Document ID: USCG-2009-0883-0012
Agency: uscg
Document Type: Rule
Title: FR:  2010 Rates for Pilotage on the Great Lakes (Federal Publication)
Posted Date: 2010-02-23T05:00Z

[Federal Register Volume 75, Number 35 (Tuesday, February 23, 2010)]
[Rules and Regulations]
[Pages 7958-7971]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-3396]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

46 CFR Part 401

[Docket No. USCG-2009-0883]
RIN 1625-AB39

2010 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 5.07% to generate sufficient 
revenue to cover allowable expenses, target pilot compensation, and 
return on investment. This increase reflects an August 1, 2010, 
increase in benchmark contractual wages and benefits and an adjustment 
for inflation. This rulemaking promotes the Coast Guard strategic goal 
of maritime safety.

DATES: This final rule is effective August 1, 2010.

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-2009-0883 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 by going to http://www.regulations.gov, 
inserting USCG-2009-0883 in the ``Keyword'' box, and then clicking 
``Search.''

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-
372-1909, 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.

Table of Contents for Preamble

I. Abbreviations
II. Regulatory History
III. Background
IV. Discussion of Comments and Changes
V. Discussion of the Final Rule
    A. Summary
    B. Calculating the Rate Adjustment
VI. Regulatory Analyses
    A. Regulatory Planning and Review
    B. Small Entities
    C. Assistance for Small Entities
    D. Collection of Information
    E. Federalism
    F. Unfunded Mandates Reform Act
    G. Taking of Private Property
    H. Civil Justice Reform
    I. Protection of Children
    J. Indian Tribal Governments
    K. Energy Effects
    L. Technical Standards
    M. Environment

I. Abbreviations

AMOU American Maritime Officer Union
GLPAC Great Lakes Pilotage Advisory Committee
MISLE Coast Guard Marine Inspection, Safety, and Law Enforcement 
system
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. Regulatory History

    On October 30, 2009, we published a notice of proposed rulemaking 
entitled Great Lakes Pilotage Rates--2010 Annual Review and Adjustment 
in the Federal Register (NPRM, 74 FR 56153). We received five comments 
on the proposed rule. No public meeting was requested and none was 
held.

III. Background

    We published a notice of proposed rulemaking on October 30, 2009 
(NPRM, 74 FR 56153). The NPRM proposed an average 5.07% rate 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

[[Page 7959]]

Lakes Pilotage Act of 1960 (``the Act''), 46 U.S.C. Chapter 93, which 
requires foreign-flag vessels engaged in foreign trade to use U.S. 
registered pilots while transiting the St. Lawrence Seaway and the 
Great Lakes system. The Act also 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,'' and requires annual rate reviews to be 
completed by March 1 of each year, with a ``full ratemaking'' to 
establish new base rates at least once every five years. 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 Act, pilots assigned to vessels in these areas are 
only required to ``be on board and available to direct the navigation 
of 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 implement the Act's requirement for annual 
reviews of pilotage rates and a full ratemaking at least once every 
five years. 46 CFR 404.1. To assist in calculating pilotage rates, the 
regulations require pilotage associations to submit annual financial 
statements prepared by certified public accounting firms. In addition, 
every fifth year, in connection with the full ratemaking, 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, 2008 and 2009 and increased 
rates in each year. The 2009 final rule was published on July 21, 2009 
(74 FR 138), and took effect on August 1, 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 
2010, and increases rates by an average of 5.07% over the rates that 
took effect August 1, 2009.

IV. Discussion of Comments and Changes

    Five comments were submitted during the NPRM public comment period.
    Ratemaking methodology. One commenter recommended that we suspend 
any further action on this rulemaking until full consideration can be 
given to comments received in response to our July 21, 2009, request 
for public comments (``Great Lakes Pilotage Ratemaking Methodology,'' 
74 FR 35838). In July, we requested comments on the adequacy of our 
current ratemaking methodology in light of the realities of Great Lakes 
commercial shipping and the need to fairly balance competing 
considerations. We noted that any comments would be referred to the 
Great Lakes Pilotage Advisory Committee (GLPAC), a group created by the 
Great Lakes Pilotage Act to advise us on significant issues relating to 
Great Lakes pilotage. GLPAC will review our methodology and the 
comments received in response to our notice, and may recommend changes. 
If we accept their recommendations, any changes would require 
regulatory action. GLPAC has just begun reviewing comments. As yet 
there is no timeline for any GLPAC recommendations and no rulemaking 
underway to modify the methodology. Therefore, we cannot complete the 
``full consideration'' mentioned by the commenter before March 1, 2010, 
the Act's deadline for establishing any annual rate adjustment for 
2010. The Act provides no exception to the March 1 deadline for 
consideration of possible changes to the existing rate review process. 
Thus, we cannot suspend work on this rulemaking without violating the 
law.
    Another commenter reiterated comments the commenter made during the 
2007 and 2009 rate reviews. In 2007, we explained our reasons for 
disagreeing with this commenter's analysis of the ``150% factor'' for 
designated waters; 2007 interim rule, 72 FR 8115 at 8117 (Feb. 23, 
2007) and 2007 Final Rule, 72 FR 53158 at 53159 (July 18, 2007). In the 
2009 final rule, we explained our reasons for disagreeing with this 
Commenter on the ``Riker Report'' on bridge hour calculations; 74 FR 
35812 at 35814. As no new substantive information has been added, we 
will not repeat those earlier explanations. The commenter's suggestion 
that we amend the vessel weighting factor table in 46 CFR 401.400 is 
beyond the scope of this ratemaking.
    Two commenters reiterated past comments about our use of rounding 
in bridge hour calculations, without adding new information. We fully 
discussed our use of rounding in the 2009 final rule, specifically with 
reference to Area 4, which is of particular concern to one of these 
commenters, and we will not repeat that discussion; 74 FR 35812 at 
35813. The Area 4 calculations have not changed since the 2009 final 
rule.
    A commenter said that our ratemaking is arbitrary and capricious 
because we count delay and detention in calculating bridge hours for 
Areas 6, 7, and 8, but not in Areas 4 and 5. No information was 
provided to substantiate this claim, which runs counter to our 
discussion of bridge hour calculations in ratemaking documents over 
many years, and which repeats an allegation made in 2007 and refuted in 
that year's interim rule: ``The Coast Guard has never considered delay, 
detention, or travel time to be included in the definition of bridge 
hours and has never knowingly included these items in its bridge hour 
computations''; 72 FR 8115 at 8117, Feb. 23, 2007. Coast Guard did not 
consider delay, detention, or travel time in its bridge hour 
computations in this final rule.
    Effective date. Another commenter stated that the Act requires any 
2010 rate adjustment to take effect by March 1, 2010. The comment 
acknowledged that this is not the Coast Guard's interpretation of the 
Act. In our view, 46

