Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

LAKE PILOTS ASSOCIATION, INC. v. U.S. COAST GUARD

April 3, 2003

LAKE PILOTS ASSOCIATION, INC., PLAINTIFF,
v.
UNITED STATES COAST GUARD, ET AL. DEFENDANTS



The opinion of the court was delivered by: Reggie B. Walton, District Judge.

MEMORANDUM OPINION

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.*fn1 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's*fn2 argument that all of the issues raised by plaintiff's complaint are moot and concludes that both plaintiff's and defendant's motions for summary judgment must be granted in part and denied in part.

I. Factual Background

A. Events Underlying the Parties' Dispute

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."*fn3 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.*fn4 Id.; ¶¶ 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.*fn5 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 GPLO 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.*fn6 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.*fn7 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; ¶¶ 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 on 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.

B. Facts Related to the Issue of Mootness

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 plaintiff's 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' cross-motions 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. at 5. Although plaintiff acknowledged that it sought to have the 1997 rates reinstated,*fn8 this was not, plaintiff claims, its ultimate goal. Rather, it only sought reinstatement of the 1997 rates pending the outcome of this litigation, with the eventual result of having the Final Rule remanded to the defendant by the Court with specific instructions regarding how to remedy the defects in the 2001 rates. Id. at 6-7. In response, the defendant argued that continuing with this lawsuit would be a waste of judicial resources because the Coast Guard intended to conduct a new rulemaking for Great Lakes Pilotage Rates. Defendant's Reply to Plaintiff's Response to Defendant's Suggestion of Mootness at 2. Defendant argued that the plaintiff sought greater relief than is pled in its complaint, including an order requiring the Coast Guard to recalculate the pilotage rates using the specific data and interpretations of the Coast Guard's guidelines provided by the plaintiff. Id. at 2-3. This relief, defendant contends, is beyond the Court's authority because under the Administrative Procedure Act ("APA"), the sole remedy this Court could properly provide to plaintiff, if it concluded that the defendant had violated the APA, would be to set aside the 2001 Great Lakes Pilotage Rates and remand the matter to the Coast Guard for a new rulemaking, because this Court cannot substitute its judgment for that of the agency. Id.

On July 19, 2002, the defendant issued a temporary final rule, which "amends the rates charged for Great Lakes Pilotage on the Designated Waters of Area 5 in District Two and restores them to those effective before August 13, 2001." 67 Fed. Reg. 47,464 (July 19, 2002). The Coast Guard stated that this temporary rule was issued because it "learned during the course of the litigation that it had inadvertently accounted for hours of delay and detention in District Two differently from how it was done in Districts One and Three." Id. In addition, the Coast Guard noted in the temporary final rule that it is "currently working on an updated rulemaking that will, among other things, correct this error." Id. Subsequently, on July 23, 2002, defendant filed its Notice to the Court of Temporary Final Rule ("Notice"). According to the Notice, the Temporary Final Rule "is effective from July 19, 2002 to July 21, 2003, and is not retroactive." On October 18, 2002, defendant filed a Corrected Notice of Further Action ("Def.'s Corrected Notice"), in which it advised the Court that the Coast Guard had appointed Rear Admiral J. Timothy Riker, of the Coast Guard, to conduct a review of the bridge hour standards for United States pilots operating on the Great Lakes. Def.'s Corrected Notice at 2. This review will address the issues related to whether bridge hour standards should include hours associated with detention, delay, cancellation, rest and travel. Id. Plaintiff's Reply to Defendant's Notice of Further Action ("Pl.'s Reply") stated that none of the "activities" mentioned in defendant's notice are "relevant to this proceeding" and that the GLPO's current actions do not remedy its past violations. Pl.'s Reply at 1-2.

The Court heard oral arguments regarding the mootness issue on November 21, 2002. At that time, the defendant stated it would publish an initial NPRM on December 6, 2002. As a result, the Court stated it would delay ruling on the merits of this matter until this new rulemaking notice was issued, as this new rulemaking would, according to counsel for the defendant, address the issues currently before the Court.*fn9 On December 12, 2002, the defendant submitted a pleading to the Court in which it stated that the NPRM had not been published but was expected to be published "in the next month" and that defendant would file a progress report with the Court on or before December 31, 2002. Defendant's Notice to Court Regarding Impending Notice of Proposed Rulemaking at 1. Plaintiff responded to this pleading arguing that the defendant continued to attempt to delay the Court's resolution of this matter on the merits and that even if defendant is planning to issue a new rule, new rates resulting from the rule would not be finalized for several months, or possibly longer. Plaintiff's Reply to Defendant's Notice to Court Regarding Impending Notice of Proposed Rulemaking at 3. In addition, plaintiff argued that the defendant is not "correcting the mistakes it made in the Final Rule . . . [but] is simply proceeding with its normal rate review and adjustment process." Id.

