The world of shipping, in legal terms, has several quirks. One of those quirks is the Great Lakes Pilotage Act of 1960, or the Act, which requires foreign ships navigating the Great Lakes or the St. Lawrence River to hire an American or Canadian seaway pilot to navigate the American portions of those bodies of water.
The Act also requires that the Secretary of Homeland Security provide a rate for paying those pilots. While there is no specific calculation provided in the Act, the Act states that the rate should consider public interest and the cost of providing service.
In turn, the Secretary of Homeland Security delegated the setting of rates to the Coast Guard. In creating proper rates for seaway pilots, the Coast Guard stated that the rates are to “promote safe, efficient, and reliable pilotage service on the Great Lakes, by generating for each pilotage association sufficient revenue to reimburse its necessary and reasonable operating expenses, fairly compensate trained and rested pilots, and provide an appropriate profit to use for improvements.” The keywords in this statement are “necessary” and “reasonable,” which are used in determining proper rates.
In practice, a pilot association submits its operating expenses to the Coast Guard. The Coast Guard reviews those expenses to determine whether they are necessary and reasonable. An expense is necessary if it directly relates to the services provided by the pilots. It is reasonable if it is similar in cost to such costs in the maritime and related industries or based on IRS guidelines.
The Act requires that the pilot obtain a specific license that allows for him or her to navigate the Great Lakes. A general pilot license is not sufficient.
Initially, the law stated that a “Secretary” provides a rate. In 1978, Congress amended the Act to clarify that the Secretary was the Secretary of Transportation. In more recent times, Congress further amended the Act to define Secretary as the Secretary of Homeland Security.
In addition, the 1978 amendments no longer required pilots to hold an unlimited master’s license.
The amendment also discusses the enforcement of the Act. Specifically, the amendment vests the Secretary with the power to fine those who have violated the law. While the amendment does not provide specifics of how and what type of monetary penalties should be assessed, the amendment provides that the Secretary, when considering a monetary penalty, should look to the nature, extent, circumstances, and gravity of the offense committed. Based on that assessment, a fined should be levied.
In addition to pilotage rates under the Act, legal fees can be included in operating expenses. Until 2016, the Coast Guard would routinely reimburse pilotage associations for legal fees affiliated with operating their businesses. In 2016, the Coast Guard curtailed legal fees when the pilotage association is suing the government.
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(image courtesy of DJ Johnson)