Alaska Division of Legislative Audit
Audit Report #08-20015-02

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In accordance with Title 24 and 44 of the Alaska Statutes, we have reviewed the activities of the Board of Marine Pilots (BMP). Under AS 44.66.050(a), the legislative committee of reference is to consider this report during the legislative oversight process when considering whether to extend the termination date of the board. Currently, AS 08.03.010 (c)(10) states that the board will terminate on June 30, 2003, and will have one year from that date to conclude its administrative operations.

 

Objectives

 

There are three central, interrelated objectives of our report. They are:

 

1.      To determine if the termination date of the board should be extended.

 

2.      To determine if the board is operating in the public’s interest.

 

3.      To determine if the board has exercised appropriate regulatory oversight of licensed marine pilots.

 

The assessment of the operations and performance of the board was based on criteria set out in AS 44.66.050(c). Criteria set out in this statute relate to the determination of a demonstrated public need for the board.

 

Scope

 

We focused primarily on the FY 99 through FY 02 activities of the board. Of specific concern to our review are the actions of BMP in carrying out the extensive changes the legislature made to the marine pilotage statutes in 1995, and revenue and expenditures related to operation of the board. Additional concerns addressed in our review involved board proceedings, examination, licensing, drug testing, rate setting and other significant policy issues.

 

Methodology

 

To accomplish the audit objectives, the following documents were reviewed:

 

·        Applicable sections of federal regulations and state statutes and regulations.

·        Minutes of board meetings and annual reports.

·        Licensing files for marine pilots.

·        Files maintained by local associations related to drug testing of pilots.

·        Published negotiated rates for the last seven years.

·        Board revenues and expenditures from FY 99 through FY 02.

 

We interviewed the following individuals and groups:

 

·        Staff of the Division of Occupational Licensing, Department of Community and Economic Development.

 

·        Pilot associations’ officials, board members, and shipping agents regarding various concerns and issues involving marine pilotage in Alaska. The topics covered included the activities of BMP, and the impact of the extensive revisions made to marine pilot statutes in 1995 have had on board operations and pilotage in Alaska.

·        The maritime department head of the Alaska Vocational, Technical Center at Seward.

·        A private sector contractor specializing in outfitting and servicing privately-owned pleasure craft that visit southeast Alaska waters.

 

Additionally, we conducted a survey of licensed marine and deputy marine pilots and organizations that use piloting services. Our survey sought responses related to various policy issues, such as:

 

·        The size and composition of the board.

·        Mandatory retirement for pilots

·        Rate setting process

·        Adequacy of drug testing

·        Licensing requirements

·        Simulator training and performance evaluation

·        Possible exemptions or waivers from pilotage requirements for large, privately-owned pleasure craft

ORGANIZATION AND FUNCTION

The Board of Marine Pilots (BMP) was created by Chapter 106 SLA 1970, which became effective May 7, 1970. The statutes were significantly changed with the passage of the Marine Pilot Act of 1991. At that time the legislature felt it necessary to give BMP broad statutory authority which included establishing pilotage regions, maximum tariffs, and criteria for the training and licensing of marine pilots. All but one section of that act went into effect on July 2, 1991. That section, which required a pilot to be a member of a pilot association, did not go into effect until January 1, 1993. The policy, findings, and intent of the Marine Pilot Act stated, “It is the policy of the state to prevent the loss of lives and property, and to protect the marine environment of the state by requiring compulsory pilotage on the inland and coastal water of and adjacent to the state.”

 

In 1995 the legislature extensively revised the statutes and overall structure of the BMP. The most significant change involved the role in establishing rates for piloting services. This is significant, since piloting associations have monopolistic control over the provision of pilots to foreign flagged vessels and domestic oil tankers of 50,0000 dead weight tons (dwt) or greater.

 

Membership on the board

 

BMP is composed of seven members. Membership consists of two licensed pilots who are actively engaged in that profession, two agents or managers of vessels subject to the statutes, two public members, and the commissioner of the Department of Community and Economic Development (DCED) or designee. All members must be residents of Alaska. By statute, not more than one pilot member and one agent may be from any one pilotage region established by the board.

The public members cannot be engaged in the piloting profession, have a legal contract with a pilot, or have a direct financial interest in the piloting profession.

 

Duties of BMP

 

BMP’s statutory responsibilities include:

 

1.                  Maintaining an efficient and competent pilotage service on the inland and coastal waters to assure the protection of shipping, the safety of human life and property, and the protection of the marine environment.

 

2.                  Adopting regulations establishing qualifications of, and required training for pilots and providing for examination of pilots.

 

3.                  Maintaining a register of licensed pilots, licensed deputy pilots, and agents.

 

4.                  Adopting regulations establishing pilotage regions, professional fees, and criteria to recognize pilot organizations.

 

5.                  Reviewing and approving training programs conducted by pilot organizations.

 

6.                  Reviewing and approving the articles, bylaws, and rules of pilot organizations.

7.                  Establishing and publishing the dates of future license examinations.

 

8.                  Arbitrating rates for pilotage services in a manner provided for in the marine pilot statutes.

DCED Duties

 

DCED provides administrative assistance to BMP. Administrative assistance includes budgetary services and functions such as: collecting fees, maintaining files, receiving and issuing application forms, and publishing notice of examinations and meetings. On its own initiative, DCED may conduct an investigation if it appears an individual has engaged or is about to engage in a practice over which DCED has authority. DCED can issue an order that the individual stop the practice, bring an action in Superior Court to enjoin the act, examine the books and records of a licenseholder and/or association, and issue subpoenas for the attendance of witnesses and records.

