Document ID: USCG-2014-0481-0027
Agency: uscg
Document Type: Rule
Title: Great Lakes Pilotage Rates: Annual Review and Adjustment (Federal Register Publication)
Posted Date: 2015-05-26T04:00Z

[Federal Register Volume 80, Number 100 (Tuesday, May 26, 2015)]
[Rules and Regulations]
[Pages 29975-29978]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-12734]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOMELAND SECURITY

Coast Guard

46 CFR Part 401

[Docket No. USCG-2014-0481]
RIN 1625-AC22

Great Lakes Pilotage Rates--2015 Annual Review and Adjustment

AGENCY: Coast Guard, DHS.

ACTION: Final rule; change in effective date.

-----------------------------------------------------------------------

SUMMARY: The Coast Guard is advancing the effective date for the 2015 
final rule which published on February 26, 2015, adjusting rates for 
pilotage services on the Great Lakes in accordance with a full 
ratemaking procedure. The rate adjustments made by the February 2015 
final rule are unchanged, but instead of taking effect on August 1, 
2015, the rates will take effect June 2, 2015. This rulemaking rule 
promotes the Coast Guard's strategic goal of maritime safety.

DATES: The effective date for the final rule published February 26, 
2015 (80 FR 10365), is changed from August 1, 2015, to June 2, 2015.

FOR FURTHER INFORMATION CONTACT: If you have questions on this rule, 
call or email Mr. Todd Haviland, Director, Great Lakes Pilotage, 
Commandant (CG-WWM-2), Coast Guard; telephone 202-372-2037, email 
Todd.A.Haviland@uscg.mil, or fax 202-372-1914.

SUPPLEMENTARY INFORMATION: 

Table of Contents for Preamble

I. Abbreviations
II. Regulatory History
III. Background
IV. 2014 Litigation
V. Good Cause
VI. Regulatory Analyses
    A. Regulatory Planning and Review
    B. Small Entities
    C. Assistance for Small Entities
    D. Collection of Information
    E. Federalism

I. Abbreviations

CFR Code of Federal Regulations
E.O. Executive Order
FR Federal Register
MISLE Marine Information for Safety and Law Enforcement
NAICS North American Industry Classification System
NPRM Notice of proposed rulemaking
OMB Office of Management and Budget
 Sec.  Section symbol
U.S.C. United States Code

II. Regulatory History

    On September 4, 2014, we published a notice of proposed rulemaking 
(NPRM) titled ``Great Lakes Pilotage Rates--2015 Annual Review and 
Adjustment'' in the Federal Register.\1\ On December 1, 2014, we 
published revenue audits of the pilot associations and reopened the 
public comment period in the Federal Register.\2\ On February 26, 2015, 
we published a final rule entitled ``Great Lakes Pilotage Rates--2015 
Annual Review and Adjustment.'' \3\
---------------------------------------------------------------------------

    \1\ 79 FR 52602 (Sept. 4, 2014).
    \2\ 79 FR 71082 (Dec. 1, 2014).
    \3\ 80 FR 10365 (Feb. 26, 2015).
---------------------------------------------------------------------------

III. Background

    The vessels affected by this rulemaking are those engaged in 
foreign trade upon the U.S. waters of the Great Lakes. United States 
and Canadian ``lakers,'' \4\ which account for most commercial shipping 
on the Great Lakes, are not affected.\5\ For further background 
information, please see the February 26, 2015 final rule at 80 FR 10365 
at 10366. For further information summarizing the February final rule, 
see pages 10368 through 10383 of that document.
---------------------------------------------------------------------------

    \4\ A ``laker'' is a commercial cargo vessel especially designed 
for and generally limited to use on the Great Lakes.
    \5\ 46 U.S.C. 9302.
---------------------------------------------------------------------------

