2008 Rates for Pilotage on the Great Lakes, 6085-6099 [08-474]

Download as PDF sroberts on PROD1PC70 with PROPOSALS Federal Register / Vol. 73, No. 22 / Friday, February 1, 2008 / Proposed Rules accounting procedures not addressed in the Report? If so, please elaborate. 3. If a simplified approach should not be used, what approach should be used and why? Section 3 of the Report (at 25–29) addresses difficulties with identifying and valuing assets and liabilities of the CPF, noting, for example, that efforts to determine each asset’s theoretical enterprise origin and usage could be a significant undertaking that, in any event, might yield less than satisfactory results. Id. at 26. Treasury suggests four potential methods to attempt to assign assets to the theoretical competitive enterprise. Id. at 26–27. It notes that one of its methods is similar to the approach in section 2011(e)(5)(B). Id. at 27. Treasury observes that the PAEA does not contain a similar test for assigning liabilities. Id. at 29. Recognizing the significant tax implications raised by the various methods, Treasury suggests that ‘‘[a] possible approach to simplifying the assumed tax calculation to maximize net income after taxes and still meet the PAEA ‘shall be the greater of’ total assets CPF quantification test, is to use the theoretical [Postal Service] Competitive enterprise income before taxes and apply an appropriate, set effective tax rate.’’ Id. Lastly, Treasury indicates that the CPF should be subject to a reasonable level of management and reporting oversight and, further that the reporting should be subject to independent review to ensure that it is fairly stated in all material respects. Id. 1. Does the PAEA allow a simplified approach to assigning assets to the competitive products fund for financial disclosure purposes and/or calculating an assumed Federal income tax? 2. If a simplified approach is allowed, should it be used? 3. Section 3 of the Report notes that the PAEA does not define assets, but that the PAEA’s requirement to pay principal or interest on obligations issued for the provision of competitive products in section 2011(e)(5) supports the conclusion that it is permissible to define assets as net assets. The Commission asks commenters to address whether or not this is a reasonable assumption. 4. Does the PAEA require an assignment of liabilities to the CPF? If so, on what basis should they be assigned? 5. Should a full set of financial statements, including income statement, balance sheet and statement of cash flow, be prepared for the CPF? 6. What level of oversight should apply to the CPF? VerDate Aug<31>2005 19:34 Jan 31, 2008 Jkt 214001 6085 7. What accounting principles should apply to the CPF? 8. What level of independent review of the Postal Service’s CPF accounting and financial statements is sufficient and necessary under the PAEA? 9. What type (public or private) of entity would be best suited to perform that independent review? 10. Is there any information, not required to be reported under the PAEA, which should be included in the reports required under section 2011(h)(2)(B)(i)(III)? DEPARTMENT OF HOMELAND SECURITY V. Public Representative 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 8.17% for the 2008 shipping season to generate sufficient revenue to cover allowable expenses, target pilot compensation, and returns on investment. We also are proposing a clarification of the duty of pilots and pilot associations to cooperate with lawful authority. This rulemaking promotes the Coast Guard strategic goal of maritime safety. DATES: Comments and related material must reach the Docket Management Facility on or before March 3, 2008. ADDRESSES: You may submit comments identified by Coast Guard docket number USCG–2007–0039 to the Docket Management Facility at the U.S. Department of Transportation. To avoid duplication, please use only one of the following methods: (1) Online: https:// www.regulations.gov. (2) Mail: Docket Management Facility (M–30), U.S. Department of Transportation, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue, SE., Washington, DC 20590– 0001. (3) Hand delivery: Room W12–140 on the Ground Floor of the West Building, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The telephone number is 202–366–9329. (4) Fax: 202–493–2251. FOR FURTHER INFORMATION CONTACT: For questions on this proposed rule, call Mr. Michael Sakaio, Program Analyst, Great Lakes Pilotage Branch, Commandant (CG–54122), U.S. Coast Guard, at 202– 372–1538, by fax 202–372–1929, or by e-mail at Michael.Sakaio@uscg.mil. For questions on viewing or submitting material to the docket, call Renee V. Wright, Program Manager, Docket Operations, telephone 202–366–9826. SUPPLEMENTARY INFORMATION: Section 505 of title 39 requires the designation of an officer of the Commission in all public proceedings to represent the interests of the general public. The Commission hereby designates Patricia A. Gallagher to serve as the Public Representative, representing the interests of the general public. Pursuant to this designation, she will direct the activities of Commission personnel assigned to assist her and, will, upon request, provide their names for the record. Neither Patricia A. Gallagher nor any of the assigned personnel will participate in or provide advice on any Commission decision in this proceeding. VI. Ordering Paragraphs It is Ordered: 1. As set forth in the body of this notice, Docket No. PI2008–2 is established for the purpose of receiving comments regarding Treasury’s Report and recommendations as well as questions posed by the Commission in response to the Report. 2. Interested persons may submit comments no later than 60 days from the date of publication of this notice in the Federal Register. 3. Reply comments also may be filed no later than 90 days from the date of publication of this notice in the Federal Register. 4. Patricia A. Gallagher is designated as the Public Representative representing the interests of the general public in this proceeding. 5. The Secretary shall cause this notice to be published in the Federal Register. By the Commission. Dated: January 28, 2008. Steven W. Williams, Secretary. [FR Doc. E8–1893 Filed 1–31–08; 8:45 am] BILLING CODE 7710–FW–P PO 00000 Frm 00030 Fmt 4702 Sfmt 4702 Coast Guard 46 CFR Part 401 [Docket No. USCG–2007–0039] RIN 1625–AB23 2008 Rates for Pilotage on the Great Lakes Coast Guard, DHS. Notice of proposed rulemaking. AGENCY: ACTION: E:\FR\FM\01FEP1.SGM 01FEP1 6086 Federal Register / Vol. 73, No. 22 / Friday, February 1, 2008 / Proposed Rules 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: Calculate total economic cost for the base period (cost per bridge hour by area for the base period). Step 2. Calculate the expense multiplier. Step 3. Calculate annual projection of target pilot compensation. Step 4: Increase the projected target pilot compensation in Step 3 by the expense multiplier in Step 2. Step 5: Adjust the result in Step 4, as required, for inflation or deflation, and calculate projected total economic cost. Step 6: Divide the result in Step 5 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. C. Amending 46 CFR 401.700 and 710 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 I. Indian Tribal Governments J. Energy Effects K. Technical Standards L. Environment sroberts on PROD1PC70 with PROPOSALS 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:// www.regulations.