 

Marine Pilot Coordinator

 

DCED employs a marine pilot coordinator to assist the board in fulfilling its statutory duties. The duties of this position, whose hiring is subject to approval of BMP, are set out at
AS 08.62.050. The marine pilot coordinator cannot work as a pilot, be an active member of a pilot association, or have a financial interest in a pilot association or the equipment that it uses. The coordinator position is funded from licensing fees paid by marine pilots to DCED.

 

Role of pilot associations

 

By statute, all Alaska marine pilots are required to belong to an association. Therefore, pilots have formed four associations in three regional Alaska locations to provide services to the shipping industry. Pilot associations offer centralized dispatch of services to industry through its pilot members. The associations either own pilot boats, or have agents who make arrangements for pilot boats, to carry pilots to and from vessels. Pilot associations sponsor candidates by providing access to a training officer and vessels with which the association or their agent has a contract. The pilot fees are collected by the association and pilots receive a portion of the revenue collected.

 

BMP has established three pilotage regions in the State of Alaska and has recognized four[1] pilot associations. Exhibit 2 below identifies the number of pilots in each pilot association.

 

Exhibit 2

 

Region	Association	Marine Pilots	Deputy Marine Pilots	Trainees	Apprentices
Southeast	Southeast Alaska Pilot Association (SEAPA)	21	6	1	0
	Alaska Coastwise Pilot Association (ACPA)	16	1	4	1
Western	Alaska Marine Pilots (AMP)	9	1	3	1
Southcentral	Southwest Alaska Pilot Association (SWAPA)	20	1	4	0
Totals		66	9	12	2

BACKGROUND INFORMATION

Piloting involves directing a sea-going vessel into and out of waters where navigation has been determined to be dangerous or difficult. The difficulties can include restricted waterways, such as channels, ports or harbors; tides, currents and water depths; and type and nature of traffic. A pilot can either be a member of the ship’s crew or independent of the crew and brought onto the ship solely for the purpose of guiding the vessel through designated pilotage waters. The pilot’s knowledge of the local geography and waterways they are piloting makes them invaluable to the vessel. The pilot is responsible for the safety of those aboard the vessel, and the protection of the marine environment.

 

History of pilotage

 

Prior to the formation of the United States, many maritime colonies had already started regulating pilotage. The First Congress of the United States had to determine which functions would be administered by the federal government, and which functions would be administered by state governments. In 1789, the Lighthouse Act[2] was passed to enable states to continue to regulate pilotage. Since 1871, regulation of marine pilots and pilotage has been considered a joint responsibility between federal and state governments.

 

In general terms, the federal government, through the United States Coast Guard (USCG), regulates pilotage on enrolled vessels. Enrolled vessels are documented in the United States and engaged in commerce between American ports. However, individual states are given the right to regulate pilotage on registered vessels. These vessels are those with foreign registry. The states also have the right to regulate pilotage on U.S. vessels sailing on registry. A vessel sailing on registry is a U.S. vessel engaged in foreign trade (e.g. a vessel that is departing for or returning from a foreign port).

 

Political history of pilotage in Alaska

 

Enacted in 1970, Alaska’s original piloting law created the Board of Marine Pilots (BMP) to license pilots. The statute did not specify qualifications and licensing standards for pilots, leaving the establishment of such standards to the discretion of the BMP.

 

In response to a 1990 report entitled Improving Alaska’s Marine Pilotage, the legislature drafted a bill that came to be known as the Marine Pilot Act of 1991. The act made significant changes to Alaska’s pilotage statute. The act included a policy, findings, and intent section which emphasized safety by requiring compulsory pilotage on the inland and coastal waters of the State to prevent the loss of lives and property, and to protect the marine environment. The legislature gave BMP broad statutory authority, including setting pilotage regions, maximum tariffs, and criteria for the training and licensing of marine pilots.

 

Competition between piloting associations, and the role of BMP in setting piloting rates, continued to be controversial. In 1995, in conjunction with the sunset extension of BMP, the legislature again amended the marine pilot statutes. One of the more significant changes the legislature made involved the role BMP has in establishing rates charged for piloting services.

 

Under the revised statute, local pilot associations set rates either through negotiation with shippers, or by providing due notice to all enterprises utilizing pilot services. Upon due notice of a change in rates, affected parties can appeal the change in proposed rates to BMP. After considering information from both sides of the issue, BMP can then determine if the increased pilot rates are reasonable.

 

According to testimony presented to legislative committees considering the 1995 legislation, this rate setting process was a result of informal discussions and negotiations involving the Knowles administration, shippers, and marine pilots. The process represented a compromise in dealing with regulation and competition involving piloting services in state waters.

 

Rate Setting Process

 

Prior to 1995, the rates for marine pilot services were established as a maximum tariff set by BMP. This tariff served as a basis for customer charges. Typically, users of marine pilot services paid an amount which included a negotiated discount from the established tariff.

 

The 1995 amendments to the marine pilot statutes made rate setting the responsibility of the local association through provision of published rates to customers (utilizing pilot services), or negotiation of rates with shipping industry customers.