    The basis of this rule is the Great Lakes Pilotage Act of 1960 
(``the Act'') (46 U.S.C. Chapter 93), which requires U.S. vessels 
operating ``on register'' \6\ and foreign vessels to use U.S. or 
Canadian registered pilots while transiting the U.S. waters of the St. 
Lawrence Seaway and the Great Lakes system.\7\ The Act requires the 
Secretary to ``prescribe by regulation rates and charges for pilotage 
services, giving consideration to the public interest and the costs of 
providing the services.'' \8\ Rates must be established or reviewed and 
adjusted each year, not later than March 1. Base rates must be 
established by a full ratemaking at least once every 5 years, and in 
years when base rates are not established, they must be reviewed and, 
if necessary, adjusted.\9\ The Secretary's duties and authority under 
the Act have been delegated to the Coast Guard.\10\ Coast Guard 
regulations implementing the Act appear in parts 401 through 404 of 
Title 46, Code of Federal Regulations (CFR). Procedures for use in 
establishing base rates appear in 46 CFR part 404, appendix A, and 
procedures for annual review and adjustment of existing base rates 
appear in 46 CFR part 404, appendix C.
---------------------------------------------------------------------------

    \6\ ``On register'' means that the vessel's certificate of 
documentation has been endorsed with a registry endorsement, and 
therefore, may be employed in foreign trade or trade with Guam, 
American Samoa, Wake, Midway, or Kingman Reef. 46 U.S.C. 12105, 46 
CFR 67.17.
    \7\ 46 U.S.C. 9302(a)(1).
    \8\ 46 U.S.C. 9303(f).
    \9\ Id.
    \10\ Department of Homeland Security Delegation No. 0170.1, 
paragraph (92)(f).
---------------------------------------------------------------------------

    This final rule advances the effective date of the 2015 final rule 
published on February 26, 2015, which established new base pilotage 
rates, using the methodology found in 46 CFR part 404, appendix A.

IV. 2014 Litigation

    The Coast Guard published its ``Great Lakes Pilotage Rates--2014 
Annual Review and Adjustment'' final rule on March 4, 2014. Rates set 
in that rule took effect on August 1, 2014, and have remained in effect 
since then.\11\ Shortly after publication, the three Great Lakes pilot 
associations filed suit \12\ under the Administrative Procedure Act 
(APA),\13\ challenging the manner in which the Coast Guard applied 
American Maritime Officers Union wage and benefit data. Under the Coast 
Guard ratemaking methodology, that data significantly affects rate 
adjustments. On March 27, 2015, the court issued a memorandum opinion 
holding that the Coast Guard

[[Page 29976]]

had not properly applied the union data, and was therefore arbitrary 
and capricious in setting the 2014 rates, which consequently were set 
lower than they should have been. The court ordered the parties to 
brief the appropriate remedy, recognizing that the normal remedy of 
vacating and remanding the 2014 rule would be counterproductive because 
the 2013 rates are lower than the rates set in the 2014 rule. Given 
that the usual remedies are impractical, the parties have discussed a 
remedy that advances the effective date for 2015 rates set in our 2015 
final rule.\14\
---------------------------------------------------------------------------

    \11\ 79 FR 12084 (Mar. 4, 2014).
    \12\ The case is St. Lawrence Seaway Pilots Association, Inc., 
et al., v. United States Coast Guard, Civil Action No. 14-cv-392 
(TSC), (D.D.C. March 27, 2015).
    \13\ 5 U.S.C. 551 et seq.
    \14\ Under this final rule, some vessels will pay higher rates 
prior to August 1, 2015 than they otherwise would have. Under the 
2014 final rule. Note, however, that Canadian rates for 2015 took 
effect upon the opening of the shipping season in early spring 2015 
and are higher than 2014 Canadian rates. Vessels are assigned either 
a U.S. or a Canadian pilot when they enter the Great Lakes, and 
therefore cannot know in advance whether they will be subject to 
U.S. or Canadian rates. With advancement of the 2015 effective date, 
henceforth all vessels will pay 2015 rates regardless of whether 
they are assigned a U.S. or Canadian pilot, rather than a 2014 rate 
if assigned a U.S. pilot and a 2015 rate if assigned a Canadian 
pilot.
---------------------------------------------------------------------------