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 the docket number for this rulemaking (USCG–2007–0039), indicate the specific section of this document to which each comment applies, and give the reason for each comment. We recommend that you include your name and a mailing VerDate Aug<31>2005 19:34 Jan 31, 2008 Jkt 214001 address, an e-mail address, or a phone number in the body of your document so that we can contact you if we have questions regarding your submission. For example, we may ask you to resubmit your comment if we are not able to read your original submission. 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 proposed 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://www.regulations.gov at any time and click on ‘‘Search for Dockets,’’ and enter the docket number for this rulemaking (USCG–2007–0039) in the Docket ID box, and click enter. You may also visit the Docket Management Facility in Room W12–140 on the ground floor of the DOT West Building, 1200 New Jersey Avenue, SE., Washington, DC 20590, 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:// DocketsInfo.dot.gov. PO 00000 Frm 00031 Fmt 4702 Sfmt 4702 II. Program History This notice of proposed rulemaking (NPRM) is issued pursuant to Coast Guard regulations in 46 CFR Chapter III, Parts 401–404. Those regulations implement the Great Lakes Pilotage Act of 1960, 46 U.S.C. Chapter 93, which requires foreign-flag vessels and U.S.flag vessels in foreign trade to use federally registered Great Lakes pilots while transiting the St. Lawrence Seaway and the Great Lakes system, and which requires the Secretary of Homeland Security to ‘‘prescribe by regulation rates and charges for pilotage services, giving consideration to the public interest and the costs of providing the services.’’ 46 U.S.C. 9303(f). 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 setting of new rates at least once every five years, or sooner, if annual E:\FR\FM\01FEP1.SGM 01FEP1 Federal Register / Vol. 73, No. 22 / Friday, February 1, 2008 / Proposed Rules reviews show a need. 46 CFR 404.1. To assist in calculating pilotage rates, the pilotage associations are required to submit to the Coast Guard annual financial statements prepared by certified public accounting firms. In addition, every fifth year, in connection with the mandatory rate adjustment, the Coast Guard contracts with an independent accounting firm to conduct a full audit of the accounts and records of the pilotage associations and prepare and submit financial reports relevant to the ratemaking process. In those years when a full ratemaking is conducted, the Coast Guard generates the pilotage rates using Appendix A to 46 CFR Part 404. Between the five-year full ratemaking intervals, the Coast Guard annually reviews the pilotage rates using Appendix C to Part 404, and adjusts rates when deemed appropriate. Terms and formulas used in Appendix A and Appendix C are defined in Appendix B to Part 404. The last full ratemaking using the Appendix A methodology was concluded on April 3, 2006 (71 FR 16501). Rates for the 2007 shipping season were adjusted based on an Appendix C review (interim rule, 72 FR 8115, Feb. 23, 2007; final rule, 72 FR 53158, Sep. 18, 2007). The present rulemaking proposes rate adjustments for the 2008 shipping season, based once again on an Appendix C review. III. Purpose of the Proposed Rule 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 previous ratemaking, no adjustment 6087 to the rates will be initiated. However, if the annual review indicates that an adjustment is necessary, then the Coast Guard will establish new pilotage rates pursuant to 46 CFR 404.10 and applying either Appendix A or Appendix C. A. Proposed Pilotage Rate Changes— Summarized The Appendix C ratemaking methodology is intended for use during the years between Appendix A full ratemaking reviews and adjustments. This section summarizes the rate changes proposed for 2008, and then discusses in detail how the proposed changes were calculated under Appendix C. We are proposing an average increase of 8.17 percent across all Districts over the last pilotage rate adjustment. Table 1 summarizes the rate increases proposed for each Area. TABLE 1.—2008 AREA RATE CHANGES 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 8.17 percent. These changes are the same in every Area. sroberts on PROD1PC70 with PROPOSALS Then the percentage increases over the current rate is: B. Calculating the Rate Adjustment The Appendix C ratemaking calculation involves eight steps: Step 1: Calculate the total economic costs for the base period (i.e. pilot compensation expense plus all other recognized expenses plus the return element) and divide by the total bridge hours used in setting the base period rates; Step 2: Calculate the ‘‘expense multiplier,’’ the ratio of other expenses and the return element to pilot compensation for the base period; Step 3: Calculate an annual ‘‘projection of target pilot compensation’’ using the same VerDate Aug<31>2005 19:34 Jan 31, 2008 Jkt 214001 procedures found in Step 2 of Appendix A; Step 4: Increase the projected pilot compensation in Step 3 by the expense multiplier in Step 2; Step 5: Adjust the result in Step 4, as required, for inflation or deflation; Step 6: Divide the result in Step 5 by projected bridge hours to determine total unit costs; Step 7: Divide prospective unit costs in Step 6 by the base period unit costs in Step 1; and Step 8: Adjust the base period rates by the percentage changes in unit cost in Step 7. The base data used to calculate each of the eight steps comes from the 2007 Appendix C review. The Coast Guard also used the most recent union contracts between the American Maritime Officers’ (AMO) union and vessel owners and operators on the Great Lakes to determine target pilot compensation. Bridge hour projections for the 2008 season have been obtained from historical data, pilots, and PO 00000 Frm 00032 Fmt 4702 Sfmt 4702 7.78 8.41 8.50 7.98 8.37 7.83 8.31 industry. Bridge hours are the number of hours a pilot is aboard a vessel providing pilotage service. All documents and records used in this rate calculation have been placed in the public docket for this rulemaking and are available for review at the addresses listed under ADDRESSES. Some values may not total exactly due to format rounding for presentation in charts and explanations in this section. The rounding does not affect the integrity or truncate the real value of all calculations in the ratemaking methodology described below. Step 1: Calculate the total economic cost for the base period. In this step, for each Area, we add the total cost of target pilot compensation, all other recognized expenses, and the return element (net income plus interest). We divide this sum by the total bridge hours for each Area. The result is the cost in each Area of providing pilotage service per bridge hour. Tables 2 through 4 summarize the Step 1 calculations: E:\FR\FM\01FEP1.SGM 01FEP1 6088 Federal Register / Vol. 73, No. 22 / Friday, February 1, 2008 / Proposed Rules TABLE 2.