Source: https://www.federalregister.gov/documents/2010/08/19/2010-20544/great-lakes-pilotage-rates-2011-annual-review-and-adjustment
Timestamp: 2017-05-23 20:46:09
Document Index: 563202268

Matched Legal Cases: ['arts 401', 'art 404', 'art 404', 'art 404', '§\u2009401', '§\u2009401', 'art 404', '§\u2009401', '§\u2009401', '§\u2009401', '§\u2009401', '§\u2009401', '§\u2009401', '§\u2009401']

:: Great Lakes Pilotage Rates-2011 Annual Review and Adjustment
A Proposed Rule by the Coast Guard on 08/19/2010
Comments and related material must reach the Docket Management Facility on or before September 20, 2010.
51191-51204
Docket No. USCG-2010-0517
1625-AB48
https://www.federalregister.gov/d/2010-20544
You may submit comments identified by Coast Guard docket number USCG-2010-0517 to the Docket Management Facility at the U.S. Department of Transportation. To avoid duplication, please use only one of the following methods:
For questions on this proposed rule, call Mr. Paul M. Wasserman, Chief, Great Lakes Pilotage Division, Commandant (CG-5522), U.S. Coast Guard, at 202-372-1535, by fax 202-372-1909, or by e-mail at Paul.M.Wasserman@uscg.mil. If you have questions on viewing or submitting material to the docket, call Renee V. Wright, Program Manager, Docket Operations, telephone 202-366-9826.
If you submit a comment, please include the docket number for this rulemaking (USCG-2010-0517), indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online or by fax, mail, or hand delivery, but please use only one of these means. We recommend that you include your name and a mailing address, an e-mail address, or a phone number in the body of your document so that we can contact you if we have questions regarding your submission.
To submit your comment online, go to http://www.regulations.gov, click on the “submit a comment” box, which will then become highlighted in blue. In the “Document Type” drop down menu select “Proposed Rule” and insert “USCG-2010-0517” in the “Keyword” box. Click “Search” then click on the balloon shape in the “Actions” column. If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 81/2 by 11 inches, suitable for copying and electronic filing. If you submit comments by mail and would like to know that they reached the Facility, please enclose a stamped, self-addressed postcard or envelope.
To view comments, as well as documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov, click on the “read comments” box, which will then become highlighted in blue. In the Start Printed Page 51192“Keyword” box insert “USCG-2010-0517” and click “Search.” Click the “Open Docket Folder” in the “Actions” column. If you do not have access to the internet, you may view the docket online by visiting the Docket Management Facility in Room W12-140 on the ground floor of the Department of Transportation West Building, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. We have an agreement with the Department of Transportation to use the Docket Management Facility.
This notice of proposed rulemaking (NPRM) is issued pursuant to Coast Guard regulations in 46 CFR Parts 401-404. Those regulations implement the Great Lakes Pilotage Act of 1960, 46 U.S.C. Chapter 93 (“the Act”), which requires foreign-flag vessels and U.S.-flag vessels engaged in foreign trade to use federally registered Great Lakes pilots while transiting the St. Lawrence Seaway and the Great Lakes system, and which requires the Secretary of Homeland Security to “prescribe by regulation rates and charges for pilotage services, giving consideration to the public interest and the costs of providing the services.” 46 U.S.C. 9303(f). There is no minimum tonnage limit or exemption for these vessels, but the Coast Guard's interpretation is that the Act applies only to commercial vessels and not to recreational vessels.
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 No. 3385, as amended by Proclamation No. 3855, pursuant to the Act, 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).
The Act requires annual reviews of pilotage rates and the setting of new rates at least once every five years, or sooner, if annual reviews show a need. 46 U.S.C. 9303(f), 46 CFR 404.1. To assist in calculating pilotage rates, the pilotage associations are required to submit to the Coast Guard annual financial statements prepared by certified public accounting firms. In addition, every fifth year, in connection with the mandatory rate adjustment, the Coast Guard obtains a full and independent 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, the Coast Guard generates the pilotage rates using Appendix A to 46 CFR Part 404. Between the five-year full ratemaking intervals, the Coast Guard annually reviews the pilotage rates using Appendix C to Part 404, and adjusts rates when deemed appropriate. Terms and formulas used in Appendix A and Appendix C are defined in Appendix B to Part 404.
