Federal Register / Vol. 62, No. 27 / Monday, February 10, 1997 / Rules and Regulations 5917

(iv) * * *

(A) (1) the drug contains ephedrine or

its salts, optical isomers, or salts of

optical isomers; or

(2) The Administrator has determined

pursuant to the criteria in 1310.10 that

the drug or group of drugs is being

diverted to obtain the listed chemical

for use in the illicit production of a

controlled substance; and

(B) The quantity of ephedrine or other

listed chemical contained in the drug

included in the transaction or multiple

transactions equals or exceeds the

threshold established for that chemical.

* * * * *

(g) The term combination ephedrine

product means a drug product

containing ephedrine or its salts, optical

isomers, or salts of optical isomers and

therapeutically significant quantities of

another active medicinal ingredient.

The term ‘‘therapeutically significant

quantities’’ shall apply if the product

formulation (i.e., the qualitative and

quantitative composition of active

ingredients within the product) is listed

in American Pharmaceutical

Association (APHA) Handbook of

NonPrescription Drugs; Drug Facts and

Comparisons (published by Wolters

Kluwer Company); or USP DI

(published by authority of the United

States Pharmacopeial Convention, Inc.);

or the product is listed in § 1310.15 as

an exempt drug product. For drug

products having formulations not found

in the above compendiums, the

Administrator shall determine, pursuant

to a written request as specified in

§ 1310.14 whether the active medicinal

ingredients are present in quantities

considered therapeutically significant

for purposes of this paragraph.

* * * * *

(n) The term retail distributor means

a grocery store, general merchandise

store, drug store, or other entity or

person whose activities as a distributor

relating to drug products containing

pseudeophedrine,

phenylpropanolamine, or ephedrine are

limited almost exclusively to sales for

personal use, both in number of sales

and volume of sales, either directly to

walk-in customers or in face-to-face

transactions by direct sales. For the

purposes of this paragraph, sale for

personal use means the distribution of

below-threshold quantities in a single

transaction to an individual for

legitimate medical use. Also for the

purposes of this paragraph, a grocery

store is an entity within Standard

Industrial Classification (SIC) code

5411, a general merchandise store is an

entity within SIC codes 5300 through

5399 and 5499, and a drug store is an

entity within SIC code 5912.

* * * * *

3. Section 1310.02 is amended by

revising paragraphs (a)(16) and (a)(21) to

read as follows:

§ 1310.02 Substances covered.

* * * * *

(a) * * *

(16) Isosafrole ....................................... 8704

* * * * *

(21) Hydriodic Acid ............................ 6695

* * * * *

4. Section 1310.04 is amended by

revising paragraph (a) to read as follows:

§ 1310.04 Maintenance of records.

(a) Every record required to be kept

subject to § 1310.03 for a List I chemical,

a tableting machine, or an encapsulating

machine shall be kept by the regulated

person for two years after the date of the

transaction.

* * * * *

5. Section 1310.09 is revised to read

as follows:

§ 1310.09 Temporary exemption from

registration.

Each person required by section 302

of the Act (21 U.S.C. 822) to obtain a

registration to distribute, import, or

export an combination ephedrine

product is temporarily exempted from

the registration requirement, provided

that the person submits a proper

application for registration on or before

May 12, 1997. The exemption will

remain in effect for each person who has

made such application until the

Administration has approved or denied

that application. This exemption applies

only to registration; all other chemical

control requirements set forth in parts

1309, 1310, and 1313 of this chapter

remain in full force and effect.

PART 1313—IMPORTATION AND

EXPORTATION OF PRECURSORS AND

ESSENTIAL CHEMICALS

1. The authority citation for part 1313

continues to read as follows:

Authority: 21 U.S.C. 802, 830, 871(b), 971.

2. Section 1313.02 is amended by

revising paragraphs (d)(1)(iv)(A) and (B),

to read as follows:

§ 1313.02 Definitions.

* * * * *

(d) * * *

(1) * * *

(iv) * * *

(A)(1) the drug contains ephedrine or

its salts, optical isomers, or salts of

optical isomers; or

(2) The Administrator has determined

pursuant to the criteria in 1310.10 that

the drug or group of drugs is being

diverted to obtain the listed chemical

for use in the illicit production of a

controlled substance; and

(B) The quantity of ephedrine or other

listed chemical contained in the drug

included in the transaction or multiple

transactions equals or exceeds the

threshold established for that chemical.

* * * * *

Dated: January 28, 1997.

Gene R. Haislip,

Deputy Assistant Administrator, Office of

Diversion Control.

[FR Doc. 97–3086 Filed 2–7–97; 8:45 am]

BILLING CODE 4410–09–M

DEPARTMENT OF TRANSPORTATION

Saint Lawrence Seaway Development

Corporation

33 CFR Parts 404 and 407

RIN 2135–AA08

Seaway Regulations and Rules: Great

Lakes Pilotage Rates

AGENCY: Saint Lawrence Seaway

Development Corporation, DOT.

ACTION: Final rule.

SUMMARY: The Saint Lawrence Seaway

Development Corporation (SLSDC)

amends the Seaway Regulations and

Rules by increasing Great Lakes Pilotage

Rates by: 8% in District 1 (9% in Area

1; 6% in Area 2); 19% in District 2 (0%

in Area 4; 31% in Area 5); 6% in

District 3 (7% in Area 6; 6% in Area 7;

4% in Area 8); and 11% for mutual

rates.

The pilotage rate adjustments

contained in this final rule are different

from the rates proposed by the SLSDC

in the Notice of Proposed Rulemaking

published in the Federal Register (61

FR 50258) on September 25, 1996, (the

NPRM), because adjustments have been

made based on comments received in

response to the NPRM. These

adjustments are discussed in the section

of this rule entitled ‘‘Discussion of

Comments and Changes.’’

