35812 Federal Register / Vol. 74, No. 138 / Tuesday, July 21, 2009 / Rules and Regulations 

Dated: July 7, 2009. 

Deborah S. Ingram, 

Acting Deputy Assistant Administrator for 

Mitigation, Mitigation Directorate. 

[FR Doc. E9–17211 Filed 7–20–09; 8:45 am] 

BILLING CODE 9110–12–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

46 CFR Part 401 

[Docket No. USCG–2008–1126] 

RIN 1625–AB29 

2009 Rates for Pilotage on the Great 

Lakes 

AGENCY: Coast Guard, DHS. 

ACTION: Final rule. 

SUMMARY: The Coast Guard is increasing 

the rates for pilotage service on the 

Great Lakes by an average of 10.77% 

over the rates that took effect February 

4, 2009. This increase reflects an August 

1, 2009, increase in benchmark 

contractual wages and benefits, as well 

as an increase in the ratio of pilots to 

‘‘bridge hours.’’ The Coast Guard 

intends the final rule to generate 

sufficient revenue to cover allowable 

expenses, target pilot compensation, 

and returns on investment. The final 

rule promotes the Coast Guard strategic 

goal of maritime safety. 

DATES: This final rule is effective August 

1, 2009. 

ADDRESSES: Comments and material 

received from the public, as well as 

documents mentioned in this preamble 

as being available in the docket, are part 

of docket USCG–2008–1126 and are 

available for inspection or copying at 

the Docket Management Facility (M–30), 

U.S. Department of Transportation, 

West Building Ground Floor, Room 

W12–140, 1200 New Jersey Avenue, SE., 

Washington, DC 20590, between 9 a.m. 

and 5 p.m., Monday through Friday, 

except Federal holidays. You may also 

find this docket on the Internet at 

http://www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: For 

questions on this final rule, please call 

Mr. Paul Wasserman, Chief, Great Lakes 

Pilotage Branch, Commandant (CG– 

54122), U.S. Coast Guard, at 202–372– 

1535, by fax 202–372–1929, or e-mail 

Paul.M.Wasserman@uscg.mil. For 

questions on viewing or submitting 

material to the docket, call Renee V. 

Wright, Chief, Dockets, Department of 

Transportation, telephone 202–493– 

0402. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Abbreviations 

II. Effective Date 

III. Background 

IV. Discussion of Comments 

V. Discussion of the Final Rule 

VI. Regulatory Evaluation 

A. Small Entities 

B. Assistance for Small Entities 

C. Collection of Information 

D. Federalism 

E. Unfunded Mandates Reform Act 

F. Taking of Private Property 

G. Civil Justice Reform 

H. Protection of Children 

I. Indian Tribal Governments 

J. Energy Effects 

K. Technical Standards 

L. Environment 

I. Abbreviations 

AMOU American Maritime Officer 

Union 

GLPAC Great Lakes Pilotage Advisory 

Committee 

MISLE Coast Guard Marine Inspection, 

Safety, and Law Enforcement system 

MOA Memorandum of Agreement 

NAICS North American Industry 

Classification System 

NPRM Notice of Proposed Rulemaking 

NTTAA National Technology Transfer 

and Advancement Act 

OMB Office of Management and 

Budget 

II. Effective Date 

This final rule takes effect August 1, 

2009. Under 5 U.S.C. 553(d), we find 

good cause for this final rule to take 

effect less than 30 days after 

publication. The Great Lakes Pilotage 

Act of 1960, as amended by Public Law 

109–241, section 302, requires the Coast 

Guard to review and adjust the Great 

Lakes pilotage rates annually by March 

1. We could not issue this final rule 

until some months after that date due to 

the time needed to review and resolve 

comments received on the proposed 

rule. We nonetheless need to issue the 

final rule before the August 1, 2009, 

increase in benchmark contractual 

wages and benefits that necessitates this 

year’s rate adjustment. Under these 

circumstances, publication of the final 

rule 30 days or more in advance of the 

August 1 benchmark increase is 

impracticable. The regulated 

community well understands the 

significance of the August benchmark 

increase and anticipates that the final 

rule will take effect not later than 

August 1. Therefore, we find that delay 

of the final rule’s effective date beyond 

August 1, 2009, would be unnecessary, 

and contrary to the public interest in 

timely rate increases. 

III. Background 

We published a notice of proposed 

rulemaking on April 24, 2009 (NPRM, 

74 FR 18669). The NPRM proposed an 

average 9.41% increase. 

This rulemaking increases Great Lakes 

pilotage rates in accord with the 

methodology contained in Coast Guard 

regulations in 46 CFR Parts 401–404. 

Our regulations implement the Great 

Lakes Pilotage Act of 1960, 46 U.S.C. 

Chapter 93, which requires foreign-flag 

vessels engaged in foreign trade to use 

Federally registered Great Lakes pilots 

while transiting the St. Lawrence 

Seaway and the Great Lakes system, and 

which requires the Secretary of 

Homeland Security to ‘‘prescribe by 

regulation rates and charges for pilotage 

services, giving consideration to the 

public interest and the costs of 

providing the services.’’ 46 U.S.C. 

9303(f). 

The U.S. waters of the Great Lakes 

and the St. Lawrence Seaway are 

divided into three pilotage Districts. 

Pilotage in each District is provided by 

an association certified by the Coast 

Guard Director of Great Lakes Pilotage 

to operate a pilotage pool. It is 

important to note that, while we set 

rates, we do not control the actual 

number of pilots an association 

maintains, so long as the association is 

able to provide safe, efficient, and 

reliable pilotage service, nor do we 

control the actual compensation that 

pilots receive. This is determined by 

each of the three District associations, 

which use different compensation 

practices. 

District One, consisting of Areas 1 and 

2, includes all U.S. waters of the St. 

Lawrence River and Lake Ontario. 

District Two, consisting of Areas 4 and 

5, includes all U.S. waters of Lake Erie, 

the Detroit River, Lake St. Clair, and the 

St. Clair River. District Three, consisting 

of Areas 6, 7, and 8, includes all U.S. 

waters of the St. Mary’s River, Sault Ste. 

Marie Locks, and Lakes Michigan, 

Huron, and Superior. Area 3 is the 

Welland Canal, which is serviced 

exclusively by the Canadian Great Lakes 

Pilotage Authority and, accordingly, is 

not included in the U.S. rate structure. 

Areas 1, 5, and 7 have been designated 

by Presidential Proclamation, pursuant 

to the Great Lakes Pilotage Act of 1960, 

to be waters in which pilots must at all 

times be fully engaged in the navigation 

of vessels in their charge. Areas 2, 4, 6, 

and 8 have not been so designated 

because they are open bodies of water. 

Under the Great Lakes Pilotage Act of 

1960, pilots assigned to vessels in these 

areas are only required to ‘‘be on board 

and available to direct the navigation of 


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the vessel at the discretion of and 

subject to the customary authority of the 

master.’’ 46 U.S.C. 9302(a)(1)(B). 

Our pilotage regulations require 

annual reviews of pilotage rates and the 

setting of new rates at least once every 

five years, or sooner, if annual reviews 

show a need. 46 CFR 404.1. To assist in 

calculating pilotage rates, the pilotage 

associations are required to submit 

annual financial statements prepared by 

certified public accounting firms. In 

addition, every fifth year, in connection 

with the mandatory rate adjustment, we 

contract with an independent 

accounting firm to conduct a full audit 

of the accounts and records of the 

pilotage associations and prepare and 

submit financial reports relevant to the 

ratemaking process. In those years when 

a full ratemaking is conducted, we 

generate the pilotage rates using 

Appendix A to 46 CFR Part 404. The 

last Appendix A review was concluded 

in 2006 (71 FR 16501, Apr. 3, 2006). 

Between the five-year full ratemaking 

intervals, we annually review the 

pilotage rates using Appendix C to Part 

404, and adjust rates when deemed 

appropriate. We conducted Appendix C 

reviews in 2007 and 2008, and 

increased rates in both years. The 2008 

final rule was published January 5, 2009 

(74 FR 220), and took effect on February 

4, 2009. We define the terms and 

formulas used in Appendix A and 

Appendix C in Appendix B to Part 404. 

This final rule concludes the annual 

Appendix C rate review for 2009, and 

increases rates by an average of 10.77% 

over the rates that took effect February 

4, 2009. 

IV. Discussion of Comments 

We received four comments during 

the NPRM public comment period. 

Timeliness. Three commenters, 

including a pilots’ association, pointed 

out that 46 U.S.C. 9303(f), as amended 

by Public Law 109–241, sec. 302, 

requires us to review and, if necessary, 

establish adjusted pilotage rates by 

March 1 of each year, in order to 

provide critical information before the 

start of the annual Great Lakes shipping 

season, usually in early spring. These 

commenters point out that we have not 

met the March 1, 2009, deadline for this 

year’s review. We acknowledge this and 

future compliance is a Coast Guard 

priority. In 2007 and 2008, we mitigated 

the impact of delay by ensuring that 

interim rules were in place at the 

opening of the shipping season. In 

letters dated April 24, 2007, and March 

3, 2008, the pilots’ associations 

expressed their appreciation to the 

Coast Guard for these efforts. In 2009, 

publishing a rule at the beginning of the 

shipping season was not possible, but 

we hope to mitigate the impact of delay 

by issuing the final rule so that it takes 

effect on August 1, 2009, when the 

benchmark contract increase that 

accounts for a meaningful portion of 

this year’s rate adjustment takes effect. 