The last full ratemaking using the Appendix A methodology was published on April 3, 2006 (71 FR 16501). Since then, rates have been reviewed under Appendix C and adjusted annually: 2007 (72 FR 53158, Sep. 18, 2007); 2008 (interim rule 73 FR 15092, Mar. 21, 2008; final rule 74 FR 220, Jan. 5, 2009); 2009 (74 FR 35812, Jul. 21, 2009); 2010 (75 FR 7958, Feb. 23, 2010). The present rulemaking proposes a rate adjustment for the 2011 shipping season, based on an Appendix C review. At the conclusion of this ratemaking cycle, we anticipate publishing an NPRM proposing a rate adjustment based upon an Appendix A 5-year review and audit of the pilot association books and records.
As we stated in the NPRM for our 2010 Appendix C ratemaking, 74 FR 56153 at 56154 (Oct. 30, 2009), we had anticipated that the next Appendix A ratemaking would be completed in 2011. However, the current rulemaking is not an Appendix A review because the Coast Guard cannot use the audits conducted in 2009 in preparation for the next Appendix A review. Those audits were incomplete and inadequate for determining the expenses of the regulated associations or for use in ratemaking.
The Coast Guard has contracted for new audits that will be conducted during the 2010 navigation season. These audits will serve as the basis for the next Appendix A review, which we will undertake as soon as possible.
The Act and Coast Guard pilotage regulations require that the Coast Guard, as delegated by the Secretary of Homeland Security, review the pilotage rates annually. If the annual review shows that pilotage rates are within a reasonable range of the base target pilot compensation set in the previous ratemaking, no adjustment to the rates will be initiated. However, if the annual review indicates that an adjustment is necessary, then the Coast Guard will establish new pilotage rates pursuant to 46 CFR 404.10.Start Printed Page 51193
The Appendix C to 46 CFR 404 ratemaking methodology is intended for use during the years between Appendix A full ratemaking reviews and adjustments. This section summarizes the rate changes proposed for 2011, and then discusses in detail how the proposed changes were calculated under Appendix C.
We are proposing an increase across all Areas over the last pilotage rate adjustment. This reflects a projected August 1, 2011, increase in benchmark contractual wages and benefits and a deflation adjustment. This rate increase would not go into effect until August 1, 2011, after the current benchmark contracts expire. Actual rate increases vary by Area, and are summarized in Table 1.
Table 1—2011 Area Rate ChangesIf pilotage service is required in:Then the proposed percentage increases over the current rate is:Area 1 (Designated waters)3.57Area 2 (Undesignated waters)3.77Area 4 (Undesignated waters)3.75Area 5 (Designated waters)3.52Area 6 (Undesignated waters)4.89Area 7 (Designated waters)3.56Area 8 (Undesignated waters)5.26
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 6.51 percent in all Areas based upon the calculations appearing at Tables 19 through 21, which appear below.
The base data used to calculate each of the eight steps comes from the 2010 Appendix C review. The Coast Guard uses the most recent union contracts between the American Maritime Officers Union (AMOU) and vessel owners and operators on the Great Lakes to estimate target pilot compensation. However, the current AMOU contracts expire in July 2011, and the Coast Guard has been informed that contract negotiations will not begin until sometime that year, which is well after the pilotage statute requires that we establish a rate. Accordingly, we have reviewed the terms of both the existing and past AMOU contracts and have projected, for purposes of this ratemaking, that the AMOU contracts effective in 2011 would provide increases in compensation equal to 3 percent, which is the increase called for in the AMOU contracts over the last two years. We project all other benefits to remain fixed at current levels with the exception of medical plan contributions. Medical plan contributions have increased by 10 percent per year from 2006 through 2010 in the current AMOU contracts. Thus, we forecast an increase of 10 percent over 2010 medical plan contributions for the AMOU contracts in 2011. Bridge hour projections for the 2011 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.