The increase in Great Lakes pilotage

rates is necessary because, after review,

the SLSDC has determined that, in

accordance with 33 CFR 407.1(b), pilot

compensation is not meeting pilot

compensation targets established in 33

CFR Part 407, Appendix A, Step 2.

EFFECTIVE DATE: This rule becomes

effective on March 1, 1997.

FOR FURTHER INFORMATION CONTACT:

Scott A. Poyer, Chief Economist, Saint
5918 Federal Register / Vol. 62, No. 27 / Monday, February 10, 1997 / Rules and Regulations

Lawrence Seaway Development

Corporation, Office of Great Lakes

Pilotage, United States Department of

Transportation, 400 7th Street SW.,

Suite 5424, Washington, DC 20590, 1–

800–785–2779, or Marc C. Owen, Chief

Counsel, Saint Lawrence Seaway

Development Corporation, 400 Seventh

Street, S.W., Suite 5424, Washington,

D.C. 20590, (202) 366–6823.

SUPPLEMENTARY INFORMATION:

Regulatory History

On September 25, 1996, the SLSDC

published a NPRM in the Federal

Register (61 FR 50258) that proposed

new pilotage rates in accordance with

the Great Lakes Pilotage Ratemaking

Methodology (33 CFR Part 407). The

NPRM detailed the calculations

involved in determining new pilotage

rates and proposed increases in Great

Lakes pilotage rates based on the results

of these calculations. The NPRM

announced a public hearing, which was

held on October 22, 1996, in Romulus,

MI. The original comment period for the

NPRM was scheduled to end on

November 12, 1996; however, four

commenters requested an extension. In

order to allow the public more time to

prepare their responses to the proposals

contained in the NPRM, the SLSDC

published a notice in the Federal

Register on November 15, 1996, (61 FR

58496), which extended the NPRM’s

comment period to November 27, 1996.

Background and Purpose

On December 11, 1995, the Secretary

of Transportation transferred

responsibility for administration of the

Great Lakes Pilotage Act from the

Commandant of the U.S. Coast Guard to

the Administrator of the SLSDC. This

transfer was effected by a final rule

published by the U.S. Department of

Transportation (DOT) in the Federal

Register on December 11, 1995 (60 FR

63444). Among the responsibilities

transferred by this final rule was the

responsibility for setting Great Lakes

pilotage rates. On May 9, 1996, the DOT

published a final rule in the Federal

Register (61 FR 21081), which was

originated and initially drafted when

Great Lakes pilotage functions were

administered by the U.S. Coast Guard.

The final rule made the Department’s

final changes to the methodology used

to set Great Lakes pilotage rates.

The purpose of this rulemaking is to

establish pilotage rates under the new

Great Lakes Pilotage ratemaking

methodology for the first time. This

rulemaking also finishes the first full

rate review since 1987 and implements

the first U.S. rate adjustment since 1992.

Discussion of Comments and Changes

In response to the NPRM a total of 42

written and 13 oral comments were

received. Many commenters did not

limit themselves to the subject of

proposals contained in the NPRM. In

fact, nearly all the comments addressed

one or more issues that were beyond the

scope of this rulemaking. These

comments can be divided into two

major categories—commenters who

wanted a comprehensive study of the

entire Great Lakes Pilotage system and

commenters who wanted to reopen or

redesign the Great Lakes Pilotage

Ratemaking Methodology. Twenty-nine

commenters representing every facet of

the Great Lakes maritime community

requested a study or comprehensive

review of the pilotage system with the

aim of making the Great Lakes pilotage

system more efficient. Seventeen

commenters requested either specific

changes to the Great Lakes Pilotage

Ratemaking Methodology or requested a

wholesale redesign of the entire

methodology.

The SLSDC believes that the Great

Lakes needs to maintain a safe, reliable,

and efficient pilotage system and a

sensible and reliable ratemaking

methodology in order to stay

competitive in world markets. This final

rule can only address comments directly

related to the NPRM and its

implementation of the ratemaking

methodology. However, it is clear that

there is a considerable amount of public

interest in a comprehensive review of

the Great Lakes pilotage system as a

whole. In order to give all stakeholders

an equal opportunity to comment on

this subject, on January 29, 1997, the

SLSDC published a notice in the

Federal Register (62 FR 4223) that

announced a public meeting on the

issue. The remainder of the comments

discussed in this final rule deal with

subjects proposed in the NPRM.

Thirty-four commenters representing

agriculture, labor, shipping and port

interests objected to the rate increases

proposed in the NPRM and nine

commenters representing pilotage

interests supported the rate increases.

Commenters opposed to the rate

believed the increases would be

detrimental to agriculture, labor, ports

or shipping on the Great Lakes. Almost

all of these commenters requested a

comprehensive review of the Great

Lakes pilotage system (as discussed

above), before new rates were set. Some

of the commenters opposed to the

NPRM also requested that the proposed

increases either be rejected, delayed, or

phased in over as much as a five-year

period. The commenters in favor of the

rate increases believed the proposed

increases were necessary, reasonable

and only fair to pilots who had not

received a rate increase in many years.

The SLSDC has reviewed existing

pilotage rates as required by 33 CFR

§ 407.1(b), and determined that pilot

compensation is not meeting pilot

compensation targets established in 33

CFR Part 407, Appendix A, Step 2.

Therefore, pilotage rates have been

adjusted as required by Step 7 of

Appendix A to 33 CFR.

Four commenters believe the SLSDC’s

traffic projections were too low, and that

vessel traffic and pilotage hours would

increase more than the SLSDC predicted

in the NPRM. Commenters requested

that projections be reviewed using data

updated through at least November 30,

1996. In response to these comments,

the SLSDC has reviewed its traffic

projections using pilot hour data

updated through November 30, 1996.

Based on this data, the SLSDC has

revised its projection of pilot hours in

each District.