—TOTAL ECONOMIC COST FOR BASE PERIOD, DISTRICT ONE Area 1 St. Lawrence River Area 2 Lake Ontario Total District One Base operating expense .............................................................................................................. Base target pilot compensation ................................................................................................... Base return element .................................................................................................................... $431,313 +$1,368,253 +$8,802 $436,283 +$825,760 +$13,493 $867,596 +2,194,013 +$22,295 Subtotal ................................................................................................................................. Base bridge hours ....................................................................................................................... Base cost per bridge hour ........................................................................................................... =$1,808,368 ÷5,661 =$319.44 =$1,275,536 ÷7,993 =$159.58 =$3,083,904 ÷13,654 =$225.86 TABLE 3.—TOTAL ECONOMIC COST FOR BASE PERIOD, DISTRICT TWO Area 4 Lake Erie Area Southeast Shoal to Port Huron, MI Total District Two Base operating expense .............................................................................................................. Base target pilot compensation ................................................................................................... Base return element .................................................................................................................... $499,328 +$825,760 +$26,280 $737,052 +$1,596,295 +$30,711 $1,236,380 +$2,422,055 +$56,991 Subtotal ................................................................................................................................. Base bridge hours ....................................................................................................................... Base cost per bridge hour ........................................................................................................... =$1,351,368 ÷8,490 =$159.17 =$2,364,058 ÷6,395 =$369.67 =$3,715,426 ÷14,885 =$249.61 TABLE 4.—TOTAL ECONOMIC COST FOR BASE PERIOD, 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 target pilot compensation ....................................................................... Base return element ........................................................................................ $810,612 +$1,651,520 +$33,776 $319,193 +$912,168 +$9,872 $511,262 +$1,156,064 +$15,812 $1,641,067 +$3,719,752 +$59,460 Subtotal ..................................................................................................... Base bridge hours ........................................................................................... Base cost per bridge hour ............................................................................... =$2,495,908 ÷18,000 =$138.66 =$1,241,233 ÷3,863 =$321.50 =$1,683,138 ÷11,390 =$147.77 =$5,420,279 ÷33,253 =$163.00 Step 2. Calculate the expense multiplier. In this step, for each Area, we add the base operating expense and the base return element. Then we divide the sum by the base target pilot compensation to get the expense multiplier for each Area. The expense multiplier expresses, in percentage form, the relationship between all nonpilot compensation, all expenses, and pilot compensation for the base period. Tables 5 through 7 show the Step 2 calculations. TABLE 5.—EXPENSE MULTIPLIER, DISTRICT ONE Area 1 St. Lawrence River Area 2 Lake Ontario Total District One Base operating expense .............................................................................................................. Base return element .................................................................................................................... $431,313 +$8,802 $436,283 +$13,493 $867,596 +$22,295 Subtotal ................................................................................................................................. Base target pilot compensation ................................................................................................... Expense multiplier ....................................................................................................................... =$440,115 ÷$1,368,253 =.32166 =$449,776 ÷$825,760 =.54468 =$889,891 ÷$2,194,013 =.40560 sroberts on PROD1PC70 with PROPOSALS TABLE 6.—EXPENSE MULTIPLIER, DISTRICT TWO Area 4 Lake Erie Base operating expense .............................................................................................................. Base return element .................................................................................................................... VerDate Aug<31>2005 19:34 Jan 31, 2008 Jkt 214001 PO 00000 Frm 00033 Fmt 4702 Sfmt 4702 $499,328 +$26,280 E:\FR\FM\01FEP1.SGM 01FEP1 Area 5 Southeast Shoal to Port Huron, MI $737,052 +$30,711 Total District Two $1,236,380 +$56,991 6089 Federal Register / Vol. 73, No. 22 / Friday, February 1, 2008 / Proposed Rules TABLE 6.—EXPENSE MULTIPLIER, DISTRICT TWO—Continued Area 4 Lake Erie Subtotal ................................................................................................................................. Base target pilot compensation ................................................................................................... Expense multiplier ....................................................................................................................... =$525,608 ÷$825,760 =.63651 Area 5 Southeast Shoal to Port Huron, MI Total District Two =$767,763 ÷$1,596,295 =.48097 =$1,293,371 ÷$2,422,055 =.53400 Area 8 Lake Superior Total District Three TABLE 7.—EXPENSE MULTIPLIER, DISTRICT THREE Area 6 Lakes Huron and Michigan Area 7 St. Mary’s River Base operating expense .................................................................................. Base return element ........................................................................................ $810,612 +$33,776 $319,193 +$9,872 $511,262 +$15,812 $1,641,067 +$59,460 Subtotal ..................................................................................................... Base target pilot compensation ....................................................................... Expense multiplier ........................................................................................... =$844,388 ÷$1,651,520 =.51128 =$329,065 ÷$912,168 =.36075 =$527,074 ÷$1,156,064 =.45592 =$1,701,247 ÷$3,719,752 =.45716 Step 3. Calculate annual projection of target pilot compensation. In this step, which duplicates Step 2 from Appendix A, we determine the new target rate of compensation and the new number of pilots needed in each pilotage Area, in order to determine the new target pilot compensation for each Area. a. Determine new target rate of compensation. Target pilot compensation for pilots is based on the average annual compensation of first mates and masters on U.S. Great Lakes vessels. Compensation includes wages and benefits. For pilots in undesignated waters, we approximate the first mates’ compensation, and in designated waters we approximate the masters’ compensation (first mates’ wages multiplied by 150% plus benefits). To determine first mates’ and masters’ average annual compensation, we use data from the most recent AMO union contracts with the U.S. companies engaged in Great Lakes shipping. Where different AMO union agreements apply to different companies, we apportion the compensation provided by each agreement according to the percentage of tonnage represented by companies under each agreement. Our research for the 2007 ratemaking showed six companies operating under contract with the AMO union. Three of the six operated under one set of agreements and the other three operated under modified