Rates for Pilotage on the Great Lakes, 39629-39642 [E6-11062]
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Federal Register / Vol. 71, No. 134 / Thursday, July 13, 2006 / Proposed Rules
absence of a prior existing requirement
for the State to use voluntary consensus
standards (VCS), EPA has no authority
to disapprove a SIP submission for
failure to use VCS. It would thus be
inconsistent with applicable law for
EPA, when it reviews a SIP submission,
to use VCS in place of a SIP submission
that otherwise satisfies the provisions of
the Clean Air Act. Redesignation is an
action that affects the status of a
geographical area and does not impose
any new requirements on sources. Thus,
the requirements of section 12(d) of the
National Technology Transfer and
Advancement Act of 1995 (15 U.S.C.
272 note) do not apply. As required by
section 3 of Executive Order 12988 (61
FR 4729, February 7, 1996), in issuing
this proposed rule, EPA has taken the
necessary steps to eliminate drafting
errors and ambiguity, minimize
potential litigation, and provide a clear
legal standard for affected conduct. EPA
has complied with Executive Order
12630 (53 FR 8859, March 15, 1988) by
examining the takings implications of
the rule in accordance with the
‘‘Attorney General’s Supplemental
Guidelines for the Evaluation of Risk
and Avoidance of Unanticipated
Takings’’ issued under the executive
order. This rule proposing to approve
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to attainment for the 8-hour ozone
NAAQS, the associated maintenance
plan, and the MVEBs identified in the
maintenance plan, does not impose an
information collection burden under the
provisions of the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.).
This rule proposing to approve the
redesignation of Huntington to
attainment for the 8-hour ozone
NAAQS, the associated maintenance
plan, and the MVEBs identified in the
maintenance plan, does not impose an
information collection burden under the
provisions of the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.).
List of Subjects
40 CFR Part 52
rwilkins on PROD1PC63 with PROPOSAL
Environmental protection, Air
pollution control, Nitrogen oxides,
Ozone, Reporting and recordkeeping
requirements, Volatile organic
compounds.
40 CFR Part 81
Air pollution control, National Parks,
Wilderness Areas.
Authority: 42 U.S.C. 7401 et seq.
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Dated: July 6, 2006.
William T. Wisniewski,
Acting Regional Administrator, Region III.
[FR Doc. E6–11042 Filed 7–12–06; 8:45 am]
BILLING CODE 6560–50–P
DEPARTMENT OF HOMELAND
SECURITY
Coast Guard
46 CFR Part 401
[USCG–2006–24414]
RIN 1625–AB05
Rates for Pilotage on the Great Lakes
Coast Guard, DHS.
Notice of proposed rulemaking.
AGENCY:
ACTION:
SUMMARY: The Coast Guard is proposing
to update the rates for pilotage on the
Great Lakes. Based on our review we
propose to adjust the pilotage rates an
average of 6% for the 2006 shipping
season to generate sufficient revenue to
cover allowable expenses, target pilot
compensation, and returns on
investment.
Comments and related material
must reach the Docket Management
Facility on or before August 14, 2006.
ADDRESSES: To make sure your
comments and related material are not
entered more than once in the docket,
please submit them by only one of the
following means:
(1) By mail to the Docket Management
Facility (USCG–2006–24414), U.S.
Department of Transportation, room PL–
401, 400 Seventh Street, SW.,
Washington, DC 20590–0001.
(2) By delivery to room PL–401 on the
Plaza level of the Nassif Building, 400
Seventh Street, SW., Washington, DC,
between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
The telephone number is 202–366–
9329.
(3) By fax to the Docket Management
Facility at 202–493–2251.
(4) Electronically through the Web
site for the Docket Management System
at https://dms.dot.gov.
The Docket Management Facility
maintains the public docket for this
rulemaking. Comments and material
received from the public, as well as
documents mentioned in this preamble
as being available in the docket, will
become part of this docket and will be
available for inspection or copying at
room PL–401 on the Plaza level of the
Nassif Building, 400 Seventh Street,
SW., Washington, DC, between 9 a.m.
and 5 p.m., Monday through Friday,
DATES:
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39629
except Federal holidays. You may also
find this docket on the Internet at
https://dms.dot.gov. Anyone is able to
search the electronic form of all
comments received into any of our
dockets by the name of the individual
submitting the comment (or signing the
comment, if submitted on behalf of an
association, business, labor union, etc.).
You may review DOT’s complete
Privacy Act Statement in the Federal
Register published on April 11, 2000
(Volume 65, Number 70; Pages 19477–
78), or you may visit https://dms.dot.gov.
FOR FURTHER INFORMATION CONTACT: For
questions on this proposed rule, call Mr.
Michael Sakaio, Program Analyst, Office
of Great Lakes Pilotage, Commandant
(G–PWM), U.S. Coast Guard, at 202–
372–1538, by fax 202–372–1929, or by
e-mail at msakaio@comdt.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. Public Participation and Request for
Comments
A. Submitting Comments
B. Viewing Comments and Documents
C. Public Meeting
D. Privacy Act
II. Program History
III. Purpose of the Proposed Rule
A. Proposed Pilotage Rate Changes—
Summarized
B. Calculating the Rate Adjustment
Step 1: Calculating the Base Period Total
Economic Cost (Cost per Bridge Hour by
Area for the Base Period)
Step 2. Calculating the Expense Multiplier
Step 3. Calculating the new annual
‘‘projection of target pilot compensation’’
using the same procedures found in Step
2 of Appendix A to 46 CFR part 404.
Step 4: Increase the new total target pilot
compensation in Step 3 by the expense
multiplier in Step 2.
Step 5(a): Adjust the result in Step 4, as
required, for inflation or deflation.
Step 5(b): Calculate Projected Total
Economic Costs.
Step 6: Divide the Result in Step 5(b) by
Projected Bridge Hours to Determine
Total Unit Costs (Adjusted Cost per
Bridge Hour by Area).
Step 7: Divide prospective unit costs in
Step 6 by the base period unit costs in
Step 1.
Step 8: Adjust the base period rates by the
percentage change in unit costs in Step
7.
IV. 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
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Federal Register / Vol. 71, No. 134 / Thursday, July 13, 2006 / Proposed Rules
I. Indian Tribal Governments
J. Energy Effects
K. Technical Standards
L. Environment
V. Regulatory Text
SUPPLEMENTARY INFORMATION:
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I. Public Participation and Request for
Comments
We encourage you to participate in
this rulemaking by submitting
comments and related materials. All
comments received will be posted,
without change, to https://dms.dot.gov
and will include any personal
information you have provided. We
have an agreement with the Department
of Transportation (DOT) to use the
Docket Management Facility. Please see
DOT’s ‘‘Privacy Act’’ paragraph below.
A. Submitting Comments: If you
submit a comment, please include your
name and address, identify the docket
number for this rulemaking (USCG–
2006–24414), indicate the specific
section of this document to which each
comment applies, and give the reason
for each comment. You may submit
your comments and material by
electronic means, mail, fax, or delivery
to the Docket Management Facility at
the address under ADDRESSES; but
please submit your comments and
material by only one means. If you
submit them by mail or delivery, submit
them in an unbound format, no larger
than 81⁄2 by 11 inches, suitable for
copying and electronic filing. If you
submit them by mail and would like to
know that they reached the Facility,
please enclose a stamped, self-addressed
postcard or envelope. We will consider
all comments and material received
during the comment period. We may
change this rule in view of them.
B. Viewing comments and documents:
To view comments, as well as
documents mentioned in this preamble
as being available in the docket, go to
https://dms.dot.gov at any time and
conduct a simple search using the
docket number. You may also visit the
Docket Management Facility in room
PL–401 on the Plaza level of the Nassif
Building, 400 Seventh Street SW.,
Washington, DC, between 9 a.m. and 5
p.m., Monday through Friday, except
Federal holidays.
C. Public Meeting: We do not plan to
hold a public meeting. But you may
submit a request for one to the Docket
Management Facility at the address
under ADDRESSES explaining why one
would be beneficial. If we determine
that one would aid this rulemaking, we
will hold one at a time and place
announced by a later notice in the
Federal Register.
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D. Privacy Act: Anyone can search the
electronic form of all comments
received into any of our dockets by the
name of the individual submitting the
comment (or signing the comment, if
submitted on behalf of an association,
business, labor union, etc.). You may
review the Department of
Transportation’s Privacy Act Statement
in the Federal Register published on
April 11, 2000 (65 FR 19477), or you
may visit https://dms.dot.gov.
II. Program History
The Great Lakes Pilotage Act of 1960
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. Chapter 93, §§ 9302 and 9308.
The Coast Guard is responsible for
administering this pilotage program,
which includes setting rates for pilotage
service.
The U.S. waters of the Great Lakes
and the St. Lawrence Seaway are
divided into three pilotage Districts.
Pilotage in each District is provided by
an association certified by the Director
of Great Lakes Pilotage to operate a
pilotage pool. It is important to note
that, while the Coast Guard sets rates, it
does not control the actual
compensation that pilots receive. This is
determined by each of the three District
associations, which use different
compensation practices.
District One, consisting of Areas 1 and
2, includes all U.S. waters of the St.
Lawrence River and Lake Ontario.
District Two, consisting of Areas 4 and
5, includes all U.S. waters of Lake Erie,
the Detroit River, Lake St. Clair, and the
St. Clair River. District Three, consisting
of Areas 6, 7, and 8, includes all U.S.
waters of the St. Mary’s River, Sault Ste.
Marie Locks, and Lakes Michigan,
Huron, and Superior. Area 3 is the
Welland Canal, which is serviced
exclusively by the Canadian Great Lakes
Pilotage Authority and, accordingly, is
not included in the U.S. rate structure.
Areas 1, 5, and 7 have been designated
by Presidential Proclamation, pursuant
to the Great Lakes Pilotage Act of 1960,
to be waters in which pilots must at all
times be fully engaged in the navigation
of vessels in their charge. These waters
were ‘‘designated’’ because they are
difficult waters to navigate. Areas 2, 4,
6 and 8 have not been so designated
because they are open bodies of water.
Under the Great Lakes Pilotage Act of
1960, pilots assigned to vessels in these
areas are only required ‘‘to be on board
and available to direct the navigation of
a vessel at the discretion of and subject
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to the customary authority of the
master.’’ 46 U.S.C. 9302(a)(1)(A) and (B).
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. 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 contracts
with an independent accounting firm to
conduct a full ratemaking by auditing
the accounts and records of the pilotage
associations and by preparing and
submitting 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 when deemed
appropriate.
The last full ratemaking was
published in the Federal Register on
April 3, 2006 (71 FR 16501). In that
ratemaking, the Coast Guard applied the
Appendix A methodology for
calculating rates. For this annual rate
review and adjustment, we are using the
methodology contained in Appendix C.
III. Purpose of the Proposed Rule
The authority to establish pilotage
rates on the Great Lakes derives from 46
U.S.C. 9303(f), which states that: ‘‘[t]he
Secretary shall prescribe by regulation
rates and charges for pilotage services,
giving consideration to the public
interest and the costs of providing the
services.’’
The pilotage regulations require that
pilotage rates be reviewed annually. If
the annual review shows that pilotage
rates are within a reasonable range of
the base target pilot compensation set in
the full ratemaking, no adjustment to
the rates will be initiated. (Target pilot
compensation is defined in 46 CFR part
404, Appendix B, and is the
compensation that pilots are intended to
receive for full time employment.)
However, if the annual review indicates
that an adjustment is necessary, then the
Coast Guard will establish new pilotage
rates using § 404.10 and either
Appendix A or Appendix C of part 404.
