Review of 2018

Comments from the Executive Director
With the year-end closure of the St Lawrence Seaway System, another Navigation Season ends for the international flag vessels calling at U.S. Great Lakes Ports.

Our USGLSA agent members have completed another successful year of dedicated service which the international trades rely upon to conduct and complete their voyages safely and efficiently. The 2018 Season was defined by the most ship service calls by USGLSA agents since 2006. A contributing element in this number has been more tourist cruise business which continues to grow in favor on the U.S. Lakes. A special thanks to the cargo vessel operators as well as CBP and USCG for times of flexibility and understanding of the need for the passenger vessels to be able to meet arrival/departure itinerary schedules while coping with inspection requirements for non-U.S. passenger vessel operations.

Maintenance on the Seaway System locks and on related facility systems is underway. Same activities began at the Soo after January 15, 2019, when vessel operations there were suspended for the Season

SOME 2018 HIGHLIGHTS AND COMMENT

Pilotage

Rate making and policy actions by the USCG again gained much attention as in recent years. In fact there are currently still pending in different stages of resolution, litigation and appeals covering Final Rule determinations from 2016, 2017 and 2018. Also, USCG has published a Notice of Proposed Rule Making (NPRM) covering rates for the 2019 Navigation Season. Comments have been provided by stakeholders, including a U.S./Canadian coalition group in which USGLSA is an active participant sponsoring the interests of vessel owner clients. Target compensation for 2019 is pegged at $359,887., vs. $352,000., in 2018. It is reported that since 2015 the overall cost of pilotage has risen by 40 percent. Publication of the 2019 Final Rule remains pending at this time.

While 2018 had its moments of disagreement with Pilots and USCG; e.g., pilots refusal to cross picket lines in Toledo and questions over the necessity of tugs under benign conditions, I believe that the awareness of the need for reform of Lakes pilotage service and the methodologies in rate making process have becoming much broader and stronger. Two Studies have been developed and published by the Conference of Great Lakes Governors and St Lawrence Premiers; one a very comprehensive work which includes observations and suggestions for reform of the Great Lakes Pilotage System and the other, a more directly focused work which presents detailed options as possible alternates to the current Pilotage System. Also, now available is a new Great Lakes Economic Impact Study completed by Martin & Associates which has done extensive and respected economic analysis covering the Lakes/Seaway System. The Study presents not only a picture of a vessel transportation industry which has a profound impact on economic strength of the Region it serves, but also that pilotage rates continue to grow as a negative factor affecting the future. All of these documents are finding their way into the hands of legislators, regulators and various communication outlets to the public which I believe will raise awareness of the need for constructive reform. Finally, during 2018, I believe better and more effective communication has occurred between USCG leadership both at Headquarters and at District 9 on the Lakes establishing understanding and significance of this difficult subject.

Vessel Incidental Discharge Act (VIDA)

This ambitious legislation was presented to eliminate some very troublesome difficulties in the existing jurisdictional and regulatory framework on the Lakes primarily regarding ballast water. The fact that USCG and EPA both were involved in the regulatory picture was administratively cumbersome. Also, each Great Lakes State had the power to exercise its own jurisdiction over ballast water management; creating compliance havoc for operators at each State’s ports of call. VIDA proposed to eliminate EPA’s jurisdiction, placing the regulatory responsibility in the hands of USCG and providing for the pre-emption of State law by Federal law in these matters. In a wonderful example of the saying about Congress making law being as one makes sausage, the final result with passage in November of 2018 and signing by the President was neUnet a remarkable success, but the picture was not perfect, albeit a necessity if anything was to be accomplished. Specifically, EPA stays in the picture, but separate responsibilities are defined for EPA and USCG. The pre-emption was achieved, although while individual States cannot regulate, coalitions of States with common issues can join together to tailor and implement certain specific and unique limitations. There were many powerful sponsors of VIDA and yet for a while, its passage seemed likely doomed. However, the good sausage makers at American Waterways Operators and others remained resolute and were instrumental in achieving this vast improvement over the status quo.

USACE Operations and Maintenance Budget for Lakes FY 2019

Funding of the U.S. Army Corps of Engineers for Great Lakes projects has for years been a difficult task. With revenues from the Harbor Maintenance Tax being attributable primarily to larger volume ports around the U.S., Lakes ports and facilities have somewhat understandably not always been well treated. However, thanks to coordinated and persistent “educational” efforts over the last several years from U.S. Lakes industry leadership, slowly an awareness of the importance and need for Great Lakes infrastructure repair and replacement has grown and more robust funding produced. In announcing its final work plan for FY 2019, USACE designated $191.9 MM for the Great Lakes vs. an initially budgeted $108.7 MM. The additional money resulted from an earlier increase in the main appropriations and the key was that Lakes got a very healthy share of that increase.

Funding of the additional Poe sized Lock at the Soo

Further to the USACE FY 2019 Budget for the Lakes, the $191.9 MM includes $32,388. MM, for the first year’s construction cost for the New Poe sized lock at the Soo. Worthy of special notice.

NAMO Activities

USGLSA continues to remain active as a member of the National Association of Maritime Organizations (NAMO). This group representing Ports, Maritime Exchanges and other Vessel industry advocacy groups from all Coasts around the U.S. It meets twice per year, usually in Washington, DC, to connect with leadership at Federal agencies affecting the industry. This year considerable focus was with CBP and their efforts to streamline the flow of communication, documentation and record keeping through the increased use of electronic systems. Recruitment and retention of qualified officers is also a challenge with which CBP is seeking to solve.

Support and Alliances

USGLSA takes pride in seeking and participating in alliances with other Canadian and U.S. maritime organizations involved in advocacy on issues regarding the Great Lakes/St. Lawrence Seaway System. Through attendance at industry meetings, maintaining contact with such organizations and participating selectively on issues of common interest, USGLSA makes the voice of agents and the interests of the international flag fleets trading in the Lakes heard. Included among those organizations are:

• American Great Lakes Ports Association
• Green Marine – Great Lakes Advisory Committee (GLAC)
• Highway H20
• National Association of Maritime Organizations (NAMO)
  • Member Trade Associations, Maritime Exchanges and Ports Shipping Federation of Canada
• St Lawrence Seaway Development Corporation
• St Lawrence Seaway Management Corporation

USGLSA looks forward to continuing to support these and many other participants in the Industry as opportunities to assist and contribute are presented

Looking Ahead

In looking to 2019, we anticipate focus on issues including:

1. Continued pilotage rate making and service/manpower issues with an objective to achieve reform where identified as needed (without degrading the importance of safety) in the management of this very important function for the industry which still sees growth and success opportunities unduly restrained by the current
2. Ballast water management under VIDA as USCG and EPA formulate their newly defined
3. Cyber Security as USCG and others develop programs to identify, prevent, prepare and respond
4. Continued support of CBP efforts to streamline process and harmonize manpower with needs
5. Helping to promote the benefits of international maritime trades in the Great Lakes/Seaway System

Finally, personal thanks to the membership of USGLSA who have provided me the privilege of representing them and the interests of their valuable customers.

–Stuart H. Theis

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 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.