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 (2010), Areas in District One Area 1 St. Lawrence RiverArea 2 Lake OntarioBase operating expense (less base return element)$578,569$590,032Base target pilot compensation+ $1,677,397+ $1,020,120Base return element+ $11,571+ $17,701Start Printed Page 51194Subtotal= $2,267,537= $1,627,853Base bridge hours÷ 5,203÷ 5,650Base cost per bridge hour= $435.81= $288.12
Table 3—Total Economic Cost for Base Period (2010), Areas in District Two Area 4 Lake ErieArea 5 Southeast Shoal to Port Huron, MIBase operating expense$541,103$848,469Base target pilot compensation+ $816,096+ $1,677,397Base return element+ $27,055+ $33,939Subtotal= $1,384,254= $2,559,805Base bridge hours÷ 7,320÷ 5,097Base cost per bridge hour= $189.11= $502.22
Table 4—Total Economic Cost for Base Period (2010), Areas in District Three Area 6 Lakes Huron and MichiganArea 7 St. Mary's RiverArea 8 Lake SuperiorBase operating expense$877,638$428,384$691,435Base target pilot compensation+ $1,632,191+ $1,118,265+ $1,428,167Base return element+ $35,106+ $12,852+ $20,743Subtotal= $2,544,935= $1,559,501= $2,140,345Base bridge hours÷ 13,406÷ 3,259÷ 11,630Base cost per bridge hour= $189.84= $478.52= $184.04
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. Lawrence RiverArea 2 Lake OntarioBase operating expense$578,569$590,032Base return element+ $11,571+ $17,701Subtotal= $590,140= $607,733Base target pilot compensation÷ $1,677,397÷ $1,020,120Expense multiplier0.351820.59575
Table 6—Expense Multiplier, Areas in District Two Area 4 Lake ErieArea 5 Southeast Shoal to Port Huron, MIBase operating expense$541,103$848,469Base return element+ $27,055+ $33,939Subtotal= $568,158= $882,408Base target pilot compensation÷ $816,096÷ $1,677,397Expense multiplier0.696190.52606
Start Printed Page 51195
Table 7—Expense Multiplier, Areas in District Three Area 6 Lakes Huron and MichiganArea 7 St. Mary's RiverArea 8 Lake SuperiorBase operating Expense$877,638$428,384$691,435Base return element+ $35,106+ $12,852+ $20,743Subtotal= $912,744= $441,236= $712,178Base target pilot compensation÷ $1,632,191÷ $1,118,265÷ $1,428,167Expense multiplier0.559210.394570.49867
(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 percent plus benefits). To determine first mates' and masters' average annual compensation, we typically 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 July 2010, 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 will expire on July 31, 2011. Based on discussions with AMOU officials, these contracts are not expected to be negotiated until 2011. This does not provide sufficient time to incorporate new rates into the ratemaking process for the 2011 shipping season. The Coast Guard projects that when new AMOU contracts are negotiated in 2011, they would provide for a 3 percent wage increase effective August 1, 2011. This is in keeping with the recent contractual wage raises under the existing union contracts. Both 2009 and 2010 saw wage raises of 3 percent. Under Agreement A, we project that the daily wage rate would increase from $270.61 to $278.73. Under Agreement B, the daily wage rate would increase from $333.58 to $343.59. All other benefits and calculations for these contracts are forecasted to remain identical to the current AMOU contracts. The pension plan contribution, which has been a fixed amount, the 401k employers matching contribution of 5 percent of wages, which is also a set amount, and the monthly contract multipliers are all projected to remain fixed at current AMOU contract levels. These benefits have not changed their numerical or percentage values over the course of the previous AMOU agreements still in effect. We do not project that the 2011 contracts would have any impact on these fixed benefits.
Table 8 shows new wage calculations based on projected Agreements A and B to be effective as of August 1, 2011.
