Browse by Year
/ 2009
/ January
/ Monday, January 05, 2009
[Federal Register: January 5, 2009 (Volume 74, Number 2)]
[Rules and Regulations]
[Page 220-233]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05ja09-8]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HOMELAND SECURITY
Coast Guard
46 CFR Part 401
[Docket No. USCG-2007-0039]
RIN 1625-AB23
2008 Rates for Pilotage on the Great Lakes
AGENCY: Coast Guard, DHS.
ACTION: Final Rule.
-----------------------------------------------------------------------
SUMMARY: The Coast Guard is revising and finalizing the March 2008
interim rule, which updated rates for pilotage service on the Great
Lakes by increasing rates an average of 8.17% over the last ratemaking
that was completed in September 2007. In response to new contract
provisions and to public comments on our rulemaking, this final rule
increases rates an additional 9.95%, for a total average increase of
18.92% since 2007.
DATES: This final rule is effective February 4, 2009.
ADDRESSES: Comments and material received from the public, as well as
documents mentioned in this preamble as being available in the docket,
are part of docket USCG-2007-0039 and are available for inspection or
copying at the Docket Management Facility (M-30), U.S. Department of
Transportation, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays. You may also find this
docket on the Internet at www.regulations.gov.
FOR FURTHER INFORMATION CONTACT: For questions on this final rule,
please call Mr. Paul Wasserman, Chief, Great Lakes Pilotage Branch,
Commandant (CG-54122), U.S. Coast Guard, at 202-372-1535, by fax 202-
372-1929, or e-mail Paul.M.Wasserman@uscg.mil. For questions on viewing
or submitting material to the docket, call Renee V. Wright, Chief,
Dockets, Department of Transportation, telephone 202-493-0402.
Table of Contents
I. Abbreviations
II. Background
III. Discussion of Comments
IV. Discussion of the Final Rule
V. Regulatory Evaluation
A. Small Entities
B. Assistance for Small Entities
C. Collection of Information
D. Federalism
E. Unfunded Mandates Reform Act
F. Taking of Private Property
G. Civil Justice Reform
H. Protection of Children
I. Indian Tribal Governments
J. Energy Effects
K. Technical Standards
L. Environment
VI. Words of Issuance and Proposed Regulatory Text
I. Abbreviations
AMOU American Maritime Officer union
GLPAC Great Lakes Pilotage Advisory Committee
MISLE Coast Guard Marine Inspection, Safety, and Law Enforcement
MOA Memorandum of Agreement
NAICS North American Industry Classification System
NPRM Notice of Proposed Rulemaking
NTTAA National Technology Transfer and Advancement Act
OMB Office of Management and Budget
II. Background
The Great Lakes Pilotage Act of 1960, codified in Title 46, Chapter
93, of the United States Code (U.S.C.), requires foreign-flag vessels
and U.S.-flag vessels in foreign trade to use Federal Great Lakes
registered pilots while transiting the St. Lawrence Seaway and the
Great Lakes system. 46 U.S.C. 9302, 9308. The Coast Guard is
responsible for administering this pilotage program, which includes
setting rates for pilotage service. 46 U.S.C. 9303.
The Coast Guard pilotage regulations require annual reviews of
pilotage rates and the creation of a new rate at least once every five
years, or sooner, if annual reviews show a need. 46 CFR part 404. 46
U.S.C. 9303(f) requires these reviews and, where deemed appropriate,
that adjustments be established by March 1 of every shipping season.
To assist in calculating pilotage rates, the three Great Lakes
pilots' 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 full ratemaking, the
[[Page 221]]
Coast Guard contracts with an independent accounting firm to conduct
audits of the accounts and records of the pilotage associations and to
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 46 CFR Part 404, and adjusts
rates as appropriate.
The last full Appendix A ratemaking used 2002 data and was
published in the Federal Register on April 3, 2006 (71 FR 16501). A
2007 Appendix C ratemaking was completed on September 18, 2007 (72 FR
53158). An Appendix C review of rates for the 2008 season showed a need
for further adjustment. That adjustment was the subject of a notice of
proposed rulemaking (NPRM; 73 FR 6085, Feb. 1, 2008) proposing a rate
increase averaging 8.17% across all three districts. The NPRM also
proposed to clarify the duty of pilots and pilot associations to
cooperate with lawful authority. On March 21, 2008, we published an
interim rule (73 FR 15092) making the 8.17% increase effective
immediately and requesting additional comments. In addition to the
public comments received on the NPRM, we invited comments on the
interim rule.
III. Discussion of Comments
The Coast Guard received six comments in response to the NPRM and
one on the interim rule. Two comments on the NPRM were received from
legal representatives of the pilots' associations; one comment on the
NPRM and one on the interim rule were received from the Shipping
Federation of Canada; two comments on the NPRM were received from the
St. Lawrence Seaway Pilots' Association; and one comment on the NPRM
was received from the American Pilots' Association. In the interim
rule, we summarized points made by commenters on the NPRM, but deferred
full discussion for the final rule.
All the NPRM and interim rule commenters made points about the
larger context within which our annual rate rulemaking takes place.
Collectively, these comments indicated a desire for a comprehensive
review of Coast Guard ratemaking procedures, to take into account:
Determination of bridge hours, particularly in light of
Rear Admiral J. Timothy Riker's bridge hour standards report;
The pilots' contention that we should base our
calculations on a 284 day navigation season instead of a nine month
season;
Industry interest in pilot efficiency standards against
which ratemaking adjustments can be measured; and
Alignment of U.S. and Canadian Great Lakes pilotage rates.
We note these comments which are outside the scope of this rulemaking
and are actively considering ways to bring about the desired
comprehensive review. Your ideas on how best to conduct a comprehensive
review are welcome at any time; they may be addressed to Mr. Paul
Wasserman whose contact information appears in the FOR FURTHER
INFORMATION CONTACT section of this preamble. The Coast Guard is
advised on Great Lakes pilotage matters by the Great Lakes Pilotage
Advisory Committee (GLPAC), to which suggestions also may be sent. To
send suggestions, or for further information on GLPAC, contact Mr. John
Bobb at (202) 372-1532 or at John.K.Bobb@USCG.mil.
