Comprehensive Washington State Pilotage Study Delivered to Legislature

By Captain Mike Moore, Vice President, Pacific Merchant Shipping Association

On January 18th, a study was published for the Washington State Joint Transportation Committee on pilotage. The study was in response to a $6.1 million dollar gender discrimination settlement involving a female Puget Sound pilot trainee. As a result of the lawsuit settlement, the Legislature last year appropriated $200,000 to pay for an independent study of pilot diversity and best practices for tariff and fee setting. The study offers recommendations for improving diversity within marine pilotage and for improving pilot oversight and tariff and fee rate-setting.

Overview
As noted in the report, “Marine pilots’ primary objective is to facilitate the safe movement of vessels into and out of ports situated in coastal and inland water bodies.” Pilotage in Puget Sound is mandated and operated as a monopoly through a state licensing program under the oversight of the Washington State Board of Pilotage Commissioners. In 2016, 52 Puget Sound Pilots generated more than $34 million in tariff and fee revenues.

Key Findings and Challenges of the Report
Consultants retained by the Joint Transportation Committee identified the following issues:

• Lack of Diversity

• The report states that there is a lack of formal data collection on gender and ethnic diversity for pilots, concluding that “What little information exists is anecdotal at best. This is both a local and national problem.” Lack of data makes the Board of Pilot Commissioners “ill equipped to establish a baseline” or to “track progress on improving diversity.”

• The report noted past “subjectivity and bias in training and evaluation is a potential challenge to overcome” with respect to pilot trainees.

• The report noted that the lack of diversity is “endemic” in the maritime industry and a problem across all pilotage districts in the United States – and a problem that is “…beyond the scope and capabilities of any one agency or organization” and called for a “more holistic approach, leveraging the resources and expertise of government and the private sector.”

• Tariff and Fee Rate-Setting Is Contentious and Lacks Methodological Structure

• Washington state law currently requires that the Board of Pilot Commissioners “annually fix the tariffs for pilotage services.” The report noted that an annual rate hearing results in ongoing advocacy for rate adjustments that is a distraction and limits discussion on other important issues such as safety.

• The report noted that the current rate-setting process in Puget Sound lacks established and agreed-upon methodology, lack of consistency, clarity, and timeliness in the submission of data to make informed rate adjustment decisions. It further observed that the Board of Pilot Commissioners does not have enough staff to provide objective analysis.

• The report recommended the use of a public utility commission (PUC) process for setting rates, noting that the benefits “of a PUC model include a clearly defined, transparent, rigorous, and enforceable timeline and process.”

• The report also observed that the membership of the Board of Pilot Commission includes pilots, industry representatives and public members. The report found that pilot and industry representatives “often vote in their own self-interest, leaving the remaining Commissioners to cast deciding votes” – who, while they “represent the public and environmental considerations, may not have relevant financial expertise.”

Recommendations
The report offered a number of recommendations for consideration by the Washington State Legislature and Board of Pilot Commissioners. The recommendations included:

• Develop a voluntary data collection protocol to track gender and ethnicity among pilot exam applicants, trainees and licensed pilots.

• Expand and continue to improve upon efforts to minimize subjectivity and eliminate bias in the pilot application, training and licensing process.

• Establish a statewide Task Force on Maritime Sector Workforce Development with a specific focus on increasing diversity.

• Transfer rate-setting authority to the Washington Public Utilities and Transportation Commission (UTC) to provide structure, rules, expertise, and rigor necessary to achieve an analytically driven rate setting process. According to the report, “This is the single most effective action the Legislature can take to improve rate-setting in Washington state…”

• As an alternative to the UTC setting rates, rate-setting only would occur “at the request of stakeholders (eliminating the annual review requirement) and “establish an evidentiary, petition-based process for tariff and fee rate-setting…” The goal would be to have rate hearings that “reflect economic necessity rather than arbitrary guidelines” and hiring a staff analyst or economist to administer an evidentiary-based process that would include data analysis.

While a bill has been introduced to shift rate-setting over to the UTC, it is uncertain at this point what final action the Washington State Legislature will take with regard to the findings and conclusions of this report. The Board of Pilot Commissioners has already made some positive changes and improvements with regard to diversity. The report provides a good basis for additional reform of the pilotage system – providing for greater diversity, oversight, and transparency.