Table 8—WagesMonthly componentPilots on undesignated watersPilots on designated waters (undesignated × 150%)AGREEMENT A: $278.73 daily rate × 54.5 days$15,191$22,786AGREEMENT A: Monthly total × 9 months = total wages136,716205,074AGREEMENT B: $343.59 daily rate × 49.5 days17,00825,511AGREEMENT B: Monthly total × 9 months = total wages153,068229,602
Both Agreements A and B currently include a health benefits contribution rate of $88.76. On average, this benefit contribution has increased at a rate of 10 percent per year throughout the lives of the existing five-year contracts. Accordingly, for purposes of the 2011 rate we project that when new AMOU contracts are negotiated in 2011, this contribution would increase to $97.64 effective August 1, 2011. We project that Agreement A would continue to include a pension plan contribution rate of $33.35 per man-day and that Agreement B would continue to include a pension plan contribution rate of $43.55 per man-day. Similarly, we expect both Agreements A and B to continue to provide a 5 percent 401K employer matching provision. Accordingly, for purposes of the 2011 rate, we will continue to use these values in calculating total pilot compensation. Currently, neither Agreement A nor Agreement B includes a clerical contribution that appeared in earlier contracts, and we project that this Start Printed Page 51196would not be a feature of any new AMOU contracts negotiated in 2011. We project that the multiplier used to calculate monthly benefits would remain the same at 45.5 days.
Table 9 shows new benefit calculations based on projected Agreements A and B, effective August 1, 2011.
Table 9—BenefitsMonthly componentPilots on undesignated watersPilots on designated watersAGREEMENT A: Employer contribution, 401(K) plan (Monthly Wages × 5%)$759.53$1,139.30Pension = $33.35 × 45.5 days$1,517.43$1,517.43Health = $97.64 × 45.5 days$4,442.62$4,442.62AGREEMENT B: Employer contribution, 401(K) plan (Monthly Wages × 5%)$850.38$1,275.57Pension = $43.55 × 45.5 days$1,981.53$1,981.53Health = $97.64 × 45.5 days$4,442.62$4,442.62AGREEMENT A: Monthly total benefits= $6,719.58= $7,099.35AGREEMENT A: Monthly total benefits × 9 months= $60,476= $63,894AGREEMENT B: Monthly total benefits= $7,274.52= $7,699.71AGREEMENT B: Monthly total benefits × 9 months= $65,471= $69,297
Table 10—Total Wages and Benefits Pilots on undesignated watersPilots on designated watersAGREEMENT A: Wages$136,716$205,074AGREEMENT A: Benefits+ $60,476+ $63,894AGREEMENT A: Total= $197,192= $268,968AGREEMENT B: Wages$153,068$229,602AGREEMENT B: Benefits+ $65,471+ $69,297AGREEMENT B: Total= $218,539= $298,900
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 AgreementCompanyAgreement AAgreement BAmerican Steamship Company815,600.Mittal Steel USA, Inc38,826.Key Lakes, Inc361,385Total tonnage, each agreement361,385854,426.Percent tonnage, each agreement361,385 ÷ 1,215,811 = 29.7238%854,426 ÷ 1,215,811 = 70.2762%.
Table 12—Projected Target Rate of Compensation, Weighted Undesignated watersDesignated watersAGREEMENT A: Total wages and benefits x percent tonnage$197,192 × 29.7238% = $58,613$268,968 × 29.7238% = $79,948.AGREEMENT B: Total wages and benefits x percent tonnage$218,539 × 70.2762% = $153,581$298,900 × 70.2762% = $210,055.Total weighted average wages and benefits = projected target rate of compensation$58,613 + $153,581 = $212,194$79,948 + $210,055 = $290,003.
(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 2011 Start Printed Page 51197navigation season, in Districts 1 and 2, would remain unchanged from the 2010 projections noted in Table 13 of the 2010 final rule. In District 3, in both Areas 6 and 8, dropping bridge hours require the removal of two unused authorizations for pilots, one for each Area. There are no pilots currently in either of these slots and no jobs are being lost as a result of this action. The removal of these two pilot billets merely attempts to mitigate a significant downward trend across the undesignated waters of District 3. The bridge hours for the designated waters of Area 7, like Districts 1 and 2, would remain unchanged from the 2010 projections.
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 the previous three annual ratemakings, and for the reasons described in detail in the 2008 final rule (74 FR 220 at 221-222), 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 NeededPilotage areaProjected 2011 bridge hoursDivided by 1,000 (designated waters) or 1,800 (undesignated waters)Pilots needed (total = 38)Area 15,2031,0006Area 25,6501,8005Area 47,3201,8004Area 55,0971,0006Area 611,6061,8007Area 73,2591,0004Area 89,8301,8006
(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.
