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SEAFARERS INTL. UNION OF NORTH AMERICA v. USCG

November 23, 1994

SEAFARERS INTERNATIONAL UNION OF NORTH AMERICA, et al., Plaintiffs,
v.
UNITED STATES COAST GUARD, et al., Defendants.



The opinion of the court was delivered by: LOUIS F. OBERDORFER

 This case arises out of the Coast Guard's establishment of fees for marine licensing, certification of registry and merchant mariner documentation. 58 Fed. Reg. 15228 (Mar. 19, 1993). Plaintiffs include organizations that represent many different types of seamen, marine engineers, deck officers, radio/electronics officers, masters, licensed officers, and other maritime personnel. Plaintiffs also include five individuals who are subject to the Coast Guard's license and document fee requirements. For reasons to be set forth, an accompanying Order denies defendant's motion for summary judgment. The Order also grants in part and denies in part plaintiffs' motion for summary judgment, and remands this case to the Coast Guard for further calculations of the costs of its licensing and documenting activities.

 I.

 A.

 On November 5, 1990, Congress passed the Omnibus Budget Reconciliation Act (the "1990 Budget Act"). On June 20, 1991, the United States Coast Guard ("Coast Guard") issued a Notice of Proposed Rulemaking proposing to establish fees for the issuance of merchant marine licenses (both upper and lower level), certificates of registry, and merchant mariner documents. 56 Fed. Reg. 28448. The Notice of Proposed Rulemaking included an invitation to comment. The original 45-day comment period ended on August 5, 1991. The Coast Guard reopened the comment period on December 18, 1991. The second comment period closed on February 18, 1992.

 The Notice of Proposed Rulemaking proposed dividing the fees into three identifiable phases in order to avoid charging people who begin, but fail to complete, the process of obtaining the document they sought. According to the Notice, the first phase is the evaluation of the application. Evaluation includes establishing an individual's file, completing paperwork for a Federal Bureau of Investigation (FBI) criminal record check for first-time applicants, searching through Coast Guard and other government records, making verifications, and conducting follow up phone calls. When the Coast Guard determines whether or not an applicant has met the prerequisites, the evaluation phase is complete. Notice of Proposed Rulemaking, 56 Fed. Reg. at 28449.

 The evaluation fee was set at $ 70 for an upper level license, $ 65 for a lower level license, and $ 45 for a radio officer. The evaluation fee for renewals of licenses and endorsements *fn1" was set at $ 45. The evaluation fee for a certificate of registry was also set to vary by type. For a chief purser, purser or senior assistant purser, the evaluation fee was set at $ 45; for a junior assistant purser, medical doctor or professional nurse, there was no fee. The evaluation fee for a merchant mariner's document was set at $ 60 when accompanied by a "qualified rating"; otherwise, there was to be no charge. An additional $ 17 fee was to be charged at the evaluation phase for the FBI criminal record check if the applicant sought an original (i.e. first-time) license, original certificate of registry, or original merchant mariner document.

 The second phase is the examination phase. The examination phase includes the scheduling, proctoring, and grading of the necessary examinations as well as notifying applicants of the results. Like the evaluation fee, the examination fee was also set to vary by type. The examination fee for an upper level license was set at $ 225 and far a lower level license at $ 80. Radio officer licenses do not require an examination. The examination fee for renewals of licenses and endorsements was set at $ 55. There was to be no examination for a certificate of registry. The examination fee for a merchant marine document was set at $ 60 for a "qualified rating"; otherwise, there was to be no examination.

 The third phase is the issuance of the license, certificate or document. For all three types of documents, the issuance fee was set at $ 35. The Coast Guard claimed that the issuance fee was the same since the actual preparation of the different types of documents involves similar amounts of time.

 B.

 To determine the total costs of its licensing and documenting activities, the Coast Guard added together three costs: personnel and associated infrastructure; collection; and, FBI checks. Final Rule, 58 Fed. Reg. 15228, 15231 (Mar. 19, 1993).

 The bulk of the costs were the personnel and associated infrastructure costs, which include office space; office equipment and supplies such as telephones, computers and copiers; special training; and other personnel-related costs. The Coast Guard derived the information about the personnel and associated infrastructure costs from two surveys: the 1988 Task Analysis Survey and a 1989 G-MP Workload Analysis Survey. It used the 1989 G-MP Survey to determine the total of these costs, Ad. Rec. 668-71, and used the 1988 Task Survey to determine the individual costs for each type of document and each of the phases of the process.

