United States District Court, D. Columbia.
ST. LAWRENCE SEAWAY PILOTS ASSOCIATION, INC., et al., Plaintiffs,
UNITED STATES COAST GUARD, Defendant
[Copyrighted Material Omitted]
For ST. LAWRENCE SEAWAY PILOTS ASSOCIATION, INC., LAKES PILOTS ASSOCIATION, INC., WESTERN GREAT LAKES PILOTS ASSOCIATION, INC., Plaintiff: John Longstreth, K & L GATES LLP, Washington, DC .
For UNITED STATES COAST GUARD, Defendant: Fred Elmore Haynes, LEAD ATTORNEY, U.S. ATTORNEY'S OFFICE, Washington, DC.
TANYA S. CHUTKAN
United States District Judge
Plaintiffs St. Lawrence Seaway Pilots Associations, Inc., Lakes Pilots Association, Inc., and Western Great Lakes Pilots Association, Inc. challenge the Coast Guard's final rule setting pilotage rates on the Great Lakes for 2014 (the " 2014 Final Rate" ). Great Lakes Pilotage Rates -- 2014 Annual Review and Adjustment, 79 Fed.Reg. 12084 (March 4, 2014). Plaintiffs allege the Coast Guard misapplied the regulatory formula by using incorrect inputs, resulting in unreasonably low rates, and seek review of the 2014 Final Rate under the Administrative Procedure Act (" APA" ). The parties have each moved for summary judgment. For the reasons set forth below, the Court GRANTS Plaintiffs' motion for summary judgment, DENIES Defendant's motion for summary judgment, and orders supplemental briefing on the question of a proper remedy.
The Great Lakes Pilotage Act of 1960 requires foreign and American ships engaged in foreign trade traveling on the Great Lakes to hire an American or Canadian pilot to provide navigational services. 46 U.S.C. § § 9301 et seq. ; see also Lake Pilots Ass'n, Inc. v. U.S. Coast Guard, 257 F.Supp.2d 148, 151-52 (D.D.C. 2003). The Secretary of Transportation has delegated to the Coast Guard's Director of the Great Lakes Pilotage Office the authority to set rates the pilots may charge for their services, 46 U.S.C. § 9303(f). The statute does not provide a formula or method for setting these rates. Instead the Coast Guard adopted, through notice and comment rulemaking, a methodology for calculating the rate which is now codified at 46 C.F.R. § 404 and the appendices to that section.
Plaintiffs challenge the Coast Guard's application of that methodology in the 2014 Final Rate. This dispute centers specifically on step 2.A of the 7-step rulemaking methodology, " Determination of Target Rate of Compensation." To understand Plaintiffs' challenge to the Step 2.A calculation for the 2014 Final Rate, one must first understand how the Coast Guard set the rates in 2012 and 2013. Below are timelines for the establishment of the 2012, 2013, and 2014 rates.
i. The 2012 Rate
February 28, 2012: Coast Guard announced the rate for 2012. 2012 Rates for Pilotage on the Great Lakes, 77 Fed.Reg. 11752 (Feb. 28, 2012). In computing the 2012 rate the Coast Guard used the pay rates contained in the union contracts between the American Maritime Officers Union (" AMOU" ) and companies engaged in shipping on the Great Lakes. See, e.g., id. at 11760. The contracts provided for payment of a daily wage. The Coast Guard then multiplied the daily wage by either 54.5 days or 49.5 days in order to generate " monthly figures that represent actual working days and vacation, holiday, weekend,
or bonus days." Id. By creating a monthly figure representing approximately 50 days of wages, the formula accounted for payment of vacations, holidays, weekends, and bonus days. A similar calculation was performed on other components of compensation -- e.g., employer contributions to 401K plans, pensions, and insurance. Id. These wage and benefits components were aggregated into one annual target compensation rate for a nine-month shipping season: $220,861 in undesignated waters and $301,005 in designated waters. Id. at 11761-62.
ii. The 2013 Proposed Rate
August 1, 2012: Coast Guard published notice of proposed rulemaking to set the 2013 rate. Great Lakes Pilotage Rates -- 2013 Annual Review and Adjustment, 77 Fed.Reg. 45549 (Aug. 1, 2012) (the 2013 Proposed Rate). To calculate the 2013 Proposed Rate, the Coast Guard used a daily rate (applicable to Agreement A only) which was lower than the daily rate used in 2012. Compare 77 Fed.Reg. at 11761 (2012 daily rate of $287.09) with 77 Fed.Reg. at 45545 (2013 proposed daily rate of $270.61). The Coast Guard also accounted for a pension plan contribution of $0.00, and halved the amount of the medical insurance contribution. 77 Fed.Reg. at 45546. These changes resulted in proposed target compensation rates lower than the 2012 rate: $212,094 in undesignated waters and $293,302 in designated waters. 77 Fed.Reg. at 45545-46.
1. The Coast Guard Received Comments Criticizing its Proposed 2013 Rate
August 14, 2012: Coast Guard received email from AMOU with a chart of the " pension plan and medical plan contributions" for 2012, 2013, 2014, and 2015. (A.R. 103).
September 24, 2012: Coast Guard received letter from the Lake Pilots Association, Inc. stating that the " daily rate" for Agreement A effective August 1, 2013 was $295.94 and set forth the planned ...