In District 1, actual pilot hours

through November 30, 1996 were

13.98% above 1995 levels, with

December levels increasing. Therefore,

the SLSDC has changed its projection to

a 16% increase for District 1.

In District 2, actual pilot hours

through November 30, 1996 were

11.04% above 1995 levels, with

December levels increasing. Therefore,

the SLSDC has changed its projection to

a 16% increase for District 2.

In District 3, actual pilot hours

through November 30, 1996 were

20.41% above 1995 levels, with

December levels decreasing slightly.

Therefore, the SLSDC has changed its

projection to a 20% increase for District

3.

The change in traffic projections has

not affected pilotage rates in Districts 1

or 2 as much as District 3 because the

change in traffic was not as great.

District 3, which in the first three

months of the navigation season was

approximately 43% below 1995 levels,

witnessed a significant surge in vessel

traffic. By November 30, 1996, District

3 was approximately 20% ahead of 1995

traffic levels. Under the ratemaking

methodology this increase in traffic

translated into an increase in the target

number of pilots because more pilots are

necessary to handle the increased

workload. The increase in traffic also

decreased pilotage rates because

operating costs are spread out over more

entities. Virtually all of the change in

pilotage rates in District 3 is a result of

the change in traffic projections that

were requested by commenters from

District 3 and elsewhere who correctly
Federal Register / Vol. 62, No. 27 / Monday, February 10, 1997 / Rules and Regulations 5919

alerted the SLSDC that vessel traffic was

increasing in District 3. Some of these

comments are discussed further below.

Three commenters requested the

Director allow 18 pilots in District 3,

including three pilots in the St. Mary’s

River, so that there will be enough pilots

to handle the workload and none of the

current 18 pilots will be temporarily

layed-off or terminated. As detailed

above, the SLSDC has revised its traffic

projections upward in District 3. Based

on this revised projection, pilotage rates

have been recalculated based on 23

pilots in District 3 with four of those

pilots in the St. Mary’s River.

One commenter from the District 3

pilot association questioned whether the

pilot hours calculated in the NPRM

were correct for District 3 because the

SLSDC’s data showed pilot hours were

down approximately 43% at the

beginning of the year, while the

commenter was working many hours in

excess of 1995. As explained above, the

SLSDC has reexamined its projections

using data updated through November

1996, which shows that total pilot hours

for District 3 had increased. However,

further analysis of the data showed that

the increase in the pilot hour workload

was not spread evenly among all pilots,

especially in District 3. Some disparity

in workload between pilots should be

expected in any district since no two

pilots work exactly the same jobs at the

same time, and some pilots have

administrative responsibilities. Since

some pilots work almost exclusively in

designated waters where the target is

1000 hours per pilot per season, while

other pilots work almost exclusively in

undesignated waters where the target is

1800 hours per season, it would be

expected that the difference between the

pilot with the most hours and the pilot

with the least hours would be

approximately 800 hours. As shown in

Tables A, B and C below, for pilots who

worked the entire year in Districts 1 and

2, the disparity between the pilot with

the most hours and the pilot with the

least hours was close to 800 hours

(approximately 500 hours in District 1

and approximately 1000 hours in

district 2). As can be seen in the tables,

in both districts the pilot workload is

divided fairly evenly. However, for

pilots who worked the entire year in

District 3, the disparity was twice as

high (approximately 2,000 hours). Many

pilots were significantly over targeted

hours, while other pilots were below.

TABLE A.—DISTRICT 1 PILOT HOURS

Pilot

Pilot

hours

(Jan–

Nov)

Hickey ............................................. 843

Maclean, J ...................................... 989

Menkes ........................................... 845

Metzger ........................................... 1,072

Tetzlaff ............................................ 860

Maclean, M ..................................... 1,362

Welch .............................................. 1,357

Dorr ................................................. 1,309

Withington ....................................... 1,265

Difference (Hi/Lo) ............................ 519

TABLE B.—DISTRICT 2 PILOT HOURS

Pilot

Pilot

hours

(Jan–

Nov)

Greene ............................................ 778

Kanaby ............................................ 1,007

Schnell ............................................ 920

Waldrop ........................................... 1,144

Knetchel .......................................... 1,598

Meyer .............................................. 1,101

Ell .................................................... 1,298

Singler ............................................. 1,348

Coppola ........................................... 1,924

Loflin ............................................... 1,269

Coulston .......................................... 1,428

Difference (Hi/Lo) ............................ 1,146

TABLE C.—DISTRICT 3 PILOT HOURS

Pilot

Pilot

hours

(Jan–

Nov)

Opack .............................................. 1,778

Balanda ........................................... 2,106

Brown .............................................. 1,824

Madjiwita ......................................... 1,884

Sciullo ............................................. 835

Brennan .......................................... 2,156

Halverson ........................................ 963

Ojard ............................................... 1,988

Derf ................................................. 784

Aho .................................................. 1,882

Skorich ............................................ 1,552

Kolenda ........................................... 2,491

Harris .............................................. 1,504

Hayes .............................................. 2,921

Willecke ........................................... 911

Radtke ............................................. 1,226

Difference (Hi/Lo) ............................ 2,137

Two commenters believe that pilotage

rates should allow for more than the 13

pilots proposed in the NPRM for District

2. As detailed above, the SLSDC has

revised its traffic projections upward in

District 2. Based on this revised

projection, pilotage rates have been

recalculated based on 14 pilots in

District 2.

The revised traffic projections result

in a revision of the target number of

pilots for District 1. Pilotage rates have

been recalculated based on 11 pilots in

District 1.

Two commenters, the president and

controller of the District 3 pilots

association, believe the way the NPRM

proposed to allocate expenses to each

area resulted in a 1% overstatement of

expenses in favor of District 3, and an

inequitable allocation of revenues to

Area 7 (the St. Mary’s River). The

ratemaking methodology does not

specify how expenses and revenues will

be divided among the areas, only that a

separate ratemaking calculation be made

for each area (see 33 CFR § 407.10(b)).