 The Coast Guard determined that there were 145 full-time equivalent employees in the 17 Regional Examination Centers directly involved in licensing and documenting activities or providing relevant administrative support. From information in the survey, the Coast Guard divided this group into three categories of employee: clerical, examiner and executive. Of the 145 positions, 52 positions were clerical, 67 were examiner; and, 26 were executive. Based on standard rates provided in the Coast Guard Standard Rate Instruction, COMDTINST 7310.1D (Ad. Rec. 363), the Coast Guard put the cost of a clerical position at $ 14/hour; an examiner position at $ 20/hour; and an executive position at $ 23/hour. The standard number of work hours per employee per year is 1715. COMDTINST M5312.11A (Ad. Rec. 373). From this, the Coast Guard determined the costs of its licensing and documenting activities in the Regional Examination Centers.

 To the total of the costs from the Regional Examination Centers, the Coast Guard then added a 29 % surcharge, which represented the District and Headquarter's support used. The total amounted to an original annual estimate of $ 5.9 million.

 The second cost was the collection cost. The annual collection cost was originally estimated at $ 300,000. The third cost was for FBI criminal record checks. For each check, the FBI charges the Coast Guard $ 17. Based on an estimate of approximately 16,000 FBI checks per year, the Coast Guard estimated the total cost for FBI checks at $ 270,000. Thus, the original total estimated cost was $ 6.5 million.

 Using the 1988 Task Survey, the Coast Guard calculated the personnel and associated infrastructure costs for each type of document and for each of the three phases of obtaining it in order to determine an average transaction time per applicant. From this, the Coast Guard determined the individual fee for each type of document and each phase of the process. Based on adjustments and rounding, the Coast Guard determined the initial fees included in the Notice of Proposed Rulemaking. After the adjustments and rounding, the total estimated cost of $ 6.5 million resulted in a total charge to those seeking a license, certificate or document of $ 6.1 million.

  C.

 On August 5, 1991, plaintiffs filed a request, pursuant to the Freedom of Information Act, for much of the information on which the fees were based. On September 17, 1991, plaintiffs sought more information, this time requesting data from the 1989 G-MP Workload Analysis Survey used to determine the number of full-time equivalent employees at each Regional Examination Center and data substantiating the number of new merchant marine licenses, certificates of registry and merchant mariner documents issued annually at each Regional Examination Center. Ad. Rec. 461.

 The Coast Guard provided information from the 1989 G-MP Workload Analysis Survey for all of the Regional Examination Centers but provided data about the volume of documents issued during the 1989 Fiscal Year for only seven of the Regional Examination Centers: Baltimore, Charleston, New Orleans, Houston, Toledo, Seattle/Puget Sound, Honolulu. These data only included merchant mariner documents and certificates of registry and did not include the number of merchant marine licenses. Ad. Rec. 503-519; 521.

 Based on these data, plaintiffs were able to calculate the average number of person hours spent in order to issue one document at each of the Regional Examination Centers. This number varied from one Regional Examination Center to another. In Baltimore, the issuance of a single document took an average of 13.46 person hours; in Charleston, 27.01 hours; in New Orleans, 5.41 hours; in Houston, 2.80 hours; in Toledo, 20.32 hours; in Puget Sound/Seattle, 7.66 hours; in Honolulu, 4.22 hours. Levin Affidavit P 17.

 On March 19, 1993, the Coast Guard issued a final rule entitled "User Fees for Marine Licensing, Certification of Registry and Merchant Mariner Documentation" to become effective on April 19, 1993. 58 Fed. Reg. 15228. The rule established the fees that had been proposed in the Notice of Proposed Rulemaking.

 Between the Notice of Proposed Rulemaking and the Final Rule, the Coast Guard reduced the total charges. Among the reductions to the total were a decrease in the upper level examination fee from $ 225 to $ 150 and a fee exemption for youth-oriented, not-for-profit, charitable organizations involved in teaching maritime skills. 58 Fed. Reg. 15230 (1993). These resulted in total reductions of approximately $ 900,000. The estimate of the annual collection cost was increased slightly, but that increase was not incorporated into the final fees. Thus, the final regulation resulted in a total of $ 5.2 million estimated to be collected from those seeking licenses, certificates and merchant marine documents.

 In addition to setting the fees, the regulation further stated that "the Coast Guard will review the fees annually to determine if adjustments or changes to the fees are necessary, and it will revise these fees when costs change due to inflation, deflation, or changes in the way the services are provided." 58 Fed. Reg. at 15231.

 On April 15, 1993, plaintiffs brought suit seeking a Declaratory Judgment and a Preliminary and Permanent Injunction. On August 25, 1993, defendants filed a Motion for Summary Judgment. Plaintiffs filed an Opposition on October 13, 1993 and simultaneously filed their own Motion for ...


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