Section 1190 of the Harbors
and Navigation Code.
5)Provides that a vessel using pilots for ship movements or
special operations that do not constitute bar pilotage shall
pay the rate specified in the schedule of pilotage rates
adopted by the Legislature.
6)Provides for a movement fee as is 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.
This bill:
1)Revises and recasts certain provisions (Sections 1190 and 1191
of the Harbors and Navigation Code) that establish pilotage
rates and surcharges that are paid to licensed pilots by
vessels that are piloted in Monterey Bay and the Bays of San
Francisco, San Pablo and Suisun, as specified.
SB 1312 (Wieckowski) Page 3 of ?
2)Authorizes until 1/1/ 2021 a technology surcharge, not to
exceed a cumulative amount of $1.2 million to recover pilots'
costs for navigation software, hardware, and equipment
authorized by the Board on or after 1/1/2017.
3)Requires the Board to submit a schedule of all pilotage rates
and surcharges to the Office of Administrative Law (OAL) for
publication in the California Regulatory Notice Register and
to post that schedule on the Board's Internet Web site.
4)Requires an independent audit of all charges collected by
pilots to be conducted annually by a public accountant
selected by the Board.
5)Adds an administrative law judge (ALJ), experienced with
ratemaking, to the ratemaking recommendation process and
provides that the evidentiary hearing shall be a
quasi-judicial proceeding, with the ALJ acting as a finder of
fact.
6)Prescribes procedures for the conduct of the ALJ hearings, the
review of evidence, and the filing of decisions and prohibits
ex parte communications with the ALJ adjudicating the hearing
or any members of the Board. Also, requires the Board to
review and evaluate the ALJ's decision and either submit the
decision to the Secretary of the Senate and the Chief Clerk of
the Assembly or prepare and submit a written statement of its
reasons for not doing so. Additionally, provides that the ALJ
shall be compensated by the Board from the Board operations
surcharge, as specified.
7)Creates the Pilot Trainee Special Fund and requires that
moneys charged and collected each month from the pilot trainee
surcharge must be deposited into that fund and used only for
pilot trainee programs.
8)Creates the Pilot Continuing Education Special Fund and
requires that moneys charged and collected each month from the
pilot continuing education surcharge must be deposited into
that fund and used only for pilot continuing education
programs.
9)Increases damages paid to a pilot who is carried to sea
against his or her will, or unnecessarily detained on board a
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vessel, from the current rate of $600 per day, plus expenses,
from the owner, operator, or agents of the detaining vessel,
to a new rate of $2,028 per day, plus expenses.
Background
Brief Historical Perspective. 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
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
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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
Monterey.
Purpose of SB 1312. According to the author's office, this bill
is intended to enhance navigational safety and make a series of
common sense reforms to the pilotage rate setting process in the
San Francisco Bay and river pilotage system. The author's
office believes these changes will ensure continued and improved
support of the state's comprehensive oil spill prevention and
response regime, improve public safety and navigation, and
protect both the environment and the state's maritime economy.
The author's office points out that the industry and pilots both
support re-establishment of the navigational technology
surcharge which was allowed to sunset in 2011. This bill
provides some relief to the pilots by giving them access to the
revenue garnered by this surcharge to recover their costs for
navigation software, hardware, and equipment.
Prior/Related Legislation
AB 1432 (Bonta, 2015), increases pilotage fees and rates, as
specified, for commercial vessels calling on ports in San
Francisco, San Pablo, Suisun, and Monterey Bay, including the
Sacramento River to the Port of Sacramento and the San Joaquin
River to the Port of Stockton. This bill also reinstitutes a
navigation technology surcharge for the purchase or lease by the
pilots of navigation hardware and software to enhance navigation
safety. (Senate Inactive File)
AB 2287 (Swanson, of 2012) stated the intent of the Legislature
to enact legislation that would require a 2nd bar pilot for
safety in the San Francisco Bay and its tributaries for ultra
large container vessels, and what the appropriate compensation
is for the 2nd pilot. (Held in Assembly Appropriations
Committee)
AB 2042 (Huber, 2012) would have eliminated the Board of Pilot
Commissioners, effective January 1, 2022, and transferred the
Board's functions and duties to the Secretary of Business,
Transportation and Housing. Also, would have recast and
reenacted certain provisions that regulate pilotage for those
bays, as provided. (Held in this committee at author's request)
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AB 907 (Ma, 2011), among other things, would have increased
pilotage fees and rates, as specified for Monterey Bay and the
Bays of San Francisco, San Pablo and Suisun and established a
fuel surcharge for all vessel moves using pilotage service to be
determined by the board. (Failed passage in this committee and
was subsequently gutted and amended for other purposes)
AB 1025 (Skinner, Chapter 324, Statutes of 2011) made the
following substantive changes to existing provisions of law
relating to bar pilotage : (a) modified the definition of
"inland pilot" to mean a person holding an inland pilot license
prior to January 1, 2011 and deleted all references to inland
pilots, (b) required the Board's assistant director be appointed
by the Secretary of Business, Transportation and Housing,
instead of the Governor, and to serve at the pleasure of the
Secretary, (c) recast certain provisions relating to violations
of safety standards to require the executive director instead of
an assigned commission investigator to perform investigations,
make findings and recommendations and report to the Board, and
(d) authorized the Board to charge an examination fee, as
specified, to each applicant to the pilot trainee training
program.