‘‘Pilots needed’’ and rounding. One 

commenter said that, in calculating the 

number of pilots needed in each Area, 

we should always round the result of 

our mathematical calculations up to the 

nearest ‘‘whole pilot,’’ and another 

commenter criticized the imprecision of 

the language we used in the NPRM to 

describe our rounding. We agree with 

this latter comment and have revised 

our language in this final rule. 

We acknowledge that in recent years 

we have usually rounded the results of 

the mathematical calculation used to 

determine the number of ‘‘pilots 

needed,’’ pursuant to our discretionary 

authority ‘‘to make adjustments to these 

numbers to ensure uninterrupted 

pilotage service in each area, or for other 

reasonable circumstances.’’ 46 CFR Part 

404, Appendix A, Step 2.B (also 

applicable in Appendix C calculations). 

This rounding has never been 

performed as a matter of policy, nor do 

we adopt it as policy now. In fact, our 

current ratemaking methodology 

requires no rounding whatsoever, and 

until 2006, what rounding we applied 

was merely up or down to the nearest 

tenth of a whole number: see, e.g., our 

December 12, 2003 (68 FR 69564) and 

March 10, 2005 (70 FR 12082) interim 

rules. 

In the April 3, 2006 final rule (71 FR 

16501), we acknowledged nine public 

comments in favor of rounding to whole 

numbers and approved the use of that 

process for that rule. However, we did 

not actually apply that methodology in 

the 2006 final rule. The mathematical 

result of our 2006 calculations was a 

whole number in each of the seven 

Areas, because we rounded the bridge 

hour projections (not pilot numbers) 

that year. 

In the 2007 interim rule (72 FR 8115, 

Feb. 23, 2007), we agreed with a public 

commenter that the rounding of bridge 

hour projections in 2006 was a 

departure from past practice and agreed 

to use unrounded bridge hour 

projections. We also rounded the 

mathematical results of our pilotsneeded calculations up to the next 

whole number in all six Areas where 

rounding was needed. These 

calculations were unchanged in the 

2007 final rule (72 FR 53158, Sep. 18, 

2007). 

In 2008, the March 21, 2008 interim 

rule (73 FR 15092) adopted without 

change the calculations proposed in the 

February 1, 2008 NPRM (73 FR 6085). 

Mathematical results of pilots-needed 

calculations were rounded up in all six 

Areas where rounding was needed. 

However, we introduced three 

adjustments in the 2008 final rule (74 

FR 220, Jan. 5, 2009). These adjustments 

responded to public comments that 

pointed out that the NPRM and interim 

rule overstated the bridge hour 

projections for Areas 2, 4, and 5. 

The first adjustment reduced 

projected bridge hours in Area 2 from 

7,993 to 5,650, but kept the ‘‘pilots 

needed’’ for Area 2 at five, one more 

than would have been indicated by 

rounding up the mathematical result 

(5,650/1,800 = 3.14, rounded up = 4). 

We exercised our discretion to do so 

because ‘‘experience has demonstrated 

the need for at least five pilots in that 

Area,’’ a need that we discussed in 

detail in the final rule at 74 FR 221. 

Second, in Area 4, we reduced 

projected bridge hours from 8,490 to 

7,320, and rounded the mathematical 

result (7,320/1,800 = 4.07) down to four 

pilots needed. Third, in Area 5, we 

reduced projected bridge hours from 

6,395 to 5,097, and rounded the 

mathematical result (5,097/1,000 = 5.10) 

up to six pilots. We exercised our 

discretion in these two Areas ‘‘because 

the District 2 Pilots’ Association has 

routinely operated with an average of 

one less pilot than is authorized under 

the rate and for the last season and a 

half with two fewer pilots than 

authorized. Accordingly, a reduction of 

one pilot per Area reflects actual 

practice.’’ 74 FR at 222. We might also 

have observed that pilots in one Area 

frequently operate in other Areas as 

well, that District Two comprises both 

Areas 4 and 5, and that the minimal 

downward adjustment from 4.07 to 4 in 

Area 4 should therefore be balanced 

against the more substantial rounding 

up, from 5.10 to 6, in Area 5. 

We acknowledge that the 

determination of pilots needed is an 

issue of concern to many, and that some 

might wish to see the formula for that 

determination modified to require 

‘‘rounding up’’ in all instances. We 

observe that the ratemaking formula was 

never designed to produce anything 

more than a useful model for 

subsequent calculations. It could be 

argued that the model worked best 

without rounding, or with only limited 

rounding, for example because rounding 

up inflates pilot numbers and makes it 

less likely that pilots will be able to 

reach their target compensation. We 

defer consideration of such arguments 

until they can be made and considered 

in the context of an overall review of 

our ratemaking methodology. Until 


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then, we intend to apply the pilotsneeded calculations much as we have 

done since 2007. 

Data for bridge hour projections. One 

commenter said we failed to consult 

industry in projecting 2009 vessel 

traffic, and that our bridge hour 

projections for 2009 (i.e., the projection 

of hours pilots are aboard vessels 

providing pilotage service) should have 

been based on 2008 figures rather than 

on 2007 figures. To meet the statutory 

deadline for establishing rates by March 

1, 2009, we began preparing the 2009 

NPRM long before actual data for 2008 

was available. Although our practice has 

not been to document every contact 

with industry or pilots, our regulations 

and our ratemaking methodology 

presuppose frequent informal contacts 

between the Director of Great Lakes 

Pilotage, industry, and pilots. The 

information received through those 

contacts is submitted for public 

comment in our NPRM. In this case, our 

use of 2007 figures for 2009, instead of 

waiting for 2008 figures, was based on 

2008 informal discussions with pilot 

and industry representatives that 

endorsed the continued use of 2007 

figures, with some modifications. Those 

modifications were explained in the 

April 2009 NPRM. 

We agree with one commenter who 

said that the NPRM did not adequately 

explain the difference in Area 6 and 

Area 7 base period bridge hours (18,000 

and 3,863, respectively), and the 2009 

projected bridge hours for those Areas 

(13,406 and 3,259, respectively). Areas 6 

and 7 experienced a significant decrease 

in 2007 actual bridge hours, from 2007 

projections. Therefore, the 2009 

projections for those Areas reflects their 

actual 2007 bridge hours, and then 

further reduces those figures by an 

additional 10% in each Area. 

One commenter said we should adjust 

Area 1 projected bridge hours to more 

accurately reflect anticipated traffic for 

the 2009 shipping season, as we did for 

areas 2, 4, and 5 in the 2008 final rule 

and as we proposed for District Three in 

the 2009 NPRM. We agree and, in this 

final rule, we are reducing the projected 

bridge hours for Area 1 from 5661 to 

5203. We are also adjusting District 

Three bridge hours as indicated in the 

NPRM. 

Class 4 vessels. One commenter said 

that our pilotage rates for Class 4 vessels 

are 15% higher than Canadian rates. 

This may be true, but in the past year 

the difference has been less than 1%, 

but has varied subsequently due to 

fluctuations in the relative value of U.S. 

and Canadian currency. 

Miscellaneous. Three commenters 

took issue with various aspects of our 

ratemaking methodology. These 

comments are beyond the scope of this 

rulemaking, which applies the 

methodology as it exists today, but we 

address two points briefly here. One 

commenter petitioned the Coast Guard 

to review our formula for setting 

benchmark compensation levels of Great 

Lakes vessel masters. We deny that 

petition because we have previously 

conducted the requested review and 

believe the formula is correct: a 

supporting memorandum appears in the 

docket for this rulemaking as USCG– 

2008–1126–0017. The same commenter 

criticized us for not yet adopting the 

recommendations of Rear Admiral 

Timothy J. Riker’s 2003 report on Great 

Lakes bridge hours. We decline to adopt 

the Riker Report recommendations in 

full because we do not think the Report 

adequately accounted for the difference 

between a Great Lakes pilot’s active, on 

call, work life during a portion of the 

year and the work life of an office-based 

40 hour per week worker through a 52- 

week year. 

We acknowledge that through the 

years, both pilots and industry have 

indicated concerns about aspects of our 

ratemaking methodology. Some of those 

concerns are described in 

communications that we received 

between January 2009, when we 

published the 2008 final rule, and April 

2009, when we published the 2009 

NPRM. Those communications appear 

in the docket for this rulemaking as 

supplemental material. To obtain a more 

comprehensive understanding of these 

concerns, we have decided to publish a 

notice focusing on our ratemaking 

methodology, and requesting public 

comments. That notice appears 

elsewhere in today’s Federal Register. 

We will refer the comments we receive 

to the Great Lakes Pilotage Advisory 

Committee, which Congress established 

to advise the Coast Guard on significant 

policy decisions relating to Great Lakes 

pilotage. 

V. Discussion of the Final Rule 

A. Summary 

We are increasing pilotage rates in 

accordance with the methodology 

outlined in Appendix C to 46 CFR Part 

404, by increasing rates an average 

10.77% over the 2008 final rule. This 

final rule puts into place, with two 

modifications, the rate changes we 

proposed in the April 24, 2009 NPRM. 