The NPRM proposed that revenues and

expenses be divided among the

individual areas based on the number of

pilots calculated for each area and that

the area totals be added together for the

District totals. However, the

commenters are correct that in a District

with three areas (i.e., District 3), if all

fractions over .5 are rounded up, as is

the general rule, then it is possible to

have total area expenses add up to

101% of the actual expenses for the

district. The SLSDC agrees that this

situation could upwardly bias pilotage

rates in District 3, so the SLSDC has

remedied the situation by changing the

order of the calculations so that the

district totals are done first and then

this total is divided among the areas so

that the area totals must equal 100% of

the District total. The commenters also

believe that district totals should not be

apportioned to areas within a district

based on the number of pilots calculated

for that area, but instead should be

apportioned to each area based on the

actual revenue earned in that area in the

previous year. The commenters believe

this would lead to a more accurate

projection for each area. For Districts 2

and 3, the SLSDC agrees with the

commenters and has divided the district

by area accordingly. In these districts all

revenues and expenses from all areas

are pooled together and then divided.

So it is more accurate to divide district

totals based on the actual division of

revenue for each area. However, in

District 1 two pools exist, one for Area

1 and one for Area 2. Revenues are

accredited separately in each pool and

expenses are assigned on a per capita

basis. Following this system, in District

1 revenues have been apportioned to

each area on the same basis as in

Districts 2 and 3, but expenses and other

calculations are divided based on the

number of pilots in each area. The

SLSDC believes this method gives a

truer projection of how revenues and

expenses are actually divided in each

area.
5920 Federal Register / Vol. 62, No. 27 / Monday, February 10, 1997 / Rules and Regulations

One commenter agrees with the above

commenters that district revenues

should not be apportioned based on the

number of pilots. However, the

commenter’s suggested solution is to

divide total district expenses into fixed

and variable portions, adjust the

variable portion by projected pilot

numbers, and then adjust both the fixed

and variable portions for inflation. As

discussed in the previous comment

above, the SLSDC believes that dividing

revenues based on actual revenues

earned is a more accurate method, and

the SLSDC intends to retain this method

for dividing revenues.

Two commenters believe expenses

that the independent auditor had

recommended be disallowed because

these expenses were reimbursed by

other entities should not have been

disallowed in ratemaking calculations

because the expenses in question have

already been deducted from association

revenues reported as net revenues to the

Director. After reviewing association

reported revenues, the SLSDC agrees

and $113,273 has been added back to

the expense base of District 2 and

$112,812 has been added back to the

expense base of District 3.

One commenter believed that $53,971

should be added to the expense base for

District 1 to account for unaudited

travel expenses that are not reported in

the pilot association’s income statement.

The SLSDC reviewed the District travel

figures with the independent auditing

firm that conducted an audit of all three

pilot associations. The auditing firm,

which had already added $21,624 to the

expense base of District 1 for pilot travel

and per diem, did not believe additional

funds were warranted. As a result, the

SLSDC is not changing the independent

auditing firm’s recommended travel

allowance for District 1.

One commenter requested that the

District 1 pilots be granted an

immediate surcharge for the purpose of

purchasing Electronic Chart Display

Information Systems (ECDIS) units for

all pilots in District 1. The SLSDC

believes it is sound policy to evaluate

the application of ECDIS technology to

Great Lakes pilotage operations before

wholesale adoption. Therefore, this

requested change is not adopted.

One commenter supports the

Director’s proposed allowance of funds

for the test and evaluation of ECDIS

equipment in each pilot association.

However, the commenter suggests that

the equipment should be leased before

the decision is made to purchase. The

SLSDC agrees that leasing would be a

viable option for test and evaluation of

the equipment, and this option will be

allowed.

Two commenters believe the expenses

for test and evaluation of ECDIS should

be amortized as a capital expenditure,

rather than as an operational expense.

Such a change would have virtually no

impact on pilotage rates proposed in the

NPRM because the expense is so small

relative to the total rate (approximately

six tenths of one percent). Therefore the

SLSDC does not believe such a change

would be worthwhile for this NPRM. If

there are large-scale purchases of ECDIS

equipment in future years, these

expenses would be better candidates for

capitalization.

One commenter questioned the use of

Internal Revenue Service guidelines for

the recognition of expenses and argued

that $49,500 in disallowed pilot boat

lease expenses and $5,400 in disallowed

property lease expenses should be

reinstated into the District 2 expense

base. The commenter believes that all

disallowed expenses should qualify

because they are reasonable and

necessary for the provision of pilotage

service. The SLSDC reviewed these

expenses and has decided to accept the

opinion of the independent audit firm

hired for the purposes of this

ratemaking. The independent audit firm

believed the disallowed expenses were

excessive based on the accepted

auditing practice of comparison to

expenditures of similar businesses in

the same locality, and the SLSDC has

left those expenses out of the rate base

for District 2.

Two commenters believe that the

NPRM did not account for increases in

operating expenses (e.g., social security,

medicare, etc.) that come with increases

in the number of pilots and/or increases

in pilotage operations. These

commenters are incorrect, the NPRM

did take these factors into account and

an explanation of how operating

expenses were adjusted for these factors

was contained in the NPRM (see 61 FR

50261 Step 1.D.).

Three commenters disagreed that

master compensation was 1.5 times all

salary and benefits as proposed in the

NPRM. Commenters provided detailed

information, including W–2 tax

information, showing that a more

accurate approximation of master wages

is 1.5 times mate salary, plus mate

benefits. One commenter also provided

a separate calculation that indicated

master compensation should be

approximately $106,000. After

reviewing the available figures, the

SLSDC believes that master salary is

closest in comparison to 1.5 times mate

salary, plus mate benefits. Using this

method, the calculations in this final

rule are based on a figure of $92,290 for

mate compensation and $131,213 for

master compensation (representing

$116,767 for salary and $14,446 for

benefits).