 

Upon due notice of a proposed rate change, affected parties can appeal the newly proposed rates to the BMP. If the parties fail to reach an agreement, the board can solicit information from the association in regard to the proposed rate change. The BMP can then evaluate the information presented, and determine if the proposed change in rates is reasonable. The board acts as the final binding arbiter where the published rates are disputed.

 

The figure on page 9 depicts the rate setting process subsequent to legislative changes in 1995. The flow chart shows the number of times from 1996 through 2002 that the pilot associations proposed rate changes and the resulting decision actions.

 

 

 

 

 

 

 

 

 

Requirements for federal licensing

 

The USCG enforces federal pilotage laws and issues federal licenses to individuals who meet its requirements. In most states, including Alaska, an applicant must have a USCG pilot license in order to obtain a state license. The USCG license is usually referred to as a “minimum standard of competence” license. USCG licensing requires a minimum amount of qualifying sea service in addition to passing a written examination.

 

A federal license is valid for a period of five years. For renewal of the license, a pilot has to submit evidence of one year of sea service within the previous five years. Pilotage endorsements on the license do not expire, but every five years the pilot must make one familiarization round trip over the route for which they have an endorsement. For long or extended routes, the pilot does not have to physically make the familiarization trip; the pilot can be certified based on his review of publications and charts.

 

Requirements for state licensing

 

Since knowledge of local geography and waterways is an essential aspect of the pilotage profession, individuals licensed as marine pilots are required to have extensive navigational experience. Established by state law, these requirements involve up to ten years experience in navigating vessels of various sizes. Due to these requirements, most applicants for marine pilot licensing have extensive experience either with the USCG, Alaska Marine Highway System or commercial shipping.

 

Pilot trainee programs provide on-the-job training in the region where licensure is sought. Entry into an apprenticeship program typically requires less experience than entry as a trainee. Candidates in trainee/apprentice programs progress from either trainee or apprentice to a deputy marine pilot (license issued by BMP), and finally to a marine pilot. It takes from one to four years to attain licensure as a deputy marine pilot. All training programs require the candidate to ride a ship with a fully licensed training pilot, observing their handling of the ship. Over time, the trainee or apprentice begins to handle the ship under the training pilot’s guidance. Statute requires a minimum of four years apprenticeship training to become a deputy marine pilot. A deputy marine pilot, in addition to other requirements set out in statute, must have three years experience as a licensed deputy marine pilot to obtain a marine pilot license.

 

Alaska has a biennial license renewal. BMP has incorporated the continuing proficiency requirements for license renewal in regulations: (1) A marine pilot with Very Large Crude Carrier (VLCC) endorsement for license renewal after January 1, 2001, must have satisfactorily completed a manned model course within six years preceding the license period for which renewal is sought. (2) A deputy pilot and marine pilot must receive a pilot performance monitoring with at least a satisfactory rating each calendar year in which the pilot is engaged in piloting vessels for 30 days or more. (3) A marine pilot or deputy marine pilot applying for license renewal effective on or after January 1, 2003, must document satisfactory completion of a board approved simulator based training and pilot performance evaluation within six years preceding the license period for which renewal is sought.

Vessels subject to Alaska marine pilotage regulations

 

A pilot is required to be employed by vessels navigating inland and coastal waters of, or adjacent to, the State (as defined by the board). This includes any oil tanker of 50,000 dead weight tons (dwt) or greater, navigating in state water beyond Alaska pilot stations[3]. Vessels exempt from this regulation include vessels subject to federal pilot requirements, U.S. or Canadian fishing vessels, most U.S. and Canadian registered vessels and foreign flagged yachts under 300 gross tons.

 

Pilot discipline

 

The USCG investigates shipping accidents and other navigational incidents involving marine pilots operating under its federal license. The USCG has the authority to issue a letter of warning or reprimand, levy a fine, or seek criminal prosecution. The USCG may suspend or revoke a pilot’s federal license if the pilot violated maritime law or regulation, or was negligent or inattentive to their pilotage duties. At the present time, the USCG has no jurisdiction over a pilot’s state license if the pilot was operating under that license at the time an incident took place. Both the National Transportation Safety Board and the USCG Pilotage Study Group recommend that federal law be changed so the USCG can take action on a pilot’s federal license, even if an incident occurred when the pilot was acting under their state license.

 

All 24 maritime states have procedures for disciplining pilots when incidents occur while the pilot is operating under their state license. In Alaska, reports are investigated by the marine pilot coordinator (MPC), who serves as primary staff to the BMP. The BMP has the authority to suspend or revoke a pilot’s license. BMP also has the statutory power to suspend or revoke a pilot’s state license if their USCG license has been conditioned, suspended, or revoked.

 

Simulator based training and performance evaluation

 

Alaska marine pilots and deputy marine pilots must renew their licenses every two years. Pilots must also submit documentation that they have met the continuing education requirements. 12 AAC 56.83 requires:

 

A marine pilot or deputy marine pilot applying for license renewal for a license period that begins on or after January 1, 2003, shall document that the pilot has satisfactorily completed a board approved simulator based training and pilot performance evaluation within one of the three biennial license periods immediately preceding the license period for which the renewal was sought.

