The Galveston County Daily News

Parties are steaming ahead with hearings to set ship pilot pay despite threats of litigation by attorneys for two major cruise lines sailing from Galveston.

The five-member Board of Pilot Commissioners on Monday began the rate hearings, despite requests by attorneys for Carnival Cruise Lines and Royal Caribbean Cruises that they be delayed until a judicial review of previous proceedings was complete.

The attorneys were referring to a lawsuit filed late last month by the cruise lines and the Florida-Caribbean Cruise Association in the 212th State District Court against the Board of Pilot Commissioners.

In the lawsuit, the cruise lines are asking the board to uphold an agreement allowing them to pay for only one pilot to steer their ships in and out of the harbor.

Until that lawsuit is resolved, it isn’t judiciously economical to move forward with a fresh round of rate hearings, argued Justin Renshaw, an attorney for the cruise lines. Renshaw called the lawsuit the “800-pound gorilla in the room.”

But there isn’t a provision in the transportation code giving the pilot commissioners authority to delay the hearings, Vandy Anderson, chairman of the board, said.

State law requires the commissioners to begin rate hearings 20 days after pilots file for rate increases, which was Monday. Commissioners made no decisions on rates.

“We’re not going to do something we don’t think we have the authority to do,” Anderson said.

Commissioners recessed until Nov. 2 to give all parties time to prepare briefs and for opponents of the rate increase to review financial reports provided by the 15-member Galveston-Texas City Pilots Association.

Paxton Crew, an attorney for the pilots, argued that attorneys for the cruise lines were simply attempting to delay the rate hearings.

But Renshaw said his clients would be forced to seek relief from the courts to stop the hearings if parties could not come to some sort of agreement.

By late Monday, Renshaw had not filed for injunctive relief to stop the proceedings and said he hoped to reach agreements before court action was necessary.

After months of failed negotiations and some heated hearings, the pilots in August dropped a request for a controversial rate increase. The state-sanctioned monopoly had in May filed for multiyear rate increases.

The filing called for an 8 percent increase beginning June 1, an 8 percent increase the following year and 7 percent hikes each of the next three years.

Cruise lines long have argued the second pilot was unnecessary and doubled pilot fees.

They also argued it was not an industry standard.

Pilots argued the second pilot was necessary for safety.

Before the pilots dropped the rate request, they had agreed to drop the requirement of two pilots for all cruise ships sailing from the island. In exchange, the cruise lines withdrew their objection to the rate increase, according to the lawsuit.

The pilots, Carnival and Royal Caribbean submitted an agreed tariff to pilot commissioners July 16. It was unanimously approved.

The board continued the rate hearings for several days, during which pilots and other opponents of the rate increase presented evidence.

The board also voted to grant the pilots a 5 percent increase in their rates. But there was a snag, according to the lawsuit.

“Unbeknown to objectors, the tariff rates were adjusted after the fact in an effort to achieve a desired ‘target revenue’ increase, an approach not provided for in the Transportation Code,” according to the lawsuit.

The pilot association’s abrupt withdrawal of its request was prompted by threats of a legal challenge by the West Gulf Maritime Association, which represents companies that pay pilot fees, according to reports.

When the pilots dropped their request, they also rescinded the agreement to use one pilot on large cruise ships.

The pilots have since filed for new rate increases.

Carnival and Royal Caribbean are asking the court to uphold the agreement eliminating the requirement for second pilots.

What pilots earn, and that they want more during a recession, is angering the industry that pays their rates.

A Galveston-Texas City pilot testified at a rate hearing for Lake Charles, La., pilots that average reported income for 2007 was $335,000.

But pilots argue that critics never deduct health, life and disability insurance and taxes from the figure.

The cruise lines want to resolve old fights before proceeding with new rate hearings, Renshaw said.

“We want to cool these things off and address them in orderly fashion,” Renshaw said.

“We don’t want to have multiple proceedings all over the place. Seems like that’s common sense.”

Pilots argue they’ve been waiting for rate increases since 2007.