[[Page 7960]]

U.S.C. 9303(f) only requires us to publish a rule announcing the 2010 
rate adjustment by March 1, 2010; the rule's effective date should be 
delayed until the event triggering the need for adjustment actually 
takes place. In this case, the triggering event will be the benchmark 
contract changes that do not take effect until August 1, 2010. This 
commenter also said that, even under the Coast Guard's interpretation 
of the Act, some relevant rate factors have already changed. The 
commenter mentions bridge hour projections (discussed subsequently) and 
cost of living (which is determined using 2007 and 2008 data). However, 
the inflation factor is merely one of three components that make up 
projected total economic costs and has a minimal effect on the rate 
calculation. We decline to adjust the rates to reflect only minimal 
changes.
    Supporting data. One commenter found it impossible to verify the 
calculations made in our NPRM. He mentioned the absence from the docket 
of two benchmark contracts and the absence of supporting documentation 
for the inflation factor used in our calculations. The two contracts 
were placed in the docket maintained by the Docket Management Facility 
on November 25, 2009, prior to the close of the public comment period. 
The NPRM, 74 FR 56153 at 56156, identified the parties to both 
contracts and accurately represented their terms. This enabled the 
commenter to verify the accuracy of our data, prior to November 25, 
2009, by contacting any of the contractual parties. The data supporting 
the inflation factor did not appear in the docket maintained by the 
Docket Management Facility until December 2, 2009, after the close of 
the public comment period. However, the NPRM, 74 FR 56153 at 56159, 
identified Bureau of Labor Statistics (BLS) Midwest consumer price data 
as the source of our calculations, and this data was at all times 
available from the BLS Web site, http://www.bls.gov.
    This same commenter also said that projected bridge hours for 2010 
should be based on actual bridge hours for 2009 to date, along with 
results of consultations with stakeholders, including the shipping 
industry. Another commenter asked why we did not use 2009 actual hours. 
As stated in the NPRM, 74 FR 56153 at 56158, our 2010 projections are 
based on historical data (by which we mean actual figures for complete 
past shipping seasons) and information provided both by pilots and 
industry. To meet the Act's March 1 deadline for completion of each 
year's rate review, with a final rule that meets all applicable 
requirements of the Federal regulatory process, Coast Guard data 
collection for the following year's review typically begins in the 
early spring of the preceding year. Given that reality, it is 
impracticable for the Coast Guard to base NPRM projections for the next 
year on actual results from the preceding year. The commenter's 
estimate of a 25% drop in shipping traffic between 2008 and 2009 does 
not provide us with sufficiently detailed data on which to base a 
revision of our 2010 projections in this final rule. We do expect 
verified and complete 2009 actual data to inform our 2011 ratemaking.
    District One pilot boat. Another commenter expressed a desire to 
have District One's purchase of a new pilot boat reflected in the 2010 
rate adjustment, or as soon as possible. This comment is beyond the 
scope of this ratemaking, which is being conducted pursuant to our 
Appendix C methodology, because it asks for action that can be taken 
only under an Appendix A full ratemaking. The next Appendix A review is 
already in progress. It will be based on a 2008 audit of pilot 
association expenses. This could present a timing problem from District 
One's perspective, because their boat expenses did not begin until 2009 
and therefore would not be captured in the 2008 audit data. Presumably 
to address that timing problem, in March 2009, District One petitioned 
the Coast Guard for a ``modified'' Appendix A review that could focus 
specifically on the pilot boat purchase. We could not grant that 
petition because there are no provisions for ``modifying'' Appendix A 
without conducting a rulemaking to make the modifications. However, we 
are mindful of the importance of this issue for District One, and we 
will ask GLPAC for its recommendations on how best to proceed, as part 
of GLPAC's consideration of public comments received in response to our 
July 2009 ratemaking methodology notice.
    Miscellaneous. A commenter asked us to refer to ``U.S. registered 
pilots'' instead of ``federally registered Great Lakes pilots'' and we 
have done so.

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 5.07% over the 2009 final rule, effective August 1, 2010. The 
new rates are unchanged from what we proposed in the NPRM. Table 1 
shows the new rates for each Area.