 

In 1999, the Department of Community and Economic Development (DCED) awarded a three-year contract to the Simulation, Training, Assessment and Research (STAR) Center in Dania, Florida for the development of a marine pilot simulator based training and performance evaluation program. To date, 61 pilots have attended the course, and 12 more are scheduled to attend through December 2002. The current contract with the STAR Center will expire in December 2002.

 

In 2000, the Alaska Vocational Technical Center (AVTEC) used $2.5 million in federal grant funds to purchase a marine simulator from Kongsberg Nor Control of Norway. The simulator incorporates not only simulated vessels and ship traffic, but simulated geographic and weather environments as well. The ships and number of simulated environmental conditions available for training purposes can be expanded significantly. AVTEC currently runs simulator database programs for some Alaska pilotage regions.

 

DCED sent a letter of interest (LOI) to AVTEC and other potential contractors on
September 6, 2002, soliciting interest in providing the simulator based training and performance evaluation to Alaska state marine pilots. This LOI was issued as a prelude to issuing a request for proposals (RFP) for simulator based training and performance evaluation.

 

Drug and Alcohol Testing Program

 

Under AS 08.62.040(b)(2), BMP has the discretionary responsibility to establish a mandatory random drug and alcohol testing program. BMP has delegated the responsibility for the administration of alcohol and drug testing to the local pilot associations. The board requires each pilot association establish a mandatory random drug testing program. Alcohol testing is also performed, but only after a maritime incident or for reasonable cause.

 

Board regulations specify that a pilot must participate in a random drug testing program conducted according to the requirements of federal regulations (46 CFR 16 and 49 CFR 40). Additionally, pilots are required to report to the marine pilot coordinator that they have participated in a random drug testing program during the previous year.

 

License Fees

 

Alaska statutes, AS 08.01.065(a) and (c) require DCED to adopt regulations that establish the amount and manner of payment of an occupation’s applicable fees, and that the fee collected for an occupation approximately equals the actual regulatory costs for the occupation. During the prior sunset audit we determined that there was an expectation of reduction in marine pilot fees. The current $2,000 license fee for the licensing period January 1, 2000, through December 31, 2002, reflects that reduction. DCED has proposed to the board that the renewal fee for the licensing period January 1, 2003 through December 31, 2004 be increased to $2,600.

 

In FY 98, the revenue roll forward balance was $147,600. This amount has been applied to cover the shortfalls through FY 02. Licensing revenue projection for FY 03 through FY 04 is approximately $203,000. The projected expenditure for the same period is $236,000. At this rate the revenue surplus should be consumed within the next three to four years.

REPORT CONCLUSIONS

Currently, AS 08.03.010(c)(10) requires the Board of Marine Pilots (BMP) to terminate on June 30, 2003. Under AS 08.03.020, if the termination date is not extended, the board will have one year from that date to conclude its administrative operations.

 

The regulation and licensing of qualified marine pilots benefits the public’s safety and welfare. The board provides reasonable assurance that the individuals licensed to pilot passenger and cargo ships in Alaskan waters are qualified to do so. BMP has continued to put in place requirements that pilots demonstrate continuing professional proficiency. The board has successfully worked with the pilot associations in resolving many of the problems identified in prior sunset audits, and has contributed to improving marine safety in Alaskan waters.

 

As discussed in the Findings and Recommendations section, the administration of the mandatory random drug testing program is not consistent with established regulatory standards, and needs to be improved. See Recommendation Nos. 1 through 3 for further discussion.

 

In our opinion, the Board of Marine Pilots serves a valid public purpose. The board should be continued in statute, and its termination date extended to June 30, 2007.

 

FINDINGS AND RECOMMENDATIONS

Recommendation No. 1

 

The Board of Marine Pilots (BMP) should take action to ensure regional pilot associations administer mandatory random drug testing programs in a manner consistent with established regulatory standards.

 

Under AS 08.62.040(b)(2), the board is authorized to develop a mandatory drug and alcohol testing program for licensed pilots. The board adopted regulations that delegated the responsibility for administering a mandatory random drug testing program to the local pilot associations. Further, BMP regulations required that local associations administer their programs in accordance with requirements set out in Titles 46 and 49 of the Code of Federal Regulations.

 

We reviewed the relevant detailed records related to the mandatory random drug testing programs maintained by the local piloting associations. From our review we determined that some of the testing was incomplete, and inconsistent with federal regulatory requirements.

 

Specifically we noted the following:

 

1.      Testing follow-through was incomplete. Since 1999, there have been nine instances where pilots, selected for random drug testing at one association, did not show up to complete their tests. These instances involved six pilots and represented just over 27 percent of all testing selections for the period (33 selections of random drug testing). There was no effective follow-through to ensure pilots, when selected for random testing, did eventually show up and take the drug test.

 

In another situation, an individual was selected for testing, but the contractor administering the test noted that there was a “sample problem,” and the specimen was never delivered for testing. Coincidentally, according to the pilot’s licensing file, the individual involved had a history of past substance abuse problems.

 

2.      Selection for testing was inconsistent between associations. Due to differences in the way associations set up their programs, there is a wide variability between pilots, regarding the probability they will be selected. All associations contract to have their testing done. The contractor may include a number of organizations within a consortium to make up a single testing pool. Three pilot associations have established their entire membership as a single testing pool. Using this method, half of the pilots in the association are always subject to selection for random testing in a given year.