The Appendix C ratemaking
methodology is intended for use during
the years between Appendix A full
ratemaking reviews and adjustments.
This section is a description of the
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analyses performed, and the eight-step
methodology followed, in the
development of the Appendix C
adjustment. The first part summarizes
the rate adjustments proposed in this
rule. The second part describes the
ratemaking process and explains the
formulas used in the methodology to
show how the rate adjustment was
actually calculated.
A. Proposed Pilotage Rate Changes—
Summarized
This proposed rule would adjust the
rates for Federal pilots on the Great
39631
Lakes, contained in 46 CFR 401.405,
401.407, and 401.410, in accordance
with Appendix C of 46 CFR part 404.
Using this methodology, the rate
adjustment would result in an average
increase of 6 percent across all Districts
over the last pilotage rate adjustment.
2006 AREA RATE CHANGES
Then the percentage increases over
the current
rate is:
If pilotage service is required in:
Area
Area
Area
Area
Area
Area
Area
1
2
4
5
6
7
8
(Designated waters) .................................................................................................................................................................
(Undesignated waters) .............................................................................................................................................................
(Undesignated waters) .............................................................................................................................................................
(Designated waters) .................................................................................................................................................................
(Undesignated waters) .............................................................................................................................................................
(Designated waters) .................................................................................................................................................................
(Undesignated waters) .............................................................................................................................................................
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)’’ have been
increased by 6 percent. These changes
are the same in every Area.
B. Calculating the Rate Adjustment
The ratemaking analyses and
methodology contained in Appendix C
to 46 CFR part 404 is comprised of eight
steps. These steps are:
1. Calculating the Base Period Total
Economic Cost (Cost Per Bridge Hour by
Area for the Base Period);
2. Calculating the Expense Multiplier;
3. Calculating the Annual Projection
of Target Pilot Compensation;
4. Increasing the Projected Pilot
Compensation in Step 3 by the Expense
Multiplier;
5. Adjusting the Result for Inflation or
Deflation;
6. Dividing the Result in Step 5 by
Projected Bridge Hours to Determine
Total Unit Costs (Adjusted Cost per
Bridge Hour by Area);
7. Dividing Prospective Unit Costs
(Total Unit Cost) in Step 6 by the Base
Period Unit Costs in Step 1; and
8. Adjusting 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 final
rule published in the Federal Register
on April 3, 2006 (71 FR 16501),
adjusting pilotage rates on the Great
Lakes. 71 FR 16501. The Coast Guard
also used the most recent union
contracts between the American
Maritime Officers’ union (AMO) and
vessel owners and operators on the
Great Lakes to determine target pilot
compensation. Bridge hour projections
for the 2006 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.
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
5.44
6.30
6.39
5.65
6.26
5.50
6.20
integrity or truncate the real value of all
calculations in the ratemaking
methodology described below.
Step 1: Calculating the Base Period
Total Economic Cost (Cost per Bridge
Hour by Area for the Base Period).
The base period numbers used in all
calculations are those that were set by
the final rule published in the Federal
Register on April 3, 2006 (71 FR 16513).
The data used for this first step is
obtained from the tables containing the
base operating expense, base target pilot
compensation, and base return element
computations. This first step requires
that we calculate the total economic cost
for the base period by taking from these
tables, and adding together, the
recognized expenses, the total cost of
target pilot compensation, and the
return element in each Area. We then
take this sum and divide it by the total
bridge hours used in each Area in
setting the base period rates. This
calculation gives us the cost of
providing pilotage service per bridge
hour by Area for the base period.
The following tables summarize the
Step 1 computations:
TABLE 1.—BASE PERIOD TOTAL ECONOMIC COST (COST PER BRIDGE HOUR)—DISTRICT ONE
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Area 1
St. Lawrence
River
Area 2
Lake Ontario
Total—District
One
Base Operating Expenses ...............................................................................................
Base Target Pilot compensation .....................................................................................
Base Return Element 1 ....................................................................................................
$368,186
+$1,207,209
+$8,087
$372,911
+$725,848
+$10,185
$741,097
+1,933,057
+$18,272
Subtotal .....................................................................................................................
=$1,583,482
=$1,108,944
=$2,692,426
Base Bridge Hours ..........................................................................................................
÷6,000
÷9,000
÷15,000
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TABLE 1.—BASE PERIOD TOTAL ECONOMIC COST (COST PER BRIDGE HOUR)—DISTRICT ONE—Continued
Area 1
St. Lawrence
River
Base Cost per Bridge Hour .............................................................................................
Area 2
Lake Ontario
=$263.91
Total—District
One
=$123.22
=$179.50
1 The
return element is defined at Appendix B to 46 CFR part 404 as the sum of net income and interest expense. The return element can be
considered the sum of the return to equity capital (net increase), and the return to debt (the interest expense).
TABLE 2.—BASE PERIOD TOTAL ECONOMIC COST (COST PER BRIDGE HOUR)—DISTRICT TWO
Area 5—Southeast Shoal to
Port Huron, MI
Area 4—Lake
Erie
Total—District
Two
Base Operating Expenses ...............................................................................................
Base Target Pilot compensation .....................................................................................
Base Return Element ......................................................................................................
$427,333
+$725,848
+$20,354
$632,117
+$1,408,410
+$24,275
$1,059,450
+$2,134,258
+$44,629
Subtotal .....................................................................................................................
=$1,173,535
=$2,064,802
=$3,238,337
Base Bridge Hours ..........................................................................................................
Base Cost per Bridge Hour .............................................................................................
÷9,000
=$130.39
÷7,000
=$294.97
÷16,000
=$202.40
TABLE 3.—BASE PERIOD TOTAL ECONOMIC COST (COST PER BRIDGE HOUR)—DISTRICT THREE
Area 6—Lakes
Huron and
Michigan
Area 7—St.
Mary’s River
Area 8—Lake
Superior
Total—District
Three
Base Operating Expenses ...............................................................
Base Target Pilot compensation .....................................................
Base Return Element ......................................................................
$693,924
+$1,451,696
+$25,283
$271,563
+$804,806
+$9,768
$433,484
+$1,016,187
+$15,451
$1,398,971
+$3,272,689
+$50,502
Subtotal .....................................................................................
=$2,170,903
=$1,086,137
=$1,465,122
=$4,722,162
Base Bridge Hours ..........................................................................
Base Cost per Bridge Hour .............................................................
÷18,000
=$120.61
÷4,000
=$271.53
÷12,600
=$116.28
÷34,600
=$136.48
Step 2. Calculating the Expense
Multiplier.
The expense multiplier is the ratio of
both the base operating expenses and
the base return element to the base
target pilot compensation by Area. This
step requires that we add together 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 following tables show the
calculations:
1. EXPENSE MULTIPLIER FOR DISTRICT ONE
Area 1—St.
Lawrence River
Area 2—Lake
Ontario
Total—District
One
Base Operating Expense .................................................................................................
Base Return Element ......................................................................................................
$368,186
+$8,087
$372,911
+$10,185
$741,097
+$18,272
Subtotal .....................................................................................................................
=$376,273
=$383,096
=$759,369
Base Target Pilot Compensation .....................................................................................
Expense Multiplier ...........................................................................................................
÷$1,207,209
=.31169
÷$725,848
=.52779
÷$1,933,057
=.39283
2. EXPENSE MULTIPLIER FOR DISTRICT TWO
Area 5—Southeast Shoal to
Port Huron, MI
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Area 4—Lake
Erie
Total—District
Two
Base Operating Expense .................................................................................................
Base Return Element ......................................................................................................
$427,333
+$20,354
$632,117
+$24,275
$1,059,450
+$44,629
Subtotal .....................................................................................................................
=$447,687
=$656,392
=$1,104,079
Base Target Pilot Compensation .....................................................................................
÷$725,848
÷$1,408,410
÷$2,134,258
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2. EXPENSE MULTIPLIER FOR DISTRICT TWO—Continued
Area 5—Southeast Shoal to
Port Huron, MI
Area 4—Lake
Erie
Expense Multiplier ...........................................................................................................
=.61678
=.46605
Total—District
Two
=.51731
3. EXPENSE MULTIPLIER FOR DISTRICT THREE
Area 6—Lakes
Huron and
Michigan
Area 7—St.
Mary’s River
Area 8—Lake
Superior
Total—District
Three
Base Operating Expense .................................................................
Base Return Element ......................................................................
$693,924
+$25,283
$271,563
+$9,768
$433,484
+$15,451
$1,398,971
+$50,502
Subtotal .....................................................................................
=$719,207
=$281,331
=$448,935
=$1,449,473
Base Target Pilot Compensation .....................................................
Expense Multiplier ...........................................................................
÷$1,451,696
=.49543
÷$804,806
=.34956
÷$1,016,187
=.44178
÷$3,272,689
=.44290
Step 3. Calculating the new annual
‘‘projection of target pilot
compensation’’ using the same
procedures found in Step 2 of Appendix
A to 46 CFR part 404.
Step 2 of Appendix A requires the
Director of Great Lakes Pilotage to:
1. Determine the new target rate of
compensation;
2. Determine the new number of
pilots needed in each pilotage Area; and
3. Multiply new target compensation
by the new number of pilots needed to
project total new target pilot
compensation needed in each Area.
Each step is detailed as follows:
1. Determination of New Target Pilot
Compensation
Target pilot compensation for pilots
providing services in undesignated
waters approximates the average annual
compensation for first mates on U.S.
Great Lakes vessels. For this notice of
proposed rulemaking (NPRM), the
average annual compensation for first
mates is determined based on the AMO
union contract effective August 1, 2005,
for wages and benefits received by first
mates.
Target pilot compensation for pilots
providing services in designated waters
approximates the average annual
compensation for masters on U.S. Great
Lakes vessels. It is calculated as 150
percent of the compensation earned by
first mates on U.S. Great Lakes vessels.
The Office of Great Lakes Pilotage has
consistently calculated this by first
multiplying the first mates’ salary by
150 percent and then adding benefits,
since this is the best approximation of
the average annual compensation for
masters.
The following tables (7, 8, and 9)
summarize how target pilot
compensation is determined for
undesignated and designated waters:
TABLE 7.—WAGES
(First mate)
pilots on
undesignated
waters
Monthly component
(Master)
pilots on
designated
waters
$226.96 (Daily Rate) × 54 (Days) ...................................................................................................................
$12,256
N/A
Monthly Total × 9 Months = Total Wages ................................................................................................
$110,303
N/A
Wages: $226.96 (Daily Rate) × 54 × 1.5 ........................................................................................................
N/A
$18,384
Monthly Total × 9 Months = Total Wages ................................................................................................
N/A
$165,454
TABLE 8.—BENEFITS
(First mate)
pilots on
undesignated waters
(Master)
pilots on
designated waters
Employer Contribution—401(K) Plan ..........................................................................................................
Clerical .........................................................................................................................................................
Health ...........................................................................................................................................................
Pension ........................................................................................................................................................
$612.79
+$340.44
+$2,512.51
+$1,283.10
$919.19
+$340.44
+$2,512.51
+$1,283.10
Monthly Total Benefits ..........................................................................................................................
=$4,748.84
=$5,055.24
Monthly Total Benefits × 9 months ......................................................................................................
=$42,740
=$45,497
rwilkins on PROD1PC63 with PROPOSAL
Monthly component
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Federal Register / Vol. 71, No. 134 / Thursday, July 13, 2006 / Proposed Rules
TABLE 9.—WAGES AND BENEFITS
(First mate)
pilots on
undesignated waters
(Master)
pilots
on designated waters
Wages ..........................................................................................................................................................
Benefits ........................................................................................................................................................