AB 1888 (Ma, Chapter 455, Statutes of 2010), among other things,
revised the terms for members of the Board who are licensed
pilots and members who represent the industry and exempted from
those pilotage fees and surcharges noncommercial vessels that
are maritime academy training vessels and vessels owned and
operated by nonprofit museums or foundations. These vessels
would be subject to the Board operations surcharge.
SB 300 (Yee, Chapter 497, Statutes of 2009) established a
surcharge for payment of navigational aids for bar pilots and
revised the pilotage rate based upon the current number of bar
pilots.
SB 1627 (Wiggins, Chapter 567, Statutes of 2008) made numerous
substantive, clarifying and technical changes to the body of law
relating to the Board of Pilot Commissioners by injecting
ongoing and continuous legislative oversight and administrative
responsibility within the existing pilot licensing framework,
without altering the Board, its charge, or composition and
without changing current pilotage rates, pilot pension benefits,
or duties and responsibilities of current, past or future
licensed pilots. Also, directed the State Auditor to conduct a
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comprehensive performance/financial audit of the Board.
SB 1217 (Yee, Chapter 568, Statutes of 2008) required the Board
of Pilot Commissioners to appoint a physician or physicians who
are qualified to determine the suitability of a person to
perform his or her duties as a pilot, an inland pilot, or a
pilot trainee in accordance with specified requirements. Also,
required the Board to terminate a pilot trainee or suspend or
revoke the license of a pilot or an inland pilot who fails to
submit the prescribed medication information required by these
provisions.
AB 852 (Leno, Chapter 129, Statutes of 2005), among other
things, authorized revenue generated by the pilot boat surcharge
to be used to pay for pilot boat design and engineering
modifications intended to extend the service life of existing
boats, in addition to the existing purpose of purchasing new
pilot boats.
SB 1303 (Torlakson, Chapter 560, Statutes of 2004) made a minor
change to an existing provision of law relative to
representation on the Board of Pilot Commissioners by clarifying
that the Board's two industry members must be substantial users
of any of the waters of the Bays of San Francisco, San Pablo,
Suisun, or Monterey.
SB 1353 (Perata, Chapter 765, Statutes of 2002) established a
schedule of incremental changes (through January 1, 2006) to the
rates and special surcharges that bar pilots may impose on
vessels that move in and out of the Bays of San Francisco, San
Pablo and Suisun.
SB 637 (McPherson, Chapter 177, Statutes of 2001) allowed San
Francisco bar pilots to pilot commercial vessels calling on
ports in "Monterey Bay" by including Monterey Bay within the
system of state regulated pilotage for the Bays of San
Francisco, San Pablo and Suisun.
SB 2177 (McPherson, 2000) would have applied existing provisions
of law relative to the regulation, licensing, and management of
pilots for the Bays of San Francisco, San Pablo and Suisun to
persons who pilot vessels into or out of the waters of Monterey
Bay. (Held in Assembly policy committee at author's request)
SB 2144 (Perata, Chapter 394, Statutes of 2000) made various
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modifications to provisions of law governing the licensing of
bar pilots.
SB 1109 (Burton, Chapter 786, Statutes of 2000), among other
things, required a vessel owner and its operators to defend,
indemnify, and hold harmless, a bar pilot from any liability and
expenses in connection with any civil claim suit as action
arising out of the pilot's performance of the pilotage services,
except for acts of willful misconduct.
AB 951 (Wiggins, Chapter 261, Statutes of 1999) codified the
agreement on bar pilotage rate increases reached between the San
Francisco Bar Pilots and the Pacific Merchant Shipping
Association.
SB 1741 (Johnston, Chapter 1115, Statutes of 1996), among other
things, established a schedule of bar pilotage rate increases
that were phased in over a three-year period (1997-99).
SB 496 (M. Thompson, Chapter 711, Statutes of 1995) revised the
formula the fiduciary uses to calculate the quarterly adjustment
for pilotage rates. Also, changed the schedule of pilotage fees
for ship movements and internal operations, as specified.