                     Table 1--2010 Area Rate Changes
------------------------------------------------------------------------
                                                   Then the proposed
     If pilotage service is required in:          percentage increases
                                               over the current rate is:
------------------------------------------------------------------------
Area 1 (Designated waters)...................                       4.65
Area 2 (Undesignated waters).................                       5.33
Area 4 (Undesignated waters).................                       5.47
Area 5 (Designated waters)...................                       4.96
Area 6 (Undesignated waters).................                       5.27
Area 7 (Designated waters)...................                       4.73
Area 8 (Undesignated waters).................                       5.17
Overall Rate Change (percentage change in                           5.07
 overall prospective unit costs/base unit
 costs; see Table 18)........................
------------------------------------------------------------------------

    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 
5.07% 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 compensation expense plus all other recognized expenses 
plus the return element) and divide by the total bridge

[[Page 7961]]

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 2009 Appendix C review. The Coast Guard also used the most recent 
union contracts between the American Maritime Officers Union (AMOU) and 
vessel owners and operators on the Great Lakes to determine target 
pilot compensation. Bridge hour projections for the 2010 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 all 
calculations in the ratemaking methodology described below. Also, 
please note that in previous rulemakings we calculated an expense 
multiplier for each District. This was unnecessary because Appendix C 
calculations are based on area figures, not district figures. District 
figures, where they are shown in the following tables, now reflect only 
the arithmetical totals for each of the district's areas.
    Step 1: Calculate the total economic cost for the base period. In 
this step, for each area, we add the total cost of target pilot 
compensation, all other recognized expenses, and the return element 
(net income plus interest). We divide this sum by the total bridge 
hours for each area. The result is the cost in each area of providing 
pilotage service per bridge hour for the base period. Tables 2 through 
4 summarize the Step 1 calculations:

                   Table 2--Total Economic Cost for Base Period (2009), Areas in District One
----------------------------------------------------------------------------------------------------------------
                                                               Area 1 St.        Area 2 Lake    Total * District
                                                             Lawrence River        Ontario             One
----------------------------------------------------------------------------------------------------------------
Base operating expense (less base return element).........          $538,155          $547,489        $1,085,644
Base target pilot compensation............................      + $1,617,955        + $981,589      + $2,599,544
Base return element.......................................         + $10,763         + $16,425         + $27,188
                                                           -----------------------------------------------------
    Subtotal \*\..........................................      = $2,166,873      = $1,545,503      = $3,712,376
Base bridge hours.........................................           / 5,203           / 5,650          / 10,853
Base cost per bridge hour.................................         = $416.47         = $273.54         = $342.06
----------------------------------------------------------------------------------------------------------------
* As explained in the text preceding Step 1, District totals have been expressed differently from previous
  rulemakings. This accounts for slight differences between the District totals shown in Table 16 of the 2009
  final rule and the District totals shown in this table.

                   Table 3--Total Economic Cost for Base Period (2009), Areas in District Two
----------------------------------------------------------------------------------------------------------------
                                                                              Area 5 Southeast
                                                            Area 4 Lake Erie    Shoal to Port   Total * District
                                                                                  Huron, MI            Two
----------------------------------------------------------------------------------------------------------------
Base operating expense....................................          $502,087          $789,202        $1,291,289
Base target pilot compensation............................        + $785,271      + $1,617,955      + $2,403,226
Base return element.......................................         + $25,104         + $31,568         + $56,672
                                                           -----------------------------------------------------
    Subtotal..............................................      = $1,312,463      = $2,438,725      = $3,751,188
Base bridge hours.........................................           / 7,320           / 5,097          / 12,417
Base cost per bridge hour.................................         = $179.30         = $478.46         = $302.10
----------------------------------------------------------------------------------------------------------------
* See footnote to Table 2.

                  Table 4--Total Economic Cost for Base Period (2009), Areas in District Three
----------------------------------------------------------------------------------------------------------------
                                            Area 6 Lakes
                                              Huron and        Area 7 St.        Area 8 Lake    Total * District
                                              Michigan        Mary's River        Superior            Three
----------------------------------------------------------------------------------------------------------------
Base operating expense..................          $814,358          $398,461          $641,580        $1,854,399
Base target pilot compensation..........      + $1,570,542      + $1,078,637      + $1,374,224      + $4,023,403
Base return element.....................         + $32,574         + $11,954         + $19,247         + $63,776
                                         -----------------------------------------------------------------------
    Subtotal............................      = $2,417,474      = $1,489,052      = $2,035,052      = $5,941,578
Base bridge hours.......................          / 13,406           / 3,259          / 11,630          / 28,295
Base cost per bridge hour...............         = $180.33         = $456.90         = $174.98         = $209.99
----------------------------------------------------------------------------------------------------------------
* See footnote to Table 2.

[[Page 7962]]

    Step 2. Calculate the expense multiplier. In this step, for each 
Area, we add the base operating expense and the base return element. 
Then, we divide the sum by the base target pilot compensation to get 
the expense multiplier for each area. Tables 5 through 7 show the Step 
2 calculations.

                               Table 5--Expense Multiplier, Areas in District One
----------------------------------------------------------------------------------------------------------------
                                               Area 1 St.        Area 2 Lake
                                             Lawrence River        Ontario             Total District One
----------------------------------------------------------------------------------------------------------------
Base operating expense....................          $538,155          $547,489  $1,085,644
Base return element.......................         + $10,763         + $16,425  + $27,188
                                           ---------------------------------------------------------------------
    Subtotal..............................        = $548,918        = $563,914  = $1,112,832
Base target pilot compensation............      / $1,617,955        / $981,589  $2,599,544
Expense multiplier........................           0.33927           0.57449  Not applicable
                                                                                (n/a)
----------------------------------------------------------------------------------------------------------------

                               Table 6--Expense Multiplier, Areas in District Two
----------------------------------------------------------------------------------------------------------------
                                                                              Area 5 Southeast
                                                            Area 4 Lake Erie    Shoal to Port    Total District
                                                                                  Huron, MI            Two
----------------------------------------------------------------------------------------------------------------
Base operating expense....................................          $502,087          $789,202        $1,291,289
Base return element.......................................         + $25,104         + $31,568         + $56,672
                                                           -----------------------------------------------------
    Subtotal..............................................        = $527,192        = $820,770      = $1,347,962
Base target pilot compensation............................        / $785,271      / $1,617,955        $2,403,226
Expense multiplier........................................           0.67135           0.50729               n/a
----------------------------------------------------------------------------------------------------------------