$110,303
+$42,740
$165,454
+$45,497
Total Wages Plus Benefits ...................................................................................................................
=$153,042
=$210,951
The monthly component for wages is
derived by multiplying the daily rate of
pay by 54 days, instead of 30 days,
based upon the following formulation
obtained from the AMO union contract:
a. Average Working Days per month—
30.5
b. Vacation Days per month—15.0
c. Weekend days per month—4.0
d. Holidays per month—1.5
e. Bonus per month—3.0
Monthly Multiplier—54.0
Additionally, we use a nine-month
multiplier in computing annual wages
and benefits because the season is nine
months in duration vice 12 months.
Effective August 1, 2002, the
matching benefit increased to 50 percent
for each participating 401(k) employee
up to a maximum of 5 percent of a
participating employee’s compensation.
For purposes of this benefit, the AMO
union contracts interpret ‘‘employee
compensation’’ to mean base wages.
District Two has a pension plan, while
District Three has a 401(k) plan. District
One does not provide either a 401(k) or
pension plan for its members. Therefore,
to conform to the 401(k) matching
benefit provision under the AMO union
contracts, pilot compensation for
Districts Two and Three are increased.
The increase in undesignated waters is
$5,515.20 and for designated waters is
$8,272.80 per pilot. These increases are
5 percent of compensation, respectively.
District One does not administer any
form of 401(k) or retirement plan. At the
recommendation of the independent
accountant, the Coast Guard has
determined that the District One
Association pilots should receive the
same employer matching benefits as
Districts Two and Three.
Accordingly, the compensation base
of District One is adjusted to include an
amount equivalent to an employer’s
contribution under the AMO 401(k)
matching plan, which increases pilot
compensation in undesignated waters
by $5,515.20 and for designated waters
by $8,272.80 per pilot.
for that Area by 1,000. Bridge hours are
the number of hours a pilot is aboard a
vessel providing pilotage service. The
number of pilots needed in each Area of
undesignated waters is established by
dividing the projected bridge hours for
that Area by 1,800. These hours are the
target number of bridge hours a pilot
needs to earn target pilot compensation.
2. Determination of New Number of
Pilots Needed
The following table, ‘‘Number of
Pilots Needed,’’ shows the calculation of
the number of pilots needed in each
Area for the 2006 navigation season
rounded to the next whole pilot:
The number of pilots needed in each
Area of designated waters is established
by dividing the projected bridge hours
Projected bridge hours are based on
the vessel traffic that pilots are expected
to serve. The Coast Guard projects that
traffic for the 2006 navigation season
will remain the same as it did in 2005.
As indicated, these projections were
made based upon historical data, and all
other relevant information provided by
pilots and industry. Dividing the
projected annual number of bridge
hours per Area by the target number of
bridge hours per pilot results in the
number of pilots that will be needed in
each Area to service vessel traffic.
NUMBER OF PILOTS NEEDED
AREA
AREA
AREA
AREA
AREA
AREA
AREA
1
2
4
5
6
7
8
Divided by
bridge-hour
target
Projected 2006
bridge hours
Pilotage area
Pilots needed
............................................................................................................................
............................................................................................................................
............................................................................................................................
............................................................................................................................
............................................................................................................................
............................................................................................................................
............................................................................................................................
6,000
9,000
9,000
7,000
18,000
4,000
12,600
1,000
1,800
1,800
1,000
1,800
1,000
1,800
6
5
5
7
10
4
7
Total Pilots Needed ..................................................................................................
............................
............................
44
rwilkins on PROD1PC63 with PROPOSAL
3. Projection of New Total Target Pilot
Compensation
The projection of new total target
pilot compensation is determined
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separately for each pilotage Area by
multiplying the number of pilots needed
in each Area by the target pilot
compensation for pilots working in that
Area.
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The results for each pilotage Area are
set out as follows:
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Federal Register / Vol. 71, No. 134 / Thursday, July 13, 2006 / Proposed Rules
39635
DISTRICT ONE
Area 1—St.
Lawrence River
Area 2—Lake
Ontario
Total—District
One
$1,265,708
$765,212
$2,030,920
Area 4—Lake
Erie
Area 5—Southeast Shoal to
Port Huron, MI
Total—District
Two
$765,212
$1,476,660
$2,241,872
Area 6—Lakes
Huron and
Michigan
Area 7—St.
Mary’s River
Area 8—Lake
Superior
Total—District
Three
$1,530,424
$843,805
$1,071,297
$3,445,526
Projection of target pilot compensation ...........................................................................
DISTRICT TWO
Projection of target pilot compensation ...........................................................................
DISTRICT THREE
Projection of target pilot compensation ...........................................
Step 4: Increase the new total target
pilot compensation in Step 3 by the
expense multiplier in Step 2.
The increase in Step 4 refers to the
proportional increase of operating
expense when new total target pilot
compensation is multiplied by the
expense multiplier. The calculations for
Step 4 appear as follows:
DISTRICT ONE
Area 1—St.
Lawrence River
Pilot Compensation ..........................................................................................................
Expense Multiplier ...........................................................................................................
Projected Increase in Operating Expense .......................................................................
Area 2—Lake
Ontario
$1,265,708
×.31169
=$394,506
$765,212
×.52779
=$403,872
Total—District
One
$2,030,920
×.39283
=$797,813
DISTRICT TWO
Area 5—Southeast Shoal to
Port Huron, MI
Area 4—Lake
Erie
Pilot Compensation ..........................................................................................................
Expense Multiplier ...........................................................................................................
Projected increase in Operating Expense .......................................................................
$765,212
×.61678
=$471,966
$1,476,660
×.46605
=$688,200
Total—District
Two
$2,241,872
×.51731
=$1,159,749
DISTRICT THREE
Area 6—Lakes
Huron and
Michigan
Pilot Compensation ..........................................................................
Expense Multiplier ...........................................................................
Projected Increase in Operating Expense .......................................
Step 5(a): Adjust the result in Step 4,
as required, for inflation or deflation.
The calculations for Step 5(a) appear
below. Inflation rates were obtained
Area 7—St.
Mary’s River
$1,530,424
×.49543
=$758,211
Area 8—Lake
Superior
$843,805
×.34956
=$294,964
from the U.S. Department of Labor,
Bureau of Labor Statistics, ‘‘Midwest
Economy—Consumer Prices,’’ using the
$1,071,297
×.44178
=$473,282
Total—District
Three
$3,445,526
×.44290
=$1,526,023
years 2003 to 2004 annual average in the
amount of 2.4 percent per year.
rwilkins on PROD1PC63 with PROPOSAL
DISTRICT ONE
Area 1—St.
Lawrence River
Projected Increase in Operating Expense .......................................................................
Inflation Rate ....................................................................................................................
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Area 2—Lake
Ontario
$394,506
×1.024
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$403,872
×1.024
Total—District
One
$797,813
×1.024
39636
Federal Register / Vol. 71, No. 134 / Thursday, July 13, 2006 / Proposed Rules
DISTRICT ONE—Continued
Area 1—St.
Lawrence River
Adjusted Projected Increase in Operating Expense .......................................................
Area 2—Lake
Ontario
=$403,974
=$413,565
Total—District
One
=$816,961
DISTRICT TWO
Area 5—Southeast Shoal to
Port Huron, MI
Area 4—Lake
Erie
Projected Increase in Operating Expense .......................................................................
Inflation Rate ....................................................................................................................
Adjusted Projected Increase in Operating Expense .......................................................
$471,966
×1.024
=$483,293
$688,200
×1.024
=$704,717
Total—District
Two
$1,159,749
×1.024
=$1,187,583
DISTRICT THREE
Area 6—Lakes
Huron and
Michigan
Projected Increase in Operating Expense .......................................
Inflation Rate ....................................................................................
Adjusted Projected Increase in Operating Expense .......................
Step 5(b): Calculate Projected Total
Economic Costs.
After the inflation adjustments are
made to the Operating Expenses in Step
5(a), the adjusted amount (Adjusted
Area 7—St.
Mary’s River
$758,211
×1.024
=$776,408
Area 8—Lake
Superior
$294,964
×1.024
=$302,043
Projected Increase in Operating
Expense) is added to the New Total
Target Pilot Compensation, as
determined in Step 3, to arrive at a
Projected Total Economic Cost. The
$473,282
×1.024
=$484,641
Total—District
Three
$1,526,023
X 1.024
=$1,562,648
Total Economic Cost is necessary in
order to determine the Total Unit Cost
in Step 6. The calculations for Step 5(b)
appear as follows:
DISTRICT ONE
Area 1—St.
Lawrence River
Adjusted Projected Increase in Operating Expense .......................................................
Projected Target Pilot Compensation ..............................................................................
Projected Total Economic Cost .......................................................................................
Area 2—Lake
Ontario
$403,974
+$1,265,708
=$1,669,683
$413,565
+$765,212
=$1,178,777
Total—District
One
$816,961
+$2,030,920
=$2,847,881
DISTRICT TWO
Area 5—Southeast Shoal to
Port Huron, MI
Area 4—Lake
Erie
Adjusted Projected Increase in Operating Expense .......................................................
Projected Target Pilot Compensation ..............................................................................
Projected Total Economic Cost .......................................................................................
$483,293
+$765,212
=$1,248,505
$704,717
+$1,476,660
=$2,181,376
Total—District
Two
$1,187,583
+$2,241,872
=$3,429,454
DISTRICT THREE
Area 6—Lakes
Huron and
Michigan
rwilkins on PROD1PC63 with PROPOSAL
Adjusted Projected Increase in Operating Expense .......................
Projected Target Pilot Compensation ..............................................
Projected Total Economic Cost .......................................................
Step 6: Divide the Result in Step 5(b)
by Projected Bridge Hours to Determine
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$766,408
+$1,530,424
=$2,306,832
Area 7—St.
Mary’s River
Area 8—Lake
Superior
$302,043
+$843,805
=$1,145,848
Total Unit Costs (Adjusted Cost per
Bridge Hour by Area).
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$484,641
+$1,071,297
=$1,555,937
Total—District
Three
$1,562,648
+$3,445,526
=$5,008,174
Federal Register / Vol. 71, No. 134 / Thursday, July 13, 2006 / Proposed Rules
39637
DISTRICT ONE
Area 1—St.
Lawrence River
Projected Total Economic Costs .....................................................................................
Projected Bridge Hours ...................................................................................................
Total Unit Costs ...............................................................................................................
Area 2—Lake
Ontario
$1,669,683
÷6,000
=$278.28
$1,178,777
÷9,000
=$130.98
Total—District
One
$2,847,881
÷15,000
=$189.86
DISTRICT TWO
Area 5—Southeast Shoal to
Port Huron, MI
Area 4—Lake
Erie
Projected Total Economic Costs .....................................................................................
Projected Bridge Hours ...................................................................................................
Total Unit Costs ...............................................................................................................
$1,248,505
÷9,000
=$138.72
$2,181,376
÷7,000
=$311.63
Total—District
Two
$3,429,454
÷16,000
=$214.34
DISTRICT THREE
Area 6—Lakes
Huron and
Michigan
Projected Total Economic Costs .....................................................
Projected Bridge Hours ...................................................................
Total Unit Costs ...............................................................................
Step 7: Divide prospective unit costs
in Step 6 by the base period unit costs
in Step 1.
$2,306,832
÷18,000
=$128.16
Area 7—St.
Mary’s River
Area 8—Lake
Superior
$1,145,848
÷4,000
=$286.46
$1,555,937
÷12,600
=$123.49
Total—District
Three
$5,008,174
÷34,600
=$144.74
(This step calculates the percent
change in unit cost from the base period
to the prospective unit cost.)