SB 2068 (Johnston, Chapter 385, Statutes of 1994) increased the
pilotage rate from 60.70 mills to 64.88 mills and required the
Board to temporarily reduce the additional charge, as specified,
if maintenance and repair costs of two pilot boats are less than
$200,000.
SB 238 (Lockyer, Chapter 1192, Statutes of 1993) increased the
rate of the additional pilotage charge from 60.56 mills per high
gross registered ton to 60.70 mills. Also, included inland
pilots, as defined, in the pension benefit program.
AB 1768 (Papan, Chapter 1653, Statutes of 1984) among other
things, established a unified system of state regulated pilotage
whereby inland pilots became members of the San Francisco Bar
Pilots Association and the combined group assumed joint
responsibility for all pilotage moves on the pilotage grounds
(San Francisco, San Pablo, and Suisun Bays and all other ports
included therein.)
AB 1061 (Agnos, Chapter 1306, Statutes of 1983) increased
pilotage rates and pension benefits, as specified.
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AB 2027 (Felando, 1983), among other things, would have created
three classes of pilots (pilots, inland pilots, and company
pilots) and would have repealed existing law relative to the
Legislature establishing pilotage rates. (Held in this
Committee at author's request)
AB 3603 (Brown, W., 1982) would have provided a unified system
of state regulated bar and inland pilotage. (Dropped at
author's request in Senate Finance Committee)
FISCAL EFFECT: Appropriation: Yes Fiscal
Com.: Yes Local: No
SUPPORT:
California Cotton Ginners and Growers Associations
Pacific Merchant Shipping Association
Western Agricultural Processors Association
Western Plant Health Association
OPPOSITION:
International Organization of Masters, Mates and Pilots
San Francisco Bar Pilots Association
ARGUMENTS IN SUPPORT: Writing in support, the Pacific Merchant
Shipping Association (PMSA) states, this bill "Creates clear
responsibility and accountability for the ratemaking
recommendation process by reinstituting the use of
Administrative Law Judges as fact-finders for all rate change
recommendations, and require the clear publication of all rates
and surcharges plus an annual audit of the same. SB 1312
creates this new level of transparency and accountability
without any disruption to operations by codifying existing rates
and surcharges that are already in place and governing licensee
conduct."
Additionally, PMSA notes, "The current ratemaking system for
state pilotage has resulted in unsuccessful rate increase
proposals being brought before the Legislature in 2004, 2011,
2012, and 2015. While industry opposed each of these rate
increase bills successfully, it is our belief that these bills
failed primarily because the current pilot rate-setting system
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is broken. Without Legislative or Administration confidence in
the integrity and objectivity of the process of rate-setting
itself, these failed attempts at rate changes which have
manifested themselves over the past decade will just continue to
reoccur over and over again and continue to place the
Legislature in an awkward position. Our coalition supports this
bill's creation of a system with the necessary objectivity and
unimpeachable integrity necessary to re-establish confidence in
this system."
ARGUMENTS IN OPPOSITION: Writing in opposition, the San
Francisco Bar Pilots Association states, "The Board is comprised
of members with extensive knowledge in marine transportation and
maritime practices who provide valuable insights to tackle
unique issues regarding pilotage, rates, safety and shipping in
general. Accordingly, the Board should be consulted to fully
vet many of the issues raised in SB 1312. Last year, AB 1432
(Bonta) was introduced to enact the pilotage rate
recommendations of the Board following an evidentiary hearing
held pursuant to the existing long-standing statutory and
regulatory rate setting process. SB 1312 adds yet another
bureaucratic step to the process of determining pilotage rates
on San Francisco Bay. It does not remove the Legislature from
the process. In fact, it may increase the number of bar pilot
issues being brought before the Legislature. This bill seeks to
change the rate making process by adding a third layer of
bureaucracy (the addition of an ALJ) which may only increase the
frequency of pilotage rate legislation that the Legislature will
ultimately have to approve. In short, legislators will still be
required to vote on rate bills in the future. A similar process
in which an ALJ was used for rate hearings existed in 1991-1995
and was repealed by its own terms due to mixed reviews of its
efficacy and cost by both the industry and pilots. In fact,
there has been no showing that existing law is inadequate to
address these concerns or that the Board has been petitioned by
the industry to address these concerns."
Furthermore, the San Francisco Bar Pilots Association argues
that "there are a substantial number of provisions in this bill
that are best left to the Board to address without the need for
additional legislation. A change to the rate setting process
will take a minimum of two years to pass and implement - yet, as
currently proposed in this bill it is likely that the
Legislature will remain heavily involved in the rate making
process."
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DUAL REFERRAL: Senate Judiciary Committee