                              Table 7--Expense Multiplier, Areas in District Three
----------------------------------------------------------------------------------------------------------------
                                            Area 6 Lakes
                                              Huron and        Area 7 St.        Area 8 Lake     Total District
                                              Michigan        Mary's River        Superior            Three
----------------------------------------------------------------------------------------------------------------
Base operating Expense..................          $814,358          $398,461          $641,580        $1,854,399
Base return element.....................         + $32,574         + $11,954         + $19,247         + $63,776
                                         -----------------------------------------------------------------------
    Subtotal............................        = $846,932        = $410,415        = $660,828      = $1,918,175
Base target pilot compensation..........      / $1,570,542      / $1,078,637      / $1,374,224        $4,023,403
Expense multiplier......................           0.53926           0.38049           0.48087               n/a
----------------------------------------------------------------------------------------------------------------

    Step 3. Calculate annual projection of target pilot compensation. 
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. 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.
    As of May 2009, there are two current AMOU contracts, which we 
designate Agreement A and Agreement B. Agreement A applies to vessels 
operated by Key Lakes, Inc., 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, 2010. Under Agreement A, the daily wage rate will 
be increased from $262.73 to $270.61. Under Agreement B, the daily wage 
rate will be increased from $323.86 to $333.57.
    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 shows new wage calculations based on Agreements A and B 
effective August 1, 2010.

[[Page 7963]]

                                                 Table 8--Wages
----------------------------------------------------------------------------------------------------------------
                                                                     Pilots on
                       Monthly component                            undesignated     Pilots on designated waters
                                                                       waters           (undesignated x 150%)
----------------------------------------------------------------------------------------------------------------
AGREEMENT A:
    $270.61 daily rate x 54.5 days.............................            $14,748                       $22,123
AGREEMENT A:
    Monthly total x 9 months = total wages.....................            132,735                       199,103
AGREEMENT B:
    $333.57 daily rate x 49.5 days.............................             16,512                        24,768
AGREEMENT B:
    Monthly total x 9 months = total wages.....................            148,608                       222,912
----------------------------------------------------------------------------------------------------------------

    Both Agreements A and B include a health benefits contribution rate 
of $88.76 effective August 1, 2010. 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 shows new benefit calculations based on Agreements A and B, 
effective August 1, 2010, and Table 10 totals the figures in Tables 8 
and 9.

                                                Table 9--Benefits
----------------------------------------------------------------------------------------------------------------
                                                                     Pilots on
                       Monthly component                            undesignated     Pilots on designated waters
                                                                       waters
----------------------------------------------------------------------------------------------------------------
AGREEMENT A:
    Employer contribution, 401(K) plan (Monthly Wages x 5%)....            $737.42                     $1,106.13
    Pension = $33.35 x 45.5 days...............................           1,517.43                      1,517.43
    Health = $88.76 x 45.5 days................................           4,038.58                      4,038.58
AGREEMENT B:
    Employer contribution, 401(K) plan (Monthly Wages x 5%)....             825.60                      1,238.40
    Pension = $43.55 x 45.5 days...............................           1,981.53                      1,981.53
    Health = $88.76 x 45.5 days................................           4,038.58                      4,038.58
AGREEMENT A:
    Monthly total benefits.....................................         = 6,293.42                    = 6,662.13
AGREEMENT A:
    Monthly total benefits x 9 months..........................           = 56,641                      = 59,959
AGREEMENT B:
    Monthly total benefits.....................................         = 6,845.71                    = 7,258.51
AGREEMENT B:
    Monthly total benefits x 9 months..........................           = 61,611                      = 65,327
----------------------------------------------------------------------------------------------------------------

                                       Table 10--Total Wages and Benefits
----------------------------------------------------------------------------------------------------------------
                                                                     Pilots on
                                                                    undesignated     Pilots on designated waters
                                                                       waters
----------------------------------------------------------------------------------------------------------------
AGREEMENT A: Wages.............................................           $132,735                      $199,103
AGREEMENT A: Benefits..........................................           + 56,641                      + 59,959
                                                                ------------------------------------------------
    AGREEMENT A: Total.........................................          = 189,376                     = 259,062
                                                                ================================================
AGREEMENT B: Wages.............................................            148,608                       222,912
AGREEMENT B: Benefits..........................................           + 61,611                      + 65,327
                                                                ------------------------------------------------
    AGREEMENT B: Total.........................................          = 210,219                     = 288,239
----------------------------------------------------------------------------------------------------------------

    Table 11 shows that approximately one third of U.S. Great Lakes 
shipping deadweight tonnage operates under Agreement A, with the 
remaining two thirds operating under Agreement B.

             Table 11--Deadweight Tonnage by AMOU Agreement
------------------------------------------------------------------------
                 Company                    Agreement A     Agreement B
------------------------------------------------------------------------
American Steamship Company..............  ..............         815,600
Mittal Steel USA, Inc...................  ..............          38,826

[[Page 7964]]

 
Key Lakes, Inc..........................         361,385  ..............
                                         -------------------------------
    Total tonnage, each agreement.......         361,385         854,426
Percent tonnage, each agreement.........       361,385 /       854,426 /
                                             1,215,811 =     1,215,811 =
                                                29.7238%        70.2762%
------------------------------------------------------------------------

    Table 12 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     Designated
                                              waters          waters
------------------------------------------------------------------------
AGREEMENT A:
    Total wages and benefits x percent        $189,376 x       259,062 x
     tonnage............................      29.7238% =      29.7238% =
                                                  56,290          77,003
AGREEMENT B:
    Total wages and benefits x percent         210,219 x       288,239 x
     tonnage............................      70.2762% =      70.2762% =
                                                 147,734         202,563
    Total weighted average wages and            56,290 +        77,003 +
     benefits = projected target rate of       147,734 =       202,563 =
     compensation.......................         204,024         279,566
------------------------------------------------------------------------

     (b) Determine number of pilots needed. Subject to adjustment by 
the Coast Guard Director of Great Lakes Pilotage to ensure 
uninterrupted service, we determine the number of pilots needed for 
ratemaking purposes in each area by dividing each area's projected 
bridge hours, either by 1,000 (designated waters) or by 1,800 
(undesignated waters).
    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, we project that 
vessel traffic in the 2010 navigation season, in all areas, will remain 
unchanged from the 2009 projections noted in Table 13 of the 2009 final 
rule.
    Table 13, below, shows the projected bridge hours needed for each 
area, and the total number of pilots needed for ratemaking purposes 
after dividing those figures either by 1,000 or 1,800. As in 2008 and 
2009, and for the same reasons, we rounded up to the next whole pilot 
except in Area 2 where we rounded up from 3.14 to 5, and in Area 4 
where we rounded down from 4.07 to 4.