DISTRICT ONE
Area 1—St.
Lawrence River
Prospective Unit Cost (Total Unit Cost) ..........................................................................
Base Period Unit Cost .....................................................................................................
Percentage Change in Unit Cost (Rate Adjustment) ......................................................
Area 2—Lake
Ontario
$278.28
÷$263.91
=1.0544
$130.98
÷$123.22
=1.0630
Total—District
One
$189.86
÷$179.50
=1.0577
DISTRICT TWO
Area 5—Southeast Shoal to
Port Huron, MI
Area 4—Lake
Erie
Prospective Unit Cost (Total Unit Cost) ..........................................................................
Base Period Unit Cost .....................................................................................................
Percentage Change in Unit Cost (Rate Adjustment) ......................................................
$138.72
÷$130.39
=1.0639
$311.63
÷$294.97
=1.0565
Total—District
Two
$214.34
÷$202.40
=1.0590
DISTRICT THREE
Area 6—Lakes
Huron and
Michigan
rwilkins on PROD1PC63 with PROPOSAL
Prospective Unit Cost (Total Unit Cost) ..........................................
Base Period Unit Cost .....................................................................
Percentage Change in Unit Cost (Rate Adjustment) ......................
Step 8: Adjust the base period rates by
the percentage change in unit costs in
Step 7.
The ‘‘Percentage Change in Unit Cost’’
in Step 7 represents the percentage
change or rate adjustment that will be
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Area 7—St.
Mary’s River
$128.16
÷$120.61
=1.0626
applied to existing base period rates and
charges in subpart D of 46 CFR part 401.
For instance, in Area 1, the Percentage
Change in Unit Cost of 1.0544
represents a 5.44 percent rate
adjustment over the existing Area 1 rate.
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Area 8—Lake
Superior
$286.46
÷$271.53
=1.0550
$123.49
÷$116.28
=1.0620
Total—District
Three
$144.74
÷$136.48
=1.0606
The rate adjustments are summarized by
Areas in the following table. The actual
adjustments are shown in the proposed
amendments to regulatory text that
follow this preamble. Each of the area
rates listed in part 401 has been
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Federal Register / Vol. 71, No. 134 / Thursday, July 13, 2006 / Proposed Rules
adjusted according to this table. Results
are rounded to nearest whole dollar.
2006 AREA RATE CHANGES
Then the percentage increases over
the current
rate is:
If pilotage service is required in:
Area
Area
Area
Area
Area
Area
Area
1
2
4
5
6
7
8
(Designated waters) .................................................................................................................................................................
(Undesignated waters) .............................................................................................................................................................
(Undesignated waters) .............................................................................................................................................................
(Designated waters) .................................................................................................................................................................
(Undesignated waters) .............................................................................................................................................................
(Designated waters) .................................................................................................................................................................
(Undesignated waters) .............................................................................................................................................................
rwilkins on PROD1PC63 with PROPOSAL
IV. Regulatory Evaluation
Executive Order 12866, ‘‘Regulatory
Planning and Review,’’ 58 FR 51735,
October 4, 1993, requires a
determination whether a regulatory
action is ‘‘significant’’ and therefore
subject to review by the Office of
Management and Budget (OMB) and
subject to the requirements of the
Executive Order. This rulemaking is not
significant under Executive Order 12866
and has not been reviewed by OMB.
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
‘‘Purpose of the Proposed Rule’’ 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
review, we are adjusting the pilotage
rates for the 2006 shipping season to
generate sufficient revenue to cover
allowable expenses, target pilot
compensation, and returns on
investment.
This proposed rule would provide an
additional six percent average rate
adjustment for the Great Lakes system
over the rate adjustment found in the
2005 final rule. This proposed increase
is the result of adjustments for inflation,
target pilot compensation, and operating
expenses of the pilot associations.
These adjustments to Great Lakes
pilotage rates meet the requirements set
forth in 46 CFR part 404 for similar
compensation levels between Great
Lakes pilots and industry. They also
include adjustments for inflation and
5.44
6.30
6.39
5.65
6.26
5.50
6.20
presumably leave the Great Lakes
system. We assume some vessel owners
and operators may also choose to
purchase pilotage services if their
vessels are carrying hazardous
substances or were navigating the Great
Lakes system with inexperienced
personnel. Based on information from
the Coast Guard Office of Great Lakes
Pilotage, we have determined that these
vessels voluntarily chose to use pilots
and, therefore, are exempt from pilotage
requirements.
We used 2003 arrival data from the
Coast Guard’s National Vessel
Movement Center (NVMC) to estimate
the annual number of vessels affected by
the rate adjustment to be 214 vessels
that, for some, make several journeys or
trips 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 several distinct stops
docking, offloading, and onloading at
facilities in Great Lakes ports. Of the
total trips for the 214 vessels, there were
approximately 1,090 U.S. port arrivals
before the vessels left the Great Lakes
system, based on 2003 vessel arrival
data from the NVMC.
We used district pilotage revenues
from the independent accountant’s
reports of the Districts’ financial
statements to estimate the additional
cost to shippers of the rate adjustments
in this proposed rule. These revenues
represent the direct and indirect
pilotage costs that shippers must pay for
pilotage services in order to transit their
vessels in the Great Lakes. Table 1
shows historical pilotage revenues by
District.
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 proposed
rule would 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. However,
the Coast Guard issued a policy position
several years ago stating that the statute
applies only to commercial vessels and
not to recreational vessels.
Owners and operators of other vessels
that are not affected by this proposed
rule, such as recreational boats and
vessels only operating within the Great
Lakes system, may elect to purchase
pilotage services. However, this election
is voluntary and does not affect the
Coast Guard’s calculation of the rate
increase and is not a part of our
estimated national cost to shippers.
We reviewed a sample of pilot source
forms, which are the forms used to
record pilotage transactions on vessels,
and discovered very few cases of U.S.
Great Lakes vessels (i.e., domestic
vessels without registry operating only
in the Great Lakes) that purchased
pilotage services. There was one case
where the vessel operator purchased
pilotage service in District One to
TABLE 1.—DISTRICT REVENUES ($U.S.)
Year
District One
1998 .................................................................................................
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District Two
2,127,577
Sfmt 4702
District Three
3,202,374
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13JYP1
4,026,802
Total
9,356,753
39639
Federal Register / Vol. 71, No. 134 / Thursday, July 13, 2006 / Proposed Rules
TABLE 1.—DISTRICT REVENUES ($U.S.)—Continued
Year
1999
2000
2001
2002
District One
.................................................................................................
.................................................................................................
.................................................................................................
.................................................................................................
District Two
2,009,180
1,890,779
1,676,578
1,686,655
District Three
2,727,688
2,947,798
2,375,779
2,089,348
3,599,993
4,036,354
3,657,756
3,460,560
Total
8,336,861
8,874,931
7,710,113
7,236,563
Source: Annual independent accountant’s reports of the Districts to the Coast Guard’s Office of Great Lake Pilotage.
While the revenues have decreased
over time, the Coast Guard adjusts
pilotage rates to achieve a target pilot
compensation similar to masters and
first mates working on U.S. vessels
engaged in the Great Lakes trade.
We estimate the additional cost of the
rate adjustment in this proposed rule to
The projected revenue uses the 2002
revenues in Table 1 adjusted for the
2005 final rule and the proposed
adjustments for inflation, wages, and
401(k) contributions from this proposed
rule. Table 2 compares projected and
adjusted revenues and costs of the
proposed rule to industry by district.
be the difference between the total
adjusted revenue based on the 2005 rate
adjustment and the proposed rate
adjustment (change) revenue in this
proposed rule. These revenue values
and adjustments are described and
calculated in the ‘‘Calculating the Rate
Adjustment’’ section of this rulemaking.
TABLE 2.—REVENUES, RATE ADJUSTMENT FACTORS AND ADDITIONAL COST OF THE RULEMAKING ($U.S.) 1
District
District One
District Two
District Three
Total 2
Base Revenue 1 ...............................................................................
1,686,655
2,089,348
3,460,560
7,236,563
Total Adjusted Revenue 3 .........................................................
2,643,732
3,125,036
4,722,162
10,490,930
Proposed Rate Change 4 .................................................................
Revenue Needed 5 ...........................................................................
Additional Revenue or Cost of this Rulemaking 6 ...........................
1.0577
2,796,275
152,543
1.059
3,309,413
184,377
1.0606
5,008,325
286,163
1.0594
11,114,013
623,083
1 Base
revenue is from the 2002 base accounting year data.
values may not total due to rounding.
3 Total adjusted revenue = ‘2002 base revenue’ + ‘2005 final rule rate adjustment revenue’.
4 See step 7 of the ‘‘Calculating the Rate Adjustment’’ section of this proposed rule. We used the districts’ percent change in unit costs for the
rate change.
5 Revenue needed = ‘total adjusted revenue’ × ‘proposed rate change’.
6 Additional revenue or cost of this proposed rule = ‘revenue needed’—‘total adjusted revenue’.
rwilkins on PROD1PC63 with PROPOSAL
2 Some
After applying the rate change in this
proposed rule, the resulting difference
between the revenue projected and the
revenue needed is the annual cost for
the affected population of this proposed
rule. This figure will be equivalent to
the total additional payments that
shippers will make for pilotage services
from this proposed rule.
The annual cost of the rate adjustment
in this proposed rule to shippers is
approximately $623,083 (nondiscounted). 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 would face as a result
of the rate adjustment in this proposed
rule.
We estimated the total cost to
shippers of the rate adjustments in this
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18:46 Jul 12, 2006
Jkt 208001
proposed rule over a five-year period,
because the Coast Guard is required to
determine and, if necessary, adjust Great
Lakes pilotage rates at a minimum of at
least once every five years from the 2005
rate adjustment. However, the Coast
Guard does evaluate and analyze the
Great Lakes pilotage rates every year,
regardless of whether an adjustment is
needed or not. The total five-year (2006–
2010) present value cost estimate of this
rulemaking to shippers is $2.7 million
discounted at a seven percent discount
rate and $2.9 million discounted at a
three percent discount rate.
The cost to shippers of this proposed
rule is minimal compared with the
travel cost shippers save when they use
the Great Lakes system. The alternative
to Great Lakes waterborne
transportation is to choose coastal
delivery, such as East Coast and Gulf
Coast ports that are more expensive, and
extra-modal transportation overland,
which is far less practical and has
additional transportation costs for all
commodity groups. See Coast Guard
docket number USCG–2006–24414 for
an assessment of alternatives to Great
Lakes waterborne transportation and the
associated costs entitled ‘‘Analysis of
PO 00000
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Great Lakes Pilotage Costs on Great
Lakes Shipping and the Potential Impact
of Pilotage Rate Increases’’ (October 1,
2004).
A. Small Entities
Under the Regulatory Flexibility Act
(5 U.S.C. 601–612), we have considered
whether this proposed rule would have
a significant economic impact on a
substantial number of small entities.
The term ‘‘small entities’’ comprises
small businesses, not-for-profit
organizations that are independently
owned and operated and are not
dominant in their fields, and
governmental jurisdictions with
populations of less than 50,000.
In 2003, most vessels engaged in
foreign trade on the Great Lakes were
large foreign-owned shipping
conglomerates. There were two U.S.
companies that were operating vessels
engaged in foreign trade in the Great
Lakes system that would be affected by
the rate adjustments in this proposed
rule and pay additional costs for
pilotage services. However, these two
companies are subsidiaries of large
foreign parent entities. The North
American Industry Classification
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System (NAICS) code subsector for
these shippers is 483—Water
Transportation, and 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. These large
foreign-owned shippers do not qualify
as small entities because their number
of employees exceeds 500. We assume
that new industry entrants will be
comparable in size to these shippers
with a large enough employee base and
the financial resources to support long
international trade routes and, thus, will
not be small businesses.
