Galveston County Pilots Tariff Application May 3, 2010

Introduction Captain Wallace R. Hogan, Jr. Presiding Officer Galveston-Texas City Pilots

Presentation Captain Mark Saunders Vice President Galveston-Texas City Pilots

Texas Transportation Code (1) characteristics of vessels to be piloted; (1) characteristics of vessels to be piloted; (2) the average number of hours spent by a pilot in performing pilot services; (2) the average number of hours spent by a pilot in performing pilot services; (3) costs to pilots to provide the required pilot services; (3) costs to pilots to provide the required pilot services; (4) the effect, including economic factors affecting the shipping industry in the area, that the granting, refusal, or modification of the application would have on Galveston County ports and the persons residing in the board's jurisdiction; (4) the effect, including economic factors affecting the shipping industry in the area, that the granting, refusal, or modification of the application would have on Galveston County ports and the persons residing in the board's jurisdiction; (5) an adequate and reasonable compensation for the pilots and a fair return on the equipment and vessels that the pilots employ in connection with pilot duties; and (5) an adequate and reasonable compensation for the pilots and a fair return on the equipment and vessels that the pilots employ in connection with pilot duties; and (6) the relationship between the pilotage rates in Galveston County ports and the rates applicable in other ports of this state and in competitive ports in other states (6) the relationship between the pilotage rates in Galveston County ports and the rates applicable in other ports of this state and in competitive ports in other states

The Proposed Tariff Explanation of the Tariff Structure and Justification for Each Increase Explanation of the Tariff Structure and Justification for Each Increase A Comparison of the Tariff on a Per Ship Basis to other Regional Ports A Comparison of the Tariff on a Per Ship Basis to other Regional Ports Financial Factors Financial Factors Economic Effect on Industry Economic Effect on Industry

Draft Charges No Increase DRAFT CHARGE $45.80/ft. To or From Sea to Galveston, Texas City, or Bolivar Roads; To or From Bolivar Roads to Galveston or Texas City; or between Galveston and Texas City. Minimum draft charge is 20 ft.

Unit Charges No Increase Vessels shall also be charged a Unit Charge. Vessels shall also be charged a Unit Charge. Units are computed by multiplying the vessel’s length overall in feet by her extreme breadth in feet and dividing by 100. Units Cost/Unit Units Cost/Unit $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ up $1.376 Units Cost/Unit Units Cost/Unit $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ up $1.376

Education and Safety Per movement/cancellation $41.00 These charges are needed to accomplish pilot training and continuing education. This fund is also used to provide pilots with portable GPS/AIS navigation computers. With new pilots coming on board, this fund needs to be replenished.

Fuel Charges Per movement/cancellation $ This charge is for the pilot boat to cross the bar, there are no charges for inter- harbor shifts between Houston, Galveston, Texas City or to Bolivar Roads or for second pilots.

Charges That are Within the Control of the Customer Charges That are Within the Control of the Customer Anchorage: Allows customers to conduct crew changes, inspections, stores and other operations in the protected waters of Bolivar Roads that are not possible in the offshore fairway anchorage. By utilizing this anchorage, considerable port expenses such as wharfage, tugs, and line handling can be avoided. Anchorage: Allows customers to conduct crew changes, inspections, stores and other operations in the protected waters of Bolivar Roads that are not possible in the offshore fairway anchorage. By utilizing this anchorage, considerable port expenses such as wharfage, tugs, and line handling can be avoided. Cancellation and Detention: When pilot ordering is done in a timely manner, port efficiency is greatly enhanced. The Pilots, along with Tug, Line Handing companies, and port facilities can better control costs. Cancellation and Detention: When pilot ordering is done in a timely manner, port efficiency is greatly enhanced. The Pilots, along with Tug, Line Handing companies, and port facilities can better control costs.

Second Pilot SECOND PILOT On vessels over 120,000 DWT, or on vessels 860 ft. LOA or more, there shall be two Pilots. If not turning, one pilot is required for those vessels with operational thrusters or less than 130 ft. of beam. The second pilot is charged at the same rate as the first. There is no fuel charge for the second pilot. Cruise Vessels: Upon completion of dredging operations which widen the Galveston Ship Channel in any of those certain areas as specified in Attachment A where cruise ships turn, there shall no longer be any second pilot required aboard cruise ships equipped with bow thrusters, stern thrusters, azipods, and/or similar propulsion capabilities.