The first modification adjusts projected 

bridge hours in Area 1 as discussed in 

part IV of this preamble. The second 

modification updates the ship tonnage 

percentages under the AMO union 

contracts. This second modification 

accounts for only 0.36% of the overall 

rate increase. 

TABLE 1—2009 AREA RATE CHANGES

If pilotage service is required in: 

Then the proposed 

percentage increases 

over the current rate 

is: 

Area 1 (designated waters) ..................................................................................................................................................... 13.43 

Area 2 (undesignated waters) ................................................................................................................................................. 4.79 

Area 4 (undesignated waters) ................................................................................................................................................. 4.90 

Area 5 (designated waters) ..................................................................................................................................................... 4.48 

Area 6 (undesignated waters) ................................................................................................................................................. 12.52 

Area 7 (designated waters) ..................................................................................................................................................... 23.64 

Area 8 (undesignated waters) ................................................................................................................................................. 2.52 

Overall rate change (percentage change in overall prospective unit costs/base unit costs; see Table 18) .......................... 10.77 

Rates for cancellation, delay, or 

interruption in rendering services (46 

CFR 401.420), and basic rates and 

charges for carrying a U.S. pilot beyond 

the normal change point, or for boarding 

at other than the normal boarding point 

(46 CFR 401.428), have been increased 

by 10.77% in all Areas. 

B. Calculating the Rate Adjustment 

The Appendix C ratemaking 

calculation involves eight steps: 

Step 1: Calculate the total economic 

costs for the base period (i.e., pilot 


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compensation expense plus all other 

recognized expenses plus the return 

element) and divide by the total bridge 

hours used in setting the base period 

rates; 

Step 2: Calculate the ‘‘expense 

multiplier,’’ the ratio of other expenses 

and the return element to pilot 

compensation for the base period; 

Step 3: Calculate an annual 

‘‘projection of target pilot 

compensation’’ using the same 

procedures found in Step 2 of Appendix 

A; 

Step 4: Increase the projected pilot 

compensation in Step 3 by the expense 

multiplier in Step 2; 

Step 5: Adjust the result in Step 4, as 

required, for inflation or deflation; 

Step 6: Divide the result in Step 5 by 

projected bridge hours to determine 

total unit costs; 

Step 7: Divide prospective unit costs 

in Step 6 by the base period unit costs 

in Step 1; and 

Step 8: Adjust the base period rates by 

the percentage changes in unit cost in 

Step 7. 

The base data used to calculate each 

of the eight steps comes from the 2008 

final rule, published in January 2009. 

We also used the most recent union 

contracts between the American 

Maritime Officers Union (AMOU) and 

vessel owners and operators on the 

Great Lakes, which we received on 

August 16, 2007, to determine target 

pilot compensation. Bridge hour 

projections for the 2009 season have 

been obtained from historical data, 

pilots, and industry. All documents and 

records used in this rate calculation 

have been placed in the public docket 

for this rulemaking and are available for 

review at the addresses listed under 

ADDRESSES. 

Some values may not total exactly due 

to format rounding for presentation in 

charts and explanations in this section. 

The rounding does not affect the 

integrity or truncate the real value of the 

calculations in the ratemaking 

methodology described below. 

Step 1: Calculate the total economic 

cost for the base period. The 

calculations in Step 1 are unchanged 

from the NPRM, but are repeated for 

your convenience. 

In this step, for each Area, we divide 

total economic costs for the base period 

by the total bridge hours used in setting 

the base period rates, to yield the base 

cost per bridge hour. Total base period 

economic costs include pilot 

compensation expenses, plus all other 

recognized expenses, plus the return 

element. The calculations providing the 

total base period economic costs for 

each Area are summarized in Table 16 

of the 2008 final rule. Total bridge hours 

used in setting the base period rates 

were calculated in Table 13 of the 2008 

final rule. Tables 2 through 4 summarize 

the Step 1 calculations: 

TABLE 2—TOTAL ECONOMIC COST FOR BASE PERIOD, DISTRICT ONE

Area 1 

St. Lawrence 

River 

Area 2 

Lake Ontario 

Total 

District One 

Total base period economic costs ......................................................................................... $2,078,551 $1,474,806 $3,553,357 

Base bridge hours ................................................................................................................. ÷ 5,661 ÷ 5,650 ÷ 11,311 

Base cost per bridge hour ..................................................................................................... = $367.17 = $261.03 = $314.15 

TABLE 3—TOTAL ECONOMIC COST FOR BASE PERIOD, DISTRICT TWO

Area 4 

Lake Erie 

Area 5 

Southeast 

Shoal to 

Port Huron, MI 

Total 

District Two 

Total base period economic costs ......................................................................................... $1,251,203 $2,334,169 $3,585,372 

Base bridge hours ................................................................................................................. ÷ 7,320 ÷ 5,097 ÷ 12,417 

Base cost per bridge hour ..................................................................................................... = $170.93 = $457.95 = $288.75 

TABLE 4—TOTAL ECONOMIC COST FOR BASE PERIOD, DISTRICT THREE

Area 6 

Lakes Huron 

and Michigan 

Area 7 

St. Mary’s River 

Area 8 

Lake Superior 

Total 

District Three 

Total base period economic costs ........................................................... $2,884,724 $1,427,515 $1,944,032 $6,256,273 

Base bridge hours ................................................................................... ÷ 18,000 ÷ 3,863 ÷ 11,390 ÷ 33,253 

Base cost per bridge hour ....................................................................... = $160.26 = $369.54 = $170.68 = $188.14 

Step 2. Calculate the expense 

multiplier. The calculations in Step 2 

are unchanged from the NPRM, but are 

repeated for your convenience. 

In this step, for each Area, we 

calculate an expense multiplier by 

dividing the base operating expense, 

shown in Table 16, Column B of the 

2008 final rule, by base pilot 

compensation, shown in Table 16, 

Column C of the 2008 final rule. Tables 

5 through 7 show the Step 2 

calculations. 

TABLE 5—EXPENSE MULTIPLIER, DISTRICT ONE

Area 1 

St. Lawrence 

River 

Area 2 

Lake Ontario 

Total 

District One 

Base operating expense ........................................................................................................ $516,138 $529,046 $1,045,185 


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TABLE 5—EXPENSE MULTIPLIER, DISTRICT ONE—Continued 

Area 1 

St. Lawrence 

River 

Area 2 

Lake Ontario 

Total 

District One 

Base target pilot compensation ............................................................................................. ÷ $1,562,413 ÷ $945,760 ÷ $2,508,173 

Expense multiplier ................................................................................................................. = .33035 = .55939 = .41671 

TABLE 6—EXPENSE MULTIPLIER, DISTRICT TWO

Area 4 

Lake Erie 

Area 5 

Southeast 

Shoal to 

Port Huron, MI 

Total 

District Two 

Base operating expense ........................................................................................................ $494,595 $771,756 $1,266,351 

Base target pilot compensation ............................................................................................. ÷ $756,608 ÷ $1,562,413 ÷ $2,319,021 

Expense multiplier ................................................................................................................. = .65370 = .49395 = .54607 

TABLE 7—EXPENSE MULTIPLIER, DISTRICT THREE

Area 6 

Lakes Huron 

and Michigan 

Area 7 

St. Mary’s River 

Area 8 

Lake Superior 

Total 

District Three 

Base operating expense .......................................................................... $993,207 $385,906 $619,968 $1,999,081 

Base target pilot compensation ............................................................... ÷ $1,891,520 ÷ $1,041,609 ÷ $1,324,064 ÷ $4,257,193 

Expense multiplier ................................................................................... = .52508 = .37049 = .46823 = .46958 

Step 3. Calculate annual projection of 

target pilot compensation. Step 3 

calculations have been modified since 

the NPRM. In this step, we determine 

the new target rate of compensation and 

the new number of pilots needed in 

each pilotage Area, to determine the 

new target pilot compensation for each 

Area. 

(a) Determine new target rate of 

compensation. Target pilot 

compensation is based on the average 

annual compensation of first mates and 

masters on U.S. Great Lakes vessels. 

Compensation includes wages and 

benefits. For pilots in undesignated 

waters, we approximate the first mates’ 

compensation and, in designated 

waters, we approximate the master’s 

compensation (first mates’ wages 

multiplied by 150% plus benefits). To 

determine first mates’ and masters’ 

average annual compensation, we use 

data from the most recent AMOU 

contracts with the U.S. companies 

engaged in Great Lakes shipping. Where 

different AMOU agreements apply to 

different companies, we apportion the 

compensation provided by each 

agreement according to the percentage 

of tonnage represented by companies 

under each agreement. 

There are two current AMOU 

contracts. In our April 2009 NPRM, we 

stated that vessels operated by the 

American Steamship Co. and Inland 

Lakes Management Co. (acquired in 

2008 by Mittal Steel USA, Inc.) operate 

under ‘‘Agreement A,’’ and that Key 

Lakes, Inc. and Mittal Steel USA, Inc. 

vessels (other than the Inland Lakes 

vessels acquired by Mittal) operate 

under ‘‘Agreement B.’’ However, as of 

May 2009, Agreement A applies only to 

Key Lakes, Inc. vessels, and Agreement 

B applies to all vessels operated by 

American Steamship Co. and Mittal 

Steel USA, Inc. 