There are three U.S. entities that are
affected by the proposed rule that will
receive the additional revenues from the
proposed 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 as the U.S.
shippers 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 proposed 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 proposed
rule would not have a significant
economic impact on a substantial
number of U.S. small entities. If you
think that your business, organization,
or governmental jurisdiction qualifies as
a small entity and that this rule would
have a significant economic impact on
it, please submit a comment to the
Docket Management Facility at the
address under ADDRESSES. In your
comment, explain why you think it
qualifies and how and to what degree
this rule would economically affect it.
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 proposed rule so that
they could better evaluate its effects on
them and participate in the rulemaking.
If the rule would affect your small
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18:46 Jul 12, 2006
Jkt 208001
business, organization, or governmental
jurisdiction and you have questions
concerning its provisions or options for
compliance, please call Paul
Wasserman, Director, Office of Great
Lakes Pilotage, (G–PWM–2), U.S. Coast
Guard, telephone 202–372–1535 or send
him e-mail at
pwasserman@comdt.uscg.mil. 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).
C. Collection of Information
Under the Paperwork Reduction Act
(44 U.S.C. 3501–3520), the Office of
Management and Budget (OMB) reviews
each proposed rule that contains a
collection of information requirement to
determine whether the practical value of
the information is worth the burden
imposed by its collection. Collection of
information requirements include
reporting, record keeping, notification,
and other similar requirements.
This proposed rule would call for no
new collection of information under the
Paperwork Reduction Act of 1995 (44
U.S.C. 3501–3520). This proposed rule
would 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 proposed 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
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Fmt 4702
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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 proposed 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 proposed 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 proposed 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 proposed 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 proposed 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 proposed 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.
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Federal Register / Vol. 71, No. 134 / Thursday, July 13, 2006 / Proposed Rules
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 proposed rule
does not use technical standards.
Therefore, we did not consider the use
of voluntary consensus standards.
L. Environment
We have analyzed this proposed rule
under Commandant Instruction
M16475.lD and Department of
Homeland Security Management
Directive 5100.1, 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 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, we believe that
this rule should be 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 NPRM
proposes rate adjustments in accordance
with applicable statutory and regulatory
mandates. A preliminary
‘‘Environmental Analysis Check List’’ is
available in the docket where indicated
under the ‘‘Public Participation and
Request for Comments’’ section of this
preamble. Comments on this section
will be considered before we make the
final decision on whether this rule
should be categorically excluded from
further environmental review.
Service
Administrative practice and
procedure, Great Lakes, Navigation
(water), Penalties, Reporting and
recordkeeping requirements, Seamen.
For the reasons discussed in the
preamble, the Coast Guard proposes to
amend 46 CFR part 401 as follows:
PART 401—GREAT LAKES PILOTAGE
REGULATIONS
1. The authority citation for part 401
continues to read as follows:
Authority: 46 U.S.C. 2104(a), 6101, 7701,
8105, 9303, 9304; Department of Homeland
Security Delegation No. 0170.1 46 CFR
401.105 also issued under the authority of 44
U.S.C. 3507.
2. In § 401.405, revise paragraphs (a)
and (b), including the footnote to Table
(a), to read as follows:
§ 401.405 Basic rates and charges on the
St. Lawrence River and Lake Ontario.
*
*
*
*
*
Area 1 (Designated Waters):
St. Lawrence River
Basic Pilotage ...........................................................................................
Each Lock Transited .................................................................................
Harbor Movage .........................................................................................
1 The
List of Subjects in 46 CFR Part 401
1 $12
per Kilometer or $20 per mile.
1 251.
1 821.
minimum basic rate for assignment of a pilot in the St. Lawrence River is $548, and the maximum basic rate for a through trip is $2,405.
(b) Area 2 (Undesignated Waters):
Service
Lake Ontario
Six-Hour Period ...........................................................................................................................................................................
Docking or Undocking .................................................................................................................................................................
3. In § 401.407, revise paragraphs (a)
and (b), including the footnote to Table
(b), to read as follows:
§ 401.407 Basic rates and charges on Lake
Erie and the navigable waters from
Southeast Shoal to Port Huron, MI.
*
*
*
*
$391
373
(a) Area 4 (Undesignated Waters):
*
Lake Erie (East of
Southeast Shoal)
Service
Six-Hour Period .......................................................................................................................................
Docking or Undocking .............................................................................................................................
Any Point on the Niagara River below the Black Rock Lock ..................................................................
$559
431
N/A
Buffalo
$559
431
1,099
(b) Area 5 (Designated Waters):
rwilkins on PROD1PC63 with PROPOSAL
Any point on or in
Southeast Shoal
Toledo or any port on Lake Erie west of
Southeast Shoal ...........................................
Port Huron Change Point ................................
St. Clair River ..................................................
Detroit or Windsor Or the Detroit River ...........
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18:46 Jul 12, 2006
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Toledo or any
Point on Lake
Erie west of
Southeast Shoal
$1,433
$846
1 2,494
1 2,890
1 2,494
N/A
1,859
1,433
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Detroit River
Detroit Pilot Boat
$1,859
1,874
1,874
846
E:\FR\FM\13JYP1.SGM
13JYP1
$1,433
1,458
1,874
N/A
St. Clair River
N/A
1,036
846
1,874
39642
Federal Register / Vol. 71, No. 134 / Thursday, July 13, 2006 / Proposed Rules
Southeast Shoal
Any point on or in
Toledo or any
Point on Lake
Erie west of
Southeast Shoal
1,036
1,433
Detroit Pilot Boat ..............................................
1 When
Detroit River
Detroit Pilot Boat
N/A
St. Clair River
N/A
1,874
pilots are not changed at the Detroit Pilot Boat.
4. In § 401.410, revise paragraphs (a),
(b), and (c) to read as follows:
§ 401.410 Basic rates and charges on
Lakes Huron, Michigan, and Superior, and
the St. Mary’s River.
*
*
*
*
(a) Area 6 (Undesignated Waters):
*
Lakes Huron and
Michigan
Service
Six-Hour Period ...........................................................................................................................................................................
Docking or Undocking .................................................................................................................................................................
$443
421
(b) Area 7 (Designated Waters):
Area
De Tour
Gros Cap .......................................................................................................................................................
Algoma Steel Corporation Wharf at Sault Ste. Marie Ontario ......................................................................
Any point in Sault Ste. Marie, Ontario, except the Algoma Steel Corporation Wharf ..................................
Sault Ste. Marie, MI .......................................................................................................................................
Harbor Movage ..............................................................................................................................................
Gros Cap
$1,532
1,532
1,284
1,284
N/A
Any
Harbor
N/A
577
577
577
N/A
N/A
N/A
N/A
N/A
577
(c) Area 8 (Undesignated Waters):
Service
Lake Superior
Six-Hour Period ...........................................................................................................................................................................
Docking or Undocking .................................................................................................................................................................
§ 401.420
[Amended]
rwilkins on PROD1PC63 with PROPOSAL
5. In § 401.420—
a. In paragraph (a), remove the
number ‘‘$70’’ and add, in its place, the
number ‘‘$74’’; and remove the number
‘‘$1,100’’ and add, in its place, the
number ‘‘$1,166’’.
b. In paragraph (b), remove the
number ‘‘$70’’ and add, in its place, the
number ‘‘$74’’; and remove the number
‘‘$1,100’’ and add, in its place, the
number ‘‘$1,166’’.
c. In paragraph (c)(1), remove the
number ‘‘$416’’ and add, in its place,
the number ‘‘$441’’; in paragraph (c)(3),
remove the number ‘‘$70’’ and add, in
its place, the number ‘‘$74’’; and, also
in paragraph (c)(3), remove the number
‘‘$1,100’’ and add, in its place, the
number ‘‘$1,166’’.
§ 401.428
Dated: May 30, 2006.
C.E. Bone,
Rear Admiral, U.S. Coast Guard, Assistant
Commandant for Prevention.
[FR Doc. E6–11062 Filed 7–12–06; 8:45 am]
BILLING CODE 4910–15–P
Jkt 208001
National Oceanic and Atmospheric
Administration
50 CFR Part 300
RIN 0648–AS75
Antarctic Marine Living Resources
(AMLR); Centralized Vessel Monitoring
System; Preapproval of Fresh
Toothfish Imports; Customs Entry
Number; Electronic Catch
Documentation Scheme; Scientific
Observers; Definitions; Seal Excluder
Device; Information on Harvesting
Vessels
National Marine Fisheries
Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA),
Commerce.
ACTION: Proposed rule; request for
comments.
AGENCY:
6. In § 401.428, remove the number
‘‘$424’’ and add, in its place, the
number ‘‘$449’’.
18:46 Jul 12, 2006
DEPARTMENT OF COMMERCE
[Docket No. 060621174–6174–01; I.D.
022106C]
[Amended]
VerDate Aug<31>2005
SUMMARY: The proposed rule would
implement measures adopted by the
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]]>Agencies
[Federal Register Volume 71, Number 134 (Thursday, July 13, 2006)]
[Proposed Rules]
[Pages 39629-39642]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-11062]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HOMELAND SECURITY
Coast Guard
46 CFR Part 401
[USCG-2006-24414]
RIN 1625-AB05
Rates for Pilotage on the Great Lakes
AGENCY: Coast Guard, DHS.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Coast Guard is proposing to update the rates for pilotage
on the Great Lakes. Based on our review we propose to adjust the
pilotage rates an average of 6% for the 2006 shipping season to
generate sufficient revenue to cover allowable expenses, target pilot
compensation, and returns on investment.
DATES: Comments and related material must reach the Docket Management
Facility on or before August 14, 2006.
ADDRESSES: To make sure your comments and related material are not
entered more than once in the docket, please submit them by only one of
the following means:
(1) By mail to the Docket Management Facility (USCG-2006-24414),
U.S. Department of Transportation, room PL-401, 400 Seventh Street,
SW., Washington, DC 20590-0001.
(2) By delivery to room PL-401 on the Plaza level of the Nassif
Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5
p.m., Monday through Friday, except Federal holidays. The telephone
number is 202-366-9329.
(3) By fax to the Docket Management Facility at 202-493-2251.
(4) Electronically through the Web site for the Docket Management
System at https://dms.dot.gov.
The Docket Management Facility maintains the public docket for this
rulemaking. Comments and material received from the public, as well as
documents mentioned in this preamble as being available in the docket,
will become part of this docket and will be available for inspection or
copying at room PL-401 on the Plaza level of the Nassif Building, 400
Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays. You may also find this docket
on the Internet at https://dms.dot.gov. Anyone is able to search the
electronic form of all comments received into any of our dockets by the
name of the individual submitting the comment (or signing the comment,
if submitted on behalf of an association, business, labor union, etc.).
You may review DOT's complete Privacy Act Statement in the Federal
Register published on April 11, 2000 (Volume 65, Number 70; Pages
19477-78), or you may visit https://dms.dot.gov.
FOR FURTHER INFORMATION CONTACT: For questions on this proposed rule,
call Mr. Michael Sakaio, Program Analyst, Office of Great Lakes
Pilotage, Commandant (G-PWM), U.S. Coast Guard, at 202-372-1538, by fax
202-372-1929, or by e-mail at msakaio@comdt.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. Public Participation and Request for Comments
A. Submitting Comments
B. Viewing Comments and Documents
C. Public Meeting
D. Privacy Act
II. Program History
III. Purpose of the Proposed Rule
A. Proposed Pilotage Rate Changes--Summarized
B. Calculating the Rate Adjustment
Step 1: Calculating the Base Period Total Economic Cost (Cost
per Bridge Hour by Area for the Base Period)
Step 2. Calculating the Expense Multiplier
Step 3. Calculating the new annual ``projection of target pilot
compensation'' using the same procedures found in Step 2 of Appendix
A to 46 CFR part 404.
