CRUISING THE GREAT LAKES: A REPORT ON THE UNITED STATES AND CANADIAN REGULATIONS FOR THE COMMERCIAL CRUISE INDUSTRY ON THE GREAT LAKES.

• Author: Parran, Theodore V., III
• Position: Proceedings of the 43rd Canada-United States Law Institute Annual Conference: Can the United States and Canada Cooperate on Climate Change?

TABLE OF CONTENTS Table of Contents Introduction and Executive Summary The Great Lakes Maritime & Tourism Industry I. Overview of the Great Lakes-St. Lawrence Maritime Transportation System II. Overview of Great Lakes Tourism and Commercial Cruising III. Related Great Lakes Industries: Manufacturing and Shipping IV. Looking Ahead: General Economic Indicators V. Possible Impediments to Growth Pilotage and Great Lakes Commercial Cruise Navigation VI. Defining Pilotage VII. Current Regulatory Framework for Pilotage on the Great Lakes. VIII. Regulating Coordination between the U.S. and Canada on Pilotage IX. Pilotage Fees and Requirements: Inconsistent Rules and Implementation X. Pending Regulatory and Oversight Changes Safety & Security and Great Lakes Commercial Cruising XI. Current Regulatory Framework for Safety and Security A. Passenger Screening B. Fire Safety & Passenger Safety and Security XII. Regulatory Coordination between the U.S. on Safety and Security XIII. Safety and Security Regulations: Areas of Divergence and Conflict Cabotage Law on the Great Lakes XIV. Review of International Cabotage Law XV. Review of Cabotage Law in the United States and Canada XVI. Regulatory Interplay between Canada and United States Cabotage Laws Conclusion: Moving Forward with Regulatory and Legislative Innovation . INTRODUCTION AND EXECUTIVE SUMMARY

The Great Lakes Commercial Cruise Industry: Regulatory Hurdles and Opportunities

The tourism industry has undergone immense growth globally since the 1950's. In today's global economy, travel and tourism is the world's largest service industry, contributing trillions to world GDP. Given that the industry has become such a diverse and potent economic driver, competition for increasingly informed and discerning consumers is fierce. Against this backdrop, North America is the fastest growing geographical region in the tourism industry, thanks in large part to the high-quality destinations and visitor experiences available in the United States and Canada.

In this context, the Council of the Great Lakes Region has recently conducted a study of the tourism industry in the Great Lakes to explore possible growth areas. A key finding from the Council's study is that, while the Region punches above its weight in visitors and jobs, it only drives 15% of tourism related revenues and 19% of tourism related GDP in North America. The study also determined that domestic tourists account for 84% of all tourists to the Region.

In spite of the current data, the Council's study, as well as other sources, indicate robust growth potential for tourism in the Great Lakes and for the cruise industry in particular. For example, The Great Lakes Cruise Strategy report found that, with the right marketing and economic development strategy, the Great Lakes cruise industry has the potential to grow to roughly 180,000 passengers served a year by 2028. While this opportunity exists, the commercial cruise industry in the Great Lakes remains relatively unknown and with limited service.

Aside from the concerted actions needed to promote the Great Lakes cruise industry, the unique nature of the shared U.S.-Canada border throughout the Great Lakes presents a novel legal and regulatory environment. In the commercial cruising context, long-standing maritime regulations and services such as cabotage, passenger screening and security, and pilotage present complex legal and regulatory challenges, resulting in added compliance and operating costs for potential cruise operators. This report seeks to provide a working guide for the Council and industry groups to aid in identifying where specific legal and regulatory hurdles exist, and provide a roadmap for possible resolutions to these issues.

THE GREAT LAKES MARITIME & TOURISM INDUSTRY

1. Overview of the Great Lakes-St. Lawrence Maritime Transportation System

   The Great Lakes-St. Lawrence Maritime Transportation System (2) (MTS) is the longest deep-draft inland navigation system in the world. The MTS includes the five Great Lakes (Superior, Michigan, Huron, Ontario, and Erie), their connecting channels, and the St. Lawrence River. Canada and the United States share four of the Lakes and the St. Lawrence--only Lake Michigan is entirely within the United States. The MTS extends 2,300 miles (3,680 km) from the Gulf of St. Lawrence on the Atlantic Ocean to the North American heartland, and serves more than 100 ports in the eight Great Lakes U.S. states (Minnesota, Wisconsin, Illinois, Indiana, Michigan, Ohio, Pennsylvania, and New York), as well as the Canadian provinces of Ontario and Quebec. (3)

   Lock infrastructure enables vessels to navigate the roughly 600-foot (180-meter) elevation change between the St. Lawrence River and Lake Superior. The section of the MTS between Montreal and the Gulf of St. Lawrence is open year-round to navigation, while the other portions of the system are seasonal. (4) Given its unique geographic, geologic, and ecologic makeup, the MTS is best understood as a single, comprehensive system that spans two nations. As such, it is fundamentally different from other coastal regions in the U.S. and Canada and, in many ways, requires governance that recognizes and accounts for these specific characteristics.