The commenter on our interim rule asked for a full ratemaking
pursuant to 46 CFR 404.1(b). We are honoring that request and have
already begun the next full Appendix A ratemaking. As previously noted,
our last Appendix A ratemaking used 2002 data and was completed in
2006. We are now auditing 2007 pilot financial data for the next
Appendix A ratemaking. Meanwhile, we are also preparing for the 2009
annual Appendix C review.
One commenter on the NPRM stated the Coast Guard proposed an
increase without any demonstration of its need. We disagree and observe
that the NPRM and interim rule both provided detailed information to
show how we applied the 46 CFR Part 404, Appendix C ratemaking
methodology.
One commenter on the NPRM asked us to post, on the public docket,
the pilot association financial statements and American Maritime
Officer union (AMOU) contracts relied upon in this ratemaking. We have
honored this request and the documents may be viewed on the docket as
described in the Addresses section of this preamble.
As we discussed in the interim rule, several commenters on the NPRM
opposed our proposal to clarify the duty of pilots and pilot
associations to cooperate with lawful authority, saying the proposal
needed further justification. We removed the proposed language in the
interim rule. Given the apparent public interest in this subject, we
have decided it cannot be treated properly in the context of annual
ratemakings that need to be completed quickly. If we return to this
subject in the future, we will fully justify our position and provide
ample opportunity for public comment.
Two commenters on the NPRM pointed out that the 49.5 monthly
multiplier we proposed and used for the interim rule failed to reflect
the two separate sets of AMOU contracts in use, which in the NPRM were
referred to as Agreements A and B. We agree and our final rule uses a
54.5 multiplier for Agreement A contracts and a 49.5 multiplier for
Agreement B contracts.
One commenter on the NPRM pointed out that, under both sets of
Agreements A and B, a 4.57% increase in the daily wage rate and health
insurance contributions took effect August 1, 2008. We agree and have
revised the final rule to reflect that change.
Two commenters on the NPRM said that we overstated bridge hour
projections for Areas 2, 4, and 5, thereby underestimating the rates
needed to permit pilots to make target pilot compensation. They pointed
out that the NPRM (and subsequently the interim rule) stated that
bridge hours would remain the same as they had been in 2007 and that,
therefore, we should make projections for 2008 based on the actual 2007
bridge hours. We agree and have reduced the hour projections for Areas
2, 4, and 5 to the actual bridge hours for 2007. The Area 2 reduction
would ordinarily result in a reduction to four pilots, but experience
has demonstrated the need for at least five pilots in that area.
Data has shown that as a fifth U.S. pilot begins working in Area 2,
vessel delays due to awaiting a pilot completing a mandatory rest
between assignments have decreased from 78 hours during the 2007
navigation season to five total hours during the 2008 navigation
season. Whereas when there were only four pilots servicing vessels on
Lake Ontario in 2005 & 2006 there were 300 hours and 340 hours of delay
to vessels respectively. There have also been 17 pilot resignations in
Area 2 over the past 13 years. A significant pilot attrition problem
exists in Area 2. This is attributed to pilots continually having to
return to work immediately after completing a mandatory minimum rest
period. Since putting on a fifth pilot in Area 2, there has not been
one resignation in the last 2.5 years.
The additional pilot is necessary both to ensure adequate pilotage
service and to ensure that the 1977 U.S.-Canadian Memorandum of
Agreement's (MOA's) 50-50 U.S.-Canadian traffic sharing provision can
be met. The Canadian pilots cover Area 2 with a total of six
[[Page 222]]
pilots as opposed to 5 U.S. pilots covering the same area. In 2007 50%
of the U.S. piloted vessels transiting Area 2 go straight through the
district, pilot boat to pilot boat. Because of distances and normal
speeds attained by vessels the trip between Cape Vincent and Port
Weller will typically last no more than two six hour period charges.
Similarly, in Area 4 58% of U.S. piloted vessel transits going straight
through District 2 are charged three or more period charges. Therefore,
there is less revenue generated in Area 2 than in Area 4.
It should also be noted that the rate increase in Area 2 now very
closely matches the current Canadian rates for the first time in many
years. Due to these factors we are refraining from reducing the number
of pilots on which our calculations are based for Area 2. However, we
have reduced by one the number of pilots on which our calculations are
based for Areas 4 and 5, because the District 2 Pilots' Association has
routinely operated with an average of one less pilot than is authorized
under the rate and for the last season and a half with two fewer pilots
than authorized. Accordingly, a reduction of one pilot per area
reflects actual practice.
IV. Discussion of the Final Rule
A. Pilotage Rate Changes Summarized
This final rule adjusts pilotage rates in accordance with Appendix
C of 46 CFR part 404, by increasing rates an average 18.92% over the
2007 final rule. The increase in Areas 1, 6, 7, and 8 is attributable
to AMOU contract increases that took effect between August 1, 2006, and
August 1, 2008, an adjustment to the AMOU contract monthly multiplier
in the Agreement A contracts, and the use of an updated consumer price
index. The increases in Areas 2, 4, and 5 reflect the changes referred
to above and also the public comments discussed in Part III of this
preamble. We are also making an across-the-board increase, equal to
18.92% above the 2007 rate, for service interruptions, delays, and
cancellations, and for boarding or discharging pilots at non-normal
locations. The new rates are comparable to Canadian rates that took
effect January 1, 2008. Table 1 summarizes the rate changes since 2007.
Table 1--Summary of Rate Changes Since 2007
----------------------------------------------------------------------------------------------------------------
2008 IR/ 2008 FR 2008 FR
2008 NPRM percent Total 2008 percent Total 2008
percent increase FR percent increase FR percent
increase over 2008 increase from 2008 increase
over 2007 IR/2008 over 2007 IR/2008 from 2007
FR NPRM FR NPRM FR
----------------------------------------------------------------------------------------------------------------
Increases effective before August 1,
2008
Increase effective after
August 2, 2008
----------------------------------------------------------------------------------------------------------------
Area 1......................................... 7.78 2.09 10.03 6.65 14.94
Area 2 *....................................... 8.41 44.18 56.30 50.88 63.57
Area 4 *....................................... 8.50 -5.44 2.61 -1.03 7.39
Area 5......................................... 7.98 9.79 18.55 14.72 23.88
Area 6......................................... 8.37 1.92 10.45 6.65 15.58
Area 7......................................... 7.83 2.09 10.08 6.66 15.01
Area 8......................................... 8.31 1.92 10.38 6.64 15.50
Average Rate Change............................ 8.17 5.15 13.72 9.95 18.92
----------------------------------------------------------------------------------------------------------------
* Note: Area 3 is omitted, being entirely in Canadian waters and not under U.S. jurisdiction.