Both Agreement A and Agreement B 

provide for a 3% wage increase effective 

August 1, 2009. Under Agreement A, the 

daily wage rate will be increased from 

$255.28 to $262.73. Under Agreement B, 

the daily wage rate will be increased 

from $314.42 to $323.86. 

To calculate monthly wages, we apply 

Agreement A and Agreement B monthly 

multipliers of 54.5 and 49.5, 

respectively, to the daily rate. 

Agreement A’s 54.5 multiplier 

represents 30.5 average working days, 

15.5 vacation days, 4 days for four 

weekends, 3 bonus days, and 1.5 

holidays. Agreement B’s 49.5 multiplier 

represents 30.5 average working days, 

16 vacation days, and 3 bonus days. 

To calculate average annual 

compensation, we multiply monthly 

figures by 9 months, the length of the 

Great Lakes shipping season. 

Table 8, which is unchanged from the 

NPRM, shows new wage calculations 

based on Agreements A and B effective 

August 1, 2009. 

TABLE 8—WAGES

Monthly component 

Pilots on 

undesignated 

waters 

Pilots on 

designated 

waters 

(undesignated 

× 150%) 

Agreement A: 

$262.73 daily rate × 54.5 days ..................................................................................................................... $14,319 $21,478 

Agreement A: 

Monthly total × 9 months = total wages ....................................................................................................... 128,870 193,305 

Agreement B: 

$323.86 daily rate × 49.5 days ..................................................................................................................... 16,031 24,046 

Agreement B: 


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TABLE 8—WAGES—Continued 

Monthly component 

Pilots on 

undesignated 

waters 

Pilots on 

designated 

waters 

(undesignated 

× 150%) 

Monthly total × 9 months = total wages ....................................................................................................... 144,278 216,417 

Both Agreements A and B include a 

health benefits contribution rate of 

$80.69 effective August 1, 2009. 

Agreement A includes a pension plan 

contribution rate of $33.35 per man-day. 

Agreement B includes a pension plan 

contribution rate of $43.55 per man-day. 

Both Agreements A and B provide a 

401K employer matching rate, 5% of the 

wage rate. Neither Agreement A nor 

Agreement B includes a clerical 

contribution that appeared in earlier 

contracts. Per the AMOU, the multiplier 

used to calculate monthly benefits is 

45.5 days. 

Table 9, which is unchanged from the 

NPRM, shows new benefit calculations 

based on Agreements A and B, effective 

August 1, 2009. 

TABLE 9—BENEFITS

Monthly component 

Pilots on 

undesignated 

waters 

Pilots on 

designated 

waters 

Agreement A: 

Employer contribution, 401(K) plan (Monthly Wages × 5%) ........................................................................ $715.95 $1,073.92 

Pension = $33.35 × 45.5 days ..................................................................................................................... 1,517.43 1,517.43 

Health = $80.69 × 45.5 days ........................................................................................................................ 3,671.40 3,671.40 

Agreement B: 

Employer contribution, 401(K) plan (Monthly Wages × 5%) ........................................................................ 801.54 1,202.32 

Pension = $43.55 × 45.5 days ..................................................................................................................... 1,981.53 1,981.53 

Health = $80.69 × 45.5 days ........................................................................................................................ 3,671.40 3,671.40 

Agreement A: 

Monthly total benefits ................................................................................................................................... = 5,904.77 = 6,262.74 

Agreement A: 

Monthly total benefits × 9 months ................................................................................................................ = 53,143 = 56,365 

Agreement B: 

Monthly total benefits ................................................................................................................................... = 6,454.46 = 6,855.24 

Agreement B: 

Monthly total benefits × 9 months ................................................................................................................ = 58,090 = 61,697 

Table 10, which is unchanged from 

the NPRM, totals the wages and benefits 

under each agreement. 

TABLE 10—TOTAL WAGES AND BENEFITS

Pilots on 

undesignated 

waters 

Pilots on 

designated 

waters 

Agreement A: Wages .......................................................................................................................................... $128,870 $193,305 

Agreement A: Benefits ......................................................................................................................................... + 53,143 + 56,365 

Agreement A: Total ...................................................................................................................................... = 182,013 = 249,670 

Agreement B: Wages .......................................................................................................................................... 144,278 216,417 

Agreement B: Benefits ......................................................................................................................................... + 58,090 + 61,697 

Agreement B: Total ...................................................................................................................................... = 202,368 = 278,114 

Table 11, as it appeared in the NPRM, 

has been revised to reflect the change in 

the distribution of vessels operating 

under Agreements A and B as of May 

2009. It shows that approximately 30% 

of U.S. Great Lakes shipping deadweight 

tonnage operates under Agreement A, 

with the remaining 70% operating 

under Agreement B. 

TABLE 11—DEADWEIGHT TONNAGE BY AMOU AGREEMENT

Company Agreement A Agreement B 

American Steamship Company ........................................................................................................................... .......................... 815,600 


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35818 Federal Register / Vol. 74, No. 138 / Tuesday, July 21, 2009 / Rules and Regulations 

TABLE 11—DEADWEIGHT TONNAGE BY AMOU AGREEMENT—Continued 

Company Agreement A Agreement B 

Mittal Steel USA, Inc ........................................................................................................................................... .......................... 38,826 

Key Lakes, Inc ..................................................................................................................................................... 361,385 ..........................

Total tonnage, each agreement ................................................................................................................... 361,385 854,426 

Percent tonnage, each agreement ........................................................................................................ 361,385 ÷ 

1,215,811 = 

29.7238% 

854,426 ÷ 

1,215,811 = 

70.2762% 

Table 12, as it appeared in the NPRM, 

has been modified. It applies the 

percentage of tonnage represented by 

each agreement to the wages and 

benefits provided by each agreement, to 

determine the projected target rate of 

compensation on a tonnage-weighted 

basis. 

TABLE 12—PROJECTED TARGET RATE OF COMPENSATION, WEIGHTED

Undesignated waters Designated waters 

AGREEMENT A: 

Total wages and benefits × percent tonnage ................................................................... $182,013 × 29.72% 

= $54,101 

$249,670 × 29.72% 

= $74,211 

AGREEMENT B: 

Total wages and benefits × percent tonnage ................................................................... $202,368 × 70.28% = 

$142,217 

$278,114 × 70.28% 

= $195,448 

Total weighted average wages and benefits = projected target rate of compensation ... $54,101 + $142,217 

= $196,318 

$74,211 + $195,448 

= $269,659 

(b) Determine number of pilots 

needed. Subject to discretionary 

adjustment by the Director of Great 

Lakes Pilotage to ensure uninterrupted 

service or for other reasonable 

circumstances, we determine the 

number of pilots needed in each Area by 

dividing each Area’s projected bridge 

hours, either by 1,000 (designated 

waters) or by 1,800 (undesignated 

waters). The resulting number is 

rounded either up or down based upon 

the needs of commerce at the discretion 

of the Director. 

Bridge hours are the number of hours 

a pilot is aboard a vessel providing 

pilotage service. Projected bridge hours 

are based on the vessel traffic that pilots 

are expected to serve. Based on 

historical data and information 

provided by pilots and industry, the 

Coast Guard projects the same bridge 

hours for Areas 2, 4, 5, and 8 in 2009 

as were projected in the 2008 final rule. 

As discussed in Part IV of this preamble, 

we are reducing projected bridge hours 

for Areas 1, 6, and 7. With these 

reductions, we are reducing the number 

of pilots in Area 6 by two. 

Table 13, as it appeared in the NPRM, 

has been modified to reflect the 

reductions in Areas 1, 6, and 7 bridge 

hour projections. Table 13 shows the 

projected bridge hours needed for each 

Area, and the total number of pilots 

needed after dividing those figures 

either by 1,000 or 1,800 and, for the 

purposes of this rulemaking only, 

rounding up to the next whole pilot, 

with two exceptions. In Area 2 we 

round up from 3.14 to 5, and in Area 4 

we round down from 4.07 to 4, for the 

reasons discussed in the 2008 final rule. 

TABLE 13—NUMBER OF PILOTS NEEDED

Pilotage area Projected 2009 

bridge hours 

Divided by 1,000 

(designated 

waters) or 1,800 

(undesignated 

waters) 

Pilots needed 

(total = 40) 

Area 1 .................................................................................................................. 5,203 1,000 6 

Area 2 .................................................................................................................. 5,650 1,800 5 

Area 4 .................................................................................................................. 7,320 1,800 4 

Area 5 .................................................................................................................. 5,097 1,000 6 

Area 6 .................................................................................................................. 13,406 1,800 8 

Area 7 .................................................................................................................. 3,259 1,000 4 

Area 8 .................................................................................................................. 11,630 1,800 7 

(c) Determine the projected target 

pilot compensation for each Area. We 

project new total target pilot 

compensation separately for each 

pilotage Area, by multiplying the 

number of pilots needed in each Area 

(see Table 13) by the projected target 

rate of compensation (see Table 12) for 

pilots working in that Area. Table 14 

(modified from NPRM version) shows 

this calculation. 


