BILL ANALYSIS
Bill No: SB
300
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Roderick D. Wright, Chair
2009-2010 Regular Session
Staff Analysis
SB 300 Author: Yee
As Amended: March 31, 2009
Hearing Date: April 28, 2009
Consultant: Art Terzakis
SUBJECT
Bays of Monterey, San Francisco, San Pablo & Suisun:
pilotage rates
DESCRIPTION
SB 300 makes the following substantive modifications to
existing provisions of law (Harbors & Navigation Code)
relating to pilotage rates and surcharges for Monterey Bay
and the Bays of San Francisco, San Pablo, and Suisun.
Specifically, this measure:
1. Deletes the existing rate adjuster, which requires an
adjustment to pilotage rates when the number of pilots
falls below 60 or rises above 60.
2. Establishes a new surcharge to pay for:
a. The purchase, lease, maintenance and training
(including on-going education) of the pilots'
navigation equipment purchased after November 5, 2008.
b. The cost to conduct research (by the Board of
Pilot Commissioners) of potential hazards on the
pilotage grounds and the subsequent development of
navigational technology to enhance the margin of safety
on the pilotage grounds.
EXISTING LAW
SB 300 (Yee) continued
Page 2
Existing law establishes in state government the Board of
Pilot Commissioners, with jurisdiction over Monterey Bay
and the Bays of San Francisco, San Pablo, and Suisun.
Existing law directs the Board to regulate pilotage and
provides for the licensing, regulation, and management of
pilots in these Bays. The Board consists of 7 members
appointed by the Governor, with the consent of the Senate,
as follows: (1) two members must be licensed pilots; (2)
two members must represent the industry and be substantial
users of Monterey Bay and any of the waters of the Bays of
San Francisco, San Pablo, or Suisun; and, (3) three must be
"public" members.
Existing law requires the Board to appoint and license the
number of pilots needed to carry out provisions of the
Harbors and Navigation Code and requires the Board to
consider various factors in making this determination.
Existing law specifies that the Board has the sole
authority to determine the qualifications and requirements
for obtaining a pilot license and it also authorizes the
Board to suspend or revoke licenses for misconduct and it
specifies procedures for such action. Existing law
establishes various rights and duties of these pilots.
Existing law prescribes pilotage rates for vessels and
requires vessels spoken inward or outward bound to pay a
specified rate of bar pilotage through the Golden Gate and
into or out of the Bays of San Francisco, San Pablo and
Suisun and vessels navigating the waters of Monterey Bay
are also required to pay a specified rate.
Existing law provides that the Board shall, from time to
time, review pilotage expenses and establish guidelines for
the evaluation and application of these expenses regarding
its recommendations for adjustments in rates. Currently,
those rates may be adjusted at the direction of the Board
in the event of specified changes in the number of pilots
or catastrophic cost increases. Specifically, current law
requires an adjustment to rates when the number of pilots
falls below 60 or rises above 60.
Existing law also imposes a Board operation surcharge of
pilotage fees, as specified, to be deposited in the Board
of Pilot Commissioners' Special Fund and used to support
the Board, and imposes an additional charge for pension
benefits payable to a fiduciary agent, as specified. The
SB 300 (Yee) continued
Page 3
Fund is continuously appropriated for the payment of the
compensation and expenses of the Board, its officers and
employees. Additionally, existing law provides for a pilot
trainee surcharge and a pilot and inland pilot training
program surcharge that pays for these respective training
programs.
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 12
miles west of the Golden Gate Bridge, a bar pilot boards
the ship and takes navigational control. 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.
Purpose of SB 300: On November 7, 2007 the cargo vessel
Cosco Busan collided with the San Francisco-Oakland Bay
SB 300 (Yee) continued
Page 4
Bridge and discharged approximately 53,000 gallons of fuel
into San Francisco Bay. In March of 2009, the U.S. Coast
Guard released an investigative report of the incident
which outlined the causal and contributing factors that led
to the accident. Specifically, the report indicated the
main causes of the accident were:
Navigational error by the pilot of the Cosco Busan,
who navigated the vessel at a high, unsafe speed in
near-zero visibility, failed to properly monitor the
vessel's position and progress, and lost situational
awareness;
Failure of the master of the Cosco Busan to
adequately monitor the navigational actions of the
pilot and to maintain sufficient situational awareness
to question or correct navigational errors made by the
pilot;
Failure of the pilot and master to effectively
communicate relevant navigational information with
each other during the course of the voyage leading up
to the casualty;
Failure of the pilot and master to conduct a proper
pilot-master exchange prior to getting underway;
Failure of the master to adhere to
restricted-visibility procedures in the vessel's
safety management system; and
Failure of the pilot and Cosco Busan's crew to
employ proper bridge management team principles.
The author's office notes that, in the wake of Cosco Busan,
it became evident that the use of navigation software and
hardware, such as laptop computers with independent GPS
devices, would assist in improving the safety of
navigation. The author's office states that such
technology and equipment would provide the pilot with a
SB 300 (Yee) continued
Page 5
familiar tool that supplements the pilot vessel's existing
equipment. Additionally, the author's office points out
that Cosco Busan reinforced the need to conduct additional
research on navigational hazards and to develop
technologies that would widen the margin of navigational
safety in order to protect California's marine environment.
Thus, the author's office indicates that this measure
proposes to impose a "navigation technology surcharge" to
be used for the purchase or lease of navigational software,
hardware and ancillary equipment, along with maintenance
and training on such technology. Additionally, this
measure allows the new surcharge to be used by the Board to
conduct research of potential navigational hazards on the
pilotage grounds and determining how future technology
should be developed to enhance pilotage.