V. Good Cause

    The Coast Guard is advancing the August 1, 2015 effective date of 
the 2015 final rule without following the usual APA procedures for 
prior notice and public opportunity to comment, and for thirty days to 
elapse between publication of a rule and the effective date of that 
rule. Under 5 U.S.C. 553(b)(3)(B) and 5 U.S.C. 553(d), the Coast Guard 
finds that it has good cause to depart from these procedures because to 
follow those procedures would be impracticable and contrary to public 
interest.
    Standard APA procedures would require publishing a notice of 
proposed rulemaking, taking and considering public comments on that 
notice, publishing a second document actually advancing the effective 
date, and then waiting thirty days before that advancement could take 
effect. However, effective implementation of the remedy depends on 
acting as soon as practicable to advance the current August 1, 2015 
effective date for the 2015 rates. The effectiveness of the remedy is 
reduced by each day that advancement of the effective date is delayed, 
thereby leaving the 2014 rates invalidated by the court in place and 
reducing the additional compensation that the pilots receive from 
advancement. Delay in order to follow standard APA notice-and-comment 
rulemaking procedures is therefore impracticable, because any delay 
would largely, if not wholly, defeat the remedy's purpose.\15\
---------------------------------------------------------------------------

    \15\ Good cause is ``. . . appropriately invoked when the timing 
and disclosure requirements of the usual procedures would defeat the 
purpose of the proposal.'' Mack Trucks, Inc. v. EPA, 682 F.3d 87, 95 
(D.C. Cir. 2012). A good cause ``impracticability'' finding may be 
upheld where quick action is needed to fulfill the goal of a court-
ordered deadline. Asiana Airlines, 134 F.3d 393, 398 (D.C. Cir. 
1998).
---------------------------------------------------------------------------

    Delaying the implementation of this rule to follow standard APA 
notice-and-comment rulemaking procedures is also contrary to public 
interest. The Coast Guard is statutorily required to set Great Lakes 
pilotage rates ``giving consideration to the public interest and the 
costs of providing services.'' \16\ The Coast Guard's goal in setting 
pilotage rates is to serve the public interest in assuring ``safe, 
efficient, and reliable'' pilotage service on the Great Lakes.\17\ The 
court has accepted the pilot associations' argument that the 2014 rates 
inadequately compensate them for the cost of providing service. 
Inadequate compensation reduces the funds that the plaintiff pilot 
associations need to provide safe, efficient, and reliable pilotage, 
because it weakens their ability to operate, attract and retain 
qualified pilots, and maintain pilot boats and other infrastructure, 
all of which are essential to providing current and future pilotage 
services. The intended effect of the remedy of advancing the effective 
date of the 2015 rates is to mitigate the impact of the inadequate 
compensation provided by the invalidated 2014 rates. Therefore any 
delay in implementing the remedy, diminishes the Coast Guard's ability 
to mitigate the inadequate compensation of the 2014 rates and would 
harm the public interest in assuring safe, efficient, and reliable 
pilotage.\18\
---------------------------------------------------------------------------

    \16\ 46 U.S.C. 9303(f).
    \17\ See 80 FR 10365 (Feb. 26, 2015).
    \18\ See Mack Trucks, Inc. v. EPA, 682 F.3d 87, 95 (D.C. Cir. 
2012); Asiana Airlines, 134 F.3d 393, 398 (D.C. Cir. 1998).
---------------------------------------------------------------------------

VI. Regulatory Analyses

    We developed this rule after considering numerous statutes and 
E.O.s related to rulemaking. Below we summarize our analyses based on 
these statutes or E.O.s.

