Lake Pilots Association Inc. v. U.S. Coast Guard
| Decision Date | 04 April 2003 |
| Docket Number | No. CIV.A. 01-1721(RBW).,CIV.A. 01-1721(RBW). |
| Citation | 257 F.Supp.2d 148 |
| Parties | LAKE PILOTS ASSOCIATION, INC., Plaintiff, v. UNITED STATES COAST GUARD, et al. Defendants. |
| Court | U.S. District Court — District of Columbia |
Katherine Street Nucci, Thompson Coburn, LLP, Washington, DC, for Plaintiff.
Sherri Evans Harris, U.S. Attorney's Office, Washington, DC, for Defendants.
This lawsuit was filed by a group of pilots who provide navigational services on the Great Lakes. Currently before the Court are the parties' cross-motions for summary judgment.1 Also before the Court are the parties' pleadings regarding the defendant's Notice to the Court and Suggestion of Mootness. The Court rejects the defendant's2 argument that all of the issues raised by plaintiffs complaint are moot and concludes that both plaintiffs and defendant's motions for summary judgment must be granted in part and denied in part.
Foreign ships engaged in foreign trade that travel on the Great Lakes must hire an experienced American or Canadian pilot to provide navigational services on such vessels as required by the Great Lakes Pilotage Act of 1960, codified at 46 U.S.C. §§ 9301-9309 (2000) ("GLPA"). Memorandum of Points and Authorities in Support of Defendant's Motion to Dismiss and/or For Summary Judgment ("Def.'s Mem.") at 1. There are three voluntary associations of United States registered pilots that provide pilotage services on the Great Lakes. Id. at 2. Plaintiff, the Lake Pilots Association ("Lake Pilots" or "the Association"), one of the three associations, is "an organization of thirteen licensed pilots who provide navigational services for vessels travelling [sic] the Great Lakes."3 Plaintiff's Motion for Summary Judgment, Supporting Memorandum of Points and Authorities ("Pl.'s Mem.") at 2. The Association provides services on the waters that comprise District Two, "which covers Lake Erie and Detroit-area waters up to Port Huron, Michigan[,]" and constitutes Areas 4 and 5.4 Id.; 66 Fed.Reg. at 36488.
The GLPA authorizes the Secretary of Transportation to license pilots and, most importantly for purposes of this litigation, determine the rates that pilots may charge for their services. Pl.'s Mem. at 2 (citing 46 U.S.C. § 9301). The Secretary has delegated this rate making authority to the Commandant of the Coast Guard ("Commandant") pursuant to 46 U.S.C. § 2104, who has in turn delegated his authority to the Director of the Great Lakes Pilotage Office ("Director" or "GLPO") in implementing regulations found at 46 C.F.R. Parts 401-404. Def.'s Mem. at 2.
There are two types of waters in the Great Lakes on which pilots must provide navigational services to ships. In "designated waters," which are designated by the President, the pilot must actually direct the movement of the ship. Def.'s Mem. at 2. In all other waters, known as "undesignated waters," the pilot must merely be on board and available to direct the vessel's movement subject to the discretion of the vessel's master. Id. The rates for pilotage services on the two types of waters differ. Id. at 2-3. The Act itself does not set forth a specific formula for calculating pilotage rates. Id. Rather, the methodology for calculating pilotage rates is set forth in a Final Rule issued by the Commandant in 1996. Id. (citing 61 Fed.Reg. 21,081). The rates and charges for pilotage services are reviewed annually by the Director. Id. at 3. In determining pilotage rates, the Director is guided by the statute's direction to balance the public's interests, which includes lower shipping costs, with the cost of providing pilotage services.5 Id. At the center of the present controversy are the basic rates for pilotage services in District Two. Pl.'s Mem. at 3.