agreements. Since the 2007 ratemaking, one of the six companies has gone out of business, and a second no longer operates under an AMO union contract. On August 16, 2007, the Coast Guard received two new sets of agreements that updated wage and benefit information for the four companies now operating under AMO union contracts. The agreements involved a 5% wage rate increase effective August 1, 2006 and a 3% increase effective August 1, 2007. Under one set of agreements (‘‘Agreement A’’), the daily wage rate increased from $226.96 to $245.46, while under the other set of agreements (‘‘Agreement B’’) the daily wage rate was raised from $279.55 to $302.33. To calculate monthly wages, we apply the new Agreement A and Agreement B monthly multiplier of 49.5 to the daily rate. The new monthly multiplier is decreased from the multiplier of 54 that was contained in the 2003 contracts. It represents 30.5 average working days per month, 16 vacation days, and 3 bonus days. To calculate average annual compensation, we multiply monthly figures by 9 months, the length of the Great Lakes shipping season. Table 8 shows new wage calculations based on Agreements A and B. TABLE 8.—WAGES Pilots on undesignated waters Monthly component sroberts on PROD1PC70 with PROPOSALS AGREEMENT A: $245.46 daily rate × 49.5 days ............................................................................................................. AGREEMENT A: Monthly total × 9 months = total wages ............................................................................................... AGREEMENT B: $302.33 daily rate × 49.5 days ............................................................................................................. AGREEMENT B: Monthly total × 9 months = total wages ............................................................................................... Benefits under Agreements A and B include a health contribution rate of $66.69 per man-day and a pension plan contribution rate of $33.35 per man-day VerDate Aug<31>2005 19:34 Jan 31, 2008 Jkt 214001 under Agreement A, and $43.55 per man-day under Agreement B. The AMO 401K employer matching rate remained at 5% of the wage rate. A clerical PO 00000 Frm 00034 Fmt 4702 Sfmt 4702 Pilots on designated waters (undesignated × 150%) $12,150 $18,225 109,352 164,029 14,965 22,488 134,688 202,032 contribution included in the 2003 contracts was eliminated. Per the AMO union, the multiplier used to calculate monthly benefits is 45.5 days. E:\FR\FM\01FEP1.SGM 01FEP1 6090 Federal Register / Vol. 73, No. 22 / Friday, February 1, 2008 / Proposed Rules TABLE 9.—BENEFITS Pilots on undesignated waters Monthly component AGREEMENT A: Employer contribution, 401(K) plan (Monthly Wages × 5%) ................................................................ Pension = $33.35 × 45.5 days ............................................................................................................. Health = $66.69 × 45.5 days ................................................................................................................ AGREEMENT B: Employer contribution, 401(K) plan (Monthly Wages × 5%) ................................................................ Pension = $43.55 × 45.5 days ............................................................................................................. Health = $66.69 × 45.5 days ................................................................................................................ AGREEMENT A: Monthly total benefits ........................................................................................................................... AGREEMENT A: Monthly total benefits × 9 months ........................................................................................................ AGREEMENT B: Monthly total benefits ........................................................................................................................... AGREEMENT B: Monthly total benefits × 9 months ........................................................................................................ Pilots on designated waters $607.51 $1,517.43 $3,034.40 $911.27 $1,517.43 $3,034.40 $748.27 1,981.53 $3,034.40 $1,122.40 1,981.53 $3,034.40 =$5,159.33 =$5,463.09 =$46,434 =$49,168 =$5,764.19 =$6,138.32 =$51,878 =$55,245 Pilots on undesignated waters Pilots on designated waters $109,352 +$46,434 =$155,786 $134,688 +$51,878 =$186,566 $164,029 +$49,168 =$213,196 $202,032 +$55,245 =$257,277 Table 10 totals the wages and benefits under each agreement. TABLE 10.—TOTAL WAGES AND BENEFITS UNDER EACH AGREEMENT AGREEMENT AGREEMENT AGREEMENT AGREEMENT AGREEMENT AGREEMENT A: A: A: B: B: B: Wages ................................................................................................................................. Benefits ............................................................................................................................... Total .................................................................................................................................... Wages ................................................................................................................................. Benefits ............................................................................................................................... Total .................................................................................................................................... Table 11 shows that, for the four U.S. Great Lakes shipping companies currently operating under AMO union contracts, approximately 29% of their total deadweight tonnage belongs to companies operating under Agreement A, and approximately 71% belongs to companies operating under Agreement B. TABLE 11.—DEADWEIGHT TONNAGE BY AMO UNION AGREEMENT Company Agreement A Agreement B American Steamship Company ....................................................................................................................... Mittal Steel USA, Inc. ...................................................................................................................................... HMC Ship Management .................................................................................................................................. Key Lakes, Inc. ................................................................................................................................................ Total tonnage, each agreement ............................................................................................................... Percent tonnage, each agreement ........................................................................................................... ............................ ............................ 12,656 303,145 315,801 315,801 ÷1,076,560 =29.3343% 664,215 96,544 ............................ ............................ 760,759 760,759 ÷ 1,076,560 =70.6657% Table 12 applies the percentage of tonnage represented by each agreement to the wages and benefits provided by each agreement, to determine the projected target rate of compensation on a tonnage-weighted basis. TABLE 12.