 

In contrast, the membership of a fourth association is enrolled as a subgroup within a larger testing pool. As a result, only four out of over 20 members of the association were randomly selected for testing during 2001. Although enrolling as part of a consortium in a mandatory drug testing program may technically be consistent with federal regulation, such action has the effect of circumventing the central objectives of a mandatory random drug testing program. Ensuring that a representative number of pilots are subject to random testing over any given time period would be one of these objectives.

 

3.      All pilots were not enrolled in a drug testing program. One association had three licensed pilots who were never enrolled in the organization’s mandatory drug testing program. Accordingly, even though these individuals should have been subject to random testing, they were never “eligible” for selection because their names had never been forwarded to the association’s contractor.

 

The primary reason for these oversights and inconsistencies was that the pilot associations were not familiar with the drug testing program requirements set out in the relevant federal regulations.

 

BMP should require pilot associations to set out in their by-laws and/or operating rules, the specific provisions that associations should follow in administering the random drug testing requirements. Specifically, the BMP should ensure that each association’s program meets the requirement that at least 50 percent of covered association members are selected for random testing on an annual basis.

 

 

Recommendation No. 2

 

The BMP should establish more informative and comprehensive reporting requirements so the Marine Pilot Coordinator (MPC) can confirm that an appropriate number of licensed pilots are consistently being subjected to random testing.

 

Current state regulation (12 AAC 56.940(h)) requires each pilot to submit a report to the MPC by January 31 of each year, stating that the pilot has participated in a random drug testing program during the previous year. Currently, the respective association provides this annual report on behalf of all their pilot members. The report is essentially a list of the association’s membership. Presumably all members are subject to, but not necessarily selected for, random drug testing. Nowhere in the report is there an indication if a pilot was actually selected for, and submitted to, a random drug test.

 

The regulations and reporting should be clarified in order for the MPC to develop a better understanding of the extent and results of testing. As discussed in Recommendation No. 1, there is currently a disparity between local associations in the number of times a pilot has been subject to random drug testing, or the likelihood of their being selected.

 

We suggest BMP develop or amend regulations to provide for more specificity regarding what constitutes “participation” in a drug testing program, and that provisions be made for associations to report the pilots selected for testing, the pilots who have completed testing, and the results of all completed tests.

Recommendation No. 3

 

The legislature should consider amending current statutes in order to extend mandatory drug and alcohol testing to pilot organization trainees and apprentices.

 

Currently, trainees and apprentices do not participate in the random drug testing programs. This can be attributed to the language of the statute related to alcohol and drug testing programs administered by the Board of Marine Pilots. Alaska Statute 08.62.040(b)(2) states:

 

The board, may, by regulation make any other provision for proper and safe pilotage upon the inland and coastal water of and adjacent to the state and for the efficient administration of this chapter, including establishing a mandatory drug and alcohol testing program, including random tests, post-incident tests, and tests based upon reasonable cause, for pilots licensed [by the Board of Marine Pilots]. [Emphasis added]

 

Since the statute relates only to licensed pilots, individuals who are involved with associations as either trainees or apprentices are not subject random testing. Pilot associations report that most trainees and apprentices work for other employers involved in maritime activities. As such, they are likely to be subject to employer testing under federal regulations.

 

In our view, it would be better for apprentices and trainees to participate in random testing in conjunction with their training with the local association. This would ensure that all individuals who board and train on vessels in conjunction with the State’s marine pilotage requirements are subject to random testing. It would also ensure that test results have been appropriately filed and reported. Accordingly, we recommend the legislature consider amending the current statute to extend the board’s authority for alcohol and drug testing to include individuals who are in the process of becoming licensed pilots under the supervision of the local association.

 

 

Recommendation No. 4

 

The Board of Marine Pilots should seek statutory authority to allow the board the discretion to grant waivers of pilotage requirements to large pleasure crafts.

 

Under AS 08.62.180(7), foreign-registered pleasure craft of “less than 300 gross tons as measured [as specified in federal regulations]” are exempted from obtaining a licensed marine pilot. Therefore, pleasure crafts of 300 gross tons do require a marine pilot. As we have discussed in prior BMP sunset audits, effective enforcement of this particular statutory provision has historically been inconsistent, if not impossible. Reportedly, the number of private foreign-registered yachts that exceed the 300 gross ton limit is steadily increasing. Currently, these large vessels are generally either plying Alaska waters without the required pilot on board, or are being discouraged from coming to the state altogether because of the prohibitive pilotage costs,[4] and the impracticality of maintaining a pilot on board over an extended period of time.

 

A Juneau contractor who specializes in provisioning pleasure yachts, has contacted the MPC and BMP chair to suggest the board consider granting waivers on a case-by-case basis. The contractor cites Washington state law that permits the State’s pilotage board to grant exemptions to yachts that do not exceed 500 gross tons and 200 feet in length. The waiver statute applies only to waters of the Puget Sound pilotage district, which suggests that BMP or the legislature could limit waivers to specified waterways.

 

It appears most pilots want the statute better enforced. As discussed in the survey results section of this report, over two-thirds of the pilots responding to our survey opposed exempting foreign-registered yachts from pilotage requirements.