                                        Table 13--Number of Pilots Needed
----------------------------------------------------------------------------------------------------------------
                                                                                   Divided by
                                                                                     1,000
                                                                                  (designated
                        Pilotage area                           Projected 2010     waters) or     Pilots needed
                                                                 bridge hours        1,800         (total = 40)
                                                                                 (undesignated
                                                                                    waters)
----------------------------------------------------------------------------------------------------------------
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. The projection of new total target pilot compensation is 
determined 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 shows this calculation.

[[Page 7965]]

                                  Table 14--Projected Target Pilot Compensation
----------------------------------------------------------------------------------------------------------------
                                                                                  Multiplied by      Projected
                         Pilotage area                           Pilots needed   target rate of    target pilot
                                                                 (total = 40)     compensation     compensation
----------------------------------------------------------------------------------------------------------------
Area 1........................................................               6        x $279,566      $1,677,397
Area 2........................................................               5         x 204,024       1,020,120
                                                               -------------------------------------------------
    Total, District One.......................................              11               n/a       2,697,517
Area 4........................................................               4         x 204,024         816,096
Area 5........................................................               6         x 279,566       1,677,397
                                                               -------------------------------------------------
    Total, District Two.......................................              10               n/a       2,493,493
Area 6........................................................               8         x 204,024       1,632,191
Area 7........................................................               4         x 279,566       1,118,265
Area 8........................................................               7         x 204,024       1,428,167
                                                               -------------------------------------------------
    Total, District Three.....................................              19               n/a       4,178,623
----------------------------------------------------------------------------------------------------------------

    Step 4: Increase the projected pilot compensation in Step 3 by the 
expense multiplier in Step 2. This step yields a projected increase in 
operating costs necessary to support the increased projected pilot 
compensation. Table 15 shows this calculation.

                                      Table 15--Projected Operating Expense
----------------------------------------------------------------------------------------------------------------
                                                                   Projected     Multiplied by      Projected
                         Pilotage area                           target pilot       expense         operating
                                                                 compensation     multiplier         expense
----------------------------------------------------------------------------------------------------------------
Area 1........................................................      $1,677,397       x 0.33927        = $569,084
Area 2........................................................       1,020,120       x 0.57449         = 586,050
                                                               -------------------------------------------------
    Total, District One.......................................       2,697,517             n/a       = 1,155,134
Area 4........................................................         816,096       x 0.67135         = 547,886
Area 5........................................................       1,677,397       x 0.50729         = 850,924
                                                               -------------------------------------------------
    Total, District Two.......................................       2,493,493             n/a       = 1,398,810
Area 6........................................................       1,632,191       x 0.53926         = 880,177
Area 7........................................................       1,118,265       x 0.38049         = 425,493
Area 8........................................................       1,428,167       x 0.48087         = 686,767
                                                               -------------------------------------------------
    Total, District Three.....................................       4,178,623             n/a       = 1,992,438
----------------------------------------------------------------------------------------------------------------

    Step 5: Adjust the result in Step 4, as required, for inflation or 
deflation, and calculate projected total economic cost. Based on data 
from the U.S. Department of Labor's Bureau of Labor Statistics 
available at http://www.bls.gov/xg_shells/ro5xg01.htm, we have 
multiplied the results in Step 4 by a 1.037 inflation factor, 
reflecting an average inflation rate of 3.7% between 2007 and 2008, the 
latest years for which data are available. Table 16 shows this 
calculation and the projected total economic cost.

                                     Table 16--Projected Total Economic Cost
----------------------------------------------------------------------------------------------------------------
                                          A. Projected   B. Increase, multiplied   C. Projected    D. Projected
             Pilotage area                  operating    by inflation factor  (=   target pilot   total economic
                                             expense            A x 1.037)         compensation   cost (= B + C)
----------------------------------------------------------------------------------------------------------------
Area 1.................................        $569,084                 $590,140      $1,677,397      $2,267,537
Area 2.................................         586,050                  607,733       1,020,120       1,627,853
                                        ------------------------------------------------------------------------
    Total, District One................       1,155,134                1,197,874       2,697,517       3,895,390
Area 4.................................         547,886                  568,158         816,096       1,384,253
Area 5.................................         850,924                  882,408       1,677,397       2,559,805
                                        ------------------------------------------------------------------------
    Total, District Two................       1,398,810                1,450,566       2,493,493       3,944,058
Area 6.................................         880,177                  912,744       1,632,191       2,544,935
Area 7.................................         425,493                  441,236       1,118,265       1,559,501
Area 8.................................         686,767                  712,178       1,428,167       2,140,345
                                        ------------------------------------------------------------------------
    Total, District Three..............       1,992,438                2,066,158       4,178,623       6,244,781
----------------------------------------------------------------------------------------------------------------

[[Page 7966]]

    Step 6: Divide the result in Step 5 by projected bridge hours to 
determine total unit costs. Table 17 shows this calculation.