Step 4: Increase the new total target pilot compensation in Step
3 by the expense multiplier in Step 2.
Step 5(a): Adjust the result in Step 4, as required, for
inflation or deflation.
Step 5(b): Calculate Projected Total Economic Costs.
Step 6: Divide the Result in Step 5(b) by Projected Bridge Hours
to Determine Total Unit Costs (Adjusted Cost per Bridge Hour by
Area).
Step 7: Divide prospective unit costs in Step 6 by the base
period unit costs in Step 1.
Step 8: Adjust the base period rates by the percentage change in
unit costs in Step 7.
IV. 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
[[Page 39630]]
I. Indian Tribal Governments
J. Energy Effects
K. Technical Standards
L. Environment
V. Regulatory Text
SUPPLEMENTARY INFORMATION:
I. Public Participation and Request for Comments
We encourage you to participate in this rulemaking by submitting
comments and related materials. All comments received will be posted,
without change, to https://dms.dot.gov and will include any personal
information you have provided. We have an agreement with the Department
of Transportation (DOT) to use the Docket Management Facility. Please
see DOT's ``Privacy Act'' paragraph below.
A. Submitting Comments: If you submit a comment, please include
your name and address, identify the docket number for this rulemaking
(USCG-2006-24414), indicate the specific section of this document to
which each comment applies, and give the reason for each comment. You
may submit your comments and material by electronic means, mail, fax,
or delivery to the Docket Management Facility at the address under
ADDRESSES; but please submit your comments and material by only one
means. If you submit them by mail or delivery, submit them in an
unbound format, no larger than 8\1/2\ by 11 inches, suitable for
copying and electronic filing. If you submit them by mail and would
like to know that they reached the Facility, please enclose a stamped,
self-addressed postcard or envelope. We will consider all comments and
material received during the comment period. We may change this rule in
view of them.
B. Viewing comments and documents: To view comments, as well as
documents mentioned in this preamble as being available in the docket,
go to https://dms.dot.gov at any time and conduct a simple search using
the docket number. You may also visit the Docket Management Facility in
room PL-401 on the Plaza level of the Nassif Building, 400 Seventh
Street SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through
Friday, except Federal holidays.
C. Public Meeting: We do not plan to hold a public meeting. But you
may submit a request for one to the Docket Management Facility at the
address under ADDRESSES explaining why one would be beneficial. If we
determine that one would aid this rulemaking, we will hold one at a
time and place announced by a later notice in the Federal Register.
D. Privacy Act: Anyone can search the electronic form of all
comments received into any of our dockets by the name of the individual
submitting the comment (or signing the comment, if submitted on behalf
of an association, business, labor union, etc.). You may review the
Department of Transportation's Privacy Act Statement in the Federal
Register published on April 11, 2000 (65 FR 19477), or you may visit
https://dms.dot.gov.
II. Program History
The Great Lakes Pilotage Act of 1960 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. Chapter 93, Sec. Sec. 9302 and 9308. The
Coast Guard is responsible for administering this pilotage program,
which includes setting rates for pilotage service.
The U.S. waters of the Great Lakes and the St. Lawrence Seaway are
divided into three pilotage Districts. Pilotage in each District is
provided by an association certified by the Director of Great Lakes
Pilotage to operate a pilotage pool. It is important to note that,
while the Coast Guard sets rates, it does not control the actual
compensation that pilots receive. This is determined by each of the
three District associations, which use different compensation
practices.
District One, consisting of Areas 1 and 2, includes all U.S. waters
of the St. Lawrence River and Lake Ontario. District Two, consisting of
Areas 4 and 5, includes all U.S. waters of Lake Erie, the Detroit
River, Lake St. Clair, and the St. Clair River. District Three,
consisting of Areas 6, 7, and 8, includes all U.S. waters of the St.
Mary's River, Sault Ste. Marie Locks, and Lakes Michigan, Huron, and
Superior. Area 3 is the Welland Canal, which is serviced exclusively by
the Canadian Great Lakes Pilotage Authority and, accordingly, is not
included in the U.S. rate structure. Areas 1, 5, and 7 have been
designated by Presidential Proclamation, pursuant to the Great Lakes
Pilotage Act of 1960, to be waters in which pilots must at all times be
fully engaged in the navigation of vessels in their charge. These
waters were ``designated'' because they are difficult waters to
navigate. Areas 2, 4, 6 and 8 have not been so designated because they
are open bodies of water. Under the Great Lakes Pilotage Act of 1960,
pilots assigned to vessels in these areas are only required ``to be on
board and available to direct the navigation of a vessel at the
discretion of and subject to the customary authority of the master.''
46 U.S.C. 9302(a)(1)(A) and (B).
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. 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
contracts with an independent accounting firm to conduct a full
ratemaking by auditing the accounts and records of the pilotage
associations and by preparing and submitting 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 when deemed appropriate.
The last full ratemaking was published in the Federal Register on
April 3, 2006 (71 FR 16501). In that ratemaking, the Coast Guard
applied the Appendix A methodology for calculating rates. For this
annual rate review and adjustment, we are using the methodology
contained in Appendix C.
III. Purpose of the Proposed Rule
The authority to establish pilotage rates on the Great Lakes
derives from 46 U.S.C. 9303(f), which states that: ``[t]he Secretary
shall prescribe by regulation rates and charges for pilotage services,
giving consideration to the public interest and the costs of providing
the services.''
The pilotage regulations require that pilotage rates be reviewed
annually. If the annual review shows that pilotage rates are within a
reasonable range of the base target pilot compensation set in the full
ratemaking, no adjustment to the rates will be initiated. (Target pilot
compensation is defined in 46 CFR part 404, Appendix B, and is the
compensation that pilots are intended to receive for full time
employment.) However, if the annual review indicates that an adjustment
is necessary, then the Coast Guard will establish new pilotage rates
using Sec. 404.10 and either Appendix A or Appendix C of part 404.
The Appendix C ratemaking methodology is intended for use during
the years between Appendix A full ratemaking reviews and adjustments.
This section is a description of the
[[Page 39631]]
analyses performed, and the eight-step methodology followed, in the
development of the Appendix C adjustment. The first part summarizes the
rate adjustments proposed in this rule. The second part describes the
ratemaking process and explains the formulas used in the methodology to
show how the rate adjustment was actually calculated.
A. Proposed Pilotage Rate Changes--Summarized
This proposed rule would adjust the rates for Federal pilots on the
Great Lakes, contained in 46 CFR 401.405, 401.407, and 401.410, in
accordance with Appendix C of 46 CFR part 404. Using this methodology,
the rate adjustment would result in an average increase of 6 percent
across all Districts over the last pilotage rate adjustment.
2006 Area Rate Changes
------------------------------------------------------------------------
Then the
percentage
If pilotage service is required in: increases over
the current
rate is:
------------------------------------------------------------------------
Area 1 (Designated waters).............................. 5.44
Area 2 (Undesignated waters)............................ 6.30
Area 4 (Undesignated waters)............................ 6.39
Area 5 (Designated waters).............................. 5.65
Area 6 (Undesignated waters)............................ 6.26
Area 7 (Designated waters).............................. 5.50
Area 8 (Undesignated waters)............................ 6.20
------------------------------------------------------------------------
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)'' have been increased by
6 percent. These changes are the same in every Area.
B. Calculating the Rate Adjustment
The ratemaking analyses and methodology contained in Appendix C to
46 CFR part 404 is comprised of eight steps. These steps are:
1. Calculating the Base Period Total Economic Cost (Cost Per Bridge
Hour by Area for the Base Period);
2. Calculating the Expense Multiplier;
3. Calculating the Annual Projection of Target Pilot Compensation;
4. Increasing the Projected Pilot Compensation in Step 3 by the
Expense Multiplier;
5. Adjusting the Result for Inflation or Deflation;
6. Dividing the Result in Step 5 by Projected Bridge Hours to
Determine Total Unit Costs (Adjusted Cost per Bridge Hour by Area);
7. Dividing Prospective Unit Costs (Total Unit Cost) in Step 6 by
the Base Period Unit Costs in Step 1; and
8. Adjusting 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 final rule published in the Federal Register on April 3, 2006 (71
FR 16501), adjusting pilotage rates on the Great Lakes. 71 FR 16501.
The Coast Guard also used the most recent union contracts between the
American Maritime Officers' union (AMO) and vessel owners and operators
on the Great Lakes to determine target pilot compensation. Bridge hour
projections for the 2006 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.
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: Calculating the Base Period Total Economic Cost (Cost per
Bridge Hour by Area for the Base Period).
The base period numbers used in all calculations are those that
were set by the final rule published in the Federal Register on April
3, 2006 (71 FR 16513). The data used for this first step is obtained
from the tables containing the base operating expense, base target
pilot compensation, and base return element computations. This first
step requires that we calculate the total economic cost for the base
period by taking from these tables, and adding together, the recognized
expenses, the total cost of target pilot compensation, and the return
element in each Area. We then take this sum and divide it by the total
bridge hours used in each Area in setting the base period rates. This
calculation gives us the cost of providing pilotage service per bridge
hour by Area for the base period.
The following tables summarize the Step 1 computations:
Table 1.--Base Period Total Economic Cost (Cost Per Bridge Hour)--District One
----------------------------------------------------------------------------------------------------------------
Area 1 St. Area 2 Lake Total--District
Lawrence River Ontario One
----------------------------------------------------------------------------------------------------------------
Base Operating Expenses................................... $368,186 $372,911 $741,097
Base Target Pilot compensation............................ +$1,207,209 +$725,848 +1,933,057
Base Return Element \1\................................... +$8,087 +$10,185 +$18,272
=====================================================
Subtotal.............................................. =$1,583,482 =$1,108,944 =$2,692,426
-----------------------------------------------------
Base Bridge Hours......................................... /6,000 /9,000 /15,000
[[Page 39632]]
Base Cost per Bridge Hour................................. =$263.91 =$123.22 =$179.50
----------------------------------------------------------------------------------------------------------------
\1\ The return element is defined at Appendix B to 46 CFR part 404 as the sum of net income and interest
expense. The return element can be considered the sum of the return to equity capital (net increase), and the
return to debt (the interest expense).
Table 2.--Base Period Total Economic Cost (Cost Per Bridge Hour)--District Two
----------------------------------------------------------------------------------------------------------------
Area 5--
Area 4--Lake Southeast Shoal Total--District
Erie to Port Huron, Two
MI
----------------------------------------------------------------------------------------------------------------
Base Operating Expenses................................... $427,333 $632,117 $1,059,450
Base Target Pilot compensation............................ +$725,848 +$1,408,410 +$2,134,258
Base Return Element....................................... +$20,354 +$24,275 +$44,629
-----------------------------------------------------
Subtotal.............................................. =$1,173,535 =$2,064,802 =$3,238,337
=====================================================
Base Bridge Hours......................................... /9,000 /7,000 /16,000
Base Cost per Bridge Hour................................. =$130.39 =$294.97 =$202.40
----------------------------------------------------------------------------------------------------------------
Table 3.--Base Period Total Economic Cost (Cost Per Bridge Hour)--District Three
----------------------------------------------------------------------------------------------------------------
Area 6--Lakes
Huron and Area 7--St. Area 8--Lake Total--District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Base Operating Expenses................. $693,924 $271,563 $433,484 $1,398,971
Base Target Pilot compensation.......... +$1,451,696 +$804,806 +$1,016,187 +$3,272,689
Base Return Element..................... +$25,283 +$9,768 +$15,451 +$50,502
-----------------------------------------------------------------------
Subtotal............................ =$2,170,903 =$1,086,137 =$1,465,122 =$4,722,162
=======================================================================
Base Bridge Hours....................... /18,000 /4,000 /12,600 /34,600
Base Cost per Bridge Hour............... =$120.61 =$271.53 =$116.28 =$136.48
----------------------------------------------------------------------------------------------------------------
Step 2. Calculating the Expense Multiplier.
