The opinion of the court was delivered by: LEONARD B. SAND
This case involves a battle between state and federally licensed maritime pilots over the right to charge lucrative pilotage fees to U.S. commercial vessels when they enter domestic ports from the U.S. Virgin Islands (the "Islands"). The dispute concerns the anomalous status of the Islands within the centuries-old statutory scheme which divides authority over domestic and foreign shipping between the states and the federal government.
Plaintiffs, eighteen state-licensed pilots, brought this action against defendant Amerada Hess Corporation ("Hess") to recover compulsory pilotage fees allegedly owed by five Hess vessels for voyages between the U.S. Virgin Islands and the Port of New York.
Plaintiffs claim this right under longstanding New York and New Jersey statutes that require certain vessels to take state pilots when they enter the Port of New York. These statutes require each ship entering U.S. harbors from a foreign port to take on the first state-licensed pilot that hails them and to employ that pilot's services in guiding the ship safely through the harbor. Hess responds that its vessels were sailing under federal, not state, jurisdiction, and as such were exempt from the state pilotage statutes; in its defense, it cites a letter ruling by the United States Coast Guard. Both parties have moved for summary judgment. For the reasons set forth below, we grant Hess's summary judgment motion and deny plaintiffs' motion.
Before we turn to the facts underlying this dispute, we briefly review the relevant statutory framework, as an understanding of that framework is essential to the discussion which follows.
The maritime laws which this case requires us to construe include some of the oldest, most byzantine, and often obsolete sections of the United States Code.
In particular, this case requires us to address one of the country's most longstanding monopolistic regulatory systems -- the institution of state compulsory pilotage.
This venerable institution, which dates back to the Roman Law,
has been described as follows:
As a profession, pilotage owes its existence to the infinite variety of navigation hazards -- currents, tides, sand bars, submerged objects, weather conditions, and the like -- that mark the harbors and rivers open to commercial vessels. No matter how competent the master of a ship is at open sea, he cannot be expected to be familiar with the local navigation hazards of each harbor and river that he encounters as he conducts his ship in the course of a maritime trade. Accordingly, it has long been the practice of vessels to employ, for each port they enter and leave, a local pilot intimately familiar with the waters of that port to board and guide them through those waters in from or back to the open sea.
Indeed, local pilotage has been regarded so important to the conduct of maritime affairs that for centuries commercial states with substantial shipping trades have required vessels entering or departing their ports to take on board a local pilot or to pay some sort of penalty. In this country, compulsory pilotage laws date back to the time of the Revolution and today, at least 23 states have such laws as part of a comprehensive pilotage regulatory system.
Jackson v. Marine Exploration Co., 583 F.2d 1336, 1338-39 (5th Cir. 1978) (citations omitted).
The First Congress of the United States addressed the issue of pilotage when it enacted legislation in 1789 leaving general authority over pilotage with the states.
This legislation, now codified at 46 U.S.C. § 8501(a) in substantially similar form, now provides:
Except as otherwise provided in this subtitle [Chapter 85 of Title 46], pilots in the bays, rivers, harbors, and ports of the United States shall be regulated only in conformity with the laws of the States.
To understand the lines along which Congress has exercised jurisdiction over pilots, it is necessary to understand the basic scheme by which vessels are classified and licensed:
The basic form for the comprehensive federal regulation of trading and fishing vessels was established in the earliest days of the Nation and has changed little since. Ships engaged in trade with foreign lands are"registered". . . . "The purpose of a register is to declare the nationality of a vessel . . . and to enable her to assert that nationality wherever found." Vessels engaged in domestic or coastwise trade or used for fishing are "enrolled". . . . "The purpose of an enrollment is to evidence the national character of a vessel . . . and to enable such vessel to procure a . . . license."
Douglas v. Seacoast Products, Inc., 431 U.S. 265, 272-73, 52 L. Ed. 2d 304, 97 S. Ct. 1740 (1977) (citations omitted & emphasis added).
This vessel documentation regime is codified in the Vessel Documentation Act of 1980.
Under this regime, the Coast Guard issues certificates of documentation to each vessel, which may be "endorsed" for one or more category of use. These endorsements, or licenses, are available in five categories -- registry (for foreign trade), coastwise (for domestic trade), Great Lakes, fishery, and recreational -- each type enabling its vessel to engage in a particular use. See 46 U.S.C. §§ 12105-09. On pain of forfeiture, a vessel may not engage in a trade without an endorsement covering that trade. 46 U.S.C. § 12110.