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TABLE 14—PROJECTED TARGET PILOT COMPENSATION

Pilotage Area Pilots needed 

(total = 40) 

Multiplied by target 

rate of compensation 

Projected target pilot 

compensation 

Area 1 ...................................................................................................... 6 × $269,659 $1,617,955 

Area 2 ...................................................................................................... 5 × 196,318 981,589 

Total, District One ............................................................................. 11 .................................... 2,599,544 

Area 4 ...................................................................................................... 4 × 196,318 785,271 

Area 5 ...................................................................................................... 6 × 269,659 1,617,955 

Total, District Two ............................................................................. 10 .................................... 2,403,226 

Area 6 ...................................................................................................... 8 × 196,318 1,570,542 

Area 7 ...................................................................................................... 4 × 269,659 1,078,637 

Area 8 ...................................................................................................... 7 × 196,318 1,374,224 

Total, District Three .......................................................................... 19 .................................... 4,023,403 

Step 4: Increase the projected pilot 

compensation in Step 3 by the expense 

multiplier in Step 2. Step 4 calculations 

have been modified since the NPRM. 

This step yields a projected increase in 

operating costs necessary to support the 

increased projected pilot compensation. 

Table 15 (modified from NPRM version) 

shows this calculation. 

TABLE 15—PROJECTED OPERATING EXPENSE

Pilotage area Projected target 

pilot compensation 

Multiplied by 

expense multiplier 

Projected 

operating expense* 

Area 1 ...................................................................................................... $1,617,955 × .33035 $534,487 

Area 2 ...................................................................................................... 981,589 × .55939 549,089 

Total, District One ............................................................................. 2,599,544 × .41671 1,083,260 

Area 4 ...................................................................................................... 785,271 × .65370 513,332 

Area 5 ...................................................................................................... 1,617,955 × .49395 799,192 

Total, District Two ............................................................................. 2,403,226 × .54607 1,312,333 

Area 6 ...................................................................................................... 1,570,542 × .52508 824,666 

Area 7 ...................................................................................................... 1,078,637 × .37049 399,625 

Area 8 ...................................................................................................... 1,374,224 × .46823 643,454 

Total, District Three .......................................................................... 4,023,403 × .46958 1,889,298 

*Unique expense multipliers are used to calculate projected operating expense for all areas and districts, and as such, projected operating expense for Districts One, Two and Three may not equal the sum of the projected operating expense for the areas. 

Step 5: Adjust the result in Step 4, as 

required, for inflation or deflation, and 

calculate projected total economic cost. 

Step 5 calculations have been modified 

since the NPRM. Based on data from the 

U.S. Department of Labor’s Bureau of 

Labor Statistics, we have multiplied the 

results in Step 4 by a 1.027 inflation 

factor, reflecting an average inflation 

rate of 2.7% in ‘‘Midwest Economy— 

Consumer Prices’’ between 2006 and 

2007, the latest years for which data are 

available. Table 16 (modified from 

NPRM version) shows this calculation 

and the projected total economic cost. 

TABLE 16—PROJECTED TOTAL ECONOMIC COST

Pilotage area A. Projected 

operating expense 

B. Increase, 

multiplied by 

inflation factor 

(= A × 1.027) 

C. 

Projected 

target pilot 

compensation 

D. 

Projected total 

economic cost 

(= B + C) 

Area 1 .............................................................. $534,487 $548,918 $1,617,955 $2,166,873 

Area 2 .............................................................. 549,089 563,914 981,589 1,545,503 

Total, District One ..................................... 1,083,260 1,112,508 2,599,544 *3,712,052 

Area 4 .............................................................. 513,332 527,192 785,271 1,312,463 

Area 5 .............................................................. 799,192 820,770 1,617,955 2,438,725 

Total, District Two ..................................... 1,312,333 1,347,766 2,403,226 *3,750,992 

Area 6 .............................................................. 824,666 846,932 1,570,542 2,417,474 

Area 7 .............................................................. 399,625 410,415 1,078,637 1,489,052 


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35820 Federal Register / Vol. 74, No. 138 / Tuesday, July 21, 2009 / Rules and Regulations 

TABLE 16—PROJECTED TOTAL ECONOMIC COST—Continued 

Pilotage area A. Projected 

operating expense 

B. Increase, 

multiplied by 

inflation factor 

(= A × 1.027) 

C. 

Projected 

target pilot 

compensation 

D. 

Projected total 

economic cost 

(= B + C) 

Area 8 .............................................................. 643,454 660,828 1,374,224 2,035,052 

Total, District Three .................................. 1,889,298 1,940,310 4,023,403 *5,963,713 

*Unique expense multipliers are used to calculate projected operating expense for all areas and districts, and as such, projected total economic cost for Districts One, Two and Three may not equal the sum of the projected total economic cost for the areas. 

Step 6: Divide the result in Step 5 by 

projected bridge hours to determine 

total unit costs. Step 6 calculations have 

been modified since the NPRM. Table 

17 (modified from NPRM version) 

shows this calculation. 

TABLE 17—TOTAL UNIT COSTS

Pilotage area A. Projected total 

economic cost 

B. Projected 

2009 bridge 

hours 

Prospective 

(total) unit costs 

(A divided by B) 

Area 1 ............................................................................................................ $2,166,873 5,203 $416.47 

Area 2 ............................................................................................................ 1,545,503 5,650 273.54 

Total, District One ................................................................................... 3,712,052 10,853 342.03 

Area 4 ............................................................................................................ 1,312,463 7,320 179.30 

Area 5 ............................................................................................................ 2,438,725 5,097 478.46 

Total, District Two ................................................................................... 3,750,992 12,417 302.09 

Area 6 ............................................................................................................ 2,417,474 13,406 180.33 

Area 7 ............................................................................................................ 1,489,052 3,259 456.90 

Area 8 ............................................................................................................ 2,035,052 11,630 174.98 

Total, District Three ................................................................................ 5,963,713 28,295 210.77 

Overall ............................................................................................. 13,426,758 51,565 260.39 

Step 7: Divide prospective unit costs 

(total unit costs) in Step 6 by the base 

period unit costs in Step 1. Step 7 

calculations have been modified since 

the NPRM. Table 18 (modified from 

NPRM version) shows this calculation, 

which expresses the percentage change 

between the total unit costs and the base 

unit costs. The results, for each Area, 

are identical with the percentage 

increases listed in Table 1. 

TABLE 18—PERCENTAGE CHANGE, PROSPECTIVE IN UNIT COSTS

Pilotage area A. Prospective 

unit costs 

B. Base period 

unit costs 

C. Percentage 

change from 

base (A divided 

by B; result 

expressed as 

percentage) 

Area 1 ............................................................................................................ $416.47 $367.17 13.43 

Area 2 ............................................................................................................ 273.54 261.03 4.79 

Total, District One ................................................................................... 342.03 314.15 8.87 

Area 4 ............................................................................................................ 179.30 170.93 4.90 

Area 5 ............................................................................................................ 478.46 457.95 4.48 

Total, District Two ................................................................................... 302.09 288.75 4.62 

Area 6 ............................................................................................................ 180.33 160.26 12.52 

Area 7 ............................................................................................................ 456.90 369.54 23.64 

Area 8 ............................................................................................................ 174.98 170.68 2.52 

Total, District Three ................................................................................ 210.77 188.14 12.03 

Overall ............................................................................................. 260.39 235.08 10.77 


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Step 8: Adjust the base period rates by 

the percentage change in unit costs in 

Step 7. Step 8 calculations have been 

modified since the NPRM. Table 19 

(modified from NPRM version) shows 

this calculation. 

TABLE 19—BASE PERIOD RATES ADJUSTED BY PERCENTAGE CHANGE IN UNIT COSTS* 

Pilotage A. Base period 

rate 

B. Percentage 

change in 

unit costs 

C. Increase in 

base rate 

(A × B%) 

D. Adjusted 

rate (A + C, 

rounded to 

nearest cent) 

Area 1 .................................................................................................. .......................... 13.43 (1.1343) 

—Basic pilotage ............................................................................ $14.94/km, 

$26.44/mi 

.............................. $2.00/km, 

$3.55/mi 

$16.95/km, 

$29.99/mi 

—Each lock transited ................................................................... 331.03 .............................. 44.44 375.47 

—Harbor movage ......................................................................... 1,083.89 .............................. 145.52 1,229.41 

—Minimum basic rate, St. Lawrence River .................................. 722.98 .............................. 97.07 820.04 

—Maximum rate, through trip ....................................................... 3,173.51 .............................. 426.07 3,599.58 

Area 2 .................................................................................................. .......................... 4.79 (1.0479) .......................... ..........................

—6-hr. period ................................................................................ 780.23 .............................. 37.40 817.63 

—Docking or undocking ............................................................... 744.24 .............................. 35.68 779.92 

Area 4 .................................................................................................. .......................... 4.90 (1.0490) .......................... ..........................

—6-hr. period ................................................................................ 688.35 .............................. 33.70 722.05 

—Docking or undocking ............................................................... 530.49 .............................. 25.97 556.46 

—Any point on Niagara River below Black Rock Lock ................ 1,354.15 .............................. 66.30 1,420.45 

Area 5 between any point on or in ...................................................... .......................... 4.48 (1.0448) .......................... ..........................