 

With enforcement problematic, discretionary waivers provide a way to track impact

 

In practice, the statute is difficult to enforce. Scofflaws face little risk of sanction, while conscientious cruisers may be discouraged from traveling through state waters by the cost of compliance. If enforcement of the statute is unrealistic or given a low priority, the law should be modified to be more workable.

 

If the board was granted more discretion in statute to provide waivers to large yachts (similar to the situation involving vessels in Puget Sound), there would be documented evidence of the nature and extent of the potential impact.

 

By being able to consider and issue waivers on a case-by-case basis, the board could develop a sense of the impact of high-end pleasure cruising in the state. BMP could tabulate the average size involved with these larger yachts, and if there were perceived abuses, could begin limiting or eliminating waivers altogether on a discretionary basis. Such action would seem to be preferable to current situation whereby the individuals involved are either flaunting the statute with no effective consequence, or are avoiding Alaska waters due to the cost prohibitive nature of the fees involved.

 

Accordingly, we suggest the BMP seek authority from the legislature to amend this section of the pilotage statutes to allow it the discretion to grant waivers for foreign-registered pleasure craft that exceed an established size.

 

AUDITOR COMMENTS

As discussed in the Background Information section of this letter, licensed marine pilots are periodically required to demonstrate continued professional competency by going through various computer-generated scenarios using a maritime vessel simulator. Currently, marine pilots licensed in Alaska utilize a simulator operated by a private contractor located in Dania, Florida.

 

There is a maritime simulator located in Seward operated by AVTEC. This simulator, bought with $2.5 million in federal grant funds, is currently used in the certification process for USCG certified pilots and various other commercial navigational licenses and certifications.

 

BMP should consider meeting proficiency needs through use of an in-state simulator

 

The Board of Marine Pilots is in the process of soliciting bids from contractors to operate a simulator as part of the State’s continued proficiency program. AVTEC representatives have advised us that they are very interested in trying to accommodate the needs of the State’s marine pilots, in order to make more efficient use of the facility’s simulator.

 

We suggest the Board of Marine Pilots fully consider the merits and potential of the AVTEC facility, and determine if designation of that facility would possibly be in the best overall interests of the State. Although there may be some retrofitting costs involved, we believe there may be some merit in promoting the use of the AVTEC facility. Specifically, using AVTEC would:

 

1.      Make better use of a state-owned resource. The simulator facility at AVTEC is sufficient for performing an adequate simulated performance evaluation. The facility may not have a full bridge set-up like the STAR Center, however, with some modification it is fully capable of performing the evaluation with the current equipment. The graphics are superior to the STAR Center, thus contributing to the visual enhancement of the simulations. A clearer picture provides a better overall simulation experience.

 

2.      Lower training costs to pilots. The AVTEC facility can provide training at a lower cost than that of the Florida-based simulator. We have been told the current cost to attend the simulator training at the Florida facility is as much as $5,000 for one week. While AVTEC representatives have not developed comparable cost figures, AVTEC staff thought the cost of the course (including airfare) would be less than what many pilots are currently paying.

 

3.      Promote in-state economic development. By keeping the simulator proficiency operations in-state, the board would provide some incremental benefits to the Seward hospitality businesses who would host the more than 70 pilots as they came through for their certification. In many respects, negotiating and working specifically with AVTEC to provide this unique service, the board could economically exploit one of Alaska’s renewable resources – its extensive and expansive coastline and waterways.

 

As discussed in the Survey Results section of this report, almost half of the pilots responding to our survey expressed an interest in conducting proficiency demonstration exercises at AVTEC. Pilots responding to the survey commented that the graphics and technology at the AVTEC site are superior to those of the STAR Center. Other pilots expressed reservations about simulator operations at AVTEC. These pilots reported AVTEC does not have adequate staff and a large enough bridge design.

ANALYSIS OF PUBLIC NEED

Limited Analysis

 

The following analyses of board activities relate to the public need factors defined in Alaska Statute 44.66.050(c). These analyses are not intended to be comprehensive, but address those areas we were able to cover within the scope of our review.

 

 

The extent to which the board, commission, or program has operated in the public interest.

 

The regulation and licensing of qualified marine pilots benefit the public’s safety and welfare. The steady increase in tourist passenger ships in recent years has made Board of Marine Pilots (BMP) role increasingly more important. The board provides reasonable assurance that the individuals licensed to pilot passenger and cargo ships in Alaskan waters are qualified to do so. Beginning with the January 1, 1999, licensing renewal period, BMP required that pilots have no regional exclusions attached to their state and federal licenses.

 

BMP has been continuously reviewing all exam database questions and answers for content, applicability, and accuracy. Pilot associations are solicited for questions to input into the database. BMP has also begun improving training and continuing education of Alaska marine pilots.

 

·        The board has successfully worked with the pilot associations in sending 61 pilots to attend the simulator and performance evaluation training at the Simulation, Training, Assessment and Research (STAR) Center in Dania, Florida. Twelve more pilots are scheduled to attend by the end of calendar year 2002. Satisfactory completion of this simulator based training is a requirement for license renewal after January 1, 2003.

 

·        Marine pilots with very large crude carrier (VLCC) endorsements are required to satisfactorily complete a manned model course for the licensing period that begins on or after January 1, 2001.