B. Calculating the Rate Adjustment
The Appendix C to Part 404 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).
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 2007 final rule. The Coast Guard also used the most recent union
contracts between the AMOU and vessel owners and operators on the Great
Lakes to determine target pilot compensation. Bridge hour projections
for the 2008 season have been obtained from historical data, pilots,
and industry. Bridge hours are the number of hours a pilot is aboard a
vessel providing pilotage service. 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.
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 subtract the return element from the
base operating expense to show the component parts comprising total
economic cost used in this calculation. These two expenses are
eventually recombined as total operating expenses and subsequently
added to base pilot compensation to yield the total economic cost. The
subtraction and addition of the return element is for illustrative
purposes only. It does not change total expenses and, therefore, does
not affect the total economic cost calculation. The sum of all expenses
and the return element are added together and divided by total bridge
hours for each area to arrive at the base cost per bridge hour. Tables
2 through 4 summarize the Step 1 calculations:
[[Page 223]]
Table 2--Total Economic Cost for Base Period, District One
----------------------------------------------------------------------------------------------------------------
Area 1 St. Area 2 Lake Total District
Lawrence River Ontario One
----------------------------------------------------------------------------------------------------------------
Base operating expense (less base return element)............... $431,313 $436,283 $867,596
Base target pilot compensation.................................. +$1,368,253 +$825,760 +$2,194,013
Base return element............................................. +$8,802 +$13,493 +$22,295
-----------------------------------------------
Subtotal.................................................... =$1,808,368 =$1,275,536 =$3,083,904
Base bridge hours............................................... /5,661 /7,993 /13,654
Base cost per bridge hour....................................... =$319.44 =$159.58 =$225.86
----------------------------------------------------------------------------------------------------------------
Table 3--Total Economic Cost for Base Period, District Two
----------------------------------------------------------------------------------------------------------------
Area 5
Area 4 Lake Southeast Total District
Erie Shoal to Port Two
Huron, MI
----------------------------------------------------------------------------------------------------------------
Base operating expense.......................................... $499,328 $737,052 $1,236,380
Base target pilot compensation.................................. +$825,760 +$1,596,295 +$2,422,055
Base return element............................................. +$26,280 +$30,711 +$56,991
-----------------------------------------------
Subtotal.................................................... =$1,351,368 =$2,364,058 =$3,715,426
Base bridge hours............................................... /8,490 /6,395 /14,885
Base cost per bridge hour....................................... =$159.17 =$369.67 =$249.61
----------------------------------------------------------------------------------------------------------------
Table 4--Total Economic Cost for Base Period, District Three
----------------------------------------------------------------------------------------------------------------
Area 6 Lakes
Huron and Area 7 St. Area 8 Lake Total District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Base operating expense.......................... $810,612 $319,193 $511,262 $1,641,067
Base target pilot compensation.................. +$1,651,520 +$912,168 +$1,156,064 +$3,719,752
Base return element............................. +$33,776 +$9,872 +$15,812 +$59,460
---------------------------------------------------------------
Subtotal.................................... =$2,495,908 =$1,241,233 =$1,683,138 =$5,420,279
Base bridge hours............................... /18,000 /3,863 /11,390 /33,253
Base cost per bridge hour....................... =$138.66 =$321.50 =$147.77 =$163.00
----------------------------------------------------------------------------------------------------------------
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. The expense multiplier expresses,
in percentage form, the relationship pilot compensation bears to all
other expenses. Tables 5 through 7 show the Step 2 calculations.
Table 5--Expense Multiplier, District One
----------------------------------------------------------------------------------------------------------------
Area 1 St. Area 2 Lake Total District
Lawrence River Ontario One
----------------------------------------------------------------------------------------------------------------
Base operating expense.......................................... $431,313 $436,283 $867,596
Base return element............................................. +$8,802 +$13,493 +$22,295
-----------------------------------------------
Subtotal.................................................... =$440,115 =$449,776 =$889,891
Base target pilot compensation.................................. /$1,368,253 /$825,760 /$2,194,013
Expense multiplier.............................................. =.32166 =.54468 =.40560
----------------------------------------------------------------------------------------------------------------
Table 6--Expense Multiplier, District Two
----------------------------------------------------------------------------------------------------------------
Area 5
Area 4 Lake Southeast Total District
Erie Shoal to Port Two
Huron, MI
----------------------------------------------------------------------------------------------------------------
Base operating expense.......................................... $499,328 $737,052 $1,236,380
Base return element............................................. +$26,280 +$30,711 +$56,991
-----------------------------------------------
Subtotal.................................................... =$525,608 =$767,763 =$1,293,371
Base target pilot compensation.................................. /$825,760 /$1,596,295 /$2,422,055
[[Page 224]]
Expense multiplier.............................................. =.63651 =.48097 =.53400
----------------------------------------------------------------------------------------------------------------
Table 7--Expense Multiplier, District Three
----------------------------------------------------------------------------------------------------------------
Area 6 Lakes
Huron and Area 7 St. Area 8 Lake Total District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Base operating expense.......................... $810,612 $319,193 $511,262 $1,641,067
Base return element............................. +$33,776 +$9,872 +$15,812 +$59,460
---------------------------------------------------------------
Subtotal.................................... =$844,388 =$329,065 =$527,074 =$1,701,247
Base target pilot compensation.................. /$1,651,520 /$912,168 /$1,156,064 /$3,719,752
Expense multiplier.............................. =.51128 =.36075 =.45592 =.45716
----------------------------------------------------------------------------------------------------------------
Step 3. Calculate annual projection of target pilot compensation.
In this step, which duplicates Step 2 from Appendix A, we determine the
new target rate of compensation and the new number of pilots needed in
each pilotage Area, to determine the new target of pilot compensation
for each Area.
(a) Determine new target rate of compensation. Target pilot
compensation for pilots is based on the average annual compensation of
first mates and masters on U.S. Great Lakes vessels. Compensation
includes wages and benefits. For pilots in undesignated waters, we
approximate the first mates' compensation, and, in designated waters,
we approximate the masters' 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.
