The Florida Legislature’s Office of Program Policy Analysis and Government Accountability (OPPAGA) today released a report examining Florida’s harbor pilot system. According to the official OPPAGA findings, while harbor pilots serve an important and necessary role within in the maritime industry, the report conclusively found the system by which the harbor pilots are regulated and compensated is flawed and in need of substantial reform. Florida’s 94 active harbor pilots essentially control almost all of the waterborne maritime commerce in the state including more than $66 billion in total economic impact for the cargo and $6.3 billion economic impact for the cruise industry. The maritime industry's combined jobs total is 350,000 in the state. The Florida Alliance of Maritime Organizations (FAMO), formed in 2009, is calling for immediate modernization of the harbor pilot system.
Among other findings (a full fact sheet is included below) the report found:
The Board of Pilot Commissioners and the Pilotage Rate Review Board are not in compliance with state law. The boards are operating short of members due to long-term vacancies, which “may affect the boards’ effectiveness.” Numerous members are serving with expired terms. OPPAGA concludes that these factors may “reduce the expertise and representation intended by state law.” The Board of Pilot Commissioners also lacks the mandated balance in pilots and non-pilots, resulting in possible bias during board decision making.
“The absence of standardized and verifiedmeasures introduces subjectivity into the rate-setting process, which may contribute to the board approving unnecessary changes in pilotage rates.” The average annual income for a Florida harbor pilot has grown to an average of $400,000, significantly higher than similar public safety occupations. A more uniform rate setting method would ensure pilot rates are “fair, just and reasonable” as required by state law.
Current closed licensing system has put the size of near-future workforce at serious risk. Of the state’s 94 active harbor pilots, 44 percent are 55 years or older. Nearly half of the harbor pilot workforce will be entering retirement over the next decade. Because of closed nature of the current system and inability of new pilots to get licensed, the rush of retirements will create a shortage of pilots.
Level of accountability and Review Board’s ability to thoroughly investigate complaints are questionable. Over a three year period (FY 06 - FY 09), 49 complaints filed met the state threshold for investigation of a pilot. Only three complaints of the 49 investigations resulted in disciplinary action by the Board of Pilot Commissioners. The most severe action was 18 months probation, payments costs of $3,516, and license suspension for 14 days.
“Today’s in-depth report reinforces what the maritime industry has long-known – the system that regulates harbor pilots is broken,” said FAMO President Michele Paige. “The current system is a detriment to the economic health of our ports and we are hopeful the Legislature will reform this outdated system this year.”
“Our industries believe that the current pilotage structure needs reform,” continued Paige. “ Laws governing the pilots were established some 36 years ago and the OPPAGA study affirms to us that it’s time to update this structure to accommodate open competition whereby a larger pool of adequately trained harbor pilots can offer their services.”
Currently in Florida, most ships (non-U.S. registered cargo and passenger vessels and U.S. flag vessels not engaged in coastal trade) are required by law to obtain the services of a state-licensed harbor pilot when entering or leaving any of Florida’s 14 seaports. First enacted in 1975, Chapter 310 of Florida statutes tasked the Department of Business and Professional Regulation (DBPR) with regulating the state’s approximately 94 harbor pilots.
Two separate state-appointed boards, under DBPR’s regulation, are authorized to oversee harbor pilot licensing and fee structure. Licenses are issued by the state Board of Pilot Commissioners, half of whom are mandated to be non-harbor pilots despite the Board’s current composition. A second panel, the Pilotage Rate Review Board, considers applications from local port pilot association for pay increases. As noted in the OPPAGA study, these boards have numerous and enduring vacancies, during which time both boards have continued conducting business, including pay increase approvals.
“Under the current mode of operation, vacancies are not being filled, members whose terms are expired are voting and ultimately, there are real questions about due process requirements being violated,” Paige said. “The net result is pay raises and other decisions may have been made without proper compliance with state regulations. In their response to the criticisms with the independent report, the DBPR refused to acknowledge the innate flaws within the system. This highlights the need for openness and additional oversight.”
Additionally, in the 36 years since Chapter 310 was established, progress in navigation, radar and communications technology has changed dramatically allowing ships to be driven and docked with greater safety and precision.
“A more reasonable harbor pilot structure that allows for open market competition is both long overdue and healthy for business and consumers. As evidenced by today’s report, legislators should hold the Board’s accountable for failing to adhere to current law, and we encourage a close examination of options for reform,” said FAMO Board Member, Jennifer Nugent-Hill of Tropical Shipping.
The official OPPAGA report recommended options to modernize the system.
Allow pilot exemption certificates for officers of foreign flagged ships that frequent Florida ports.
Establish a formula to determine pilot fees. (Official OPPAGA report states, “Rate setting or approval by elected officials or the Public Service Commission may have more credibility than the current system”)
Establish a formula to determine the number of pilots needed at each port.
Create alternative rate-setting procedure which is fair and more transparent.
The full OPPAGA report can be found at http://www.oppaga.state.fl.us/MonitorDocs/Reports/pdf/1021rpt.pdf.
Last October, a study conducted by a leading economist concluded Florida’s harbor pilot system functions similar to a monopoly that limits the number of available pilots and inflates pilots’ salaries. The study concluded that the current harbor pilot system causes Florida to lose jobs, income, economic output and revenues for the state.
The study found that Florida’s 14 ports were served in 2008 by less than 100 pilots, who were paid approximately $50 million in fees by cargo and passenger vessel operators whose ships frequent the state’s ports. Those costs, in turn, are borne by consumers who purchase goods transported through Florida’s ports or vacationers who cruise through state waters. The study found that reducing Florida’s fees to levels comparable to the incomes of air traffic controllers would result in as much as $35 million in direct annual savings.