One commenter believed mate

compensation included funds for

workmen’s compensation, insurance

and social security, and these expenses

should be disallowed from pilotage

district operating costs. The SLSDC

disagrees because the figure used by the

SLSDC for mate benefits does not

include the ascribed items.

One commenter believed that profits

from related entities of each pilot

association should be counted towards

pilot compensation. In effect this is how

such profits are counted after deduction

for expenses and return on investment.

Five commenters complimented the

SLSDC and the Office of Great Lakes

Pilotage on the NPRM, believing the

SLSDC did a fair and equitable job of

applying the ratemaking methodology.

One commenter, however, believes the

SLSDC applied the ratemaking

methodology inconsistently and did not

follow the published methodology. The

commenter argues that the number of

pilots were calculated without regard to

federal regulations. The commenter

believes the regulations require the

Director to include mandatory rest

hours when calculating the number of

pilots. The SLSDC does not believe the

NPRM was inconsistent or contradicted

the ratemaking methodology. The

federal regulations were followed as per

Step 2.A. of Appendix A to part 407 of

Title 33, Code of Federal Regulations,

which states that the number of pilots

will be calculated based on projected

bridge hours.

One commenter believes the

ratemaking methodology does not

require pilotage rates to be set on an

area by area basis. The commenter

suggests that rates be set by district and

divided evenly among areas within each

district. The SLSDC believes the method

proposed by the commenter is

contradictory to the requirements of the

ratemaking methodology (see 33 CFR

§ 407.10(b) and Part 407, Appendix A,

Step 7). The suggested change is not

adopted.

One commenter believes that the

proposed increase in rates would have

a substantial impact on a significant

number of small entities. However, the

commenter only mentions twelve small

entities that might be affected, with no

details on how much these entities

could be effected. Lacking any evidence

to the contrary, the SLSDC disagrees

that the proposed increases would have

a substantial impact on a significant

number of small entities.

One commenter believes the Director

should set pilotage rates separate from
Federal Register / Vol. 62, No. 27 / Monday, February 10, 1997 / Rules and Regulations 5921

the calculations detailed in the Great

Lakes pilotage ratemaking methodology

in order to arrive at a more fair and

equitable rate. The SLSDC disagrees that

the rate calculations are unfair or

unreasonable and both this final rule

and the Great Lakes Pilotage Ratemaking

Methodology have been established by

public rulemaking, with ample

opportunity for public input. The

ratemaking methodology was the subject

of a separate rulemaking which took

several years to develop and involved

extensive public comment. The final

changes to the Great Lakes Pilotage

Ratemaking Methodology were

published as a final rule in the Federal

Register on May 9, 1996, (61 FR 21081).

The time for commenting on the

methodology is long expired. This

rulemaking serves to implement the

methodology, not reopen the

methodology for comment and change.

Rate Calculations

Based on the changes discussed

above, the step-by-step calculations for

each pilotage area are summarized in

the following tables:

TABLE D

Total District 1

Area 1, St.

Lawrence

River

Area 2, Lake

Ontario

Step 1: Projection of operating expenses .................................................................................... $354,561 $226,919 $127,642

Step 2: Projection of target pilot compensation ........................................................................... $1,287,651 $918,491 $369,160

Step 3: Projection of revenue ...................................................................................................... $1,532,401 $1,057,356 $475,045

Step 4: Calculation of investment base ....................................................................................... $232,890 $149,050 $83,840

Step 5: Determination of target rate of return on investment ...................................................... 7.72% 7.72% 7.72%

Step 6: Adjustment determination ................................................................................................ $1,660,191 $1,156,917 $503,274

Step 7: Adjustment of pilotage rates ............................................................................................ 1.08 1.09 1.06

TABLE E

Total District 2 Area 4 Lake

Erie

Area 5, South

East Shoal to

Port Huron, MI

Step 1: Projection of operating expenses .................................................................................... $1,148,410 $447,880 $700,530

Step 2: Projection of target pilot compensation ........................................................................... $1,642,367 $461,450 $1,180,917

Step 3: Projection of revenue ...................................................................................................... $2,371,548 $924,904 $1,446,644

Step 4: Calculation of investment base ....................................................................................... $265,488 $103,540 $161,948

Step 5: Determination of target rate of return on investment ...................................................... 7.72% 7.72% 7.72%

Step 6: Adjustment determination ................................................................................................ $2,821,272 $921,223 $1,900,049

Step 7: Adjustment of pilotage rates ............................................................................................ 1.19 1.00 1.31

TABLE F

Total District 3

Area 6, Lakes

Huron and

Michigan

Area 7, St.

Mary’s River

Area 8, Lake

Superior

Step 1: Projection of operating expenses ........................................................ $1,159,099 $602,731 $266,593 $289,775

Step 2: Projection of target pilot compensation ............................................... $2,278,362 $1,199,770 $524,852 $553,740

Step 3: Projection of revenue ........................................................................... $3,262,301 $1,696,396 $750,329 $815,576

Step 4: Calculation of investment base ........................................................... $119,823 $62,308 $27,559 $29,956

Step 5: Determination of target rate of return on investment .......................... 7.72% 7.72% 7.72% 7.72%

Step 6: Adjustment determination .................................................................... $3,446,711 $1,807,311 $793,572 $845,828

Step 7: Adjustment of pilotage rates ................................................................ 1.06 1.07 1.06 1.04

As summarized in the tables A, B and

C above, the SLSDC amends the pilotage

rates found in 33 CFR §§ 404.405–410

by increasing pilotage rates: 9% in Area

1; 6% in Area 2; 0% in Area 4; 31% in

Area 5; 7% in Area 6; 6% in Area 7; and

4% in Area 8. For the pilotage rates in

33 CFR §§ 404.420, 404.425 and

404.428, which are paid in all pilotage

areas, the SLSDC amends those sections

by increasing these rates 11%, which is

the aggregate increase for the pilotage

rate increase in all areas.