Our research for the 2007 ratemaking showed six companies operating
under contract with the AMOU. Three of the six operated under one set
of agreements and the other three operated under modified agreements.
Since the 2007 ratemaking, one of the six companies has gone out of
business, and a second no longer operates under an AMOU contract.
On August 16, 2007, the Coast Guard received two new sets of
agreements that updated wage and benefit information for the four
companies now operating under AMOU contracts. The agreements involved a
5% wage rate increase effective August 1, 2006, a 3% increase effective
August 1, 2007, and a 4% increase effective August 1, 2008. Under one
set of agreements (``Agreement A''), the daily wage rate increased from
$226.95 to $245.46 effective until July 31, 2008, and to $255.28
effective August 1, 2008. Similarly, under the other set of agreements
(``Agreement B''), the daily wage rate was raised from $279.55 to
$302.33 effective until July 31, 2008, and to $314.42 effective August
1, 2008.
To calculate monthly wages, we apply Agreement A and Agreement B
monthly multipliers of 54.5 and 49.5, respectively, to the daily rate.
The 54.5 multiplier represents 30.5 average working days, 15.5 vacation
days, 1.5 additional days of pay per holiday per month, 4 days for four
weekends, and 3 bonus days. The 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 nine months, the length of the Great Lakes shipping season.
Table 8 shows new wage calculations based on Agreements A and B.
Table 8--Wages
------------------------------------------------------------------------
Pilots on
Pilots on designated
Monthly component undesignated waters
waters (undesignated
x 150%)
------------------------------------------------------------------------
AGREEMENT A:
$255.28 daily rate x 54.5 days...... $13,913 $20,869
AGREEMENT A:
Monthly total x 9 months = total 125,214 187,821
wages..............................
AGREEMENT B:
$314.42 daily rate x 49.5 days...... 15,564 23,346
AGREEMENT B:
Monthly total x 9 months = total 140,076 210,113
wages..............................
------------------------------------------------------------------------
Benefits under Agreements A and B include a health contribution
rate of $73.36 per man-day and a pension plan contribution rate of
$33.35 per man-day under Agreement A, and $43.55 per man-day under
Agreement B. The AMOU 401K employer matching rate remained at 5% of the
wage rate. A clerical contribution included in the 2003 contracts was
eliminated under both contracts. The multiplier used to calculate
monthly benefits under Agreements A and B is 45.5 days.
[[Page 225]]
Table 9--Benefits
------------------------------------------------------------------------
Pilots on Pilots on
Monthly component undesignated designated
waters waters
------------------------------------------------------------------------
AGREEMENT A:
Employer contribution, 401(K) plan $695.63 $1,043.45
(Monthly Wages x 5%)...............
Pension = $33.35 x 45.5 days........ $1,517.43 $1,517.43
Health = $73.36 x 45.5 days......... $3,337.88 $3,337.88
AGREEMENT B:
Employer contribution, 401(K) plan $778.20 $1,167.30
(Monthly Wages x 5%)...............
Pension = $43.55 x 45.5 days........ $1,981.53 $1,981.53
Health = $73.36 x 45.5 days......... $3,337.88 $3,337.88
AGREEMENT A:
Monthly total benefits.............. = $5,550.94 = $5,898.76
AGREEMENT A:
Monthly total benefits x 9 months... = $49,958 = $53,089
AGREEMENT B:
Monthly total benefits.............. = $6.097.60 = $6,486.70
AGREEMENT B:
Monthly total benefits x 9 months... = $54,878 = $58,380
------------------------------------------------------------------------
Table 10 totals the wages and benefits under each agreement.
Table 10--Total Wages and Benefits Under Each Agreement
------------------------------------------------------------------------
Pilots on Pilots on
undesignated designated
waters waters
------------------------------------------------------------------------
AGREEMENT A: Wages...................... $125,214 $187,821
AGREEMENT A: Benefits................... +$49,958 +53,089
AGREEMENT A: Total...................... = $175,173 = $240,913
AGREEMENT B: Wages...................... $140,076 $210,113
AGREEMENT B: Benefits................... +$54,878 +$58,380
AGREEMENT B: Total...................... = $194,954 = $268,494
------------------------------------------------------------------------
Table 11 shows that, for the four U.S. Great Lakes shipping
companies currently operating under AMOU contracts, approximately 29%
of their total deadweight tonnage belongs to companies operating under
Agreement A, and approximately 71% belongs to companies operating under
Agreement B.
Table 11--Deadweight Tonnage by AMOU Agreement
--------------------------------------------------------------------------------------------------------------------------------------------------------
Company Agreement A Agreement B
--------------------------------------------------------------------------------------------------------------------------------------------------------
American Steamship Company.............. ...................................................... 664,215.
Mittal Steel USA, Inc................... ...................................................... 96,544.
HMC Ship Management..................... 12,656. ......................................................
Key Lakes, Inc.......................... 303,145.
---------------------------------------------------------------------------------------------------------------
Total tonnage, each agreement....... 315,801............................................... 760,759.
Percent tonnage, each agreement......... 315,801 / 1,076,560 = 29.3343%. 760,759 / 1,076,560 = 70.6657%.
--------------------------------------------------------------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------
Undesignated waters Designated waters
----------------------------------------------------------------------------------------------------------------
AGREEMENT A:
Total wages and benefits $175,173 x 29.3343% = $51,386........... $240,910 x 29.3343% = $70,669.
x percent tonnage.
AGREEMENT B:
Total wages and benefits $194,954 x 70.6657% = $137,766. $268,494 x 70.6657% = $189,733.
x percent tonnage.
Total weighted average $51,386 + $137,766 = $189,152........... $70,669 + $189,733 = $260,402.
wages and benefits =
projected target rate
of compensation.
----------------------------------------------------------------------------------------------------------------
[[Page 226]]
(b) Determine number of pilots needed. Subject to adjustment by the
Director of Great Lakes Pilotage to ensure uninterrupted service, we
determine the number of pilots needed in each Area by dividing each
Area's projected bridge hours, either by 1,000 (designated waters) or
by 1,800 (undesignated waters).
Based on historical data, information provided by pilots and
industry, and the comments received in response to the NPRM and interim
rule, the number of bridge hours in Areas 1, 6, 7, and 8 remains
unchanged from the NPRM and interim rule, and, as previously discussed,
we are reducing the projected bridge hours in Areas 2, 4, and 5 and
reducing by one each the number of pilots authorized for Areas 4 and 5.