2. Overview of Great Lakes Tourism and Commercial Cruising

   The Great Lakes themselves, and the urban, cultural, and natural attractions that are located on and near them, have long been a compelling destination for vacationers. Beginning with natural attractions such as Niagara Falls, lake islands such as the Bass Islands in Lake Erie and Mackinac Island at the juncture of Lakes Michigan and Huron, and a number of scenic riverine ports on many of the lakes, increasingly urban populations began viewing Great Lakes as the perfect summer getaway as early as the 1870's. (5) Formal tourist attractions like Cedar Point on Lake Erie and major urban centers with thriving arts and entertainment scenes like Chicago, Illinois, also became major vacation draws in that same period. (6)

   These above attractions have remained popular destinations across the Great Lakes. These destinations continue to attract tens of thousands of visitors a year, and while the Great Lakes commercial fishing industry is now a ghost of its former self, recreational fishing has become a multi-billion dollar industry. (7) In terms of revenue, Great Lakes-wide income generated from tourism has grown steadily. For example, revenue generated from Great Lakes tourism has grown year-on-year since 2009. (8) A snapshot of the industry gathered in 2015 showed that Great Lakes tourism generated $492 million (U.S.) in revenue. Further studies project that, by 2020, revenue derived from the Great Lakes tourism industry will increase to roughly $632 million (U.S.). (9)

   The current strength and continued growth in Great Lakes tourism presents growth opportunities for the commercial cruise industry as well. In fact, there is already a limited but robust flow of visitors through the Great Lakes' more than 100 ports and commercial docks. (10) In 2018, for example, Great Lakes waterways saw nearly 100,000 port visits by passengers. (11) In response, industry, NGO, and trade groups including the Great Lakes Seaway Partnership, the Conference of Great Lakes and St. Lawrence Governors and Premiers, and the Research and Traffic Group have also shown interest in exploring the future of Great Lakes commercial cruising. Recent reports show that industry groups consider the Great Lakes commercial cruise market to have a viable future and that there is market interest from consumers. (12)

   More specifically, several developments indicate that industry groups are moving to capitalize on these opportunities. For example, industry stakeholders recently formed a consortium titled Cruise the Great Lakes in 2018 with the specific goal of creating "a new international partnership aimed at bringing more cruise passengers to the region." (13) This partnership seeks to increase the overall economic impact of Great Lakes cruising, by marketing not only to passengers, but also to potential tour operators. (14) This effort is underpinned by the realization that cruises on the Great Lakes of the United States and Canada are increasing in popularity due to their easy access and lower costs associated when compared to other cruises. (15)

   As such, major cruise operators are gearing up for expansion in the Great Lakes region, with European cruise line expected to enter the Great Lakes market in the 2019-2020 season. Specifically, French luxury cruise line Ponant is engaging in the Great Lakes area with new services. (16) German Hapag-Lloyd Cruises will be joining the venture as well. (17) Local and regional press have also reported that major cruise lines, including Viking Cruises, may be considering expansion into the Great Lakes for the first time. (18) Finally, major destinations are also working to ensure that they are competitive draws for the cruise market. For example, the Detroit/Wayne County Port Authority recently spent $21.5 million improving its port for security and to make it more appealing to cruises and tourists. (19)

3. Related Great Lakes Industries: Manufacturing and Shipping

   The Great Lakes, as an overall economic unit, is one of the most productive on the planet. In 2015, the region accounted for nearly a third--30% in economic activity and 31% in employment--of combined Canadian and U.S. output, jobs and exports. (20) The total economic output (from both the Canadian and U.S. side) was estimated at $5.8 trillion (U.S.). (21) That number has now increased to over $6 trillion (U.S.) since 2017. (22) The two top trade exports in the Great Lakes Region have consistently been transportation equipment and machinery, with agricultural and food products, metals and chemicals playing secondary, but still prominent, roles. (23) Regarding cross-border trade between the U.S. and Canada, the region's trade...