Galveston Channel Proposed Turning Radiuses

Bolivar Roads Anchoring In addition to any other applicable charge, any movement involving the Bolivar Roads Anchorage will be charged $ Anchoring a vessel in Bolivar Roads requires additional use of assets including Pilot time, Pilot Boat Time and takes a pilot boat away from the boarding area.

Detention or Holding Detention is charged after the first half-hour (30 minutes free time), and not prorated. If, after 30 minutes, the vessel does not sail, or does not arrive, then detention shall be charged from the original time of the order. Detention shall be charged if the pilot is unable to disembark within 30 minutes of first line. Detention shall be charged to vessels over 80,000 DWT only if the pilot is unable to disembark within 45 minutes of first line. Detention is charged after the first half-hour (30 minutes free time), and not prorated. If, after 30 minutes, the vessel does not sail, or does not arrive, then detention shall be charged from the original time of the order. Detention shall be charged if the pilot is unable to disembark within 30 minutes of first line. Detention shall be charged to vessels over 80,000 DWT only if the pilot is unable to disembark within 45 minutes of first line. Holding is charged when a vessel requires a Pilot to hold the vessel alongside a dock or bank, or hold in the stream, or to stand by while the compass is calibrated. Holding time will also be charged when a vessel is under reduced speed in order to await a clear berth, or adequate harbor tugs. Holding is charged when a vessel requires a Pilot to hold the vessel alongside a dock or bank, or hold in the stream, or to stand by while the compass is calibrated. Holding time will also be charged when a vessel is under reduced speed in order to await a clear berth, or adequate harbor tugs. Detention/Holding $392.47//hr. Detention/Holding $392.47//hr.

Cancellations Sailings, shifts, or other movements originating on inside waters $ Arrivals $654.15

Notice Can Be Given to Avoid Cancellation and Detention Charges Cancellation and Detention charges can be avoided by giving the pilot office notice of changes. Sailings, shifts, or other movements originating on inside waters:1.5 hrs. Sailings, shifts, or other movements originating on inside waters:1.5 hrs. Arrivals:2 hrs

Minimum Charge The minimum charge for all vessels, whether arriving, sailing, or shifting, is $995.00

Shifting Between docks within Galveston or within Texas City, a flat rate charge shall be made. Shifting charge $ Vessels shifting shall pay the unit charge in addition to the shift charge. Minimum shifting charges$995.00

Communication Charge Per movement/cancellation$22.49 This charge is essentially to offset costs of operating dispatch services and Harborlights fees.

Oil Rigs Helicopter: Pilots will embark or disembark by helicopter, unless the rig is stationary alongside a dock within Galveston Harbor. Helicopter service fees will be contracted and paid by the customer. The Pilots will board by pilot ladder via pilot boat if it is safe and suitable to do so. The Pilots will make the final determination on how to board the rig. Helicopter: Pilots will embark or disembark by helicopter, unless the rig is stationary alongside a dock within Galveston Harbor. Helicopter service fees will be contracted and paid by the customer. The Pilots will board by pilot ladder via pilot boat if it is safe and suitable to do so. The Pilots will make the final determination on how to board the rig. Number of Pilots: Semi-Submersibles and similar sized vessels, while underway, will require two pilots on the rig, and one pilot on the towing vessel, for a total of three pilots. Shifting from berth to berth within the harbor, under adequate local harbor assist tugs, will require only two pilots on the rig. Number of Pilots: Semi-Submersibles and similar sized vessels, while underway, will require two pilots on the rig, and one pilot on the towing vessel, for a total of three pilots. Shifting from berth to berth within the harbor, under adequate local harbor assist tugs, will require only two pilots on the rig. Jack-ups and similar sized vessels, while underway, will require one pilot on the rig, and one pilot on the towing vessel, for a total of two pilots. Shifting from berth to berth within the harbor, under adequate local harbor assist tugs, will require only one pilot on the rig. Jack-ups and similar sized vessels, while underway, will require one pilot on the rig, and one pilot on the towing vessel, for a total of two pilots. Shifting from berth to berth within the harbor, under adequate local harbor assist tugs, will require only one pilot on the rig. For those rigs due to their size, purpose or construction where the number of pilots cannot clearly be determined as required under this section, the Galveston-Texas City Pilots will make such final determination as to the number of pilots required. For those rigs due to their size, purpose or construction where the number of pilots cannot clearly be determined as required under this section, the Galveston-Texas City Pilots will make such final determination as to the number of pilots required.

