Galveston Board of Commissioners of Pilots Schedule Next Hearing for Monday, 9 April

In a tersely worded “NOTICE OF CONTINUATION OF RATE HEARING” announcement, the Galveston Board of Commissioners of Pilots have advised the local maritime community that “The Board of Commissioners of Pilots for the Ports of Galveston County, State of Texas, will resume a public hearing on Monday, April 9, 2007 at 9:00 A.M. at the Ray Holbrook Annex Building, 601 Tremont, Galveston, Texas.” The statement also said, “It may be necessary to continue the hearing on Tuesday, April 10, 2007 at 9:00 A.M. The hearing is being held to consider an Applications For Pilot Rate Increases pursuant to Texas Transportation Code, Subtitle B, subchapter D as mailed to all Board of Pilot Commissioners on April 21, 2005 and February 16, 2007.”

The Galveston County Pilots had previously requested a 27% rate increase over the current tariffs. Negotiations and presentations have been underway for more than a week in Texas and the matter was initially discussed in Non-Binding Mediation with Industry Stakeholders. The mediation produced no movement from either side and the issue is now before the local Pilot Commission, with the hearings on Thursday and Friday of the previous week spilling over into this week. Industry trade groups representing a wide array of maritime interests from Lake Charles to Brownsville strongly oppose the rate increase proposal.

According to local Galveston sources, the hearings recessed on Wednesday afternoon after being convened at 11 AM. The West Gulf Maritime Association (WGMA) wrapped up its presentation with testimony from a CPA retained by the WGMA to give an assessment of the Pilots' Financials. The Pilots did not complete their presentation to the Pilot Commission until late in the day on Monday, April 3, which was the 3rd day of the hearings. Testimony for the WGMA also included that of a former U.S. Coast Guard officer who had been Commanding Officer of the Houston/Galveston Vessel Traffic Service. Other presentations to the Pilot Commission on Tuesday included Skaugan Petrotrans and the Port of Galveston, with testimony from the Port Director, Steven Cernak.

MarEx sources close to the proceedings also said “There are other groups that the Pilot Commission has also recognized as having standing before the Board are Carnival Corporation and the Port of Texas City, which will be given by that Port's Executive Director, Bill Mathis. Both of the last two groups were slated and ready to give their testimony yesterday afternoon when the Board unexpectedly called a recess until next Monday, April 9. The overall message from Industry to the Pilot Commission has been that Industry wants to see a reduction in the rates vs. the increase being requested by the Pilots. Representatives of the Houston Pilots and the Port Arthur, Texas Pilots were in attendance and observing the proceedings at both Monday and Tuesday's hearings. The proceedings have been mostly contentious and tense, with all witnesses being subject to cross-examination by Pilot Commissioners, Pilots and their attorneys and Industry representatives and attorneys.”

The Galveston Pilots are currently thought to be making about $300,000 per year. In addition to their request to increase pilotage rates, they are also looking for increases in other fees, including a mechanism to fund a new pilot boat. The Pilots last increase in rates occurred in 2000, when they received an increase of approximately 35%. Since then, attempts to further augment those rates have been turned down on at least two occasions. One industry stakeholder, who declined to be identified for the purpose of this article, said that the vague nature of the Pilots’ financial data was the prime mover for those decisions. Niels Aalund told MarEx last week, “I have never seen a stronger, more cohesive industry opposition to a rate increase.” The Port of Galveston’s governing board has also come out against the proposed rate increase.

The Board of Pilot Commissioners, a group of five volunteers appointed by Governor Rick Perry, will ultimately decide to approve or deny the rate increase. The 16 members of the Galveston-Texas City Pilots say that rapidly escalating expenses, such as fuel and insurance, more than warrant the rate increase. But the majority of Texas City and Galveston tenants and stakeholders have predictably come out against the rate increase. Others, however, point to record profits being enjoyed by oil companies--ample proof, they say, that users can easily absorb the increase in fees--which make up a large percentage of the traffic handled by the pilots. As MarEx went on line with this edition of the e-newsletter, there was no indication of when or how the matter might be resolved.