                                           Table 17--Total Unit Costs
----------------------------------------------------------------------------------------------------------------
                                                                                                  Prospective
                                                                A. Projected    B. Projected      (total) unit
                        Pilotage area                          total economic    2009 bridge    costs (A divided
                                                                    cost            hours            by B)
----------------------------------------------------------------------------------------------------------------
Area 1.......................................................      $2,267,537           5,203            $435.81
Area 2.......................................................       1,627,853           5,650             288.12
                                                              --------------------------------------------------
    Total, District One......................................       3,895,390          10,853             358.92
Area 4.......................................................       1,384,253           7,320             189.11
Area 5.......................................................       2,559,805           5,097             502.22
                                                              --------------------------------------------------
    Total, District Two......................................       3,944,058          12,417             317.63
Area 6.......................................................       2,544,935          13,406             189.84
Area 7.......................................................       1,559,501           3,259             478.52
Area 8.......................................................       2,140,345          11,630             184.04
                                                              --------------------------------------------------
    Total, District Three....................................       6,244,781          28,295              20.70
Overall......................................................      14,084,230          51,565             273.14
----------------------------------------------------------------------------------------------------------------

    Step 7: Divide prospective unit costs (total unit costs) in Step 6 
by the base period unit costs in Step 1. Table 18 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 in Unit Costs
----------------------------------------------------------------------------------------------------------------
                                                                                                 C. Percentage
                                                                                               change from base
                      Pilotage area                        A. Prospective    B. Base period    (A divided by B;
                                                             unit costs        unit costs      result expressed
                                                                                                as percentage)
----------------------------------------------------------------------------------------------------------------
Area 1..................................................           $435.81           $416.47                4.65
Area 2..................................................            288.12            273.54                5.33
                                                         -------------------------------------------------------
    Total, District One.................................            358.92            342.06                4.93
Area 4..................................................            189.11            179.30                5.47
Area 5..................................................            502.22            478.46                4.96
                                                         -------------------------------------------------------
    Total, District Two.................................            317.63            302.10                5.14
Area 6..................................................            189.84            180.33                5.27
Area 7..................................................            478.52            456.90                4.73
Area 8..................................................            184.04            174.98                5.17
                                                         -------------------------------------------------------
    Total, District Three...............................            220.70            209.99                5.10
Overall.................................................            273.14            259.97                5.07
----------------------------------------------------------------------------------------------------------------

    Step 8: Adjust the base period rates by the percentage change in 
unit costs in Step 7. Table 19 shows this calculation.

                    Table 19--Base Period Rates Adjusted by Percentage Change in Unit Costs*
----------------------------------------------------------------------------------------------------------------
                                                                                                    D. Adjusted
                                                                 B. Percentage    C. Increase in   rate (A + C,
                   Pilotage                    A. Base period    change in unit    base rate  (A    rounded to
                                                    rate             costs             x B%)          nearest
                                                                                                      dollar)
----------------------------------------------------------------------------------------------------------------
Area                                           ..............       (Multiplying  ..............  ..............
                                                                         Factor)
Area 1:......................................  ..............      4.65 (1.0465)  ..............  ..............
    --Basic pilotage.........................      $16.95/km,  .................       $0.78/km,      $17.73/km,
                                                     29.99/mi                            1.39/mi        31.38/mi
    --Each lock transited....................          375.47  .................           17.44             393
    --Harbor movage..........................        1,229.41  .................           57.11           1,287
    --Minimum basic rate, St. Lawrence River.          820.04  .................           38.09             858
    --Maximum rate, through trip.............        3,599.58  .................          167.20           3,767
Area 2:......................................  ..............      5.33 (1.0533)  ..............  ..............
    --6-hr. period...........................          817.63  .................           43.56             861

[[Page 7967]]