—PROJECTED TARGET RATE OF COMPENSATION sroberts on PROD1PC70 with PROPOSALS Undesignated waters AGREEMENT A: Total wages and benefits × percent tonnage ..................................................................... AGREEMENT B: Total wages and benefits × percent tonnage ..................................................................... VerDate Aug<31>2005 19:34 Jan 31, 2008 Jkt 214001 PO 00000 Frm 00035 Fmt 4702 Sfmt 4702 E:\FR\FM\01FEP1.SGM 01FEP1 $155,786 × 29.3343% = $45,699 $186,566 × 70.6657% = $131,838 Designated waters $213,196 × 29.3343% = $62,540 $257,277 × 70.6657% = $181,807 6091 Federal Register / Vol. 73, No. 22 / Friday, February 1, 2008 / Proposed Rules TABLE 12.—PROJECTED TARGET RATE OF COMPENSATION—Continued Undesignated waters Total weighted average wages and benefits = projected target rate of compensation .......................... b. Determine number of pilots needed. Subject to adjustment by the Director of Great Lakes Pilotage to ensure uninterrupted service, we determine the number of pilots needed in each Area by dividing each Area’s projected bridge hours, either by 1,000 (designated waters) or by 1,800 (undesignated waters). Bridge hours are the number of hours a pilot is aboard a vessel providing pilotage service. Projected bridge hours are based on the vessel traffic that pilots are expected to serve. Based on historical data and information provided by pilots and industry, the Coast Guard projects that traffic for the Designated waters $45,699 + $131,838 = $177,537 $62,540 + $181,807 = $244,346 2008 navigation season will remain the same as it did in 2007. Table 13 shows the projected bridge hours needed for each Area, and the total number of pilots needed after dividing those figures either by 1,000 or 1,800 and rounding up to the next whole pilot: TABLE 13.—NUMBER OF PILOTS NEEDED Projected 2008 bridge hours Pilotage area Area Area Area Area Area Area Area 1 2 4 5 6 7 8 Divided by 1,000 (designated waters) or 1,800 (undesignated waters) Pilots needed (total = 44) 5,661 7,993 8,490 6,395 18,000 3,863 11,390 1,000 1,800 1,800 1,000 1,800 1,000 1,800 6 5 5 7 10 4 7 ...................................................................................................................................................... ...................................................................................................................................................... ...................................................................................................................................................... ...................................................................................................................................................... ...................................................................................................................................................... ...................................................................................................................................................... ...................................................................................................................................................... c. Determine the projected target pilot compensation for each Area. The projection of new total target pilot compensation is determined separately for each pilotage Area by multiplying the number of pilots needed in each Area by the projected target rate of compensation for pilots working in that Area. Table 14 shows this calculation. TABLE 14.—PROJECTED TARGET PILOT COMPENSATION Multiplied by target rate of compensation Pilots needed (total = 44) Pilotage area Projected target pilot compensation Area 1 .............................................................................................................................. Area 2 .............................................................................................................................. 6 5 × $244,346 × $177,537 $1,466,077 887,684 Total, District One ..................................................................................................... ............................ ............................ 2,353,761 Area 4 .............................................................................................................................. Area 5 .............................................................................................................................. 5 7 × $177,537 × $244,346 887,684 1,710,424 ............................ ............................ 2,598,108 10 4 7 × $177,537 × $244,346 × $177,537 1,775,368 977,385 1,242,758 Total, District Three .................................................................................................. sroberts on PROD1PC70 with PROPOSALS Total, District Two ..................................................................................................... Area 6 .............................................................................................................................. Area 7 .............................................................................................................................. Area 8 .............................................................................................................................. ............................ ............................ 3,995,511 Step 4: Increase the projected pilot compensation in Step 3 by the expense multiplier in Step 2. This step yields a VerDate Aug<31>2005 19:34 Jan 31, 2008 Jkt 214001 projected increase in operating costs necessary to support the increased PO 00000 Frm 00036 Fmt 4702 Sfmt 4702 projected pilot compensation. Table 15 shows this calculation. E:\FR\FM\01FEP1.SGM 01FEP1 6092 Federal Register / Vol. 73, No. 22 / Friday, February 1, 2008 / Proposed Rules TABLE 15.—PROJECTED PILOT COMPENSATION, MULTIPLIED BY THE EXPENSE MULTIPLIER EQUALS PROJECTED OPERATING EXPENSE Projected target pilot compensation Multiplied by expense multiplier Area 1 .............................................................................................................................. Area 2 .............................................................................................................................. $1,466,077 887,684 × .32166 × .54468 = $471,581 = $483,505 Total, District One ..................................................................................................... 2,353,761 × .40560 = $954,685 Area 4 .............................................................................................................................. Area 5 .............................................................................................................................. 887,684 1,710,424 × .63651 × .48097 = $565,024 = $822,655 Pilotage area Projected operating expense Total, District Two ..................................................................................................... 2,598,108 × .53400 = $1,387,383 Area 6 .............................................................................................................................. Area 7 .............................................................................................................................. Area 8 .............................................................................................................................. 1,775,368 977,385 1,242,758 × .51128 × .36075 × .45592 = $907,709 = $352,592 = $566,600 Total, District Three .................................................................................................. 