Regulatory Evaluation

This proposed regulation involves a

foreign affairs function of the United

States and therefore, Executive Order

12866 does not apply. The Great Lakes

Pilotage Act (46 U.S.C. § 9305) provides

that the Secretary may make agreements

with the appropriate agency of Canada

to prescribe joint or identical pilotage

rates and charges. The Secretary of

Transportation and the Minister of

Transport of Canada have signed a

Memorandum of Agreement concerning

Great Lakes Pilotage dated January 18,

1977, section 7 of which provides that

the Secretary and the Minister will

provide for the establishment of

identical rates, charges and any other

conditions or terms. The terms of this

rulemaking have been discussed with

the cognizant agency of Canada, the

Great Lakes Pilotage Authority, which

has voiced no objections.

This proposed regulation has also

been evaluated under the Department of

Transportation’s Regulatory Policies and

Procedures and the proposed regulation

is considered to be substantive but

nonsignificant under those procedures.

All previous pilotage rate rulemakings

have been considered nonsignificant

except for the interim pilotage rate

adjustment of June 5, 1992, (57 FR

23955). This interim adjustment was

necessary because a new rate

methodology was being designed and

was significant because the interim rate
5922 Federal Register / Vol. 62, No. 27 / Monday, February 10, 1997 / Rules and Regulations

adjustment was put in before the

methodology was completed. The rate

methodology has now been completed

and 33 CFR § 407.1(b) requires that

pilotage rates be reviewed annually.

The economic impact of this

rulemaking is expected to be minimal so

that a full economic evaluation is not

warranted. Fees for Great Lakes

registered pilotage service are paid

almost exclusively by foreign vessels.

Therefore, the effect of the proposed

increase in Great Lakes pilotage rates

will be borne almost exclusively by

foreign vessels operators, not U.S.

entities.

Regulatory Flexibility Act

Determination

The SLSDC certifies that this

proposed regulation, if adopted, would

not have a significant economic impact

on a substantial number of small

entities. In addition, this rule does not

impose unfunded mandates or

requirements that will have any impact

on the quality of the human

environment. The number of small

entities that the SLSDC believes will be

directly affected by this rule are three

U.S. pilot associations. The pilot

associations will be positively affected

by this rulemaking, and as discussed

above under ‘‘Regulatory Evaluation,’’

the SLSDC expects the impact of this

proposed rule to be minimal for other

small entities. Since the vast majority of

pilotage fees are paid by foreign vessels,

any resulting costs will be borne almost

exclusively by foreign vessel operators.

The alternative of not increasing

pilotage rates would have a negative

impact on the three small entity U.S.

pilot associations.

Environmental Impact

This proposed regulation does not

require an environmental impact

statement under the National

Environmental Policy Act (49 U.S.C.

4321, et seq.) because it is not a major

federal action significantly affecting the

quality of the human environment.

Collection of Information

This rule contains no collection of

information requirements under the

Paperwork Reduction Act (44 U.S.C.

3501 et seq.).

Federalism

The Corporation has analyzed this

proposal under the principles and

criteria in Executive Order 12612 and

has determined that this proposal does

not have sufficient federalism

implications to warrant the preparation

of a Federalism Assessment.

List of Subjects in 33 CFR Parts 404 and

407

Administrative practice and

procedure, Great Lakes, Navigation

(water), Penalties, Reporting and

recordkeeping requirements, Seamen.

For reasons set out in the preamble,

the SLSDC amends Part 404 and 407 of

Title 33 of the Code of Federal

Regulations as follows:

PART 404—[AMENDED]

1. The authority citation for part 404

continues to read as follows:

Authority: 46 U.S.C. 6101, 7701, 8105,

9303, 9304; 49 CFR 1.45, 1.52. 33 CFR

404.105 also is issued under the authority of

44 U.S.C. 3507.

2. Section 404.400 (a) and (c) are

revised to read as follows:

§ 404.400 Calculation of pilotage units and

determination of weighting factor.

* * * * *

(a) Pilotage unit computation:

Pilot Unit=(Length×Breadth×Depth)/

283.17 (measured in meters)

Pilot Unit=(Length×Breadth×Depth)/

10,000 (measured in feet)

* * * * *

(c) The charge for pilotage service is

obtained by multiplying the weighting

factor, obtained from paragraph (b) of

this section by the appropriate basic rate

specified in §§ 404.405, 404.407,

404.410, 404.420 and 404.425.

3. Section 404.405 is revised to read

as follows:

§ 404.405 Basic rates and charges on the

St. Lawrence River and Lake Ontario.

Except as provided in § 404.420, the

following basic rates are payable for all

services and assignments performed by

U.S. registered pilots in the St.

Lawrence River and Lake Ontario.

(a) Area 1 (Designated Waters):

Service St. Lawrence River

Basic Pilotage ........... $8 per Kilometer or

$13 per Mile.1

Each Lock Transited $171.1

Harbor Movage ......... $562.1

1The minimum basic rate for assignment of

a pilot in the St. Lawrence River is $374 and

the maximum basic rate for a through trip is

$1,643.

(b) Area 2 (Undesignated Waters):

Service Lake

Ontario

Six Hour Period .............................. $294

Docking/Undocking ......................... $280

4. Section 404.407 is added to read as

follows:

§ 404.407 Basic rates and charges on Lake

Erie and the navigable waters from

Southeast Shoal to Port Huron, MI.

Except as provided in § 404.420, the

following basic rates are payable for all

services and assignments performed by

U.S. registered pilots on Lake Erie and

the navigable waters from Southeast

Shoal to Port Huron, MI.