—Toledo or any point on Lake Erie W. of Southeast Shoal ....... 1,243.75 .............................. 55.71 1,299.46 

—Toledo or any point on Lake Erie W. of Southeast Shoal & 

Southeast Shoal ........................................................................ 2,104.72 .............................. 94.28 2,198.99 

—Toledo or any point on Lake Erie W. of Southeast Shoal & 

Detroit River .............................................................................. 2,732.79 .............................. 122.41 2,855.20 

—Toledo or any point on Lake Erie W. of Southeast Shoal & 

Detroit Pilot Boat ....................................................................... 2,104.72 .............................. 94.28 2,198.99 

—Port Huron Change Point & Southeast Shoal (when pilots are 

not changed at the Detroit Pilot Boat) ...................................... 3,665.60 .............................. 164.20 3,829.80 

—Port Huron Change Point & Toledo or any point on Lake Erie 

W. of Southeast Shoal (when pilots are not changed at the 

Detroit Pilot Boat) ...................................................................... 4,246.60 .............................. 190.22 4,436.82 

—Port Huron Change Point & Detroit River ................................ 2,753.85 .............................. 123.36 2,877.20 

—Port Huron Change Point & Detroit Pilot Boat ......................... 2,141.88 .............................. 95.94 2,237.82 

—Port Huron Change Point & St. Clair River .............................. 1,522.48 .............................. 68.20 1,590.68 

—St. Clair River ............................................................................ 1,243.75 .............................. 55.71 1,299.46 

—St. Clair River & Southeast Shoal (when pilots are not 

changed at the Detroit Pilot Boat) ............................................ 3,665.60 .............................. 164.20 3,829.80 

—St. Clair River & Detroit River/Detroit Pilot Boat ...................... 2,753.85 .............................. 123.36 2,877.20

—Detroit, Windsor, or Detroit River .............................................. 1,243.75 .............................. 55.71 1,299.46 

—Detroit, Windsor, or Detroit River & Southeast Shoal .............. 2,104.72 .............................. 94.28 2,198.99 

—Detroit, Windsor, or Detroit River & Toledo or any point on 

Lake Erie W. of Southeast Shoal ............................................. 2,732.79 .............................. 122.41 2,855.20 

—Detroit, Windsor, or Detroit River & St. Clair River .................. 2,753.85 .............................. 123.36 2,877.20 

—Detroit Pilot Boat & Southeast Shoal ....................................... 1,522.48 .............................. 68.20 1,590.68 

—Detroit Pilot Boat & Toledo or any point on Lake Erie W. of 

Southeast Shoal ........................................................................ 2,104.72 .............................. 94.28 2,198.99 

—Detroit Pilot Boat & St. Clair River ........................................... 2,753.85 .............................. 123.36 2,877.20 

Area 6 .................................................................................................. .......................... 12.52 (1.1252) .......................... ..........................

—6-hr. period ................................................................................ 553.62 .............................. 69.31 622.93 

—Docking or undocking ............................................................... 525.88 .............................. 65.84 591.72 

Area 7 between any point on or in ...................................................... .......................... 23.64 (1.2364) .......................... ..........................

—Gros Cap & De Tour ................................................................. 1,975.83 .............................. 467.15 2,442.98 

—Algoma Steel Corp. Wharf, Sault Ste. Marie, Ont. & De Tour 1,975.83 .............................. 467.15 2,442.98 

—Algoma Steel Corp. Wharf, Sault Ste. Marie, Ont. & Gros Cap 744.10 .............................. 175.93 920.03 

—Any point in Sault Ste. Marie, Ont., except the Algoma Steel 

Corp. Wharf & De Tour ............................................................. 1,656.11 .............................. 391.55 2,047.67 

—Any point in Sault Ste. Marie, Ont., except the Algoma Steel 

Corp. Wharf & Gros Cap .......................................................... 744.10 .............................. 175.93 920.03 

—Sault Ste. Marie, MI & De Tour ................................................ 1,656.11 .............................. 391.55 2,047.67 

—Sault Ste. Marie, MI & Gros Cap .............................................. 744.10 .............................. 175.93 920.03 

—Harbor movage ......................................................................... 744.10 .............................. 175.93 920.03 

Area 8 .................................................................................................. .......................... 2.52 (1.0252) .......................... ..........................

—6-hr. period ................................................................................ 535.92 .............................. 13.51 549.44 

—Docking or undocking ............................................................... 509.36 .............................. 12.84 522.20 

Rates for ‘‘Cancellation, delay or interruption in rendering services ( § 401.420)’’ and ‘‘Basic Rates and charges for carrying a U.S. pilot beyond 

the normal change point, or for boarding at other than the normal boarding point (§ 401.428)’’ are not reflected in this table but have been increased by 10.77% across all areas. 


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35822 Federal Register / Vol. 74, No. 138 / Tuesday, July 21, 2009 / Rules and Regulations 

VI. Regulatory Analyses 

We developed this rule after 

considering numerous statutes and 

executive orders related to rulemaking. 

Below, we summarize our analyses 

based on 13 of these statutes or 

executive orders. 

A. Regulatory Planning and Review 

Executive Order 12866, ‘‘Regulatory 

Planning and Review,’’ 58 FR 51735, 

October 4, 1993, requires a 

determination whether a regulatory 

action is ‘‘significant’’ and therefore 

subject to review by the Office of 

Management and Budget (OMB) and 

subject to the requirements of the 

Executive Order. This rulemaking is not 

significant under Executive Order 12866 

and will not be reviewed by OMB. 

The Coast Guard is required to 

conduct an annual review of pilotage 

rates on the Great Lakes and, if 

necessary, adjust these rates to align 

compensation levels between Great 

Lakes pilots and industry. See the 

‘‘Background and Purpose’’ section for a 

detailed explanation of the legal 

authority and requirements for the Coast 

Guard to conduct an annual review and 

provide possible adjustments of pilotage 

rates on the Great Lakes. Based on our 

annual review for this rulemaking, we 

are adjusting the pilotage rates for the 

2009 shipping season to generate 

sufficient revenue to cover allowable 

expenses, target pilot compensation, 

and returns on investment. 

This rule will implement a 10.77% 

overall rate adjustment for the Great 

Lakes system over the current rate as 

adjusted in the 2008 final rule. These 

adjustments to Great Lakes pilotage 

rates meet the requirements set forth in 

46 CFR part 404 for similar 

compensation levels between Great 

Lakes pilots and industry. They also 

include adjustments for inflation and 

changes in association expenses to 

maintain these compensation levels. 

In general, we expect an increase in 

pilotage rates for a certain area to result 

in additional costs for shippers using 

pilotage services in that area, while a 

decrease would result in a cost 

reduction or savings for shippers in that 

area. This rule will result in a 

distributional effect that transfers 

payments (income) from affected 

shippers (vessel owners and operators) 

to the Great Lakes’ pilot associations 

through Coast Guard regulated pilotage 

rates. 

The shippers affected by these rate 

adjustments are those owners and 

operators of domestic vessels operating 

on register (employed in the foreign 

trade) and owners and operators of 

foreign vessels on a route within the 

Great Lakes system. These owners and 

operators must have pilots or pilotage 

service as required by 46 U.S.C. 9302. 

There is no minimum tonnage limit or 

exemption for these vessels. However, 

the Coast Guard issued a policy position 

several years ago stating that the statute 

applies only to commercial vessels and 

not to recreational vessels. 

Owners and operators of other vessels 

that are not affected by this rule, such 

as recreational boats and vessels only 

operating within the Great Lakes 

system, may elect to purchase pilotage 

services. However, this election is 

voluntary and does not affect the Coast 

Guard’s calculation of the rate increase 

and is not a part of our estimated 

national cost to shippers. 

We reviewed a sample of pilot source 

forms, which are the forms used to 

record pilotage transactions on vessels, 

and discovered very few cases of U.S. 

Great Lakes vessels (i.e., domestic 

vessels without registry operating only 

in the Great Lakes) that purchased 

pilotage services. We assume some 

vessel owners and operators may also 

choose to purchase pilotage services if 

their vessels are carrying hazardous 

substances or were navigating the Great 

Lakes system with inexperienced 

personnel. Based on information from 

the Coast Guard Office of Great Lakes 

Pilotage, we have determined that these 

vessels voluntarily chose to use pilots 

and, therefore, are exempt from pilotage 

requirements. 

We used 2006–2007 vessel arrival 

data from the Coast Guard’s Marine 

Inspection, Safety, and Law 

Enforcement system (MISLE) to estimate 

the average annual number of vessels 

affected by the rate adjustment to be 208 

vessels that journey into the Great Lakes 

system. These vessels entered the Great 

Lakes by transiting through or in part of 

at least one of the three pilotage 

Districts before leaving the Great Lakes 

system. These vessels often make more 

than one distinct stop, docking, loading, 

and unloading at facilities in Great 

Lakes ports. Of the total trips for the 208 

vessels, there were approximately 923 

annual U.S. port arrivals before the 

vessels left the Great Lakes system, 

based on 2006–2007 vessel data from 

MISLE. 

The impact of the rate adjustment to 

shippers is estimated from the district 

pilotage revenues. These revenues 

represent the direct and indirect costs 

(‘‘economic costs’’) that shippers must 

pay for pilotage services. The Coast 

Guard sets rates so that revenues equal 

the estimated cost of pilotage. 

We estimate the additional impact 

(costs or savings) of the rate adjustment 

in this final rule to be the difference 

between the total projected revenue 

needed to cover costs based on the 2008 

rate adjustment and the total projected 

revenue needed to cover costs in this 

final rule for 2009. Table 20 details 

additional costs or savings by area and 

district. 

