Concerned about an estimated $44 million rise in costs to industry requiring Louisiana river pilot services, leadership from the Louisiana Chemical Association and the Louisiana Mid-Continent Oil and Gas Association are pushing, in part, for a mid-year “true-up” that would make adjustments to pilot and shipment numbers based upon “real world” data, thereby eliminating gross compensation overages.
Even as alleged improprieties in the selection of its at-large commissioners are hashed out in 19th Judicial District Court, Baton Rouge Business Report reports, industry representatives on the Louisiana Pilotage Fee Commission say they face a more enduring and costly problem: Flawed methodology for calculating compensation, they contend, is putting millions of additional dollars in the pockets of state river pilots at the expense of industry.
Public records extrapolated by the Louisiana Chemical Association show that state pilot compensation exceeded target compensation goals by as much as 31% in 2017 (the latest available data), with individual pilot wages exceeding $700,000 in some cases. In total, these overages resulted in a $44 million increase in additional cost for the industries requiring their services.
LCA is one of four industry representatives on the LPFC, along with four from the river pilots’ associations and three independent, at-large appointees. Created by the 2004 Legislature, the commission establishes rates and fees charged by state river pilots operating on the Mississippi and Calcasieu rivers. State pilots are required by law to take international vessels upriver upon entering the U.S.
Greg Bowser, LCA president and an LPFC commissioner since its inception, says the cost overages are the result of overestimations in pilot numbers and underestimations of shipping volumes in annual target compensation rate requests—which are approved by the commission. When the number of pilots falls short of the estimate, the excess money is distributed among the other pilots instead of the fees being reduced. “They basically get paid for what I call phantom pilots. Pilots that don’t exist,” Bowser says.
Each year, the estimates are presented to the commission by the river’s three pilot groups—the Associated Branch Pilots (Bar Pilots), the Crescent River Port Pilots Association (Crescent Pilots) and the New Orleans Baton Rouge Steamship Pilots Association (NOBRA). In 2017, NOBRA’s commission-approved target compensation was $455,646 per pilot for an expected 120 pilots, but 1099 tax filings show there were only 115 actual pilots, earning an average salary of $633,275 annually, some $177,629 over target. Similar overages were found for the Crescent Pilots and Bar Pilots, which exceeded target compensations by an average of $125,207 and $139,302, respectively, according to LCA calculations.
Nonetheless, these groups contend that their pilots are working more hours, given the lower-than-projected number of pilots, and therefore should be compensated accordingly.
Bowser and Louisiana Mid-Continent Oil & Gas Association President Tyler Gray think changes to the calculation methodology are long overdue; hence, the proposed mid-year “true-up.” “The commission could look at it six months down the road and find they’re over-earning by 30 percent,” Bowser says. “Well, you need to adjust the tariff. The tariff can be adjusted down and still achieve your target.”