Table 14—Projected Target Pilot CompensationPilotage areaPilots needed (total = 38)Multiplied by target rate of compensationProjected target pilot compensationArea 16× $290,003$1,740,018Area 25× 212,1941,060,970Area 44× 212,194848,776Area 56× 290,0031,740,018Area 67× 212,1941,485,357Area 74× 290,0031,160,012Area 86× 212,1941,273,164
Table 15—Projected Operating ExpensePilotage areaProjected target pilot compensationMultiplied by expense multiplierProjected operating expenseArea 1$1,740,018× 0.35182= $612,171Area 21,060,970× 0.59575= 632,069Area 4848,776× 0.69619= 590,909Area 51,740,018× 0.52606= 915,350Area 61,485,357× 0.55921= 830,633Area 71,160,012× 0.39457= 457,708Area 81,273,164× 0.49867= 634,883
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 0.994 deflation factor, reflecting an average deflation rate of 0.6 percent between 2008 and 2009, the latest years for which data are available. Table 16 shows this calculation and the projected total economic cost.Start Printed Page 51198
Table 16—Projected Total Economic CostPilotage areaA. Projected operating expenseB. Increase, multiplied by deflation factor (= A × 0.994)C. Projected target pilot compensationD. Projected total economic cost (= B + C)Area 1$612,171$608,498$1,740,018$2,348,516Area 2632,069628,2771,060,9701,689,246Area 4590,909587,364848,7761,436,140Area 5915,350909,8581,740,0182,649,876Area 6830,633825,6491,485,3572,311,006Area 7457,708454,9621,160,0121,614,974Area 8634,883631,0741,273,1641,904,237
Table 17—Total Unit CostsPilotage areaA. Projected total economic costB. Projected 2011 bridge hoursProspective (total) unit costs (A divided by B)Area 1$2,348,5165,203$451.38Area 21,689,2465,650298.98Area 41,436,1407,320196.19Area 52,649,8765,097519.89Area 62,311,00611,606199.12Area 71,614,9743,259495.54Area 81,904,2379,830193.72
Table 18—Percentage Change in Unit CostsPilotage areaA. Prospective unit costsB. Base period unit costsC. Percentage change from base (A divided by B; result expressed as percentage)Area 1$451.38$435.813.57Area 2298.98288.123.77Area 4196.19189.113.75Area 5519.89502.223.52Area 6199.12189.844.89Area 7495.54478.523.56Area 8193.72184.045.26
We use the percentage change between the prospective overall unit cost and the base overall unit cost to increase 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). This calculation is derived from the Appendix C ratemaking methodology found at 46 CFR 404.10, and differs from the area rate calculation by using total costs and total bridge hours for all areas. Tables 19 through 21 show this calculation.
Table 19—Calculation of Base Period Overall Unit Cost A. Base period (2010) overall total economic costsB. Base period (2010) overall bridge hoursC. Base period (2010) overall unit cost (A divided by B)Sum of all Areas$14,084,23051,565$273.14
Table 20—Calculation of Projected Period Overall Unit Cost A. Projected period (2011) overall total economic costsB. Projected period (2011) overall bridge hoursC. Base period (2011) overall unit cost (A divided by B)Sum of all Areas$13,953,99647,965$290.92
Table 21—Percentage Change in Overall Prospective Unit Costs/Base Unit Cost A. Prospective overall unit costB. Base period overall unit costC. Percentage change from overall base unit cost (A divided by B)Across all Areas$290.92273.146.51
Step 8: Adjust the base period rates by the percentage change in unit costs in Step 7. Table 22 shows this calculation.
