GALTEX Rate Increase Proposal Heads for Climax; Two Sides Very Far Apart

Board of Pilot Commissioners for the Ports of Galveston County met on June 8 to review rate adjustments. Two-day formal rate hearing set for July 16 & 17; non-binding mediation hoped for as GALTEX pilot chief says that “discussions continuing with customers.”

The multi-year rate increase proposed by the Galveston Texas City Pilots (GALTEX) was discussed at length on June 8 at a meeting of the Board of Pilot Commissioners for the Ports of Galveston County. Discussions were wide-ranging and included challenges by various parties as to (a.) the legality of a multi-year rate proposal and (b.) the fact that the GALTEX pilots were being represented at the meeting by an attorney who was not licensed to practice in the state of Texas.

Vandy Anderson, Chairman of the Board of Pilot Commissioners for the Ports of Galveston County, was of the opinion that it did not matter that the pilot’s representative was not licensed in the state of Texas for the purposes of these hearings. In the end, the board voted unanimously to schedule a two-day meeting to resolve the issue on July 16 and 17. Separately, stakeholders on both sides of the matter were attempting to come to some sort of a resolution before that date.

At the time of the meeting, the West Gulf Maritime Association (WGMA), the Port of Galveston, the Port of Texas City, Carnival Cruise Lines, Royal Caribbean Cruises, Ltd., and Florida-Caribbean Cruise Association had all objected to the rate adjustments. Since that time, “K” LINE AMERICA, INC. has also gone on record as being against the proposal. “K” Line, a shipping operator with a number of vessels in lay-up due to the current lack of cargo, also went on record as being opposed to the rate application in its entirety.

During the latest meeting, Board Secretary Sally Prill stated that multi-year contracts are "efficient rather than illegal." Beyond this, it was also noted that other pilot organizations across the state and elsewhere currently operate under multi-year contracts. Local industry stakeholders, however, expressed fears that a multi-year rate agreement would not preclude the pilots from asking for another increase within the time frame of any future contract agreement. In way of answer, the board voted unanimously to “consider” a multi-year contract, without providing assurances that they will ultimately agree that it is legal. This week, Vandy Anderson told MarEx that “the multi-year contracts elsewhere were negotiated by agreement between industry and pilots, but not necessarily decided by a pilot board or commission.” The distinction, he added, was important.

Since the meeting and separately, WMGA Vice President of Maritime Affairs Niels Aalund broadcast an E-mail advisory to interested stakeholders which said, among other things, “It had been suggested that all parties try non-binding mediation prior to the July 16-17 public hearing. The hope was to reach some type of mutual agreement. The WGMA and all others who filed formal objections to the proposed rate application agreed to mediation. We also proposed a mediator and possible mediation dates."

Aalund's update went on to say, "Just minutes ago, we learned via email from their attorney Andy Ezell," (who said) "I have spoken to the Pilots concerning mediation of the current rate dispute. It is their opinion that the tone and substance of your email indicate little intent on the part of WGMA to enter into meaningful negotiations. Based on recent and past experience, the Pilots do not intend to negotiate with WGMA on any issue in the future."

The GALTEX Pilots responded to this E-mail with their own informational E-mail, stating, “Please make the following correction to your note copied below.

WGMA never agreed to mediation with the Galveston/Texas City Pilots as recently suggested by the Pilot Commission in the present rate case. If it did, we were not informed. The last communication we have from WGMA is an e-mail from Mr. Nathan Wesely, WGMA's attorney saying, "The objecting parties are WILLING (emphasis added) to mediate, BUT there are conditions and considerations that need to be addressed and resolved by the parties as part of an agreement to mediate." It was Mr. Ezell's reply to this e-mail, which you quoted in the 'breaking news' portion of your note, which said that given the conditions imposed by Mr. Wesely and the tone of his e-mail, we could not agree to mediation.

Willingness is not agreement.

Please distribute this correction as widely as you did the misinformation contained in your note below so that your readers can see the truth.”

The GALTEX E-mail, sent by Chris J. Gutierrez, Presiding Officer, continued, “The Galveston/Texas City Pilots are continuing to hold discussions with non-WGMA members in an attempt to resolve certain issues.”

Before the conclusion of the June 8 meeting, Board of Pilot Commissioner Chairman Vandy Anderson urged both parties to try and reach an agreement before the next hearing. This week and in an interview with MarEx, Anderson reiterated his desire that both parties work out an agreement through non-binding mediation before the scheduled July meeting. Although he also admitted that both sides appeared to be very far apart on a number of issues, he did concede that if the decision was not reached prior to the July meeting, that “Probably, both sides would not be happy with the final result.”

Also reached by MarEx on Thursday morning was GALTEX pilots Presiding Officer Chris J. Gutierrez, who told MarEx that “discussions were continuing with their customers.” In the process of putting together a formal proposal to that end, Guitierrez declined to disclose the specifics of which customers he was referring to and what his newest proposal might entail. Separately, WGMA’s Niels Aalund told MarEx that he continued to hope that non-binding mediation could attempted and that he had suggested terms and condition to that end. He was unaware of any proposals pending that might resolve the matter amicably. WGMA represents a wide swath of Gulf Coast industry stakeholders, all of whom oppose the rate hike.