3,995,511 × .45716 = $1,826,593 Step 5: Adjust the result in Step 4, as required, for inflation or deflation, and calculate projected total economic cost. Based on data from the U.S. Department of Labor’s Bureau of Labor Statistics, we have multiplied the results in Step 4 by a 1.024 inflation factor, reflecting an average inflation rate of 2.4% in ‘‘Midwest Economy—‘‘Consumer Prices’’ between 2005 and 2006, the latest years for which data are available. Table 16 shows this calculation and the projected total economic cost. TABLE 16.—PROJECTED OPERATING EXPENSE, ADJUSTED FOR INFLATION, AND ADDED TO PROJECTED TARGET PILOT COMPENSATION EQUALS PROJECTED TOTAL ECONOMIC COST A. projected operating expense B. increase, multiplied by inflation factor (= A × 1.024) Area 1 .............................................................................................. Area 2 .............................................................................................. $471,581 483,505 $482,899 495,109 $1,466,077 887,684 $1,948,977 1,382,793 Pilotage area C. projected target pilot compensation D. projected total economic cost (= B+C) Total, District One ..................................................................... 954,685 977,597 2,353,761 3,331,359 Area 4 .............................................................................................. Area 5 .............................................................................................. 565,024 822,655 578,584 842,399 887,684 1,710,424 1,466,268 2,552,822 Total, District Two ..................................................................... 1,387,383 1,420,680 2,598,108 4,018,788 Area 6 .............................................................................................. Area 7 .............................................................................................. Area 8 .............................................................................................. 907,709 352,592 566,600 929,494 361,054 580,198 1,775,368 977,385 1,242,758 2,704,862 1,338,439 1,822,956 Total, District Three .................................................................. 1,826,593 1,870,432 3,995,511 5,865,942 Step 6: Divide the result in Step 5 by projected bridge hours to determine total unit costs. Table 17 shows this calculation. TABLE 17.—PROSPECTIVE (TOTAL) UNIT COSTS B. projected 2008 bridge hours A. projected total economic cost Pilotage area Prospective (total) unit costs (A divided by B) Area 1 .............................................................................................................................. Area 2 .............................................................................................................................. $1,948,977 1,382,793 5,661 7,993 $344.28 173.00 sroberts on PROD1PC70 with PROPOSALS Total, District One ..................................................................................................... 3,331,359 13,654 243.98 Area 4 .............................................................................................................................. Area 5 .............................................................................................................................. 1,466,268 2,552,822 8,490 6,395 172.71 399.19 Total, District Two ..................................................................................................... 4,018,788 14,885 269.99 Area 6 .............................................................................................................................. Area 7 .............................................................................................................................. Area 8 .............................................................................................................................. 2,704,862 1,338,439 1,822,956 18,000 3,863 11,390 150.27 346.48 160.05 VerDate Aug<31>2005 19:34 Jan 31, 2008 Jkt 214001 PO 00000 Frm 00037 Fmt 4702 Sfmt 4702 E:\FR\FM\01FEP1.SGM 01FEP1 Federal Register / Vol. 73, No. 22 / Friday, February 1, 2008 / Proposed Rules 6093 TABLE 17.—PROSPECTIVE (TOTAL) UNIT COSTS—Continued Total, District Three .................................................................................................. Step 7: Divide prospective unit costs (total unit costs) in Step 6 by the base period unit costs in Step 1. Table 18 B. projected 2008 bridge hours A. projected total economic cost Pilotage area 5,865,942 shows this calculation, which expresses the percentage change between the total unit costs and the base unit costs. The 33,253 Prospective (total) unit costs (A divided by B) 176.40 results, for each Area, are identical with the percentage increases listed in Table 1. TABLE 18.—PERCENTAGE CHANGE, PROSPECTIVE VS. BASE PERIOD UNIT COSTS A. prospective unit costs Pilotage area B. base period unit costs $319.44 159.5 C. percentage change from base (A divided by B; result expressed as percentage) Area 1 .............................................................................................................................. Area 2 .............................................................................................................................. $344.28 173.00 7.78 8.41 Total, District One ..................................................................................................... 243.98 225.86 8.02 Area 4 .............................................................................................................................. Area 5 .............................................................................................................................. 172.71 399.19 159.17 369.67 8.50 7.98 Total, District Two ..................................................................................................... 269.99 249.61 8.16 Area 6 .............................................................................................................................. Area 7 .............................................................................................................................. Area 8 .............................................................................................................................. 150.27 346.48 160.05 138.66 321.31 147.77 8.37 7.83 8.31 Total, District Three .................................................................................................. 176.40 163.00 8.22 Step 8: Adjust the base period rates by the percentage change in unit costs in Step 7. Table 19 shows this calculation. TABLE 19.—BASE PERIOD RATES ADJUSTED BY PERCENTAGE CHANGE IN UNIT COSTS1 sroberts on PROD1PC70 with PROPOSALS Pilotage area Area 1 .............................................................................. Basic pilotage ........................................................... Each lock transited ................................................... Harbor movage ......................................................... Minimum basic rate, St. Lawrence River ................. Maximum rate, through trip ...................................... Area 2 .............................................................................. 6-hr. period ............................................................... Docking or undocking ............................................... Area 4 .............................................................................. 