 
    --Docking or undocking...................          779.92  .................           41.55             821
Area 4:......................................  ..............      5.47 (1.0547)  ..............  ..............
    --6 hr. period...........................          722.05  .................           39.49             762
    --Docking or undocking...................          556.46  .................           30.44             587
    --Any point on Niagara River below Black         1,420.45  .................           77.69           1,498
     Rock Lock...............................
Area 5 between any point on or in:...........  ..............      4.96 (1.0496)  ..............  ..............
    --Toledo or any point on Lake Erie W. of         1,299.46  .................           64.51           1,364
     Southeast Shoal.........................
    --Toledo or any point on Lake Erie W. of         2,198.99  .................          109.16           2,308
     Southeast Shoal & Southeast Shoal.......
    --Toledo or any point on Lake Erie W. of         2,855.20  .................          141.74           2,997
     Southeast Shoal & Detroit River.........
    --Toledo or any point on Lake Erie W. of         2,198.99  .................          109.16           2,308
     Southeast Shoal & Detroit Pilot Boat....
    --Port Huron Change Point & Southeast            3,829.80  .................          190.12           4,020
     Shoal (when pilots are not changed at
     the Detroit Pilot Boat).................
    --Port Huron Change Point & Toledo or any        4,436.82  .................          220.26           4,657
     point on Lake Erie W. of Southeast Shoal
     (when pilots are not changed at the
     Detroit Pilot Boat).....................
    --Port Huron Change Point & Detroit River        2,877.20  .................          142.83           3,020
    --Port Huron Change Point & Detroit Pilot        2,237.82  .................          111.09           2,349
     Boat....................................
    --Port Huron Change Point & St. Clair            1,590.68  .................           78.97           1,670
     River...................................
    --St. Clair River........................        1,299.46  .................           64.51           1,364
    --St. Clair River & Southeast Shoal (when        3,829.80  .................          190.12           4,020
     pilots are not changed at the Detroit
     Pilot Boat).............................
    --St. Clair River & Detroit River/Detroit        2,877.20  .................          142.83           3,020
     Pilot Boat..............................
    --Detroit, Windsor, or Detroit River.....        1,299.46  .................           64.51           1,364
    --Detroit, Windsor, or Detroit River &           2,198.99  .................          109.16           2,308
     Southeast Shoal.........................
    --Detroit, Windsor, or Detroit River &           2,855.20  .................          141.74           2,997
     Toledo or any point on Lake Erie W. of
     Southeast Shoal.........................
    --Detroit, Windsor, or Detroit River &           2,877.20  .................          142.83           3,020
     St. Clair River.........................
    --Detroit Pilot Boat & Southeast Shoal...        1,590.68  .................           78.97           1,670
    --Detroit Pilot Boat & Toledo or any             2,198.99  .................          109.16           2,308
     point on Lake Erie W. of Southeast Shoal
    --Detroit Pilot Boat & St. Clair River...        2,877.20  .................          142.83           3,020
Area 6:......................................  ..............      5.27 (1.0527)  ..............  ..............
    --6 hr. period...........................          622.93  .................           32.84             656
    --Docking or undocking...................          591.72  .................           31.20             623
Area 7 between any point on or in:...........  ..............      4.73 (1.0473)  ..............  ..............
    --Gros Cap & De Tour.....................        2,442.98  .................          115.57           2,559
    --Algoma Steel Corp. Wharf, Sault Ste.           2,442.98  .................          115.57           2,559
     Marie, Ont. & De Tour...................
    --Algoma Steel Corp. Wharf, Sault Ste.             920.03  .................           43.52             964
     Marie, Ont. & Gros Cap..................
    --Any point in Sault Ste. Marie, Ont.,           2,047.67  .................           96.87           2,145
     except the Algoma Steel Corp. Wharf & De
     Tour....................................
    --Any point in Sault Ste. Marie, Ont.,             920.03  .................           43.52             964
     except the Algoma Steel Corp. Wharf &
     Gros Cap................................
    --Sault Ste. Marie, MI & De Tour.........        2,047.67  .................           96.87           2,145
    --Sault Ste. Marie, MI & Gros Cap........          920.03  .................           43.52             964
    --Harbor movage..........................          920.03  .................           43.52             964
Area 8:......................................  ..............      5.17 (1.0517)  ..............  ..............
    --6 hr. period...........................          549.44  .................           28.42             578
    --Docking or undocking...................          522.20  .................           27.02             549
----------------------------------------------------------------------------------------------------------------
*Rates for ``Cancellation, delay or interruption in rendering services (Sec.   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 (Sec.   401.428)'' are not reflected in this table but have been increased by 5.07% across all
  areas.

VI. Regulatory Analyses

    We developed this final 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 has not been reviewed by OMB.
    Public comments on the NPRM are summarized in Part IV of this 
publication. We received no public comments that would alter our 
assessment of the impacts discussed in the NPRM. We have adopted the

[[Page 7968]]

assessment in the NPRM as final. See the ``Regulatory Analyses'' 
section of the NPRM for more details. A summary of the assessment 
follows.
    This final rule would implement a 5.07 percent overall rate 
adjustment for the Great Lakes system over the current rate as adjusted 
in the 2009 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.
    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 
final 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 used 2006-2008 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 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.
    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 of the rate adjustment in this 
final rule to be the difference between the total projected revenue 
needed to cover costs based on the 2009 rate adjustment and the total 
projected revenue needed to cover costs in this final rule for 2010. 
Table 20 details additional costs by area and district.

                          Table 20--Rate Adjustment and Additional Impact of Final Rule
                                           [$U.S.; non-discounted] \1\
----------------------------------------------------------------------------------------------------------------
                                                 Total                           Total
                                               projected     Proposed rate     projected     Additional revenue
                                              expenses in       change        expenses in      or cost of this
                                                 2009                          2010 \2\        rulemaking \3\
----------------------------------------------------------------------------------------------------------------
Area 1....................................      $2,166,873          1.0465      $2,267,537              $100,664
Area 2....................................       1,545,503          1.0533       1,627,853                82,350
                                           ---------------------------------------------------------------------
    Total, District One...................       3,712,376  ..............       3,895,390               183,014
Area 4....................................       1,312,463          1.0547       1,384,253                71,791
Area 5....................................       2,438,725          1.0496       2,559,805               121,080
                                           ---------------------------------------------------------------------
    Total, District Two...................       3,751,188  ..............       3,944,058               192,870
Area 6....................................       2,417,474          1.0527       2,544,935               127,461
Area 7....................................       1,489,052          1.0473       1,559,501                70,449
Area 8....................................       2,035,052          1.0517       2,140,345               105,293
                                           ---------------------------------------------------------------------
    Total, District Three.................       5,941,578  ..............       6,244,781               303,203
                                           ---------------------------------------------------------------------
    All Districts.........................      13,405,142  ..............      14,084,230               679,088
----------------------------------------------------------------------------------------------------------------
\1\ Some values may not total due to rounding.
\2\ Rate changes are calculated for areas only. District totals reflect arithmetic totals and are for
  informational and discussion purposes. See discussion in final rule for further details.
\3\ Additional Revenue or Cost of this Rulemaking = `Total Projected Expenses in 2010'--`Total Projected
  Expenses in 2009'.

    After applying the rate change in this final rule, the resulting 
difference between the projected revenue in 2009 and the projected 
revenue in 2010 is the annual impact to shippers from this final rule. 
This figure will be equivalent to the total additional payments that 
shippers will incur for pilotage services from this rule.
    The impact of the rate adjustment in this final rule to shippers 
varies by area and district. The annual non-discounted costs of the 
rate adjustments in Districts 1, 2 and 3 would be approximately 
$183,000 and $193,000, and $303,000. 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 port arrivals of their vessels' trips. However, the 
annual cost 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 final rule. The overall impact of the final 
rule would be an additional cost to shippers of just over $679,000 
across all three districts, due primarily to an increase in benchmark 
contractual wages and benefits and an inflation adjustment.