TABLE 20—RATE ADJUSTMENT AND ADDITIONAL IMPACT OF THE FINAL RULE ($U.S.; NON-DISCOUNTED) 1

Total 

projected 

expenses in 

2008 

Proposed rate 

change 

Total 

projected 

expenses in 

2009 3

Additional 

revenue or cost 

of this rulemaking 2

Area 1 .................................................................................................... $2,078,551 1.0425 2,166,873 $88,322 

Area 2 .................................................................................................... 1,474,806 1.0479 1,545,503 70,697 

Total, District One ........................................................................... 3,553,357 1.0447 3,712,052 158,695 

Area 4 .................................................................................................... 1,251,203 1.0490 1,312,463 61,260 

Area 5 .................................................................................................... 2,334,169 1.0448 2,438,725 104,556 

Total, District Two ........................................................................... 3,585,372 1.0462 3,750,992 165,620 

Area 6 .................................................................................................... 2,884,724 0.8380 2,417,474 (467,250 ) 

Area 7 .................................................................................................... 1,427,515 1.0431 1,489,052 61,537 

Area 8 .................................................................................................... 1,944,032 1.0468 2,035,052 91,020 


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Federal Register / Vol. 74, No. 138 / Tuesday, July 21, 2009 / Rules and Regulations 35823 

1When a decrease in traffic is not accompanied 

by a reduction in pilots, as in this case, projected 

pilot compensation and other expenses do not 

decrease. As such, revenue must increase to meet 

these expenses, which can only be accomplished 

through rate increases. 

TABLE 20—RATE ADJUSTMENT AND ADDITIONAL IMPACT OF THE FINAL RULE ($U.S.; NON-DISCOUNTED) 1—Continued 

Total 

projected 

expenses in 

2008 

Proposed rate 

change 

Total 

projected 

expenses in 

2009 3

Additional 

revenue or cost 

of this rulemaking 2

Total, District Three ........................................................................ 6,256,273 0.9532 5,963,713 (292,560 ) 

1Some values may not total due to rounding. 

2Additional Revenue or Cost of this Rulemaking = ‘Total Projected Expenses in 2009’ ¥ ‘Total Projected Expenses in 2008’. 3 ‘Total Projected Expenses in 2009’ and ‘Additional Revenue or Cost of this Rulemaking’ for Districts One, Two and Three differ from the sum 

of the area totals due to the use of unique multipliers, as mentioned in Step 5 under ‘Calculating the Rate Adjustment’. 

After applying the rate change in this 

rule, the resulting difference between 

the projected revenue in 2008 and the 

projected revenue in 2009 is the annual 

impact to shippers from this rule. This 

figure will be equivalent to the total 

additional payments or savings that 

shippers will incur for pilotage services 

from this rule. As discussed earlier, we 

consider a reduction in payments to be 

a cost savings. 

The impact of the rate adjustment in 

this rule to shippers varies by area and 

district. The annual costs of the rate 

adjustments in Districts 1 and 2 are 

approximately $159,000 and $166,000, 

respectively, while District 3 will 

experience an annual savings of 

approximately $293,000. To calculate an 

exact cost or savings per vessel is 

difficult because of the variation in 

vessel types, routes, port arrivals, 

commodity carriage, time of season, 

conditions during navigation, and 

preferences for the extent of pilotage 

services on designated and 

undesignated portions of the Great 

Lakes system. Some owners and 

operators will pay more and some will 

pay less depending on the distance and 

port arrivals of their vessels’ trips. 

However, the annual cost or savings 

reported above does capture all of the 

additional cost the shippers face as a 

result of the rate adjustment in this rule. 

As Table 20 indicates, all areas will 

experience an increased annual cost due 

to this rulemaking except Area 6, which 

will experience a savings. The projected 

savings for Area 6 is approximately 

$467,000. This will cause a net savings 

for District 3, and is due to a decrease 

in actual bridge hours in Area 6 from 

2008 to 2009. This decrease in bridge 

hours led to a decrease in the number 

of pilots needed, from 10 pilots in 2008 

to 8 pilots in 2009. This decrease in the 

number of pilots would reduce the 

projected revenue needed to cover costs 

of pilotage services in Area 6. 

The effects of a rate adjustment on 

costs and savings vary by year and area. 

A decrease in projected expenses for 

individual areas or districts is common 

in past pilotage rate adjustments. Most 

recently, in the 2008 Final Rule, District 

2 experienced a decrease in projected 

expenses due to an adjustment in bridge 

hours from the 2008 Interim Rule, 

which led to a savings for that district. 

However, this savings was not large 

enough to outweigh the costs to the 

other districts. 

The overall impact of the final rule 

will be an additional cost to shippers of 

$32,000 across all three districts. This 

differs from the estimated cost savings 

of $15,000 in the NPRM due to the 

projected changes in bridge hours in 

Area 1,1 as well as the change in the 

distribution of vessels operating under 

Agreements A and B as of May 2009. We 

explained these two differences from 

the NPRM in our Part IV discussion of 

public comments on bridge hour 

projection data, and in our Part V.B 

discussion of Step 3(b) rate calculations. 

These two changes since the NPRM 

resulted in increased projected 

expenses, accounting for the overall 

increased cost to shippers of the final 

rule. 

B. Small Entities 

Under the Regulatory Flexibility Act 

(5 U.S.C. 601–612), we have considered 

whether this rule would have a 

significant economic impact on a 

substantial number of small entities. 

The term ‘‘small entities’’ comprises 

small businesses, not-for-profit 

organizations that are independently 

owned and operated and are not 

dominant in their fields, and 

governmental jurisdictions with 

populations of less than 50,000 people. 

We expect entities affected by the 

proposed rule would be classified under 

the North American Industry 

Classification System (NAICS) code 

subsector 483—Water Transportation, 

which includes one or all of the 

following 6-digit NAICS codes for 

freight transportation: 483111—Deep 

Sea Freight Transportation, 483113— 

Coastal and Great Lakes Freight 

Transportation, and 483211—Inland 

Water Freight Transportation. 

According to the Small Business 

Administration’s definition, a U.S. 

company with these NAICS codes and 

employing less than 500 employees is 

considered a small entity. 

For this rule, we reviewed recent 

company size and ownership data from 

2006–2007 MISLE data and business 

revenue and size data provided by 

Reference USA and Dunn and 

Bradstreet. We were able to gather 

revenue and size data or link the entities 

to large shipping conglomerates for 22 

of the 24 affected entities in the United 

States. We found that large, mostly 

foreign-owned, shipping conglomerates 

or their subsidiaries owned or operated 

all vessels engaged in foreign trade on 

the Great Lakes. We assume that new 

industry entrants will be comparable in 

ownership and size to these shippers. 

There are three U.S. entities affected 

by the rule that receive revenue from 

pilotage services. These are the three 

pilot associations that provide and 

manage pilotage services within the 

Great Lakes districts. Two of the 

associations operate as partnerships and 

one operates as a corporation. These 

associations are classified with the same 

NAICS industry classification and small 

entity size standards described above, 

but they have far fewer than 500 

employees: approximately 65 total 

employees combined. We expect no 

adverse impact to these entities from 

this rule since all associations receive 

enough revenue to balance the projected 

expenses associated with the projected 

number of bridge hours and pilots. 

Therefore, the Coast Guard has 

determined that this rule will not have 

a significant economic impact on a 

substantial number of small entities 

under 5 U.S.C. 605(b). 

C. Assistance for Small Entities 

Under section 213(a) of the Small 

Business Regulatory Enforcement 

Fairness Act of 1996 (Pub. L. 104–121), 

we offered to assist small entities in 

understanding the rule so that they 

could better evaluate its effects on them 

and participate in the rulemaking. The 


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35824 Federal Register / Vol. 74, No. 138 / Tuesday, July 21, 2009 / Rules and Regulations 

Coast Guard will not retaliate against 

small entities that question or complain 

about this rule or any policy or action 

of the Coast Guard. 

Small businesses may send comments 

on the actions of Federal employees 

who enforce, or otherwise determine 

compliance with, Federal regulations to 

the Small Business and Agriculture 

Regulatory Enforcement Ombudsman 

and the Regional Small Business 

Regulatory Fairness Boards. The 

Ombudsman evaluates these actions 

annually and rates each agency’s 

responsiveness to small business. If you 

wish to comment on actions by 

employees of the Coast Guard, call 

1–888–REG–FAIR (1–888–734–3247). 

D. Collection of Information 

This rule calls for no new collection 

of information under the Paperwork 

Reduction Act of 1995 (44 U.S.C. 3501– 

3520). This rule does not change the 

burden in the collection currently 

approved by the Office of Management 

and Budget (OMB) under OMB Control 

Number 1625–0086, Great Lakes 

Pilotage Methodology. 

E. Federalism 

A rule has implications for federalism 

under Executive Order 13132, 

Federalism, if it has a substantial direct 

effect on State or local governments and 

would either preempt State law or 

impose a substantial direct cost of 

compliance on them. We have analyzed 

this rule under that Order and have 

determined that it does not have 

implications for federalism because 

there are no similar State regulations, 

and the States do not have the authority 

to regulate and adjust rates for pilotage 

services in the Great Lakes system. 