Table 13 shows the projected bridge hours needed for each Area, and
the total number of pilots needed after dividing those figures either
by 1,000 or 1,800 and rounding up to the next whole pilot:
Table 13--Number of Pilots Needed
----------------------------------------------------------------------------------------------------------------
Divided by
1,000
(designated
Pilotage area Projected 2008 waters) or Pilots needed
bridge hours 1,800 (total = 42)
(undesignated
waters)
----------------------------------------------------------------------------------------------------------------
Area 1.......................................................... 5,661 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.......................................................... 18,000 1,800 10
Area 7.......................................................... 3,863 1,000 4
Area 8.......................................................... 11,390 1,800 7
----------------------------------------------------------------------------------------------------------------
* Calculation = 4 pilots; maintaining at 5 pilots to ensure adequate service; see discussion in Part III.
(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 by the projected target rate of
compensation for pilots working in that area. Table 14 shows this
calculation.
Table 14--Projected Target Pilot Compensation
----------------------------------------------------------------------------------------------------------------
Multiplied by Projected
Pilotage area Pilots needed target rate of target pilot
(Total = 42) compensation compensation
----------------------------------------------------------------------------------------------------------------
Area 1.......................................................... 6 x $260,402 $1,562,413
Area 2.......................................................... 5 x 189,152 945,760
-----------------------------------------------
Total, District One......................................... 11 .............. 2,508,173
Area 4.......................................................... 4 x 189,152 756,608
Area 5.......................................................... 6 x 260,402 1,562,413
-----------------------------------------------
Total, District Two......................................... 10 .............. 2,319,021
Area 6.......................................................... 10 x 189,152 1,891,520
Area 7.......................................................... 4 x 260,402 1,041,609
Area 8.......................................................... 7 x 189,152 1,324,064
-----------------------------------------------
Total, District Three....................................... 21 .............. 4,257,193
----------------------------------------------------------------------------------------------------------------
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 Pilot Compensation, Multiplied by the Expense Multiplier Equals Projected Operating Expense
----------------------------------------------------------------------------------------------------------------
Projected Multiplied by Projected
Pilotage area target pilot expense operating
compensation multiplier expense
----------------------------------------------------------------------------------------------------------------
Area 1.......................................................... $1,562,413 x .32166 = $502,569
Area 2.......................................................... 945,760 x .54468 = 515,138
-----------------------------------------------
Total, District One......................................... 2,508,173 x .40560 = 1,017,314
Area 4.......................................................... 756,608 x .63651 = 481,592
Area 5.......................................................... 1,562,413 x .48097 = 751,467
-----------------------------------------------
Total, District Two......................................... 2,319,021 x .53400 = 1,238,351
Area 6.......................................................... 1,891,520 x .51128 = 967,095
[[Page 227]]
Area 7.......................................................... 1,041,609 x .36075 = 375,761
Area 8.......................................................... 1,324,064 x .45592 = 603,669
-----------------------------------------------
Total, District Three....................................... 4,257,193 x .45716 = 1,946,224
----------------------------------------------------------------------------------------------------------------
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, we have
multiplied the results in Step 4 by a 1.027 inflation factor,
reflecting an average inflation rate of 2.7% in ``Midwest Economy--
Consumer Prices'' between 2006 and 2007, the latest years for which
data are available. Table 16 shows this calculation and the projected
total economic cost.
Table 16--Projected Operating Expense, Adjusted for Inflation, and Added to Projected Target Pilot Compensation
Equals Projected Total Economic Cost
----------------------------------------------------------------------------------------------------------------
B. Increase,
A. Projected multiplied by C. Projected D. Projected
Pilotage area operating inflation factor Target Pilot Total Economic
expense (= A x 1.027) Compensation Cost (= B+C)
----------------------------------------------------------------------------------------------------------------
Area 1.................................. $502,568.82 $516,138.18 $1,562,412.77 $2,078,550.94
Area 2.................................. 515,137.75 529,046.47 945,760.00 1,474,806.47
-----------------------------------------------------------------------
Total, District One................. 1,017,314.10 1,044,781.59 2,508,172.77 3,552,954.35
Area 4.................................. 481,591.77 494,594.74 756,608.00 1,251,202.74
Area 5.................................. 751,466.81 771,756.41 1,562,412.77 2,334,169.18
-----------------------------------------------------------------------
Total, District Two................. 1,238,350.99 1,271,786.47 2,319,020.77 3,590,807.23
Area 6.................................. 967,095.03 993,206.60 1,891,520.00 2,884,726.60
Area 7.................................. 375,760.72 385,906.26 1,041,608.51 1,427,514.77
Area 8.................................. 603,668.75 619,967.81 1,324,064.00 1,944,031.81
-----------------------------------------------------------------------
Total, District Three............... 1,946,224 1,998,772.10 4,257,192.51 6,255,964.61
----------------------------------------------------------------------------------------------------------------
Step 6: Divide the result in Step 5 by projected bridge hours to
determine total unit costs. Table 17 shows this calculation.
Table 17--Prospective (Total) Unit Costs
----------------------------------------------------------------------------------------------------------------
Prospective
A. Projected B. Projected (total) unit
Pilotage area total economic 2008 bridge costs (A
cost hours divided by B)
----------------------------------------------------------------------------------------------------------------
Area 1.......................................................... $2,078,550.94 5,661 $367.17
Area 2.......................................................... 1,474,806.47 5,650 261.03
-----------------------------------------------
Total, District One......................................... 3,552,954.35 11,311 314.11
Area 4.......................................................... 1,251,202.74 7,320 170.93
Area 5.......................................................... 2,334,169.18 5,097 457.95
-----------------------------------------------
Total, District Two......................................... 3,590,807.23 12,417 289.18
Area 6.......................................................... 2,884,726.60 18,000 160.26
Area 7.......................................................... 1,427,514.77 3,863 369.54
Area 8.......................................................... 1,944,031.81 11,390 170.68
-----------------------------------------------
Total, District Three....................................... 6,255,964.61 33,253 188.13
----------------------------------------------------------------------------------------------------------------
Step 7: Divide prospective unit costs (total unit costs) in Step 6
by the unit cost 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.