6 hr. period ............................................................... Docking or undocking ............................................... Any point on Niagara River below Black Rock Lock Area 5 between any point on or in: ................................. Toledo or any point on Lake Erie W. of Southeast Shoal ..................................................................... Toledo or any point on Lake Erie W. of Southeast Shoal & Southeast Shoal ...................................... Toledo or any point on Lake Erie W. of Southeast Shoal & Detroit River ............................................ Toledo or any point on Lake Erie W. of Southeast Shoal & Detroit Pilot Boat ..................................... Port Huron Change Point & Southeast Shoal (when pilots are not changed at the Detroit Pilot Boat) .. VerDate Aug<31>2005 19:34 Jan 31, 2008 Jkt 214001 PO 00000 Frm 00038 B. percentage change in unit costs (multiplying factor) C. increase in base rate (A × B%) D. adjusted rate (A + C, rounded to nearest dollar) $1.01/km, $1.79/mi 22.41 73.37 48.94 214.81 $14/km, $25/mi 310 1,016 678 2,976 40.12 38.27 517 493 54.49 41.99 107.19 695 536 1,368 1,004 80.12 1,084 1,699 135.58 1,835 2,206 176.04 2,382 1,699 135.58 1,835 2,959 236.13 3,195 A. base period rate 7.78 (1.0778) $13/km, $23/mi 288 943 629 2,761 8.41 (1.0841) 477 455 8.50 (1.0850) 641 494 1,261 7.98 (1.0798) Fmt 4702 Sfmt 4702 E:\FR\FM\01FEP1.SGM 01FEP1 6094 Federal Register / Vol. 73, No. 22 / Friday, February 1, 2008 / Proposed Rules TABLE 19.—BASE PERIOD RATES ADJUSTED BY PERCENTAGE CHANGE IN UNIT COSTS1—Continued Pilotage area B. percentage change in unit costs (multiplying factor) C. increase in base rate (A × B%) D. adjusted rate (A + C, rounded to nearest dollar) 3,428 2,223 1,729 1,229 1,004 273.55 177.40 137.97 98.07 80.12 3,702 2,400 1,867 1,327 1,084 2,959 2,223 1,004 236.13 177.40 80.12 3,195 2,400 1,084 1,699 135.58 1,835 2,206 2,223 1,229 176.04 177.40 98.07 2,382 2,400 1,327 1,699 2,223 135.58 177.40 1,835 2,400 40.09 38.08 519 493 1,718 134.52 1,853 1,718 134.52 1,853 647 50.66 698 1,440 112.75 1,553 647 1,440 647 647 50.66 112.75 50.66 50.66 698 1,553 698 698 38.56 36.65 503 478 A. base period rate Port Huron Change Point & Toledo or any point on Lake Erie W. of Southeast Shoal (when pilots are not changed at the Detroit Pilot Boat) .................. Port Huron Change Point & Detroit River ................ Port Huron Change Point & Detroit Pilot Boat ......... Port Huron Change Point & St. Clair River .............. St. Clair River ........................................................... St. Clair River & Southeast Shoal (when pilots are not changed at the Detroit Pilot Boat) .................. St. Clair River & Detroit River/Detroit Pilot Boat ...... Detroit, Windsor, or Detroit River ............................. Detroit, Windsor, or Detroit River & Southeast Shoal ..................................................................... Detroit, Windsor, or Detroit River & Toledo or any point on Lake Erie W. of Southeast Shoal ........... Detroit, Windsor, or Detroit River & St. Clair River .. Detroit Pilot Boat & Southeast Shoal ....................... Detroit Pilot Boat & Toledo or any point on Lake Erie W. of Southeast Shoal .................................. Detroit Pilot Boat & St. Clair River ........................... Area 6 .............................................................................. 6 hr. period ............................................................... Docking or undocking ............................................... Area 7 between any point on or in: ................................. Gros Cap & De Tour ................................................ Algoma Steel Corp. Wharf, Sault Ste. Marie, Ont. & De Tour ................................................................. Algoma Steel Corp. Wharf, Sault Ste. Marie, Ont. & Gros Cap ............................................................... Any point in Sault Ste. Marie, Ont., except the Algoma Steel Corp. Wharf & De Tour .................. Any point in Sault Ste. Marie, Ont., except the Algoma Steel Corp. Wharf & Gros Cap ................ Sault Ste. Marie, MI & De Tour ................................ Sault Ste. Marie, MI & Gros Cap ............................. Harbor movage ......................................................... Area 8 .............................................................................. 6 hr. period ............................................................... Docking or undocking ............................................... 8.37 (1.0837) 479 455 7.83 (1.0783) 8.31 (1.0831) 464 441 sroberts on PROD1PC70 with PROPOSALS 1 Rates for ‘‘Cancellation, delay or interruption in rendering services ( § 401.420)’’ and ‘‘Basic Rates and charges for carrying a U.S. pilot beyond the normal change point, or for boarding at other than the normal boarding point (§ 401.428)’’ are not reflected in this table but have been increased by 8.17% across all areas. C. Amending 46 CFR 401.700 and 710 The Coast Guard also proposes to amend 46 CFR 401.700 and 401.710 to clarify the obligation imposed on Great Lakes registered pilots and authorized pilotage pools to fully and professionally cooperate in the course of performing their duties with U.S. and Canadian Coast Guard units and personnel, vessel traffic service personnel, and other lawful authority. This amendment is required because foreign trade vessels piloted by U.S. pilots on the St. Lawrence Seaway and Great Lakes system routinely cross and re-cross the international boundary between the U.S. and Canada. Frequently numerous crossings are made in a single voyage with both sovereigns exercising authority at various points of a transit. The post 9/ 11 period of heightened security makes VerDate Aug<31>2005 19:34 Jan 31, 2008 Jkt 214001 it imperative to clearly state the obligation of U.S. Great Lakes pilots and their associations to immediately and professionally comply with any legal directions received, and requests for information, from both U.S. and Canadian law enforcement authority and with those administrative personnel responsible for ensuring the safety and security of the system. 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 PO 00000 Frm 00039 Fmt 4702 Sfmt 4702 significant under Executive Order 12866 and will not be 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 ‘‘Background’’ section for a detailed explanation of the legal authority and requirements for the Coast Guard to conduct an annual review and provide possible adjustments of pilotage rates on the Great Lakes.) Based on our review, we are proposing an adjustment to the pilotage rates for the 2008 shipping season to generate sufficient revenue to cover allowable expenses, target pilot compensation, and returns on investment. This proposed rule would implement an 8.17 percent average rate adjustment E:\FR\FM\01FEP1.SGM 01FEP1 6095 Federal Register / Vol. 73, No. 22 / Friday, February 1, 2008 / Proposed Rules per area for the Great Lakes system over the rate adjustment found in the 2007 final rule. These adjustments to Great Lakes pilotage rates meet the requirements set forth in 46 CFR part 404 for similar compensation levels between Great Lakes pilots and industry. They also include adjustments for inflation and changes in association expenses to maintain these compensation levels. 