Oil Rigs Charges Movements within Galveston Harbor-Shifting $750.00/hr.* Movements to or from Sea, as well as Bolivar Roads, with 5 hr. minimum applicable $750.00/hr.* All hourly charges to commence upon time for order, and hours of service are not prorated. *Plus the Communication Charge, the Fuel Charge, and the Education and Safety Charge. Movements within Galveston Harbor-Shifting $750.00/hr.* Movements to or from Sea, as well as Bolivar Roads, with 5 hr. minimum applicable $750.00/hr.* All hourly charges to commence upon time for order, and hours of service are not prorated. *Plus the Communication Charge, the Fuel Charge, and the Education and Safety Charge. Ordering/Movements: Notice for pilot services for rig movements will be placed at least four hours in advance of movement. Rigs will be moved at slack water or on following tidal currents, during daylight hours. Depending on draft, large rigs may require prior implementation of a U.S.C.G. safety zone or the like. All movements will be predicated on sea, weather, and visibility conditions, as well as adequate assist tugs, as determined by the Galveston-Texas City Pilots. Ordering/Movements: Notice for pilot services for rig movements will be placed at least four hours in advance of movement. Rigs will be moved at slack water or on following tidal currents, during daylight hours. Depending on draft, large rigs may require prior implementation of a U.S.C.G. safety zone or the like. All movements will be predicated on sea, weather, and visibility conditions, as well as adequate assist tugs, as determined by the Galveston-Texas City Pilots.

Special Services and Pilot Carried to Sea SPECIAL SERVICES The rates for any Special or Extra service not covered herein, including, but not limited to, trial runs, movements of unusual types of floating equipment such as special purpose barges, and placing vessels on or off a drydock or barge, shall be by specific agreement made in advance of movement. SPECIAL SERVICES The rates for any Special or Extra service not covered herein, including, but not limited to, trial runs, movements of unusual types of floating equipment such as special purpose barges, and placing vessels on or off a drydock or barge, shall be by specific agreement made in advance of movement. PILOT CARRIED TO SEA If the Pilot is carried to sea for any reason, including weather, the pilot shall be paid $950 per day plus all expenses back to Galveston. PILOT CARRIED TO SEA If the Pilot is carried to sea for any reason, including weather, the pilot shall be paid $950 per day plus all expenses back to Galveston.

Galveston County Pilots Handle a Broad Array of Vessels- Large and Small We Pilot them All Aframax and Suezmax Tankers Aframax and Suezmax Tankers Ro-Ro Vessels Ro-Ro Vessels Breakbulk Cargo Vessels Breakbulk Cargo Vessels Cruise Ships Cruise Ships Seismic Support Vessels Seismic Support Vessels Crew boats Crew boats Semi-Submersible Drilling Units Semi-Submersible Drilling Units Mobile-Offshore Drilling Units Mobile-Offshore Drilling Units Self Propelled Drilling Units Self Propelled Drilling Units Deadship Tows Deadship Tows

The Pilots Commitment to Safety, Technology and Efficiency New Pilot Boat on the way Harborlights System Website Access for Agents

The Pilots Commitment to Port Efficiency The Pilots are committed to port efficiency. The implementation of Harbor Lights, along with the concerted efforts of Industry and Pilots will greatly mitigate these costs, thereby benefiting everyone. The Pilots are committed to port efficiency. The implementation of Harbor Lights, along with the concerted efforts of Industry and Pilots will greatly mitigate these costs, thereby benefiting everyone. The Gal-Tex Pilot organization is comprised of highly trained and experienced pilots. In addition, our pilot boat captains average more than twenty years experience each. These highly skilled mariners not only ensure the safe and efficient boarding process, they are a key part of port efficiency. The Gal-Tex Pilot organization is comprised of highly trained and experienced pilots. In addition, our pilot boat captains average more than twenty years experience each. These highly skilled mariners not only ensure the safe and efficient boarding process, they are a key part of port efficiency. Our Pilot Dispatchers are also highly trained and experienced personnel who liaise with agents, the USCG, VTS, Harbor Masters from both Ports, Tug Boat companies, line handlers and more. Our Pilot Dispatchers are also highly trained and experienced personnel who liaise with agents, the USCG, VTS, Harbor Masters from both Ports, Tug Boat companies, line handlers and more.