[[Page 228]]
Table 18--Percentage Change, Prospective vs. Base Period Unit Costs
----------------------------------------------------------------------------------------------------------------
C. Percentage
change from
base (A
Pilotage area A. Prospective B. Base period divided by B;
unit costs unit costs result
expressed as
percentage)
----------------------------------------------------------------------------------------------------------------
Area 1.......................................................... $367.17 $319.44 14.94
Area 2.......................................................... 261.03 159.58 63.57
-----------------------------------------------
Total, District One......................................... 314.11 225.86 39.08
Area 4.......................................................... 170.93 159.17 7.39
Area 5.......................................................... 457.95 369.67 23.88
-----------------------------------------------
Total, District Two......................................... 289.18 249.61 15.85
Area 6.......................................................... 160.26 138.66 15.58
Area 7.......................................................... 369.54 321.50 15.01
Area 8.......................................................... 170.68 147.77 15.50
-----------------------------------------------
Total, District Three....................................... 188.13 163.00 15.42
----------------------------------------------------------------------------------------------------------------
Step 8: Adjust the base period rates by the percentage change in
unit costs in Step 7. The base period rates are the rates set by the
2007 Final Rule. Table 19 shows this calculation.
Table 19--Base Period Rates Adjusted by Percentage Change in Unit Costs\1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
B. Percentage change in D. Adjusted rate (A
Pilotage area A. Base period unit costs (multiplying C. Increase in base + C, rounded to
rate factor) rate (A x B%) nearest cent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Area 1 14.94 (1.1494)
--------------------------------------------------------------------------------------------------------------------------------------------------------
--Basic pilotage............................................. $13/km, $23/mi ....................... $1.94/km, $3.44/mi $14.94/km, $26.44/mi
--Each lock transited........................................ 288 ....................... 43.03 331.03
--Harbor movage.............................................. 943 ....................... 140.89 1,083.89
--Minimum basic rate, St. Lawrence River..................... 629 ....................... 93.98 722.98
--Maximum rate, through trip................................. 2,761 ....................... 412.51 3,173.51
--------------------------------------------------------------------------------------------------------------------------------------------------------
Area 2 63.57 (1.6357)
--------------------------------------------------------------------------------------------------------------------------------------------------------
--6-hr. period............................................... 477 ....................... 303.23 780.23
--Docking or undocking....................................... 455 ....................... 289.24 744.24
--------------------------------------------------------------------------------------------------------------------------------------------------------
Area 4 7.39 (1.0739)
--------------------------------------------------------------------------------------------------------------------------------------------------------
--6 hr. period............................................... 641 ....................... 47.35 688.35
--Docking or undocking....................................... 494 ....................... 36.49 530.49
--Any point on Niagara River below Black Rock Lock........... 1,261 ....................... 93.15 1,354.15
--------------------------------------------------------------------------------------------------------------------------------------------------------
Area 5 between any point on or in 23.88 (1.2388)
--------------------------------------------------------------------------------------------------------------------------------------------------------
--Toledo or any point on Lake Erie W. of Southeast Shoal..... 1,004 ....................... 239.75 1,243.75
--Toledo or any point on Lake Erie W. of Southeast Shoal & 1,699 ....................... 405.72 2,104.72
Southeast Shoal.............................................
--Toledo or any point on Lake Erie W. of Southeast Shoal & 2,206 ....................... 526.79 2,732.79
Detroit River...............................................
--Toledo or any point on Lake Erie W. of Southeast Shoal & 1,699 ....................... 405.72 2,104.72
Detroit Pilot Boat..........................................
--Port Huron Change Point & Southeast Shoal (when pilots are 2,959 ....................... 706.60 3,665.60
not changed at the Detroit Pilot Boat)......................
--Port Huron Change Point & Toledo or any point on Lake Erie 3,428 ....................... 818.60 4,246.60
W. of Southeast Shoal (when pilots are not changed at the
Detroit Pilot Boat).........................................
--Port Huron Change Point & Detroit River.................... 2,223 ....................... 530.85 2,753.85
--Port Huron Change Point & Detroit Pilot Boat............... 1,729 ....................... 412.88 2,141.88
--Port Huron Change Point & St. Clair River.................. 1,229 ....................... 293.48 1,522.48
--St. Clair River............................................ 1,004 ....................... 239.75 1,243.75
[[Page 229]]
--St. Clair River & Southeast Shoal (when pilots are not 2,959 ....................... 706.60 3,665.60
changed at the Detroit Pilot Boat)..........................
--St. Clair River & Detroit River/Detroit Pilot Boat......... 2,223 ....................... 530.85 2,753.85
--Detroit, Windsor, or Detroit River......................... 1,004 ....................... 239.75 1,243.75
--Detroit, Windsor, or Detroit River & Southeast Shoal....... 1,699 ....................... 405.72 2,104.72
--Detroit, Windsor, or Detroit River & Toledo or any point on 2,206 ....................... 526.79 2,732.79
Lake Erie W. of Southeast Shoal.............................
--Detroit, Windsor, or Detroit River & St. Clair River....... 2,223 ....................... 530.85 2,753.85
--Detroit Pilot Boat & Southeast Shoal....................... 1,229 ....................... 293.48 1,522.48
--Detroit Pilot Boat & Toledo or any point on Lake Erie W. of 1,699 ....................... 405.72 2,104.72
Southeast Shoal.............................................
--Detroit Pilot Boat & St. Clair River....................... 2,223 ....................... 530.85 2,753.85
--------------------------------------------------------------------------------------------------------------------------------------------------------
Area 6 15.58 (1.1558)
--------------------------------------------------------------------------------------------------------------------------------------------------------
--6 hr. period............................................... 479 ....................... 74.62 553.62
--Docking or undocking....................................... 455 ....................... 70.88 525.88
--------------------------------------------------------------------------------------------------------------------------------------------------------
Area 7 between any point on or in 15.01 (1.1501)
--------------------------------------------------------------------------------------------------------------------------------------------------------
--Gros Cap & De Tour......................................... 1,718 ....................... 257.83 1,975.83
--Algoma Steel Corp. Wharf, Sault Ste. Marie, Ont. & De Tour. 1,718 ....................... 257.83 1,975.83
--Algoma Steel Corp. Wharf, Sault Ste. Marie, Ont. & Gros Cap 647 ....................... 97.10 744.10
--Any point in Sault Ste. Marie, Ont., except the Algoma 1,440 ....................... 216.11 1,656.11
Steel Corp. Wharf & De Tour.................................