The expense multiplier is the ratio of both the base operating
expenses and the base return element to the base target pilot
compensation by Area. This step requires that we add together 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 following tables show the calculations:
1. Expense Multiplier for District One
----------------------------------------------------------------------------------------------------------------
Area 1--St. Area 2--Lake Total--District
Lawrence River Ontario One
----------------------------------------------------------------------------------------------------------------
Base Operating Expense.................................... $368,186 $372,911 $741,097
Base Return Element....................................... +$8,087 +$10,185 +$18,272
-----------------------------------------------------
Subtotal.............................................. =$376,273 =$383,096 =$759,369
=====================================================
Base Target Pilot Compensation............................ /$1,207,209 /$725,848 /$1,933,057
Expense Multiplier........................................ =.31169 =.52779 =.39283
----------------------------------------------------------------------------------------------------------------
2. Expense Multiplier for District Two
----------------------------------------------------------------------------------------------------------------
Area 5--
Area 4--Lake Southeast Shoal Total--District
Erie to Port Huron, Two
MI
----------------------------------------------------------------------------------------------------------------
Base Operating Expense.................................... $427,333 $632,117 $1,059,450
Base Return Element....................................... +$20,354 +$24,275 +$44,629
-----------------------------------------------------
Subtotal.............................................. =$447,687 =$656,392 =$1,104,079
=====================================================
Base Target Pilot Compensation............................ /$725,848 /$1,408,410 /$2,134,258
[[Page 39633]]
Expense Multiplier........................................ =.61678 =.46605 =.51731
----------------------------------------------------------------------------------------------------------------
3. Expense Multiplier for District Three
----------------------------------------------------------------------------------------------------------------
Area 6--Lakes
Huron and Area 7--St. Area 8--Lake Total--District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Base Operating Expense.................. $693,924 $271,563 $433,484 $1,398,971
Base Return Element..................... +$25,283 +$9,768 +$15,451 +$50,502
-----------------------------------------------------------------------
Subtotal............................ =$719,207 =$281,331 =$448,935 =$1,449,473
=======================================================================
Base Target Pilot Compensation.......... /$1,451,696 /$804,806 /$1,016,187 /$3,272,689
Expense Multiplier...................... =.49543 =.34956 =.44178 =.44290
----------------------------------------------------------------------------------------------------------------
Step 3. Calculating the new annual ``projection of target pilot
compensation'' using the same procedures found in Step 2 of Appendix A
to 46 CFR part 404.
Step 2 of Appendix A requires the Director of Great Lakes Pilotage
to:
1. Determine the new target rate of compensation;
2. Determine the new number of pilots needed in each pilotage Area;
and
3. Multiply new target compensation by the new number of pilots
needed to project total new target pilot compensation needed in each
Area.
Each step is detailed as follows:
1. Determination of New Target Pilot Compensation
Target pilot compensation for pilots providing services in
undesignated waters approximates the average annual compensation for
first mates on U.S. Great Lakes vessels. For this notice of proposed
rulemaking (NPRM), the average annual compensation for first mates is
determined based on the AMO union contract effective August 1, 2005,
for wages and benefits received by first mates.
Target pilot compensation for pilots providing services in
designated waters approximates the average annual compensation for
masters on U.S. Great Lakes vessels. It is calculated as 150 percent of
the compensation earned by first mates on U.S. Great Lakes vessels. The
Office of Great Lakes Pilotage has consistently calculated this by
first multiplying the first mates' salary by 150 percent and then
adding benefits, since this is the best approximation of the average
annual compensation for masters.
The following tables (7, 8, and 9) summarize how target pilot
compensation is determined for undesignated and designated waters:
Table 7.--Wages
----------------------------------------------------------------------------------------------------------------
(First mate)
pilots on (Master) pilots
Monthly component undesignated on designated
waters waters
----------------------------------------------------------------------------------------------------------------
$226.96 (Daily Rate) x 54 (Days)............................................ $12,256 N/A
-----------------------------------
Monthly Total x 9 Months = Total Wages.................................. $110,303 N/A
===================================
Wages: $226.96 (Daily Rate) x 54 x 1.5...................................... N/A $18,384
-----------------------------------
Monthly Total x 9 Months = Total Wages.................................. N/A $165,454
----------------------------------------------------------------------------------------------------------------
Table 8.--Benefits
----------------------------------------------------------------------------------------------------------------
(First mate)
pilots on (Master) pilots
Monthly component undesignated on designated
waters waters
----------------------------------------------------------------------------------------------------------------
Employer Contribution--401(K) Plan........................................ $612.79 $919.19
Clerical.................................................................. +$340.44 +$340.44
Health.................................................................... +$2,512.51 +$2,512.51
Pension................................................................... +$1,283.10 +$1,283.10
-------------------------------------
Monthly Total Benefits................................................ =$4,748.84 =$5,055.24
=====================================
Monthly Total Benefits x 9 months..................................... =$42,740 =$45,497
----------------------------------------------------------------------------------------------------------------
[[Page 39634]]
Table 9.--Wages and Benefits
----------------------------------------------------------------------------------------------------------------
(First mate)
pilots on (Master) pilots
undesignated on designated
waters waters
----------------------------------------------------------------------------------------------------------------
Wages..................................................................... $110,303 $165,454
Benefits.................................................................. +$42,740 +$45,497
-------------------------------------
Total Wages Plus Benefits............................................. =$153,042 =$210,951
----------------------------------------------------------------------------------------------------------------
The monthly component for wages is derived by multiplying the daily
rate of pay by 54 days, instead of 30 days, based upon the following
formulation obtained from the AMO union contract:
a. Average Working Days per month--30.5
b. Vacation Days per month--15.0
c. Weekend days per month--4.0
d. Holidays per month--1.5
e. Bonus per month--3.0
Monthly Multiplier--54.0
Additionally, we use a nine-month multiplier in computing annual
wages and benefits because the season is nine months in duration vice
12 months.
Effective August 1, 2002, the matching benefit increased to 50
percent for each participating 401(k) employee up to a maximum of 5
percent of a participating employee's compensation. For purposes of
this benefit, the AMO union contracts interpret ``employee
compensation'' to mean base wages. District Two has a pension plan,
while District Three has a 401(k) plan. District One does not provide
either a 401(k) or pension plan for its members. Therefore, to conform
to the 401(k) matching benefit provision under the AMO union contracts,
pilot compensation for Districts Two and Three are increased. The
increase in undesignated waters is $5,515.20 and for designated waters
is $8,272.80 per pilot. These increases are 5 percent of compensation,
respectively.
District One does not administer any form of 401(k) or retirement
plan. At the recommendation of the independent accountant, the Coast
Guard has determined that the District One Association pilots should
receive the same employer matching benefits as Districts Two and Three.
Accordingly, the compensation base of District One is adjusted to
include an amount equivalent to an employer's contribution under the
AMO 401(k) matching plan, which increases pilot compensation in
undesignated waters by $5,515.20 and for designated waters by $8,272.80
per pilot.
2. Determination of New Number of Pilots Needed
The number of pilots needed in each Area of designated waters is
established by dividing the projected bridge hours for that Area by
1,000. Bridge hours are the number of hours a pilot is aboard a vessel
providing pilotage service. The number of pilots needed in each Area of
undesignated waters is established by dividing the projected bridge
hours for that Area by 1,800. These hours are the target number of
bridge hours a pilot needs to earn target pilot compensation.
Projected bridge hours are based on the vessel traffic that pilots
are expected to serve. The Coast Guard projects that traffic for the
2006 navigation season will remain the same as it did in 2005. As
indicated, these projections were made based upon historical data, and
all other relevant information provided by pilots and industry.
Dividing the projected annual number of bridge hours per Area by the
target number of bridge hours per pilot results in the number of pilots
that will be needed in each Area to service vessel traffic.
The following table, ``Number of Pilots Needed,'' shows the
calculation of the number of pilots needed in each Area for the 2006
navigation season rounded to the next whole pilot:
Number of Pilots Needed
----------------------------------------------------------------------------------------------------------------
Divided by
Pilotage area Projected 2006 bridge-hour Pilots needed
bridge hours target
----------------------------------------------------------------------------------------------------------------
AREA 1.................................................... 6,000 1,000 6
AREA 2.................................................... 9,000 1,800 5
AREA 4.................................................... 9,000 1,800 5
AREA 5.................................................... 7,000 1,000 7
AREA 6.................................................... 18,000 1,800 10
AREA 7.................................................... 4,000 1,000 4
AREA 8.................................................... 12,600 1,800 7
-----------------------------------------------------
Total Pilots Needed................................... ................ ................ 44
----------------------------------------------------------------------------------------------------------------
3. Projection of New Total Target Pilot Compensation
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 target pilot compensation for pilots working
in that Area.
The results for each pilotage Area are set out as follows:
[[Page 39635]]
District One
----------------------------------------------------------------------------------------------------------------
Area 1--St. Area 2--Lake Total--District
Lawrence River Ontario One
----------------------------------------------------------------------------------------------------------------
Projection of target pilot compensation................ $1,265,708 $765,212 $2,030,920
----------------------------------------------------------------------------------------------------------------
District Two
----------------------------------------------------------------------------------------------------------------
Area 5--Southeast
Area 4--Lake Erie Shoal to Port Total--District
Huron, MI Two
----------------------------------------------------------------------------------------------------------------
Projection of target pilot compensation................ $765,212 $1,476,660 $2,241,872
----------------------------------------------------------------------------------------------------------------
District Three
----------------------------------------------------------------------------------------------------------------
Area 6--Lakes
Huron and Area 7--St. Area 8--Lake Total--District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Projection of target pilot $1,530,424 $843,805 $1,071,297 $3,445,526
compensation.......................
----------------------------------------------------------------------------------------------------------------
Step 4: Increase the new total target pilot compensation in Step 3
by the expense multiplier in Step 2.
The increase in Step 4 refers to the proportional increase of
operating expense when new total target pilot compensation is
multiplied by the expense multiplier. The calculations for Step 4
appear as follows:
District One
----------------------------------------------------------------------------------------------------------------
Area 1--St. Area 2--Lake Total--District
Lawrence River Ontario One
----------------------------------------------------------------------------------------------------------------
Pilot Compensation........................................ $1,265,708 $765,212 $2,030,920
Expense Multiplier........................................ x.31169 x.52779 x.39283
Projected Increase in Operating Expense................... =$394,506 =$403,872 =$797,813
----------------------------------------------------------------------------------------------------------------
District Two
----------------------------------------------------------------------------------------------------------------
Area 5--
Area 4--Lake Southeast Shoal Total--District
Erie to Port Huron, Two
MI
----------------------------------------------------------------------------------------------------------------
Pilot Compensation........................................ $765,212 $1,476,660 $2,241,872
Expense Multiplier........................................ x.61678 x.46605 x.51731
Projected increase in Operating Expense................... =$471,966 =$688,200 =$1,159,749
----------------------------------------------------------------------------------------------------------------
District Three
----------------------------------------------------------------------------------------------------------------
Area 6--Lakes
Huron and Area 7--St. Area 8--Lake Total--District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Pilot Compensation...................... $1,530,424 $843,805 $1,071,297 $3,445,526
Expense Multiplier...................... x.49543 x.34956 x.44178 x.44290
Projected Increase in Operating Expense. =$758,211 =$294,964 =$473,282 =$1,526,023
----------------------------------------------------------------------------------------------------------------
Step 5(a): Adjust the result in Step 4, as required, for inflation
or deflation.