Table 22—Base Period Rates Adjusted by Percentage Change in Unit Costs A. Base period rateB. Percentage change in unit costsC. Increase in base rate (A × B%)D. Adjusted rate (A + C, rounded to nearest dollar)*Pilotage area(Multiplying Factor)Area 1:3.57 (1.0357)—Basic pilotage$17.73/km, $31.38/mi$0.63/km, $1.12/mi$18.36/km, $32.50/mi.—Each lock transited$393$14.03$407.—Harbor movage$1,287$45.95$1,333.—Minimum basic rate, St. Lawrence River$858$30.63$889.—Maximum rate, through trip$3,767$134.48$3,901.Area 2:3.77 (1.0377)—6-hr. period$861$32.46$893.—Docking or undocking$821$30.95$852.Area 4:3.75 (1.0375)—6-hr. period$762$28.58$791.—Docking or undocking$587$22.01$609.—Any point on Niagara River below Black Rock Lock$1,498$56.18$1,554.Area 5 between any point on or in: 3.52 (1.0352)—Toledo or any point on Lake Erie W. of Southeast Shoal$1,364$48.01$1,412.—Toledo or any point on Lake Erie W. of Southeast Shoal & Southeast Shoal$2,308$81.24$2,389.—Toledo or any point on Lake Erie W. of Southeast Shoal & Detroit River$2,997$105.49$3,102.—Toledo or any point on Lake Erie W. of Southeast Shoal & Detroit Pilot Boat$2,308$81.24$2,389.—Port Huron Change Point & Southeast Shoal (when pilots are not changed at the Detroit Pilot Boat)$4,020$141.50$4,162.—Port Huron Change Point & Toledo or any point on Lake Erie W. of Southeast Shoal (when pilots are not changed at the Detroit Pilot Boat)$4,657$163.93$4,821.—Port Huron Change Point & Detroit River$3,020$106.30$3,126.—Port Huron Change Point & Detroit Pilot Boat$2,349$82.68$2,432.—Port Huron Change Point & St. Clair River$1,670$58.78$1,729.—St. Clair River$1,364$48.01$1,412.—St. Clair River & Southeast Shoal (when pilots are not changed at the Detroit Pilot Boat)$4,020$141.50$4,162.—St. Clair River & Detroit River/Detroit Pilot Boat$3,020$106.30$3,126.—Detroit, Windsor, or Detroit River$1,364$48.01$1,412.—Detroit, Windsor, or Detroit River & Southeast Shoal$2,308$81.24$2,389.—Detroit, Windsor, or Detroit River & Toledo or any point on Lake Erie W. of Southeast Shoal$2,997$105.49$3,102.—Detroit, Windsor, or Detroit River & St. Clair River$3,020$106.30$3,126.—Detroit Pilot Boat & Southeast Shoal$1,670$58.78$1,729.—Detroit Pilot Boat & Toledo or any point on Lake Erie W. of Southeast Shoal$2,308$81.24$2,389.—Detroit Pilot Boat & St. Clair River$3,020$106.30$3,126.Area 6:4.89 (1.0489)—6-hr. period$656$32.08$688.—Docking or undocking$623$30.46$653.Start Printed Page 51200Area 7 between any point on or in:3.56 (1.0356)—Gros Cap & De Tour$2,559$91.10$2,650.—Algoma Steel Corp. Wharf, Sault Ste. Marie, Ont. & De Tour$2,559$91.10$2,650.—Algoma Steel Corp. Wharf, Sault Ste. Marie, Ont. & Gros Cap$964$34.32$998.—Any point in Sault Ste. Marie, Ont., except the Algoma Steel Corp. Wharf & De Tour$2,145$76.36$2,221.—Any point in Sault Ste. Marie, Ont., except the Algoma Steel Corp. Wharf & Gros Cap$964$34.32$998.—Sault Ste. Marie, MI & De Tour$2,145$76.36$2,221.—Sault Ste. Marie, MI & Gros Cap$964$34.32$998.—Harbor movage$964$34.32$998.Area 8:5.26 (1.0526)—6-hr. period$578$30.40$608.—Docking or undocking$549$28.88$578.* Rates for “Cancellation, delay or interruption in rendering services (§ 401.420)” and “Basic Rates and charges for carrying a U.S. pilot beyond the normal change point, or for boarding at other than the normal boarding point (§ 401.428)” are not reflected in this table but have been increased by 6.51% across all areas (see Table 21).
This proposed rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. A draft Regulatory Assessment follows:
The Coast Guard is required to conduct an annual review of pilotage rates on the Great Lakes and, if necessary, adjust these rates to align compensation levels between Great Lakes pilots and industry. See the “Background” section for a detailed explanation of the legal authority and requirements for the Coast Guard to conduct an annual review and provide possible adjustments of pilotage rates on the Great Lakes. Based on our annual review for this proposed rulemaking, we are adjusting the pilotage rates for the 2011 shipping season to generate sufficient revenue to cover allowable expenses, target pilot compensation, and returns on investment.
