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Comments from the Executive Director
Industry Files Lawsuit on May 31, 2016, Challenging U.S. Coast Guard 2016 Pilotage Rate Increases
In earlier communications, I have addressed the issue of pilotage rates paid by the international flag vessels operating in U.S. Great Lakes Lakes waters serving U.S.Great Lakes ports. In particular, the comments have discussed the methodology of how the rates are determined by the U.S. Coast Guard Lakes Pilotage Office as well as the magnitude of annual increases. In recent years, pilotage cost as a component of total voyage cost has grown at an alarming rate for operators and Lakes stakeholders who are affected. The vessel operators being hit by these increased costs are served by USGLSA Agent members.
Beginning in late 2015, when the USCG published its proposed rates in the Federal Register for Lakes pilotage services covering the 2016 Navigation Season, affected industry operators and their representatives determined that a more focused and involved approach to question and, as appropriate, oppose the seemingly unending upward spiral of these costs had to occur. After a pattern of increases over the last 10 years of approximately 114 percent, the 2016 rate will add approximately 58 percent more to vessel operator burden for pilotage services. A steering committee consisting of representatives from The American Great Lakes Ports Association, The United States Great Lakes Shipping Association, The Shipping Federation of Canada and Fednav International joined together to lead a broad group of affected vessel operators in responding to the proposed rates. Comments to the published proposed rates were filed by this group which identified many flaws in the methodology, data and conclusions which were offered by the USCG as its basis to justify the rate increases and other elements which served to increase costs. Industry regarded much of such basis provided by USCG for its conclusions and rate proposals to so seriously lack foundation that the matters constituted actions which were arbitrary and capricious, thereby failing to meet required administrative procedural standards for implementation of the proposals. Regrettably, USCG chose to ignore the arguments and suggestions posted by the industry group so that the rates and methodologies became effective at the commencement of the 2016 Navigation Season. In response to this action, on May 31, 2016, the industry group filed a Complaint in U.S. Federal District Court challenging the implementation of these rates and methodologies.
Litigation can be a costly and difficult path. This action was only taken when it was sadly concluded that continued attempts at persuasion would fall on deaf ears and that a continuation of this upward spiral of cost represented a serious threat to the ability to operate successfully in the covered trades. The choice was clear.
Comments are invited. More to come.
Mr. Theis, who has served as Executive Director since April 2007, is an attorney and businessman with prior associations at Cleveland, Ohio based M. A. Hanna Company and Oglebay Norton Company. At Hanna, he held a variety of legal/operational positions including Corporate Vice President with responsibilities for Hanna's Great Lakes/St Lawrence Seaway and Ocean Marine vessel and dock operations in the U. S. and Canada. While at Oglebay Norton, Mr. Theis served as President of the Company's Great Lakes fleet and dock operations. Mr. Theis is a member of the American Bureau of Shipping and has recently served as a member on two U. S. Coast Guard Advisory Committees, the Great Lakes Pilotage Advisory Committee and the National Maritime Security Advisory Committee.