A. Regulatory Planning and Review

    Executive Orders 12866, Regulatory Planning and Review, and 13563, 
Improving Regulation and Regulatory Review, direct agencies to assess 
the costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility.
    This rule is not a significant regulatory action under section 3(f) 
of E.O. 12866 as supplemented by E.O. 13563. The Office of Management 
and Budget (OMB) has not reviewed it under E.O. 12866.
    Below is our analysis of the costs and benefits of the rule; this 
analysis assists in ascertaining the probable impacts of this rule on 
industry. The Coast Guard is advancing the effective date for the 
February 26, 2015 final rule adjusting rates for pilotage services on 
the Great Lakes in accordance with a full ratemaking procedure. The 
rate adjustments made by the February 2015 final rule are unchanged, 
but instead of taking effect on August 1, 2015, the rates will take 
effect June 2, 2015. We estimate that shippers will experience an 
increase in payments of approximately $283,761 across all three 
districts as a result of this rulemaking.
    A regulatory assessment follows.
    The Coast Guard is advancing the effective date of the final rule 
published on February 26, 2015, which established new base 2015 
pilotage rates. This action leads to an increase in the cost per unit 
of service to shippers in all three districts for the additional period 
that the 2015 rates will be in effect. The calculations of the rates in 
the 2014 ratemaking \19\ and the 2015 ratemaking \20\ remain unchanged. 
The shippers affected by these rate adjustments are those owners and 
operators of domestic vessels operating on register (employed in 
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. The statute 
applies only to commercial vessels and not to recreational vessels.
---------------------------------------------------------------------------

    \19\ 79 FR 12084 (Mar. 4, 2014).
    \20\ 80 FR 10365 (Feb. 26, 2015).
---------------------------------------------------------------------------

    Owners and operators of other vessels that are not affected by this 
final rule, such as recreational boats and vessels operating only 
within the Great Lakes system, may elect to purchase pilotage services. 
However, this election is voluntary and does not affect our calculation 
of the rate and is not a part of our estimated national cost to 
shippers.

[[Page 29977]]

    We used 2011-2013 vessel arrival data from the Coast Guard's Marine 
Information for Safety and Law Enforcement (MISLE) system to estimate 
the average annual number of vessels affected by the rate adjustment. 
Using that period, we found that approximately 114 different vessels 
journeyed into the Great Lakes system annually. These vessels entered 
the Great Lakes by transiting at least one of the three pilotage 
districts before leaving the Great Lakes system. These vessels often 
made more than one distinct stop, docking, loading, and unloading at 
facilities in Great Lakes ports. Of the total trips for the 114 
vessels, there were approximately 353 annual U.S. port arrivals before 
the vessels left the Great Lakes system, based on 2011-2013 vessel data 
from MISLE.
    We estimate the additional impact (cost increases) of the rate 
adjustment in this rule to be the difference between the 2014 and 2015 
pilotage rates, multiplied by the additional bridge hours resulting 
from advancing the 2015 rate effective date. For this analysis, we 
assumed the earliest practicable effective date the 2015 rates could be 
advanced to is June 1, 2015. This would add an additional two months of 
bridge hours from the August 1, 2015 effective date set in the February 
26, 2015 final rule. Table 1 details the additional cost increases by 
area and district as a result of this rulemaking.

                                        Table 1--Impact of the Rule by Area and District ($U.S.; Non-discounted)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Additional
                                                           2014 Pilotage   2015 Pilotage    2014 Total     Difference in   bridge hours
                          Area                               rate \21\       rate \22\     bridge hours    2014 and 2015  (June and July    Total cost
                                                                                               \23\            rates        2015) \24\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Area 1..................................................         $472.50         $519.74           5,116          $47.24           1,137         $53,707
Area 2..................................................          291.96          321.15           5,429           29.19           1,206          35,216
Total, District One.....................................  ..............  ..............  ..............  ..............  ..............          88,923
Area 4..................................................          210.40          231.44           5,814           21.04           1,292          27,184
Area 5..................................................          521.64          573.80           5,052           52.16           1,123          58,558
Total, District Two.....................................  ..............  ..............  ..............  ..............  ..............          85,742
Area 6..................................................          204.95          225.45           9,611           20.50           2,136          43,783
Area 7..................................................          495.01          544.52           3,023           49.51             672          33,260
Area 8..................................................          191.34          210.47           7,540           19.13           1,676          32,053
Total, District Three...................................  ..............  ..............  ..............  ..............  ..............         109,097
System Total............................................  ..............  ..............  ..............  ..............  ..............         283,761
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Some values may not total due to rounding.