This proposed rule would implement rate adjustments for the Great Lakes system over the current rates adjusted in the 2010 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 deflation and projected 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. The Coast Guard's interpretation is that the statute applies only to commercial vessels and not to recreational vessels.
Owners and operators of other vessels that are not affected by this rule, such as recreational boats and vessels only operating within the Great Lakes system, may elect to purchase pilotage services. However, this election is voluntary and does not affect the Coast Guard's calculation of the rate increase and is not a part of our estimated national cost to shippers. Coast Guard sampling of pilot data suggests there are very few U.S. domestic vessels, without registry and operating only in the Great Lakes, that voluntarily purchase pilotage services.
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 pilotage areas before leaving the Great Lakes system. These vessels often make more than one distinct stop, docking, loading, and unloading at facilities in Great Lakes ports. Of the total trips for the 208 vessels, there were approximately 923 annual U.S. port arrivals before the vessels left the Great Lakes system, based on 2006-2008 vessel data from MISLE.
The impact of the rate adjustment to shippers is estimated from pilotage revenues. These revenues represent the direct and indirect costs (“economic costs”) that shippers must pay for pilotage services. The Coast Guard sets rates so that revenues equal the estimated cost of pilotage.
We estimate the additional impact (costs or savings) of the rate adjustment in this proposed rule to be the difference between the total projected revenue needed to cover costs based on the 2010 rate adjustment and the total projected revenue needed to cover costs in this proposed rule for 2011. Table 23 details additional costs or savings by area.Start Printed Page 51201
Table 23—Rate Adjustment and Additional Impact of the Proposed Rule by Area[$U.S.; non-discounted] Total projected expenses in 2010Change in projected expensesTotal projected expenses in 2011Additional cost or savings of this rulemakingArea 1$2,267,5371.0357$2,348,516$80,979Area 21,627,8531.03771,689,24661,393Area 41,384,2531.03751,436,14051,887Area 52,559,8051.03522,649,87690,071Area 62,544,9350.90812,311,006(233,929)Area 71,559,5011.03561,614,97455,473Area 82,140,3450.88971,904,237(236,108)NOTES to Table 23:Some values may not total due to rounding.See “B. Calculating the Rate Adjustment” for further details on the rate adjustment methodology.“Additional Cost or Savings of this Rulemaking” = “Total Projected Expenses in 2011” minus “Total Projected Expenses in 2010.”
After applying the rate change in this proposed rule, the resulting difference between the projected revenue in 2010 and the projected revenue in 2011 is the annual impact to shippers from this rule. This figure would be equivalent to the total additional payments or savings that shippers would incur for pilotage services from this proposed rule. As discussed earlier, we consider a reduction in payments to be a cost savings.
The impact of the rate adjustment in this proposed rule to shippers varies by area. The annual costs of the rate adjustments range from $51,887 to $90,071 for most affected Areas. However, Areas 6 and 8 would experience annual cost savings of approximately $234,000 and $236,000, respectively. The annual savings is due to a projected decrease in the number of billeted pilots in Areas 6 and 8 from 2010 to 2011. This decrease in the number of pilots would reduce the projected revenue needed to cover costs of pilotage services in Areas 6 and 8.
To calculate an exact cost or savings per vessel is difficult because of the variation in vessel types, routes, port arrivals, commodity carriage, time of season, conditions during navigation, and preferences for the extent of pilotage services on designated and undesignated portions of the Great Lakes system. Some owners and operators would pay more and some would pay less depending on the distance and port arrivals of their vessels' trips. However, the annual cost or savings reported above does capture all of the additional cost the shippers face as a result of the rate adjustment in this rule.
This proposed rate adjustment would result in a savings for Areas 6 and 8 that would outweigh the combined costs of the other areas. We measure the impact of this rulemaking by examining the changes in costs to shippers for pilotage services. With savings in Areas 6 and 8 exceeding the combined costs in other Areas, the net impact of this rulemaking would be a cost savings for pilotage services in the Great Lakes system. The overall impact of the proposed rule would be a cost savings to shippers of about $130,000 if we sum across all affected areas.