The action that Congress took in the pilotage statutes was to claim pilotage jurisdiction over those ships not sailing under register:
. . . [A] coastwise seagoing vessel shall be under the direction and control of a pilot licensed under [federal law] if the vessel is --
(1) not sailing on register;
(3) not on the high seas . . .
46 U.S.C. § 8502(a) (emphasis added). It should be noted that the term "coastwise" (the meaning of which, as will be made clear, is at the heart of this dispute) is nowhere generally defined in the statutes governing shipping.
In the limited realm in which Congress has claimed federal jurisdiction over pilots, the states are preempted from taking action. Section § 8501(d) provides in part:
A State may not adopt a regulation or provision that requires a coastwide [sic] vessel to take a pilot licensed or authorized by the laws of a State . . .
Id. § 8501(d). Thus, "these two statutes read together give the Federal Government exclusive authority to regulate pilots on enrolled vessels and . . . preclude a State from imposing its own pilotage requirements upon them." Ray v. Atlantic Richfield Co., 435 U.S. 151, 159, 55 L. Ed. 2d 179, 98 S. Ct. 988 (1978). On the other hand, "just as it is clear that States may not regulate the pilots of enrolled vessels, it is equally clear that they are free to impose pilotage requirements on registered vessels entering and leaving their ports." Id. at 159-60.
This is exactly what New York and New Jersey have done in the statutes which give rise to this action. New York's compulsory pilotage statute provides in pertinent part:
Every foreign vessel and every American vessel under register entering or departing from the Port of New York by the way of Sandy Hook . . . shall take a Sandy Hook pilot licensed under the authority of this article or under the laws of the state of New Jersey . . . Whenever the services of such a pilot are refused, the master, owners or consignees, shall pay pilotage as if one had been employed. Such pilotage shall be paid to the pilot first speaking or offering his services as pilot to such vessel.
N.Y. Navig. Law § 88(1) (McKinney 1989) (emphasis added).
The New Jersey statute provides, similarly, that "all masters of foreign vessels and vessels from a foreign port, and all vessels sailing under register . . . shall take a licensed pilot." N.J. Stat. Ann. § 12:8-35 (emphasis added).
Plaintiffs are members of organizations known as the United New York Sandy Hook Pilots Benevolent Association and the United New Jersey Sandy Hook Pilots Benevolent Association (the "Sandy Hook pilots"). Through an agent, the Sandy Hook pilots for some years have assigned their member pilots on a rotational basis to pilot vessels into and out of New York Harbor. Prior to June 1992, they provided pilotage services for Hess vessels entering New York Harbor.
Defendant Hess is a corporation engaged in the petroleum business. It operates an oil refinery in St. Croix, the U.S. Virgin Islands, and during the period covered by this action it used the five U.S. flag vessels named in this action (the "Hess vessels") to transport oil products from its refinery in St. Croix to New York. Pursuant to the Vessel Documentation Act of 1980, 46 U.S.C. § 12103(a), 46 C.F.R. § 67.17-1(c) (1992), Hess endowed those ships with certificates of documentation endorsed for both coastwise and registry use. When the vessels sailed between St. Croix and New York during the relevant period, the crews entered notations in the ships' logs indicating that the vessels were sailing on their coastwise endorsements.
Defendant/Intervenor Interport Pilots Agency, Inc. ("Interport") is a foreign corporation whose members are pilots holding federal licenses issued by the U.S. Coast Guard but who are not licensed by the States of New York or New Jersey. In February 1992, Interport's president, Capt. Lou Bettinelli, wrote to the Coast Guard, urging that it assert jurisdiction over pilotage on U.S. vessels sailing with coastwise licenses between New York and the Virgin Islands. Bettinelli asserted that Interport pilots had provided pilotage in the past for Hess ships traveling between St. Croix and New York, but that the New York Board of Commissioners of Pilots had recently begun to assert its authority over all U.S. vessels in the New York-to-St. Croix trade, and to require Hess's vessels to take on state-licensed pilots instead of federal.
Hess responded to the Letter Ruling by directing its vessels traveling between St. Croix and New York to sail under their coastwise endorsements and, relying on those endorsements, to turn down plaintiffs' offers of pilotage services and to engage the services instead of Interport's federally licensed pilots. Plaintiffs responded by submitting invoices to Hess for the refused pilotage services and warning them that refusal to pay the invoices would lead to further action. Hess responded that, in reliance on ...