--Any point in Sault Ste. Marie, Ont., except the Algoma 647 ....................... 97.10 744.10
Steel Corp. Wharf & Gros Cap................................
--Sault Ste. Marie, MI & De Tour............................. 1,440 ....................... 216.11 1,656.11
--Sault Ste. Marie, MI & Gros Cap............................ 647 ....................... 97.10 744.10
--Harbor movage.............................................. 647 ....................... 97.10 744.10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Area 8 15.50 (1.1550)
--------------------------------------------------------------------------------------------------------------------------------------------------------
--6 hr. period............................................... 464 ....................... 71.92 535.92
--Docking or undocking....................................... 441 ....................... 68.36 509.36
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ 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 18.92% across all areas.
V. Regulatory Evaluation
This 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.
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 Part
I of this preamble 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 review, we are adjusting the pilotage rates for the 2008
shipping season to generate sufficient revenue to cover allowable
expenses, target pilot compensation, and returns on investment.
The Coast Guard is revising and finalizing the March 2008 interim
rule for pilotage service on the Great Lakes by increasing the rate by
an average of 18.92% across all three pilotage districts over the last
ratemaking that was completed in September 2007. A Notice of Proposed
Rulemaking was published on February 1, 2008 proposing an average 8.17%
increase over the 2007 Final Rule rates. An Interim Rule was published
on March 17, 2008 putting the 8.17% increase into effect prior to the
2008 navigation season. In response to new AMOU contract provisions and
public comments on our rulemaking, this final rule increases rates an
additional average 9.95%, for a total average increase of 18.92% since
2007. Since percentages are not additive, the summation of 8.17% and
9.95% do not yield 18.92% (see Table 1 for a specific area percentage).
This increase is the result of changes made in response to industry and
public comments on the ratemaking process as well as an increase in
compensation and benefits under the AMOU contract that went into effect
August 1, 2008.
These adjustments to Great Lakes pilotage rates meet the
requirements set forth in 46 CFR part 404 for similar compensation
levels between Great
[[Page 230]]
Lakes pilots and industry. They also include adjustments for inflation
and changes in association expenses to maintain these compensation
levels.
The increase in pilotage rates will be an additional cost for
shippers to transit the Great Lakes system. This rule will result in a
distributional effect that transfers payments (income) from vessel
owners and operators to the Great Lakes' pilot associations through
Coast Guard regulated pilotage rates.
The shippers affected by these rate adjustments are those owners
and operators of domestic vessels operating on register (employed in
the foreign trade) and owners and operators of foreign vessels on a
route within the Great Lakes system. These owners and operators must
have pilots or pilotage service as required by 46 U.S.C. 9302. There is
no minimum tonnage limit or exemption for these vessels. It is the
Coast Guard's interpretation that the statute applies only to
commercial vessels and not to recreational vessels.
Owners and operators of other vessels that are not affected by this
rule, such as recreational boats and vessels only operating within the
Great Lakes system, may elect to purchase pilotage services. However,
this election is voluntary and does not affect the Coast Guard's
calculation of the rate increase and is not a part of our estimated
national cost to shippers.
We updated our estimates of affected vessels for the rule by using
recent vessel characteristics, documentation, and arrival data. We used
2006-2007 vessel arrival data from the Coast Guard's Marine Inspection,
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, based on 2006-2007
vessel data from MISLE.
The cost of the rate adjustment to shippers is estimated from the
district pilotage revenues. These revenues represent the direct and
indirect 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 cost of the revised rate adjustment in this rule to
be the difference between the total economic costs based on the 2007
rate adjustment and the total projected economic cost in this final
rule. Table 20 compares projected economic costs in 2007 and costs of
the rule to industry by district.
Table 20--Rate Adjustment Factors and Additional Cost of This Final Rule (Costs Are in $U.S.)
----------------------------------------------------------------------------------------------------------------
District District One District Two District Three Total \1\
----------------------------------------------------------------------------------------------------------------
Total Economic Cost in 2007 (Base 3,083,904 3,715,426 5,420,279 12,219,609
Period)............................
Final Rate Adjustment \2\........... 1.1521 0.9665 1.1542 1.0965
---------------------------------------------------------------------------
Total Projected Economic Cost in 3,552,949 3,590,802 6,255,945 13,399,696
2008...........................
Additional Revenue Required or Cost 469,045 -124,624 835,666 1,180,087
of this Rulemaking \3\.............
----------------------------------------------------------------------------------------------------------------
\1\ Some values may not total due to rounding.
\2\ See steps 5 and 7 of the ``Calculating the Rate Adjustment'' section of this final rule for the `Final Rate
Adjustment' and the `Total Projected Economic Cost in 2008'.
\3\ Additional revenue or cost of this rule = `Total Projected Economic Cost in 2008' -`Total Projected Economic
Cost in 2007'.
After applying the revised rate in this final rule, the resulting
difference between the economic cost in 2007 and the projected economic
cost in 2008 is the annual cost to shippers from this rule. This figure
is equivalent to the total additional payments that shippers make for
pilotage services from the 2008 rate adjustments.
The annual cost of the revised rate adjustment in this final rule
to shippers is approximately $1.2 million (non-discounted). The annual
cost of the additional 9.95% rate adjustment to shippers in this final
rule is approximately $183,607 (non-discounted). 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 will pay more and some will 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.
In addition to the annual reviews and possible partial rate
adjustments, the Coast Guard is required to determine and, if
necessary, perform a full adjustment of Great Lakes pilotage rates at a
minimum of once every five years. Due to the frequency of the full rate
adjustments, we estimated the total cost to shippers of the rate
adjustments in this final rule over a five-year period instead of a
ten-year period. The total five-year (2008-2012) present value cost
estimate of this final rule to shippers is $5.2 million discounted at a
seven percent discount rate and $5.6 million discounted at a three
percent discount rate. For the calculation of the total five-year
present value cost estimate, we chose not to discount first-year costs
and instead began discounting in the second year, because industry will
incur costs from this rule during the 2008 Great Lakes shipping season.
A. Small Entities
Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have
considered whether this rule will 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.
Entities affected by this rule are 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.
[[Page 231]]
For the final rule, we reviewed recent company size and ownership
data from 2006-2007 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 will be comparable in ownership and size to these
shippers.