F. Unfunded Mandates Reform Act 

The Unfunded Mandates Reform Act 

of 1995 (2 U.S.C. 1531–1538) requires 

Federal agencies to assess the effects of 

their discretionary regulatory actions. In 

particular, the Act addresses actions 

that may result in the expenditure by a 

State, local, or Tribal government, in the 

aggregate, or by the private sector of 

$100,000,000 or more in any one year. 

Though this rule would not result in 

such expenditure, we do discuss the 

effects of this rule elsewhere in this 

preamble. 

G. Taking of Private Property 

This rule would not affect a taking of 

private property or otherwise have 

taking implications under Executive 

Order 12630, Governmental Actions and 

Interference with Constitutionally 

Protected Property Rights. 

H. Civil Justice Reform 

This rule meets applicable standards 

in sections 3(a) and 3(b)(2) of Executive 

Order 12988, Civil Justice Reform, to 

minimize litigation, eliminate 

ambiguity, and reduce burden. 

I. Protection of Children 

We have analyzed this rule under 

Executive Order 13045, Protection of 

Children from Environmental Health 

Risks and Safety Risks. This rule is not 

an economically significant rule and 

does not create an environmental risk to 

health or risk to safety that may 

disproportionately affect children. 

J. Indian Tribal Governments 

This rule does not have Tribal 

implications under Executive Order 

13175, Consultation and Coordination 

with Indian Tribal Governments, 

because it does not have a substantial 

direct effect on one or more Indian 

Tribes, on the relationship between the 

Federal Government and Indian Tribes, 

or on the distribution of power and 

responsibilities between the Federal 

Government and Indian Tribes. 

K. Energy Effects 

We have analyzed this rule under 

Executive Order 13211, Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use. We have 

determined that it is not a ‘‘significant 

energy action’’ under that order because 

it is not a ‘‘significant regulatory action’’ 

under Executive Order 12866 and is not 

likely to have a significant adverse effect 

on the supply, distribution, or use of 

energy. The Administrator of the Office 

of Information and Regulatory Affairs 

has not designated it as a significant 

energy action. Therefore, it does not 

require a Statement of Energy Effects 

under Executive Order 13211. 

L. Technical Standards 

The National Technology Transfer 

and Advancement Act (NTTAA) (15 

U.S.C. 272 note) directs agencies to use 

voluntary consensus standards in their 

regulatory activities unless the agency 

provides Congress, through the Office of 

Management and Budget, with an 

explanation of why using these 

standards would be inconsistent with 

applicable law or otherwise impractical. 

Voluntary consensus standards are 

technical standards (e.g., specifications 

of materials, performance, design, or 

operation; test methods; sampling 

procedures; and related management 

systems practices) that are developed or 

adopted by voluntary consensus 

standards bodies. This rule does not use 

technical standards. Therefore, we did 

not consider the use of voluntary 

consensus standards. 

M. Environment 

We have analyzed this rule under 

Department of Homeland Security 

Management Directive 023–01 and 

Commandant Instruction M16475.lD, 

which guide the Coast Guard in 

complying with the National 

Environmental Policy Act of 1969 

(NEPA) (42 U.S.C. 4321–4370f), and 

have concluded that this action is one 

of a category of actions which do not 

individually or cumulatively have a 

significant effect on the human 

environment. This rule is categorically 

excluded under section 2.B.2, figure 2– 

1, paragraph (34)(a) of the Instruction. 

Paragraph 34(a) pertains to minor 

regulatory changes that are editorial or 

procedural in nature. This rule adjusts 

rates in accordance with applicable 

statutory and regulatory mandates. An 

environmental analysis checklist and a 

categorical exclusion determination are 

available in the docket where indicated 

under ADDRESSES. 

List of Subjects in 46 CFR Part 401 

Administrative practice and 

procedure, Great Lakes, Navigation 

(water), Penalties, Reporting and 

recordkeeping requirements, Seamen. 

■ For the reasons discussed in the 

preamble, the Coast Guard amends 46 

CFR Part 401 as follows: 

PART 401—GREAT LAKES PILOTAGE 

REGULATIONS 

■ 1. The authority citation for part 401 

continues to read as follows: 

Authority: 46 U.S.C. 2104(a), 6101, 7701, 

8105, 9303, 9304; Department of Homeland 

Security Delegation No. 0170.1; 46 CFR 

401.105 also issued under the authority of 44 

U.S.C. 3507. 

■ 2. In § 401.405, revise paragraphs (a) 

and (b), including the footnote to Table 

(a), to read as follows: 

§ 401.405 Basic rates and charges on the 

St. Lawrence River and Lake Ontario. 

* * * * * 

(a) Area 1 (Designated Waters): 

Service St. Lawrence River 

Basic Pilotage ...... $16.95 per kilometer or 

$29.99 per mile.1

Each Lock 

Transited.

$375.1

Harbor Movage .... $1,229.1

1 The minimum basic rate for assignment of 

a pilot in the St. Lawrence River is $820, and 

the maximum basic rate for a through trip is 

$3,599. 

(b) Area 2 (Undesignated Waters): 


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Federal Register / Vol. 74, No. 138 / Tuesday, July 21, 2009 / Rules and Regulations 35825 

Service Lake Ontario 

Six-Hour Period .................... $818 

Docking or Undocking .......... 780 

* * * * * 

■ 3. In § 401.407 revise paragraphs (a) 

and (b), including the footnote to Table 

(b), to read as follows: 

§ 401.407 Basic rates and charges 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 $722 $722 

Docking or 

Undocking ..... 557 557 

Service 

Lake Erie 

(east of 

Southeast 

Shoal) 

Buffalo 

Any Point on the 

Niagara River 

below the 

Black Rock 

Lock ............... N/A 1,420 

(b) Area 5 (Designated Waters): 

Any point on or in Southeast 

Shoal 

Toledo or any 

point on Lake 

Erie west of 

Southeast 

Shoal 

Detroit River Detroit pilot 

boat St. Clair River 

Toledo or any port on Lake Erie west of Southeast Shoal $2,199 $1,299 $2,855 $2,199 N/A 

Port Huron Change Point .................................................... 1 3,829 1 4,436 2,877 2,237 1,591 

St. Clair River ....................................................................... 1 3,829 N/A 2,877 2,877 1,299 

Detroit or Windsor or the Detroit River ................................ 2,198 2,855 1,299 N/A 2,877 

Detroit Pilot Boat .................................................................. 1,590 2,199 N/A N/A 2,877 

1When pilots are not changed at the Detroit Pilot Boat. 

■ 4. In § 401.410, revise paragraphs (a), 

(b), and (c) to read as follows: 

§ 401.410 Basic rates and charges 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 .................... $623 

Service Lakes Huron 

and Michigan 

Docking or Undocking .......... 592 

(b) Area 7 (Designated Waters): 

Area De Tour Gros Cap Any harbor 

Gros Cap ..................................................................................................................................... $2,443 N/A N/A 

Algoma Steel Corporation Wharf at Sault Ste. Marie Ontario .................................................... 2,443 920 N/A 

Any point in Sault Ste. Marie, Ontario, except the Algoma Steel Corporation Wharf ................ 2,048 920 N/A 

Sault Ste. Marie, MI ..................................................................................................................... 2,048 920 N/A 

Harbor Movage ............................................................................................................................ N/A N/A $920 

(c) Area 8 (Undesignated Waters): 

Service Lake Superior 

Six-Hour Period .................... $549 

Docking or Undocking .......... 522 

§ 401.420 [Amended] 

■ 5. In § 401.420— 

■ a. In paragraph (a), remove the 

number ‘‘$102’’ and add, in its place, 

the number ‘‘$113’’; and remove the 

number ‘‘$1,604’’ and add, in its place, 

the number ‘‘$1,777’’. 

■ b. In paragraph (b), remove the 

number ‘‘$102’’ and add, in its place, 

the number ‘‘$113’’; and remove the 

number ‘‘$1,604’’ and add, in its place, 

the number ‘‘$1,777’’. 

■ c. In paragraph (c)(1), remove the 

number ‘‘$606’’ and add, in its place, 

the number ‘‘$671’’; in paragraph (c)(3), 

remove the number ‘‘$102’’ and add, in 

its place, the number ‘‘$113’’; and, also 

in paragraph (c)(3), remove the number 

‘‘$1,604’’ and add, in its place, the 

number ‘‘$1,777’’. 

§ 401.428 [Amended] 

■ 6. In § 401.428, remove the number 

‘‘$618’’ and add, in its place, the 

number ‘‘$684’’. 

Dated: July 13, 2009. 

Kevin S. Cook, 

Rear Admiral, U.S. Coast Guard, Director of 

Prevention Policy. 

[FR Doc. E9–17229 Filed 7–20–09; 8:45 am] 

BILLING CODE 4910–15–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Part 212 

RIN 0750–AG23 

Defense Federal Acquisition 

Regulation Supplement; Acquisition of 

Commercial Items (DFARS Case 2008– 

D011) 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Interim rule; correction. 

SUMMARY: DoD is making a correction to 

the interim rule published at 74 FR 

34263 on July 15, 2009, which amended 

the Defense Federal Acquisition 

Regulation Supplement (DFARS) to 

address the conditions under which a 

time-and-materials or labor-hour 

contract may be used for the acquisition 


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