Coast Guard regulations require that the GPl.O conduct an annual review of Great Lake pilotage rates and that new rates be established once every five years. Id. (citing 46 C.F.R. § 404(b)). There are six steps, which are set forth in 46 C.F.R. § 404, Appendix A, that the Director must take in determining the relevant pilotage rates.6 First, the director collects financial information from the three pilot associations to "project ... the total authorized operating expenses for each association." Def.'s Mem. at 3. Second, the director projects the target pilot compensation, which involves a determination of the targeted rate of pilot compensation and the number of pilots needed in each district to meet the needs of the shipping industry. Id. Third, he "projects revenue using the current pilotage rates." Id. Fourth, he determines each pilot association's investment base and determines what an appropriate return on this investment base would be for each association. Id. Fifth, he subtracts projected expenses, which includes pilot compensation, from each association's projected revenue and determines each association's projected net income. Id. Next, he compares the projected net income with the targeted return on the investment base for each association. Id. Finally, if there is a significant difference between the projected rate of return and the targeted rate of return on the investment base, the Director will adjusts the rates for pilotage services appropriately. Id.; see also 46 C.F.R. Pt. 404, App. A. After this process is completed, the Director initiates a rulemaking by publishing a Notice of Proposed Rulemaking (NPRM) and invites comments from the public, including from pilot and shipping interests groups. Id. at 3. After public comments have been reviewed and necessary adjustments, if any, are made, a Final Rule is published establishing the new rates. Id. However, if there is not a significant difference between the projected and targeted rate of return on the investment base, the Director leaves the pilotage rates unchanged. Id at 3-4.
Prior to the adoption of the Final Rule at issue in this lawsuit, pilotage rates for the Great Lakes were last adjusted through a rulemaking in 1997. Id. at 4. As part of the 1997 Final Rule, the Director announced at that time "that master salary was defined as `1.5 times mate salary, plus mate benefits.'" Id. (citing 62 Fed.Reg. 5917, 5920 (February 10, 1997)). No changes were made to the rates in 1998. Id. However, as a result of the 1999 review, the Coast Guard proposed adjusting rates for pilotage services by publishing a NPRM on April 14, 2000. Id.; 65 Fed. Reg. 20,110 (April 14, 2000). This 2000 NPRM proposed a reduction in pilotage rates in District Two for both designated and undesignated waters. Id, After receipt of comments from the public, on September 13, 2000, a Supplemental Notice of Proposed Rulemaking ("SNPRM"), which also recommended a reduction in pilotage rates in District Two on both designated and undesignated waters, and also announced that a public meeting to address the proposed rate change would be held, was published.7 Id.; 65 Fed.Reg. 55206 (September 13, 2000).
The Final Rule at issue in this case was published in the Federal Register on July 12, 2001, after the public meeting was held and then several changes were made to the proposed rates. Id. at 4; 66 Fed.Reg. 36,484 (July 12, 2001). As a result of the 2001 Final Rule, pilotage rates for designated waters in District Two decreased by five percent while the rates for undesignated waters were increased by three percent. 66 Fed.Reg. at 36,488; Defendant's Mot., Statement of Material Facts to Which There Is No Genuine Issue ("Def.'s Stmt.") ¶ 6.
On August 9, 2001, plaintiff filed its complaint and a motion for a temporary restraining order to enjoin the United States Coast Guard ("USCG") from implementing the Final Rule. Id. Plaintiff's motion for a temporary restraining order was denied Friday, August 10, 2001, following a hearing that was conducted by the judge who previously presided over this case. The Final Rule setting the new pilotage rates became effective on August 13, 2001. Id. The parties then each filed motions for summary judgment on April 5, 2002.
Before the Court can address the merits of the parties' arguments, it must delineate the history of the proceedings up to this point. Indeed, the most substantial number of pleadings that have been filed have addressed whether the issues raised in plaintiffs complaint have been rendered moot by the subsequent actions of the defendant. Because the history of this litigation spans a period of over a year and a half, the Court will detail the substance of the numerous pleadings the parties have filed regarding the mootness question.
In June 2002, while the parties' crossmotions for summary judgment were pending, and in lieu of filing a reply to the opposition to its motion for summary judgment, the defendant partially withdrew its 2001 pilotage rates for designated waters in District Two, filed a notice of the partial withdrawal with the Court, and requested that this action be dismissed as moot. Defendant's Notice to Court and Suggestion of Mootness filed June 21, 2002, at 1. Thereafter, plaintiff filed its Response to Defendant's Suggestion of Mootness, in which it argued that as a result of the defendant's violations, "the Association has lost hundreds of thousands of dollars over the past year in revenues that it should have been legally entitled to collect from its commercial customers" and that it will continue to suffer such losses until the new rates are established, which could take twelve to twenty-four months to complete. Id. at 2 (emphasis in original). In addition, plaintiff argued that one of the primary reasons it filed this action was to challenge the defendant's differential treatment of District Two, a fact that it contends would not be changed by the defendant's return to the 1997 rates, because the change would only affect District Two and none of the other districts. Id....
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