 

 

The extent to which the operation of the board, commission, or agency has been impeded or enhanced by existing statutes, procedures, and practices which it has adopted, and any other matter, including budgetary, resource, and personnel matters.

 

As discussed in the Findings and Recommendations section, BMP needs to clarify regulations related to the administration of the drug testing program.

 

The Board of Marine Pilots, Schedule of License Revenues and Board Expenditures, FY 99 through FY02 is shown in Appendix A.

 

In FY 98, the revenue roll forward balance was $147,600. This amount has been applied to cover the shortfalls through FY 02. Licensing revenue projection for FY 03 through FY 04 is approximately $203,000. The projected expenditure for the same period is $236,000. At this rate the revenue surplus should be consumed within the next three to four years.

 

 

The extent to which the board, commission, or agency has recommended statutory changes that are generally of benefit to the public interest.

 

As discussed in the Background Information section, in 1995 the legislature made substantive revisions to the marine pilot statutes. There has been no statutory change since the passage of the 1995 Marine Pilot Act. Both the marine pilots and industry representatives reported to us that they were told by legislative leaders not to bring further marine pilot issues back before the legislature. As a result, the BMP has not pursued any changes to current statutes.

 

 

The extent to which the board, commission, or agency has encouraged interested persons to report to it concerning the effect of its regulations and decisions on the effectiveness of service, economy of service, and availability of service that it has provided.

 

Through the work of marine pilot coordinator, BMP has published notices of all examinations, meetings, and prospective regulation changes. Public notice of meetings, examinations and changes in published rates are made in newspapers of general circulation and posted on the State of Alaska Online Public Notice website. Additionally, a period of time for public comment was available at each BMP meeting.

 

The Division of Occupational Licensing maintains a list of individuals or organizations who are interested in the regulations of that occupation. The division sends a Notice of Proposed Regulations automatically to the parties on the occupation listing each time there is a proposed change in the occupation’s regulations.

 

 

The extent to which the board, commission, or agency has encouraged public participation in the making of its regulations and decisions.

 

As noted previously, each board meeting agenda allots time for public comment. The public has been encouraged to use these public comment periods to express concerns and obtain information from the board. The public comment period for regulation changes also assures that the public has the opportunity to participate in the regulatory process.

 

 

The efficiency with which public inquiries or complaints regarding the activities of the board, commission, or agency filed with it, with the department to which a board or commission is administratively assigned, or with the Office of the Ombudsman have been processed and resolved.

 

We have reviewed the nature and extent of complaints filed involving licensed marine pilots. In our view, the Division of Occupational Licensing, in conjunction with the board, took appropriate investigative actions, prioritized complaints in a reasonable manner, and proceeded in a manner consistent with the potential threat the complaints posed to the public welfare. No complaints were filed with the Office of the Ombudsman in recent years regarding the operations of the board specifically, or marine pilots in general. BMP, in accordance with due process afforded by the Administrative Procedures Act, revoked the license of a marine pilot in FY 01.

 

 

The extent to which the board or commission which regulates entry into an occupation or profession has presented qualified applicants to serve the public.

 

Over the past four fiscal years, the board has certified 11 individuals as marine pilots and 13 individuals as deputy marine pilots. There are currently 12 trainees and 2 apprentices in the deputy pilot training program.

 

 

The extent to which state personnel practices, including affirmative action requirements, have been complied with by the board, commission, or agency to its own activities and the area of activity or interest.

 

We did not find any evidence that BMP was not complying with state personnel practices, including affirmative action, in qualifying applicants or in hiring the marine pilot coordinator. Each time BMP has denied an applicant a license the reason has been based on experience requirements and not personal attributes of the applicant.

 

 

The extent to which statutory, regulatory, budgeting, or other changes are necessary to enable the agency, board, or commission to better serve the interests of the public and to comply with the factors enumerated in this subsection.

 

As reflected in our discussion in the Findings and Recommendations section, the board should consider various ways to improve the consistency and administration of routine mandatory drug testing programs by local pilot associations. The board should provide more guidance to the associations regarding the structure of their drug testing program, and require more informative reporting of the nature and extent of each association’s testing.

 

We also suggest BMP consider the merit of recommending that it be given the authority to grant waivers to foreign-registered pleasure craft that exceed the statutory size limit (300 gross tons). By developing and implementing such a waiver program, the board could begin developing statistics in order to better understand the nature and extent that such large vessels could have on the State’s economy.

 

As discussed in the Auditor Comments section, BMP should consider the merits of utilizing an in-state maritime simulator as part of its continuing pilot proficiency program, rather than necessarily continuing with the current out-of-state contractor.

SURVEY RESULTS

We conducted a survey of pilots and shipping industry customers regarding their opinions and attitudes about significant policy issues related to the regulation of pilotage in Alaska.

 

The survey of pilots and shipping industry customers on selected policy issues resulted in responses from 56 of 75 pilot licensees (75% response rate), and 18 of 42 industry customers (43% response rate). Selected survey results are as follows:

 

·        Increasing the Number of Board Seats for Agents and Pilots. There are three recognized pilotage regions in the state. Statute designates two pilots from different regions are to serve as BMP members. As a result, at any given time, one pilotage region is not represented on the board. Accordingly, if pilot board membership is increased, shipping industry customers would like to see a corresponding increase in the number of agents for balance.