The author's office states that this measure would also
make a technical correction by eliminating an antiquated
rate adjuster provision in existing law. The author's
office contends that historically, the rate adjuster had
been sunsetted with each pilotage rate bill; however when
the decision was made by the San Francisco Bar Pilots to
not pursue a rate bill in 2006, the rate adjuster
inadvertently came back into effect on January 1, 2007.
Writing in support of this measure, California Coastkeeper
Alliance notes that "given increasing ship traffic in the
state's bays and estuaries and along its sensitive
coastline, SB 300 is a prudent and timely measure to ensure
the health and safety of our world-renowned environment and
the public who benefits from it."
Also writing in support, San Francisco Baykeeper states
that "SB 300 is a critical step to protecting the resources
of San Francisco Bay from another oil spill and sustaining
the human and ecological communities that depend on the
Bay."
Arguments in Opposition: The Pacific Merchant Shipping
Association (PMSA) has expressed opposition to SB 300 for a
variety of reasons. PMSA notes that the maritime industry,
along with every other sector of the trade economy, is
suffering severe economic strain at the present time, and
does not warrant an increase in industry costs. PMSA
SB 300 (Yee) continued
Page 6
believes that this measure will not help the shipping
industry grow out of the current trade slump - cargo
volumes are in decline and longshore labor force and
container cranes stand idle - it simply adds additional
burdens on the intermodal supply chain. Moreover, PMSA
claims that the rate and surcharges imposed for pilotage in
the San Francisco Bay and River system are already higher
than in Southern California and among the highest on the
West Coast.
PMSA contends that it is inappropriate for the Legislature
to step outside the traditional rate-setting structure and
delete the existing rate adjuster provision. PMSA states
that the rate adjuster is an important tool for maintaining
rate balance within the current terms of the statute
without parties needing to petition for a rate change from
the Board when traffic volumes increase or decrease. PMSA
points out that historically, this provision was always
designed to sunrise at the conclusion of a period of rate
recommendations. The current rate adjuster became
effective in 2007, after being included in legislation that
codified the Board's recommendations to raise pilot rates
by 20%, and no reason for eliminating the adjuster has been
forwarded since its establishment by the Legislature in
2002. PMSA believes that the adjuster should only be
sunset or deleted at a time when the number of pilot
licensees is neutral, and not at a time or in a manner in
which either the pilots or consumers of pilot services pay
disproportionately.
PMSA has also expressed concern with the proposed new
surcharge to pay for the pilots' navigation technology
equipment, maintenance and training and views it as an
additional amount of money over and above what shippers
already pay for the services of pilots.
PMSA points out that the Board is currently considering a
regulation to require all pilots to carry and be trained in
the operation of navigation technology equipment (e.g.,
laptops equipped to assist pilots in navigation), and PMSA
supports the adoption of this regulation, so long as some
recordkeeping associated with its proposed exemptions are
included. PMSA acknowledges that the San Francisco Bar
Pilots Association has been a good steward in this regard
as they have proactively purchased and begun the process of
training and equipping its members with navigation
SB 300 (Yee) continued
Page 7
technology equipment that would satisfy the terms of the
proposed regulation that's currently before the Board.
However, given the above, PMSA does not view SB 300 as
enhancing safety or improving navigation because the
provision of navigation technology equipment has already
occurred by the pilots and with regulation by the Board
dealing with whether or not it is required to be carried or
used or whether pilots will be trained in its proper use
pending.
PMSA has also expressed concern with the provisions of SB
300 relating to the Board conducting research of potential
navigational hazards on the pilotage grounds and
determining how future technology should be developed and
used to enhance pilotage.
According to PMSA, the Board has never expressed an
interest in conducting research nor does it possess the
resources, expertise or wherewithal to conduct this
research which is duplicative of the charting and
navigational safety missions of several federal agencies.
Staff Comments and Suggested Amendments: The fact of the
matter is it was imperative that the pilot's purchase
navigational technology equipment (hardware and software)
after the Cosco Busan collision with the Bay Bridge.
However, an on-going surcharge may not be necessary.
Option #1: The author may wish to consider language that
simply authorizes the Board to set a one-time "surcharge"
or "offset" to cover costs incurred by the pilots for the
purchase or lease of navigation software and hardware. The
pilots should also be responsible for providing some sort
of documentation of their costs.
Additionally, instead of adding a new provision of law that
addresses any training costs associated with this new
navigational equipment, the author may wish to consider
adding language to existing law, pertaining to a training
surcharge that clarifies the training surcharge encompasses
navigational equipment training.
Option #2: The author may wish to consider deleting lines
16-37 on page 3 that relate to the new surcharge and simply
permit the parties to go through the existing petition
process established in statute involving a rate change that
allows for input from the pilots, shippers and the Board.
SB 300 (Yee) continued
Page 8
PRIOR/RELATED LEGISLATION
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. Specifically, injected 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.
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
SB 300 (Yee) continued
Page 9
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) 1999-2000 Session. 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 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 pilot 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
SB 300 (Yee) continued
Page 10
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 (e.g., San Francisco, San Pablo,
and Suisun Bays and all other ports included therein.)
SUPPORT: As of April 24, 2009:
San Francisco Bar Pilots (sponsor)
AMNAV Maritime Services
California Coastkeeper Alliance
San Francisco Baykeeper
OPPOSE: As of April 24, 2009:
Pacific Merchant Shipping Association
FISCAL COMMITTEE: Senate Appropriations Committee
**********