As further support for its mootness arguments, the defendant filed with the Court a Second Notice to the Court Regarding Impending Notice of Proposed Rulemaking on December 30, 2002 ("Defs.' Notice"). In this notice, the defendant stated that the Coast Guard "had now executed the NPRM entitled `Rates for Pilotage on the Great Lakes,' and has forwarded the same for necessary review and approval by the Office of the Assistant Secretary for Transportation Policy . . . prior to its submission for final publication in the federal register." Defs.' Notice at 1. Thereafter, defendant filed another pleading on January 23, 2003, entitled "Defendant's Notice to Court and Further Suggestion of Mootness ("Defs.' Further Notice") in which it informed the Court that as of the date of this notice, a NPRM had been published regarding the pilotage rates on the Great Lakes. Defs.' Further Notice at 1. Defendant maintains that this act forecloses review by this Court because the "NPRM proposes to amend the pilotage rates for all Districts on the Great Lakes, and further advises of the Defendant USCG's intention to issue an interim rule setting forth pilotage rates in time for the 2003 shipping season." Id. at 2. In response, plaintiff filed a Reply to Defendant's Further Suggestion of Mootness wherein it reiterates that the NPRM does not render this action moot because it fails to"completely address[] . . . the four key issues identified in this lawsuit." Id. at 2. Further, the plaintiff argued that the focus of this litigation concerns the mistakes the defendant made in the Final Rule that became effective in August 2001 and the need for a ruling on this rule is not mooted by the issuance of the NPRM because "important legal rights are associated with a judicial finding that the Final Rule was improper[,]" which "include the Pilots' right to claim attorneys' fees under the Equal Access to Justice Act." Id. at 5 & n. 6. On February 20, 2003, the plaintiff informed the Court in its Notice to the Court Concerning Defendant's Failure to Issue Interim Rule, Request for Oral Hearing, that the GLPO has chosen to "rescind its decision to issue an interim rate increase that would have taken effect before the end-of-March start of the 2003 shipping season." Id. at 1. This notice by the plaintiff was prompted by defendant's issuance of its Notice of Extension of Comment Period and Notice of Intent, wherein the Coast Guard states that it is "extending the comment period on the [NPRM] on rates for pilotage on the Great Lakes published in the Federal Register January 23, 2003, for 45 days . . . [thus] extend[ing] the comment period to April 24, 2003." 68 Fed. Reg. 7489 (Feb. 14, 2003).*fn10

II. Analysis

A. Mootness

The Court must first decide whether the defendant's post-complaint actions in this matter have rendered the issues raised by plaintiff's complaint moot. "Simply stated, a case is moot when the issues presented are no longer `live' or the parties lack a legally cognizable interest in the outcome." County of Los Angeles v. Davis, 440 U.S. 625, 631 (1979) (citation omitted). As "a general rule, `voluntary cessation of allegedly illegal conduct does not deprive the tribunal of power to hear and determine the case, i.e., does not make the case moot." Id. (citation omitted); Friends of the Earth, Inc. v. Laidlaw Envtl. Services, 528 U.S. 167, 174 (2000) ("A defendant's voluntary cessation of allegedly unlawful conduct ordinarily does not suffice to moot a case."); United States v. W.T. Grant Co., 345 U.S. 629, 632 (1953) (citation omitted) ("voluntary cessation of allegedly illegal conduct does not deprive the tribunal of power to hear and determine the case, i.e., does not make the case moot[,] . . . [because a] controversy . . . remain[s] to be settled in such circumstances, . . . e.g., a dispute over the legality of the challenged practices."). In cases involving voluntary cessation of challenged activity, "a court may conclude that voluntary cessation has rendered a case moot if the party urging mootness demonstrates that (1) "`there is no reasonable expectation that the alleged violation will recur,' and (2) interim relief or events have completely or irrevocably eradicated the effects of the alleged violation." National Black Police Assoc. v. District of Columbia, 108 F.3d 346, 349 (D.C. Cir. 1997) (quoting County of Los Angeles, 440 U.S. at 631) (other citations omitted). Defendants "claiming that [their] voluntary compliance moots a case bear[] the formidable burden of showing that it is absolutely clear the allegedly wrongful behavior could not reasonably be expected to recur." Friends of the Earth, Inc., 528 U.S. at 190; W.T. Grant Co., 345 U.S. at 633. The Court need not dwell on this issue long because it is clear that the defendant has not satisfied the heavy burden of demonstrating that this action is moot.