(a) Area 4 (Undesignated Waters):

Service

Lake

Erie

(East of

Southeast

Shoal)

Buffalo

Six Hour Period ............. $322 $322

Docking/Undocking ....... 248 248

Any Point on the Niagara River below the

Black Rock Lock ........ N/A 633

(b) Area 5 (Designated Waters):

Any point on/in Southeast

Shoal

Toledo or

any port on

Lake Erie

west of

Southeast

Shoal

Detroit river Detroit pilot

boat

St. Clair

river

Toledo or any port on Lake Erie west of South-east Shoal ..................... $988 $583 $1,282 $988 N/A

Port Huron Change Point ......................................................................... 11,720 11,993 1,293 1,005 $715

St. Clair River ........................................................................................... 11,7201 N/A 1,293 1,293 583

Detroit or Windsor or the Detroit River ..................................................... 988 1,282 583 N/A 1,293

Detroit pilot boat ....................................................................................... 715 988 N/A N/A 1,293

1When pilots are not changed at the Detroit Pilot Boat.
Federal Register / Vol. 62, No. 27 / Monday, February 10, 1997 / Rules and Regulations 5923

5. Section 404.410 is revised to read

as follows:

§ 404.410 Basic rates and charges on

Lakes Huron, Michigan and Superior and

the St. Mary’s River.

Except as provided in § 404.420, the

following basic rates are payable for all

services and assignments performed by

U.S. registered pilots on Lakes Huron,

Michigan, and Superior and the St.

Mary’s River.

(a) Area 6 (Undesignated Waters):

Service

Lakes

Huron and

Michigan

Six Hour Period ........................................................................................................................................................................................ $269

Docking/Undocking .................................................................................................................................................................................. 256

(b) Area 7 (Designated Waters):

Area Detour Gros Cap Any Harbor

Gros Cap .................................................................................................................................................. $1,317 N/A N/A

Algoma Steel Corporation Wharf at Sault Ste. Marie, Ontario ................................................................ 1,317 $496 N/A

Any point in Sault Ste. Marie, Ontario except the Algoma Steel Corporation Wharf .............................. 1,105 496 N/A

Sault Ste. Marie, Michigan ....................................................................................................................... 1,105 496 N/A

Harbor Movage ......................................................................................................................................... N/A N/A $496

(c) Area 8 (Undesignated Waters):

Service Lakes Superior

Six Hour Period ........................................................................................................................................................................................ $261

Docking/Undocking .................................................................................................................................................................................. 249

6. Section 404.420 is revised to read as follows:

§ 404.420 Cancellation, delay or interruption in rendition of services.

(a) Except as provided in this section,

whenever the passage of a ship is

interrupted and the services of a U.S.

pilot are retained during the period of

the interruption or when a U.S. pilot is

detained on board a ship after the end

of an assignment for the convenience of

the ship, the ship shall pay an

additional charge calculated on a basic

rate of $51 for each hour or part of an

hour during which each interruption or

detention lasts with a maximum basic

rate of $807 for each continuous 24-hour

period during which the interruption or

detention continues. There is no charge

for an interruption or detention caused

by ice, weather or traffic, except during

the period beginning the 1st of

December and ending on the 8th of the

following April. No charge may be made

for an interruption or detention if the

total interruption or detention ends

during the 6-hour period for which a

charge has been made under §§ 404.405

through 404.410.

(b) When the departure or movage of

a ship for which a U.S. pilot has been

ordered is delayed for the convenience

of the ship for more than one hour after

the U.S. pilot reports for duty at the

designated boarding point or after the

time for which the pilot is ordered,

whichever is later, the ship shall pay an

additional charge calculated on a basic

rate of $51 for each hour or part of an

hour including the first hour of the

delay, with a maximum basic rate of

$807 for each continuous 24-hour

period of the delay.

(c) When a U.S. pilot reports for duty

as ordered and the order is cancelled,

the ship shall pay:

(1) A cancellation charge calculated

on a basic rate of $305;

(2) A charge for reasonable travel

expenses if the cancellation occurs after

the pilot has commenced travel; and

(3) If the cancellation is more than

one hour after the pilot reports for duty

at the designated boarding point or after

the time for which the pilot is ordered,

whichever is later, a charge calculated

on a basic rate of $51 for each hour or

part of an hour including the first hour,

with a maximum basic rate of $807 for

each 24-hour period.

§ 404.425 [Amended]

7. Section 404.425 is amended by

revising the term ’’§§ 404.405, 404.410,

and 404.420’’ to read ‘‘§§ 404.405,

404.407, 404.410 and 404.420’’.

8. Section 404.428 is revised to read

as follows:

§ 404.428 Basic rates and charges for

carrying a U.S. pilot beyond normal change

point or for boarding at other than the

normal boarding point.

If a U.S. pilot is carried beyond the

normal change point or is unable to

board at the normal boarding point, the

ship shall pay at the rate of $312 per day

or part thereof, plus reasonable travel

expenses to or from the pilot’s base.

These charges are not applicable if the

ship utilizes the services of the pilot

beyond the normal change point and the

ship is billed for these services. The

change points to which this section

applies are designated in § 404.450.

PART 407—[AMENDED]

9. The authority citation for Part 407

continues to read as follows:

Authority: 46 U.S.C. 8105, 9303, 9304; 49

CFR 1.52.

10. Appendix A to Part 407, Step 1.C.

and Step 5(2) are revised to read as

follows:

Appendix A to Part 407—Ratemaking

Analyses and Methodology

* * * * *
5924 Federal Register / Vol. 62, No. 27 / Monday, February 10, 1997 / Rules and Regulations

Step 1.C.—Adjustment for Inflation or

Deflation

(1) In making projections of future

expenses, expenses that are subject to

inflationary or deflationary pressures

are adjusted. Costs not subject to

inflation or deflation are not adjusted.