The calculations for Step 5(a) appear below. Inflation rates were
obtained from the U.S. Department of Labor, Bureau of Labor Statistics,
``Midwest Economy--Consumer Prices,'' using the years 2003 to 2004
annual average in the amount of 2.4 percent per year.
District One
----------------------------------------------------------------------------------------------------------------
Area 1--St. Area 2--Lake Total--District
Lawrence River Ontario One
----------------------------------------------------------------------------------------------------------------
Projected Increase in Operating Expense................... $394,506 $403,872 $797,813
Inflation Rate............................................ x1.024 x1.024 x1.024
[[Page 39636]]
Adjusted Projected Increase in Operating Expense.......... =$403,974 =$413,565 =$816,961
----------------------------------------------------------------------------------------------------------------
District Two
----------------------------------------------------------------------------------------------------------------
Area 5--
Area 4--Lake Southeast Shoal Total--District
Erie to Port Huron, Two
MI
----------------------------------------------------------------------------------------------------------------
Projected Increase in Operating Expense................... $471,966 $688,200 $1,159,749
Inflation Rate............................................ x1.024 x1.024 x1.024
Adjusted Projected Increase in Operating Expense.......... =$483,293 =$704,717 =$1,187,583
----------------------------------------------------------------------------------------------------------------
District Three
----------------------------------------------------------------------------------------------------------------
Area 6--Lakes
Huron and Area 7--St. Area 8--Lake Total--District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Projected Increase in Operating Expense. $758,211 $294,964 $473,282 $1,526,023
Inflation Rate.......................... x1.024 x1.024 x1.024 X 1.024
Adjusted Projected Increase in Operating =$776,408 =$302,043 =$484,641 =$1,562,648
Expense................................
----------------------------------------------------------------------------------------------------------------
Step 5(b): Calculate Projected Total Economic Costs.
After the inflation adjustments are made to the Operating Expenses
in Step 5(a), the adjusted amount (Adjusted Projected Increase in
Operating Expense) is added to the New Total Target Pilot Compensation,
as determined in Step 3, to arrive at a Projected Total Economic Cost.
The Total Economic Cost is necessary in order to determine the Total
Unit Cost in Step 6. The calculations for Step 5(b) appear as follows:
District One
----------------------------------------------------------------------------------------------------------------
Area 1--St. Area 2--Lake Total--District
Lawrence River Ontario One
----------------------------------------------------------------------------------------------------------------
Adjusted Projected Increase in Operating Expense.......... $403,974 $413,565 $816,961
Projected Target Pilot Compensation....................... +$1,265,708 +$765,212 +$2,030,920
Projected Total Economic Cost............................. =$1,669,683 =$1,178,777 =$2,847,881
----------------------------------------------------------------------------------------------------------------
District Two
----------------------------------------------------------------------------------------------------------------
Area 5--
Area 4--Lake Southeast Shoal Total--District
Erie to Port Huron, Two
MI
----------------------------------------------------------------------------------------------------------------
Adjusted Projected Increase in Operating Expense.......... $483,293 $704,717 $1,187,583
Projected Target Pilot Compensation....................... +$765,212 +$1,476,660 +$2,241,872
Projected Total Economic Cost............................. =$1,248,505 =$2,181,376 =$3,429,454
----------------------------------------------------------------------------------------------------------------
District Three
----------------------------------------------------------------------------------------------------------------
Area 6--Lakes
Huron and Area 7--St. Area 8--Lake Total--District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Adjusted Projected Increase in Operating $766,408 $302,043 $484,641 $1,562,648
Expense................................
Projected Target Pilot Compensation..... +$1,530,424 +$843,805 +$1,071,297 +$3,445,526
Projected Total Economic Cost........... =$2,306,832 =$1,145,848 =$1,555,937 =$5,008,174
----------------------------------------------------------------------------------------------------------------
Step 6: Divide the Result in Step 5(b) by Projected Bridge Hours to
Determine Total Unit Costs (Adjusted Cost per Bridge Hour by Area).
[[Page 39637]]
District One
----------------------------------------------------------------------------------------------------------------
Area 1--St. Area 2--Lake Total--District
Lawrence River Ontario One
----------------------------------------------------------------------------------------------------------------
Projected Total Economic Costs............................ $1,669,683 $1,178,777 $2,847,881
Projected Bridge Hours.................................... /6,000 /9,000 /15,000
Total Unit Costs.......................................... =$278.28 =$130.98 =$189.86
----------------------------------------------------------------------------------------------------------------
District Two
----------------------------------------------------------------------------------------------------------------
Area 5--
Area 4--Lake Southeast Shoal Total--District
Erie to Port Huron, Two
MI
----------------------------------------------------------------------------------------------------------------
Projected Total Economic Costs............................ $1,248,505 $2,181,376 $3,429,454
Projected Bridge Hours.................................... /9,000 /7,000 /16,000
Total Unit Costs.......................................... =$138.72 =$311.63 =$214.34
----------------------------------------------------------------------------------------------------------------
District Three
----------------------------------------------------------------------------------------------------------------
Area 6--Lakes
Huron and Area 7--St. Area 8--Lake Total--District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Projected Total Economic Costs.......... $2,306,832 $1,145,848 $1,555,937 $5,008,174
Projected Bridge Hours.................. /18,000 /4,000 /12,600 /34,600
Total Unit Costs........................ =$128.16 =$286.46 =$123.49 =$144.74
----------------------------------------------------------------------------------------------------------------
Step 7: Divide prospective unit costs in Step 6 by the base period
unit costs in Step 1.
(This step calculates the percent change in unit cost from the base
period to the prospective unit cost.)
District One
----------------------------------------------------------------------------------------------------------------
Area 1--St. Area 2--Lake Total--District
Lawrence River Ontario One
----------------------------------------------------------------------------------------------------------------
Prospective Unit Cost (Total Unit Cost)................... $278.28 $130.98 $189.86
Base Period Unit Cost..................................... /$263.91 /$123.22 /$179.50
Percentage Change in Unit Cost (Rate Adjustment).......... =1.0544 =1.0630 =1.0577
----------------------------------------------------------------------------------------------------------------
District Two
----------------------------------------------------------------------------------------------------------------
Area 5--
Area 4--Lake Southeast Shoal Total--District
Erie to Port Huron, Two
MI
----------------------------------------------------------------------------------------------------------------
Prospective Unit Cost (Total Unit Cost)................... $138.72 $311.63 $214.34
Base Period Unit Cost..................................... /$130.39 /$294.97 /$202.40
Percentage Change in Unit Cost (Rate Adjustment).......... =1.0639 =1.0565 =1.0590
----------------------------------------------------------------------------------------------------------------
District Three
----------------------------------------------------------------------------------------------------------------
Area 6--Lakes
Huron and Area 7--St. Area 8--Lake Total--District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Prospective Unit Cost (Total Unit Cost). $128.16 $286.46 $123.49 $144.74
Base Period Unit Cost................... /$120.61 /$271.53 /$116.28 /$136.48
Percentage Change in Unit Cost (Rate =1.0626 =1.0550 =1.0620 =1.0606
Adjustment)............................
----------------------------------------------------------------------------------------------------------------
Step 8: Adjust the base period rates by the percentage change in
unit costs in Step 7.
The ``Percentage Change in Unit Cost'' in Step 7 represents the
percentage change or rate adjustment that will be applied to existing
base period rates and charges in subpart D of 46 CFR part 401. For
instance, in Area 1, the Percentage Change in Unit Cost of 1.0544
represents a 5.44 percent rate adjustment over the existing Area 1
rate. The rate adjustments are summarized by Areas in the following
table. The actual adjustments are shown in the proposed amendments to
regulatory text that follow this preamble. Each of the area rates
listed in part 401 has been
[[Page 39638]]
adjusted according to this table. Results are rounded to nearest whole
dollar.
2006 Area Rate Changes
------------------------------------------------------------------------
Then the
percentage
If pilotage service is required in: increases over
the current
rate is:
------------------------------------------------------------------------
Area 1 (Designated waters).............................. 5.44
Area 2 (Undesignated waters)............................ 6.30
Area 4 (Undesignated waters)............................ 6.39
Area 5 (Designated waters).............................. 5.65
Area 6 (Undesignated waters)............................ 6.26
Area 7 (Designated waters).............................. 5.50
Area 8 (Undesignated waters)............................ 6.20
------------------------------------------------------------------------
IV. Regulatory Evaluation
Executive Order 12866, ``Regulatory Planning and Review,'' 58 FR
51735, October 4, 1993, requires a determination whether a regulatory
action is ``significant'' and therefore subject to review by the Office
of Management and Budget (OMB) and subject to the requirements of the
Executive Order. This rulemaking is not significant under Executive
Order 12866 and has not been reviewed by OMB.
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
``Purpose of the Proposed Rule'' 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 review, we are adjusting the pilotage rates
for the 2006 shipping season to generate sufficient revenue to cover
allowable expenses, target pilot compensation, and returns on
investment.
This proposed rule would provide an additional six percent average
rate adjustment for the Great Lakes system over the rate adjustment
found in the 2005 final rule. This proposed increase is the result of
adjustments for inflation, target pilot compensation, and operating
expenses of the pilot associations.
These adjustments to Great Lakes pilotage rates meet the
requirements set forth in 46 CFR part 404 for similar compensation
levels between Great Lakes pilots and industry. They also include
adjustments for inflation and changes in association expenses to
maintain these compensation levels.
The increase in pilotage rates will be an additional cost for
shippers to transit the Great Lakes system. This proposed rule would
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. However, the
Coast Guard issued a policy position several years ago stating that the
statute applies only to commercial vessels and not to recreational
vessels.
Owners and operators of other vessels that are not affected by this
proposed rule, such as recreational boats and vessels only operating
within the Great Lakes system, may elect to purchase pilotage services.
However, this election is voluntary and does not affect the Coast
Guard's calculation of the rate increase and is not a part of our
estimated national cost to shippers.
We reviewed a sample of pilot source forms, which are the forms
used to record pilotage transactions on vessels, and discovered very
few cases of U.S. Great Lakes vessels (i.e., domestic vessels without
registry operating only in the Great Lakes) that purchased pilotage
services. There was one case where the vessel operator purchased
pilotage service in District One to presumably leave the Great Lakes
system. We assume some vessel owners and operators may also choose to
purchase pilotage services if their vessels are carrying hazardous
substances or were navigating the Great Lakes system with inexperienced
personnel. Based on information from the Coast Guard Office of Great
Lakes Pilotage, we have determined that these vessels voluntarily chose
to use pilots and, therefore, are exempt from pilotage requirements.
We used 2003 arrival data from the Coast Guard's National Vessel
Movement Center (NVMC) to estimate the annual number of vessels
affected by the rate adjustment to be 214 vessels that, for some, make
several journeys or trips 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 several distinct stops docking,
offloading, and onloading at facilities in Great Lakes ports. Of the
total trips for the 214 vessels, there were approximately 1,090 U.S.
port arrivals before the vessels left the Great Lakes system, based on
2003 vessel arrival data from the NVMC.
We used district pilotage revenues from the independent
accountant's reports of the Districts' financial statements to estimate
the additional cost to shippers