[[Page 7969]]

B. Small Entities

    Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have 
considered whether this final 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.
    In the NPRM, we certified under 5 U.S.C. 605(b) that the proposed 
rule would not have a significant economic impact on a substantial 
number of small entities. We received no public comments that would 
alter our certification in the NPRM. We have found no additional data 
or information that would change our findings in the NPRM. We have 
adopted the certification in the NPRM for this final rule. See the 
``Small Entity'' section of the NPRM for additional details. A summary 
of the NPRM analysis follows.
    We found entities affected by the rule to 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.
    We reviewed company size and ownership data from 2006-2008 Coast 
Guard MISLE data and business revenue and size data provided by 
Reference USA and Dun 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 final 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 final rule 
would 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 offer to assist small 
entities in understanding the final rule so that they could 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 final rule would call 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

[[Page 7970]]

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.

0
For the reasons discussed in the preamble, the Coast Guard amends 46 
CFR part 401 as follows:

PART 401--GREAT LAKES PILOTAGE REGULATIONS

0
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.

0
2. In Sec.  401.405, revise paragraphs (a) and (b), including the 
footnote to Table (a), to read as follows:

Sec.  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......................  $17.73 per kilometer
                                      or $31.38 per mile \1\
Each Lock Transited.................  393 \1\
Harbor Movage.......................  1287 \1\
------------------------------------------------------------------------
\1\ The minimum basic rate for assignment of a pilot in the St. Lawrence
  River is $858, and the maximum basic rate for a through trip is
  $3,767.

    (b) Area 2 (Undesignated Waters):

------------------------------------------------------------------------
                         Service                           Lake Ontario
------------------------------------------------------------------------
Six-Hour Period.........................................            $861
Docking or Undocking....................................             821
------------------------------------------------------------------------

* * * * *

0
3. In Sec.  401.407, revise paragraphs (a) and (b), including the 
footnote to Table (b), to read as follows:

Sec.  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):

------------------------------------------------------------------------
                                                   Lake Erie
                                                   (East of
                     Service                       Southeast    Buffalo
                                                    Shoal)
------------------------------------------------------------------------
Six-Hour Period.................................        $762        $762
Docking or Undocking............................         587         587
Any Point on the Niagara River below the Black           N/A       1,498
 Rock Lock......................................
------------------------------------------------------------------------

    (b) Area 5 (Designated Waters):

----------------------------------------------------------------------------------------------------------------
                                                                   Toledo or
                                                                   any Point
                                                                    on Lake
                 Any point on or in                    Southeast   Erie west    Detroit     Detroit    St. Clair
                                                         Shoal        of         River    Pilot Boat     River
                                                                   Southeast
                                                                     Shoal
----------------------------------------------------------------------------------------------------------------
Toledo or any port on Lake Erie west of Southeast         $2,308      $1,364      $2,997      $2,308         N/A
 Shoal..............................................
Port Huron Change Point.............................   \1\ 4,020   \1\ 4,657       3,020       2,349       1,670
St. Clair River.....................................   \1\ 4,020         N/A       3,020       3,020       1,364
Detroit or Windsor or the Detroit River.............       2,308       2,997       1,364         N/A       3,020
Detroit Pilot Boat..................................       1,670       2,308         N/A         N/A       3,020
----------------------------------------------------------------------------------------------------------------
\1\ When pilots are not changed at the Detroit Pilot Boat.

* * * * *

0
4. In Sec.  401.410, revise paragraphs (a), (b), and (c) to read as 
follows:

Sec.  401.410  Basic rates and charges on Lakes Huron, Michigan, and 
Superior, and the St. Mary's River.

* * * * *
    (a) Area 6 (Undesignated Waters):

------------------------------------------------------------------------
                                                            Lakes Huron
                         Service                           and Michigan
------------------------------------------------------------------------
Six-Hour Period.........................................            $656
Docking or Undocking....................................             623
------------------------------------------------------------------------

     (b) Area 7 (Designated Waters):

[[Page 7971]]

------------------------------------------------------------------------
                                                                  Any
                  Area                    De Tour    Gros Cap    harbor
------------------------------------------------------------------------
Gros Cap...............................     $2,559        N/A        N/A
Algoma Steel Corporation Wharf at Sault      2,559       $964        N/A
 Ste. Marie Ontario....................
Any point in Sault Ste. Marie, Ontario,      2,145        964        N/A
 except the Algoma Steel Corporation
 Wharf.................................
Sault Ste. Marie, MI...................      2,145        964        N/A
Harbor Movage..........................        N/A        N/A       $964
------------------------------------------------------------------------

     (c) Area 8 (Undesignated Waters):

------------------------------------------------------------------------
                        Service                           Lake Superior
------------------------------------------------------------------------
Six-Hour Period........................................             $578
Docking or Undocking...................................              549
------------------------------------------------------------------------

* * * * *

Sec.  401.420  [Amended]

0
5. In Sec.  401.420--
0
a. In paragraph (a), remove the number ``$113'' and add, in its place, 
the number ``$119''; and remove the number ``$1,777'' and add, in its 
place, the number ``$1,867''.
0
b. In paragraph (b), remove the number ``$113'' and add, in its place, 
the number ``$119''; and remove the number ``$1,777'' and add, in its 
place, the number ``$1,867''.
0
c. In paragraph (c)(1), remove the number ``$671'' and add, in its 
place, the number ``$705''; in paragraph (c)(3), remove the number 
``$113'' and add, in its place, the number ``$119''; and, also in 
paragraph (c)(3), remove the number ``$1,777'' and add, in its place, 
the number ``$1,867''.

Sec.  401.428  [Amended]

0
6. In Sec.  401.428, remove the number ``$684'' and add, in its place, 
the number ``$719''.

    Dated: February 4, 2010.
Kevin S. Cook,
Rear Admiral, U.S. Coast Guard, Director of Prevention Policy.
[FR Doc. 2010-3396 Filed 2-19-10; 11:15 am]
BILLING CODE 4910-15-P