Annual cost inflation or deflation rates

will be projected to the succeeding

navigation season, reflecting the gradual

increase or decrease in costs throughout

the year. The inflation adjustment will

be based on the preceding year’s change

in the Consumer Price Index for the

North Central Region of the United

States.

* * * * *

Step 5: Determination of Target Rate of

Return on Investment

* * * * *

(2) The allowed Return on Investment

(ROI) is based on the preceding year’s

average annual rate of return for new

issues of high grade corporate securities.

* * * * *

Issued at Washington, D.C. on February 4,

1997.

Saint Lawrence Seaway Development

Corporation

Gail C. McDonald,

Administrator.

[FR Doc. 97–3176 Filed 2–7–97; 8:45 am]

BILLING CODE 4910–61–P

FEDERAL COMMUNICATIONS

COMMISSION

47 CFR Part 25

[IB Docket No. 95–117; FCC 96–425]

Satellite Application and Licensing

Procedures

AGENCY: Federal Communications

Commission.

ACTION: Final rule.

SUMMARY: The Commission has adopted

rules and policies to streamline

application and licensing requirements

for satellite space and earth stations

under the Commission’s rules regarding

satellite communications. Among other

things, the Commission waives the

construction permit requirement for

satellite space stations and modifies the

license term for temporary fixed earth

stations and the implementation period

for Very Small Aperture Terminal

(‘‘VSAT’’) earth stations. The Report and

Order amends minor modifications for

earth station and inclined orbit

operations of space stations, and

application and licensing forms.

EFFECTIVE DATE: The adopted rule

changes will become effective upon

approval by the Office of Management

and Budget of the modified information

collection requirements, but no sooner

than April 11, 1997. When approval is

received, the Federal Communications

Commission will publish a document

announcing the effective date.

FOR FURTHER INFORMATION CONTACT:

Tracey Weisler, International Bureau,

Satellite Policy Branch, (202) 418–0744;

Frank Peace, International Bureau,

Satellite Engineering Branch, (202) 418–

0730; Kathleen Campbell, International

Bureau, Satellite Policy Branch (202)

418–0753. For additional information

concerning the information collection

contained in this NPRM contact Dorothy

Conway at (202) 418–0217, or via the

Internet at dconway@fcc.gov.

SUPPLEMENTARY INFORMATION: This is a

summary of the Commission’s Report

and Order in IB Docket No. 95–117; FCC

96–425, adopted October 29, 1996 and

released December 16, 1996. The

complete text of this Report and Order

is available for inspection and copying

during normal business hours in the

FCC Reference Center (Room 239), 1919

M Street, N.W. Washington, D.C., and

also may be purchased from the

Commission’s copy contractor,

International Transcription Service,

(202) 857–3800, 2100 M Street, N.W.,

Suite 140, Washington, D.C. 20037.

This Report and Order contains

modifications to approved collections

and will be submitted to the Office of

Management and Budget for review

under Section 3507(d) of the Paperwork

Reduction Act (44 U.S.C. 3507(d)). For

copies of the submissions contact

Dorothy Conway at (202) 418–0217 or

access our fax on demand system at

202–418–0177 from the handset on your

fax machine and using the document

retrieval number 6000000. A copy of

any comments filed with the Office of

Management and Budget should also be

sent to the following address at the

Commission: Federal Communications

Commission, Records Management

Division, Room 234, Paperwork

Reduction Project, Washington, D.C.

20554. For further information contact

Judy Boley, (202) 418–0210.

Title: Streamlining the Commission’s

Rules and Regulations for Satellite

Application and Licensing Procedures.

Form No.: FCC Form 312.

Type of Review: Revision of existing

collections.

Respondents: Businesses or other for

profit, including small businesses.

Number of Respondents: 1,275.

Estimated Time Per Response: The

Commission estimates all respondents

will hire an attorney or legal assistant to

complete the form. The time to retain

these services is 2 hours per respondent.

Total Annual Burden: 2,550 hours.

Estimated Costs Per Respondent: This

includes the charges for hiring an

attorney, legal assistant, or engineer at

$150 an hour to complete the

submissions. The estimated average

time to complete the Form 312 is 10

hours per response. The estimated

average time to complete space station

submissions is 20 hours per response.

The estimated average time to complete

the ASIA submission is 24 hours per

response. Earth station submissions:

$1935. ($1500 for Form 312; $375

remainder of application; $60 for

outside hire.) Space station

submissions: $4560 ($1500 for Form

312; $3000 for remainder of submission;

$60 for outside hire). ASIA submissions:

$3,660 ($3,600 for submission; $60 for

outside hire). Fee amounts vary by type

of service and application. Total fee

estimates for industry: $4,956,255.00.

Needs and Uses: In accordance with the

Communications Act, the information

collected will be used by the

Commission in evaluating applications

requesting authority to operate pursuant

to Part 25 of the Commission’s rules.

The information will be used to

determine the legal, technical, and

financial ability of the applicants and

will assist the Commission in

determining whether grant of such

authorizations are in the public interest.

Summary of Report and Order

1. In light of the evolving satellite

technology, the Commission

commenced a review of its operations in

order to eliminate outdated regulations

and unnecessary burdens that impede

the introduction of satellite services to

the public and the efficient processing

of satellite applications and licenses. As

a result of this review, the Commission

created the International Bureau. Soon

after its creation, the new International

Bureau held a roundtable discussion in

February 1995 with representatives of

industry and members of the public to

solicit suggestions on ways to improve

satellite application and licensing

policies and procedures. Many of the

recommendations made during that

roundtable discussion were

incorporated in Notice of Proposed

Rulemaking to streamline satellite

licensing procedures. Notice of

Proposed Rulemaking, 60 FR 46252,

September 9, 1995.

2. The Report and Order amends or

eliminates existing requirements, and

codifies in Part 25 of the Commission’s

rules, various technical and procedural

policies and guidelines that have not yet

been specifically codified. Among other

things, the Commission waives the

construction permit requirement for