    We estimate that shippers will experience an increase in payments 
of approximately $283,761 across all three districts as a result of 
this rulemaking. The resulting increase in costs is the change in 
payments from shippers to pilots from advancing the effective date of 
the 2015 rates. This figure is equivalent to the total additional 
payments that shippers would incur for pilotage services. This figure, 
however, is dependent on a June 1, 2015 effective date for this 
rulemaking. Any delays in the effective date will result in a lower 
cost impact to the shippers.
---------------------------------------------------------------------------

    \21\ 2014 rates are from 2014 final rule, ``Great Lakes Pilotage 
Rates--2014 Annual Review and Adjustment'', 79 FR 12084 (Mar. 4, 
2014).
    \22\ 2015 rates are from 2015 final rule, ``Great Lakes Pilotage 
Rates--2015 Annual Review and Adjustment'', 80 FR 10365 (Feb. 26, 
2015).
    \23\ Bridge hours are from 2015 final rule, ``Great Lakes 
Pilotage Rates--2015 Annual Review and Adjustment'', 80 FR 10365 
(Feb. 26, 2015).
    \24\ Bridge hours were calculated by dividing the 2014 bridge 
hours by the number of months in the shipping season (nine), and the 
multiplying by two months.
---------------------------------------------------------------------------

    To calculate an exact cost 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 would pay more and 
some would pay less, depending on the distance and the number of port 
arrivals of their vessels' trips.
    This rulemaking provides the pilots with additional compensation 
that will partially offset revenue losses due to the lower 2014 rates, 
during the months when those rates would otherwise remain in effect. 
This rulemaking helps assure safe, efficient, and reliable pilotage by 
increasing the pilot compensation that is artificially low due to the 
the 2014 rates invalidated by the court.

B. Small Entities

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), rules that are exempt from APA notice and comment requirements 
are also exempt from the Regulatory Flexibility Act requirements when 
the agency for good cause finds that notice and public procedure 
thereon are impracticable, unnecessary, or contrary to the public 
interest. As discussed previously, Coast Guard for good cause finds 
that notice and comment are impracticable and contrary to public 
interest. Consequently, no regulatory flexibility analysisis is 
required.

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 this rule so that they can better evaluate 
its effects on them and participate in the rulemaking. The 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 OMB 
under Control

[[Page 29978]]

Number 1625-0086, Great Lakes Pilotage Methodology.

E. Federalism

    A rule has implications for federalism under E.O. 13132, 
Federalism, if it has a substantial direct effect on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. We have analyzed this rule under that order and have 
determined that it is consistent with the fundamental federalism 
principles and preemption requirements described in E.O. 13132. Our 
analysis is explained below. Congress directed the Coast Guard to 
establish ``rates and charges for pilotage services.'' 46 U.S.C. 
9303(f). This regulation is issued pursuant to that statute and is 
preemptive of state law as specified in 46 U.S.C. 9306. Under 46 U.S.C. 
9306, a ``State or political subdivision of a State may not regulate or 
impose any requirement on pilotage on the Great Lakes.''
    As a result, States or local governments are expressly prohibited 
from regulating within this category. Therefore, this rule is 
consistent with the principles of federalism and preemption 
requirements in E.O. 13132.

    Dated: May 20, 2015.
Gary C. Rasicot,
Director, Marine Transportation Systems, U.S. Coast Guard.
[FR Doc. 2015-12734 Filed 5-22-15; 8:45 am]
 BILLING CODE 9110-04-P