For the proposed rule, we reviewed recent company size and ownership data from 2006-2008 Coast Guard MISLE data and business revenue and size data provided by Reference USA and Dunn and Bradstreet. We were able to gather revenue and size data or link the entities to large shipping conglomerates for 22 of the 24 affected entities in the United States. We found that large, mostly foreign-owned, shipping conglomerates or their subsidiaries owned or operated all vessels engaged in foreign trade on the Great Lakes. We assume that new industry entrants would be comparable in ownership and size to these shippers.
There are three U.S. entities affected by the proposed rule that receive revenue from pilotage services. These are the three pilot associations that provide and manage pilotage services within the Great Lakes system. 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 proposed rule because all associations receive enough revenue to balance the projected expenses associated with the projected number of bridge hours and pilots.
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 proposed rule so that they could better evaluate its effects on Start Printed Page 51202them and participate in the rulemaking. If the proposed rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call Mr. Paul M. Wasserman, Chief, Great Lakes Pilotage Division, Commandant (CG-5522), U.S. Coast Guard, at 202-372-1535, by fax 202-372-1909, or by e-mail at Paul.M.Wasserman@uscg.mil. 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.
We have analyzed this proposed 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 made a preliminary determination that this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. A preliminary environmental analysis checklist supporting this determination is available in the docket where indicated under the “Public Participation and Request for Comments” section of this preamble. 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. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.
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§ 401.405 Basic rates and charges on the St. Lawrence River and Lake Ontario.
ServiceSt. Lawrence RiverBasic Pilotage$18.36 per kilometer or $32.50 per mile*.Each Lock Transited407*.Harbor Movage1,333*.* The minimum basic rate for assignment of a pilot in the St. Lawrence River is $889, and the maximum basic rate for a through trip is $3,901.
ServiceLake OntarioSix-Hour Period$893Docking or Undocking852
3. In § 401.407, revise paragraphs (a) and (b), to read as follows:
§ 401.407 Basic rates and charges on Lake Erie and the navigable waters from Southeast Shoal to Port Huron, MI.
ServiceLake Erie (East of Southeast Shoal)BuffaloSix-Hour Period$791$791Docking or Undocking609609Any Point on the Niagara River below the Black Rock Lock.N/A1,554
Any point on or inSoutheast ShoalToledo or any point on Lake Erie west of Southeast ShoalDetroit RiverDetroit Pilot BoatSt. Clair RiverToledo or any port on Lake Erie west of Southeast Shoal$2,389$1,412$3,102$2,389N/APort Huron Change Point*4,162*4,8213,1262,4321,729St. Clair River*4,162N/A3,1263,1261,412Detroit or Windsor or the Detroit River2,3893,1021,412N/A3,126Detroit Pilot Boat1,7292,389N/AN/A3,126* When pilots are not changed at the Detroit Pilot Boat.
§ 401.410 Basic rates and charges on Lakes Huron, Michigan, and Superior, and the St. Mary's River.
ServiceLakes Huron and MichiganSix-Hour Period$688Docking or Undocking653
AreaDe TourGros CapAny harborGros Cap2,650N/AN/AAlgoma Steel Corporation Wharf at Sault Ste. Marie, Ontario2,650998N/AAny point in Sault Ste. Marie, Ontario, except the Algoma Steel Corporation Wharf2,221998N/ASault Ste. Marie, MI2,221998N/AStart Printed Page 51204Harbor MovageN/AN/A998
ServiceLake SuperiorSix-Hour Period$608Docking or Undocking578
§ 401.420 [Amended]
a. In paragraph (a), remove the text “$119” and add, in its place, the text “$127”; and remove the text “$1,867” and add, in its place, the text “$1,989”;
b. In paragraph (b), remove the text “$119” and add, in its place, the text “$127”; and remove the text “$1,867” and add, in its place, the text “$1,989”; and
c. In paragraph (c)(1), remove the text “$705” and add, in its place, the text “$751”; and in paragraph (c)(3), remove the text “$119” and add, in its place, the text “$127”, and remove the text “$1,867” and add, in its place, the text “$1,989”.
§ 401.428 [Amended]
6. In § 401.428, remove the text “$719” and add, in its place, the text “$766”.
Acting Director, Marine Transportation Systems Management, U. S. Coast Guard.
[FR Doc. 2010-20544 Filed 8-16-10; 4:15 pm]