The defendant's actions have not mooted this action for two reasons. First, the defendant has not demonstrated to the Court that "there is no reasonable expectation that the alleged violation will recur,'" National Black Police Assoc., 108 F.3d at 349, because it is clear from the temporary final rule that was published on July 19, 2002, that the rule is by no means final. See 67 Fed. Reg. at 47,464 ("The Coast Guard . . . learn[ed] during the course of litigation that it had inadvertently accounted for hours of delay and detention differently from how it was done in Districts One and Three. The Coast Guard is currently working on an updated rulemaking that will, among other things, correct this error . . . This temporary final rule will not be retroactive and future rates will not be adjusted as a result of this action."). Although defendant has conceded that they erred in disregarding detention and delay hours, they have only published a temporary rule returning the rates to those set prior to the enactment of the challenged Final Rule, and although there is currently a review of the rates being conducted, the temporary final rule "will not be retroactive and future rates will not be adjusted as a result of this action." 67 Fed. Reg. at 47,464-465. This language clearly indicates that the defendant has not committed itself to include such hours in the future Final Rule or to uniformly include detention and delay hours when calculating the number of pilots needed in all districts and therefore the temporary final rule does nothing to assure this Court that the alleged unlawful conduct will not recur. See Friends of the Earth, Inc., 528 U.S. at 193-94 (holding that defendant's substantial compliance with its environmental pollutant discharge permit and the closure of its facility did not moot plaintiff citizens' enforcement action brought pursuant to the Clean Water Act. "The facility closure, like [the defendant's] earlier achievement of substantial compliance with its permit requirements, might moot the case, but — we once more reiterate — only if one or the other of these events made it absolutely clear that [the defendant's] permit violations could not reasonably be expected to recur . . . [and] [t]he effect of both [the defendant's] compliance and the facility closure on the prospect of future violations is a disputed factual matter.") (citation omitted); City of Los Angeles v. Lyons, 461 U.S. 95, 101 (1983) ("We agree with the City that the case is not moot, since the moratorium by its terms is not permanent. Intervening events have not `irrevocably eradicated the effects of the alleged violation.'") (quoting County of Los Angeles, 440 U.S. at 631); City of Mesquite v. Aladdin's Castle, Inc., 455 U.S. 283, 289 (1982) (holding that city's partial repeal of language contained in ordinance did not moot the Court's consideration of the challenge. "In this case the city's repeal of the objectionable language would not preclude it from reenacting precisely the same provision if the District Court's judgment were vacated."); Student Press Law Center v. Alexander, 778 F. Supp. 1227, 1231 (D.C. Cir. 1991) (holding that action challenging provision regarding disclosure of law enforcement records of the Family Educational Rights and Privacy Act ("FERPA") was not rendered moot by Congress' approval of "legislation altering the FERPA to exclude all law enforcement records. . . . Until the proposed measure actually becomes law, this action remains a live case or controversy."). Cf. County of Los Angeles, 440 U.S. at 631-32 (holding that first condition of mootness was satisfied where there was "no reasonable expectation that petitioners [would] use an unvalidated civil service examination for the purposes contemplated in 1972. . . . Those conditions were unique, are no longer present, and are unlikely to recur because, since the commencement of this litigation, petitioners have succeeded in instituting an efficient and nonrandom method of screening job applicants . . ."). Therefore, because there is a likelihood that the challenged conduct could recur, the Court concludes the defendant has failed to establish that its actions have now rendered the relief plaintiff is seeking moot.*fn11

Second, to render this action moot, the defendant must demonstrate that "interim relief or events have completely and irrevocably eradicated the effects of the alleged violation[s]." County of Los Angeles, 440 U.S. at 631 (citations omitted). In this regard, the temporary rule provides that the "measure will mitigate the effects, if any, of the Coast Guard's disparate treatment in District Two when accounting for hours of delay and detention." 67 Fed. Reg. at 47465 (emphasis added). This language does not demonstrate to the Court that the effects of the alleged violation have been "irrevocably eradicated[,]" County of Los Angeles, 440 U.S. at 631, because the temporary rule does not address all of the issues plaintiff raised in its complaint.

Paragraph 12 of plaintiff's complaint challenges the Coast Guard's Final Rule as arbitrary ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.