There are three U.S. entities affected by the final rule that will
receive the additional revenues from the rate adjustment. These are the
three pilot associations that are the only entities providing 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.
However, they are not adversely impacted with the additional costs of
the rate adjustments, but instead receive the additional revenue
benefits for operating expenses and pilot compensation.
Therefore, the Coast Guard certifies under 5 U.S.C. 605(b) that
this rule will not have a significant impact on a substantial number of
U.S. small entities.
B. Assistance for Small Entities
Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small
entities in understanding the rule so that they could better evaluate
its effects on them and participate in the rulemaking. If the rule will
affect your small business, organization, or governmental jurisdiction
and you have questions concerning its provisions or options for
compliance, please call or email Mr. Paul Wasserman whose contact
information appears under FOR FURTHER INFORMATION CONTACT at the
beginning of this preamble. 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). The Coast Guard will not
retaliate against any small entities that question or complain about
this rule or any policy or action of the Coast Guard.
C. Collection of Information
This rule will 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.
D. 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.
E. 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.
F. Taking of Private Property
This rule would not effect a taking of private property or
otherwise have taking implications under Executive Order 12630,
Governmental Actions and Interference with Constitutionally Protected
Property Rights.
G. 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.
H. 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.
I. 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.
J. Energy Effects
We have analyzed this rule under Executive Order 13211, Actions
Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use. We have determined that it is not a ``significant
energy action'' under that order because it is not a ``significant
regulatory action'' under Executive Order 12866 and is not likely to
have a significant adverse effect on the supply, distribution, or use
of energy. The Administrator of the Office of Information and
Regulatory Affairs has not designated it as a significant energy
action. Therefore, it does not require a Statement of Energy Effects
under Executive Order 13211.
K. 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.
L. Environment
We have analyzed this rule under Department of Homeland Security
Management Directive 0023.1 and Commandant Instruction M16475.lD, which
guide the Coast Guard in complying with the National Environmental
Policy Act of 1969
[[Page 232]]
(NEPA) (42 U.S.C. 4321-4370f), and have concluded under the Instruction
that there are no factors in this case that would limit the use of a
categorical exclusion under section 2.B.2 of the Instruction.
Therefore, this rule is categorically excluded, under figure 2-1,
paragraph (34)(a) of the Instruction, from further environmental
documentation. 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.
V. Words of Issuance and Proposed Regulatory Text
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) 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............................ $14.94 per Kilometer or
$26.44 per mile\1\.
Each Lock Transited....................... $331\1\.
Harbor Movage............................. $1084\1\.
------------------------------------------------------------------------
\1\ The minimum basic rate for assignment of a pilot in the St. Lawrence
River is $723, and the maximum basic rate for a through trip is
$3,174.
(b) Area 2 (Undesignated Waters):
------------------------------------------------------------------------
Service Lake Ontario
------------------------------------------------------------------------
Six-Hour Period......................................... $780
Docking or Undocking.................................... 744
------------------------------------------------------------------------
0
3. In Sec. 401.407 revise paragraphs (a) and (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......................... $688 $688
Docking or Undocking.................... 531 531
Any Point on the Niagara River below the N/A 1,354
Black Rock Lock........................
------------------------------------------------------------------------
(b) Area 5 (Designated Waters):
----------------------------------------------------------------------------------------------------------------
Toledo or any
point on Lake
Any point on or in Southeast Erie west of Detroit River Detroit Pilot St. Clair
Shoal Southeast Boat River
Shoal
----------------------------------------------------------------------------------------------------------------
Toledo or any port on Lake Erie $2,105 $1,244 $2,733 $2,105 N/A
west of Southeast Shoal........
Port Huron Change Point......... \1\ 3,665 \1\ 4,247 2,753 2,142 $1,522
St. Clair River................. \1\ 3,665 N/A 2,753 2,753 1,244
Detroit or Windsor Or the 2,105 2,732 1,244 N/A 2,753
Detroit River..................
Detroit Pilot Boat.............. 1,522 2,105 N/A N/A 2,753
----------------------------------------------------------------------------------------------------------------
\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......................................... $554
Docking or Undocking.................................... 526
------------------------------------------------------------------------
(b) Area 7 (Designated Waters):
----------------------------------------------------------------------------------------------------------------
Area De tour Gros cap Any harbor
----------------------------------------------------------------------------------------------------------------
Gros Cap........................................................ $1,976 N/A N/A
Algoma Steel Corporation Wharf at Sault Ste. Marie Ontario...... 1,976 $744 N/A
Any point in Sault Ste. Marie, Ontario, except the Algoma Steel 1,656 744 N/A
Corporation Wharf..............................................
Sault Ste. Marie, MI............................................ 1,656 744 N/A
Harbor Movage................................................... N/A N/A $744
----------------------------------------------------------------------------------------------------------------
[[Page 233]]
(c) Area 8 (Undesignated Waters):
------------------------------------------------------------------------
Service Lake Superior
------------------------------------------------------------------------
Six-Hour Period......................................... $536
Docking or Undocking.................................... 509
------------------------------------------------------------------------
Sec. 401.420 [Amended]
0
5. In Sec. 401.420--
0
a. In paragraph (a), remove the number ``$93'' and add, in its place,
the number ``$102''; and remove the number ``$1,459'' and add, in its
place, the number ``$1,604''.
0
b. In paragraph (b), remove the number ``$93'' and add, in its place,
the number ``$102''; and remove the number ``$1,459'' and add, in its
place, the number ``$1,604''.
0
c. In paragraph (c)(1), remove the number ``$552'' and add, in its
place, the number ``$606''.
0
d. In paragraph (c)(3), remove the number ``$93'' and add, in its
place, the number ``$102''; and remove the number ``$1,459'' and add,
in its place, the number ``$1,604''.
Sec. 401.428 [Amended]
0
6. In Sec. 401.428, remove the number ``$562'' and add, in its place,
the number ``$618''.
Dated: December 23, 2008.
Brian M. Salerno,
Rear Admiral, U.S. Coast Guard, Assistant Commandant for Marine Safety,
Security and Stewardship.
[FR Doc. E8-31341 Filed 1-2-09; 8:45 am]
BILLING CODE 4910-15-P
Browse by Year
/ 2009
/ January
/ Monday, January 05, 2009
|
|