New Pilot Boat-The Galveston The new Pilot boat Galveston, a sister to the Texas, is a 70 foot, 30 knot state of the art pilot boarding craft nearing completion and scheduled to be delivered first of July The new Pilot boat Galveston, a sister to the Texas, is a 70 foot, 30 knot state of the art pilot boarding craft nearing completion and scheduled to be delivered first of July This new pilot boat will complete our fleet: two heavy weather boats and one smaller boat, The Galveston Bay, to serve industry. This new pilot boat will complete our fleet: two heavy weather boats and one smaller boat, The Galveston Bay, to serve industry. When the Texas City dredging project is complete, Pilots will have to board approximately three miles further out. When the Texas City dredging project is complete, Pilots will have to board approximately three miles further out. This new boarding area will require additional assets (pilot boats) and personnel (pilot boat captains) to be called into service. This new boarding area will require additional assets (pilot boats) and personnel (pilot boat captains) to be called into service. The new pilot boat will enable the Pilots to serve both the inshore and offshore boarding areas concurrently, ensuring continued timely service to ships ready to embark or disembark a pilot. The new pilot boat will enable the Pilots to serve both the inshore and offshore boarding areas concurrently, ensuring continued timely service to ships ready to embark or disembark a pilot.

Harborlights The Pilots have recently implemented the Harborlights system The Pilots have recently implemented the Harborlights system This allows agents and other port users to log into Harborlights to coordinate port movements This allows agents and other port users to log into Harborlights to coordinate port movements This will also bring administrative efficiencies to the pilots and our customers as our business grows thereby keeping costs down. This will also bring administrative efficiencies to the pilots and our customers as our business grows thereby keeping costs down. Same system currently used by Houston Pilots Same system currently used by Houston Pilots

Harborlights Continued Will facilitate better port planning by customers and users to predict shifts from various berths in the Houston/Galveston Port Complex. Will facilitate better port planning by customers and users to predict shifts from various berths in the Houston/Galveston Port Complex. Will create a cost savings for users by avoiding some port costs, including wharfage, detention, and other costs related to shifting Will create a cost savings for users by avoiding some port costs, including wharfage, detention, and other costs related to shifting Can also facilitate layberth planning Can also facilitate layberth planning

Website Access for Agents and Users We are creating a website for users and agents which will grant them access to the Harborlights system. We are creating a website for users and agents which will grant them access to the Harborlights system. This will allow for improvements in scheduling. This will allow for improvements in scheduling.

Average Number of Hours Spent By a Pilot in Performing Services To perform their services, Galveston County Pilots are required to travel to the dispatched job, travel to the ship by pilot boat, conduct the transit or shift, and then return home and standby for the next dispatched job. Since December 09, the Pilots have averaged 2.25 jobs a day. The average pilot time per job is six hours from dispatch time to arriving home including travel time.

Costs to Pilots to Perform Services Maintenance and Repair on pilot boats Maintenance and Repair on pilot boats Operational costs of Pilot Station Operational costs of Pilot Station Personal Healthcare Plan Personal Healthcare Plan Harborlights System Harborlights System Pilot Boat Operators Pilot Boat Operators Dispatchers Dispatchers Business Staff Business Staff

Royal Caribbean and the FCCA The following port users have agreed to the modified tariff: Carnival Port of Texas City All of the members of WGMA Stolt

What Royal Caribbean is Objecting To Paying full price for the second pilot on turning vessels Carnival has agreed to this in light of the proposed dredging Royal Caribbean’s vessels will not return to Galveston until November The Dredging could and should be finalized by then

Impact of the Proposed Tariff H. Thomas Kornegay

Regional Pilotage Tariff Comparison

Pilot Financial Data Audited Financial Report from 2009 Audited Financial Report from 2009 Mr. Mark K. Johnson, CPA Mr. Mark K. Johnson, CPA

Galveston County Pilots 2010 Tariff Application May 3, 2010