 

Ninety-one (91%) percent of responding pilots did not favor expansion of board seats for another agent and pilot. This is a sharp contrast to the industry customer survey which shows 87% favoring such a change. The focal point of objections heard from pilots during our fieldwork pertains to higher operating costs. All board operating costs are covered by fees charged pilots and applicants, primarily made up of license renewal fees.

 

·        Mandatory Retirement Age for Pilots. Currently there is no mandatory retirement age for marine pilots. Other pilot associations throughout the United States have established mandatory retirement ages. Retirement policies vary widely among pilot associations around the country. According to an informal survey of 45 pilot associations conducted by the American Pilots Association (APA), only 14 had a mandatory retirement age. Among these associations with mandatory retirement, the ages ranged from 65 to 70.

 

Both pilots and shipping industry customers favor mandatory retirement. Survey results from both groups recommended that retirement age range from 60 to 70 years old.

 

·        Rate Setting Process. The 1995 legislation decentralized the rate setting process. Industry representatives we interviewed often commented that they believed that the revised rate development process gives the local pilot association undue and increased bargaining power.

 

As expected, surveys from pilots and shipping industry customers reflect opposite views regarding the rate setting process. Ninety-eight (98%) percent of pilots consider the rate setting process as satisfactory. This process relies on negotiation between pilot associations and shipping industry customers.

 

Seventy-six percent (76%) of shipping industry customers scored the current rate setting process as unsatisfactory. Some examples of industry comments were as follows:

 

(1) Pilots leave no room to negotiate. Maximum tariff used as a benchmark.

 

(2) Board is pro-pilot association and gives secondary consideration to costs to industry.

 

(3) Rates should be reviewed by an independent board or commission that will determine if the costs, i.e. pilot rates, standby time compensation and benefits are warranted. It is incredible to see marine pilots being compensated on a yearly basis, 3 to 5 times what captains of our ships get paid. Close shop doesn’t allow for competition.

 

In general, industry survey respondents did not believe BMP fully considered the financial effect of pilotage expenses on the owner of the vessel when reviewing rates for reasonableness.

 

·        Adequacy of Drug Testing Program. Under AS 08.62.040 (b) (2), the board may establish a mandatory drug and alcohol testing program, including random tests, post incident tests, and tests based upon reasonable cause. An overwhelming majority of pilots, 98% of the responses received, consider the current drug testing of pilots as adequate.

 

·        Licensing Requirements/Simulator Base Performance Evaluation. Under current regulations, pilots renewing their license after January 1, 2003, must have satisfactorily completed a board approved simulator based training and performance evaluation within six years preceding the renewal.

 

·        Eighty-nine (89%) percent of pilots consider the current licensing requirements adequate to ensure a competent pool of marine pilots. Similarly, 75% consider the simulator based performance evaluation an adequate method of maintaining pilot competency.

 

Almost half of the responding pilots, 23 out of 50, showed interest in receiving the training and performance evaluation at AVTEC.

 

·          Foreign Yachts Exemption. Piloting exemptions are granted to certain vessels listed in statute (AS 08.62.180). An exemption applies to pleasure craft of foreign registry of less than 300 gross tons. There are reportedly an increasing number of yachts that are greater than 300 gross tons that typically either do not utilize a pilot, or avoid cruising in Alaska waters due to pilotage the requirement. Sixty-eight (68%) percent of pilots who responded to this survey question, do not favor exempting yachts over 300 gross tons from piloting requirements (see Recommendation No. 4).

 

Survey data results and comments are shown on Appendix B.

APPENDICES

APPENDIX A

APPENDIX A

 

State of Alaska
Board of Marine Pilot
Schedule of License Revenues and Board Expenditures
FY 99 through FY 02
	FY02	FY01	FY00	FY99
Total Revenues:	$13,367	$154,823	$14,110	$170,615
Board/Occupation Direct Expenditures:
Personal Services	78,540	79,794	72,566	73,163
Travel	15,930	10,533	9,607	10,602
Contractual	16,961	12,707	26,454	15,094
Supplies	144	0	24	223
Equipment	0	1,887	0	0
Total Board/Occupation Direct Expenditures	111,575	104,921	108,651	99,082
Total Administrative Indirect Expenditures	4,332	3,983	3,692	3,857
Total Direct and Indirect Expenditures	$115,907	$108,904	$112,343	$102,939
Revenues – Expenditures	($102,540)	$45,919	($98,233)	$67,676
Cumulative Roll Forward Surplus	$60,422	$162,962	$117,043	$215,276

 

APPENDIX B

APPENDIX B

Department of Community and Economic Development

Board of Marine Pilots

Survey Results

 

 

As part of our audit we surveyed two groups of “stakeholders” regarding the activities and operations of the Board of Marine Pilots. The first group included all the individuals licensed by the board (marine pilots and deputy marine pilots). Although the survey included the both licensee categories, the responses received to Questions 1 through 12 are grouped together in this appendix under the heading of marine pilots.

 

The other surveyed group was made up primarily from customer lists provided to us by each of the state’s four regional piloting associations. Additionally, the survey was passed along to various other interested shipping industry customers.

 

The survey sent to each group was different. Both groups of respondents were asked three common questions (designated in the Appendix as Questions 1-3). The pilot group survey included nine additional questions (Questions 4-12), while the industry group was asked an additional three questions (Questions 13-15).

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