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 updated our estimates of affected vessels for the proposed rule by using recent vessel characteristics, documentation, and arrival data. We used 2005–2006 vessel arrival data from the National Vessel Movement Center (NVMC) and the Coast Guard’s Marine Inspection, Safety, and Law Enforcement (MISLE) system to estimate the average annual number of vessels affected by the rate adjustment to be 217 vessels that journey into the Great Lakes system. These vessels entered the Great Lakes by transiting through or in part of at least one of the three pilotage Districts before leaving the Great Lakes system. These vessels often make more than one distinct stop, docking, loading, and unloading at facilities in Great Lakes ports. Of the total trips for the 217 vessels, there were approximately 917 annual U.S. port arrivals before the vessels left the Great Lakes system, based on 2005–2006 vessel data from the NVMC and MISLE. 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. TABLE 1.—DISTRICT REVENUES [$U.S.] Year 1998 1999 2000 2001 2002 District one ................................................................................. ................................................................................. ................................................................................. ................................................................................. ................................................................................. 2,127,577 2,009,180 1,890,779 1,676,578 1,686,655 District two District three 3,202,374 2,727,688 2,947,798 2,375,779 2,089,348 4,026,802 3,599,993 4,036,354 3,657,756 3,460,560 Total 9,356,753 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. Pilotage rates are set by the Coast Guard for revenues to equal the estimated costs of pilotage. Table 2 displays projected costs from the 2006 and 2007 final rules and the 2002 revenue from Table 1. TABLE 2.—REVENUES AND COSTS THROUGH THE 2007 RATE ADJUSTMENT [$U.S.]1 District District one sroberts on PROD1PC70 with PROPOSALS 2002 District Revenues ................................................... 2006 Total Projected Economic Cost .............................. 2007 Total Projected Economic Cost .............................. 1,686,655 2,692,426 3,083,904 District two District three 2,089,348 3,238,337 3,715,426 3,460,560 4,722,162 5,420,279 Total 2 7,236,563 10,652,925 12,219,609 1 For the calculation of the 2006 and 2007 projected economic costs, see the ‘‘Discussion of Rule’’ sections of the 2006 and 2007 final rules published in the Federal Register. 2 Some values may not total due to rounding. We estimate the additional cost of the rate adjustment in this proposed rule to VerDate Aug<31>2005 19:34 Jan 31, 2008 Jkt 214001 be the difference between the total revenue needed to cover costs based on PO 00000 Frm 00040 Fmt 4702 Sfmt 4702 the 2007 rate adjustment and the total projected economic cost in this E:\FR\FM\01FEP1.SGM 01FEP1 6096 Federal Register / Vol. 73, No. 22 / Friday, February 1, 2008 / Proposed Rules proposed rule. Table 3 compares projected economic costs in 2007 and costs of the proposed rule to industry by district. TABLE 3.—RATE ADJUSTMENT FACTORS AND ADDITIONAL COST OF THIS PROPOSED RULE [$U.S.] District District one Total Projected Economic Cost in 2007 .......................... Proposed Rate Adjustment 2 ............................................ Total Projected Economic Cost in 2008 .......................... Additional Revenue Required or Cost of this Rulemaking 3 ........................................................................ District two District three Total 1 3,083,904 1.0802 3,331,359 3,715,426 1.0816 4,018,788 5,420,279 1.0822 5,865,942 12,219,609 1.0817 13,216,089 247,455 303,362 445,663 996,480 1 Some values may not total due to rounding. steps 5(b) and 7 of the ‘‘Calculating the Rate Adjustment’’ section of this proposed rule for the ‘‘Proposed Rate Adjustment’’ and the ‘‘Total Projected Economic Cost in 2008’’. 3 Additional revenue or cost of this rule = ‘‘Total Projected Economic Cost in 2008’’—‘‘Total Projected Economic Cost in 2007’’. sroberts on PROD1PC70 with PROPOSALS 2 See After applying the rate change in this proposed rule, the resulting difference between the adjusted economic cost in 2007 and the projected economic cost in 2008 is the annual cost to shippers from 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 $1.0 million (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 face as a result of the rate adjustment in this proposed rule. In addition to the annual reviews and possible partial rate adjustments, the Coast Guard is required to determine and, if necessary, perform a full adjustment of Great Lakes pilotage rates at a minimum of once every five years. Due to the frequency of the full rate adjustments, we estimated the total cost to shippers of the rate adjustments in this proposed rule over a five-year period instead of a ten-year period. The total five-year (2008–2012) present value cost estimate of this proposed rule to shippers is $4.4 million discounted at a seven percent discount rate and $4.7 million discounted at a three percent discount rate. For the calculation of the total fiveyear present value cost estimate, we chose not to discount first-year costs and instead began discounting in the second year, because we anticipate that VerDate Aug<31>2005 19:34 Jan 31, 2008 Jkt 214001 industry would most likely begin to incur costs immediately upon publication of this proposed rule during the 2008 Great Lakes shipping season which is generally less than a calendar year. We also considered a middle-ofyear discounting process to account for the payments occurring over the course of the year but the difference was small considering the overall cost of the proposed rule. 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. We expect entities affected by the proposed rule would be classified under the North American Industry Classification System (NAICS) code subsector 483-Water Transportation, which includes one or all of the following 6-digit NAICS codes for freight transportation: 483111-Deep Sea Freight Transportation, 483113-Coastal and Great Lakes Freight Transportation, and 483211-Inland Water Freight Transportation. According to the Small Business Administration’s definition, a U.S. company with these NAICS codes and employing less than 500 employees is considered a small entity. For the proposed rule, we reviewed recent company size and ownership data from 2005–2006 Coast Guard MISLE data and business revenue and size data provided by reference USA and Dunn and Bradstreet. We were able to gather revenue and size data or link the entities to large shipping conglomerates for 22 of the 24 affected entities in the United States. We found PO 00000 Frm 00041 Fmt 4702 Sfmt 4702 that large, mostly foreign-owned, shipping conglomerates or their subsidiaries owned or operated all vessels engaged in foreign trade on the Great Lakes. We assume that new industry entrants will be comparable in ownership and size to these shippers. There are three U.S. entities affected by the proposed rule that would receive the additional revenues from the rate adjustment. These are the three pilot associations that are the only entities providing pilotage services within the Great Lakes districts. Two of the associations operate as partnerships and one operates as a corporation. These associations are classified with the same NAICS industry classification and small entity size standards described above, but they have far fewer than 500 employees: approximately 65 total employees combined. However, they are not adversely impacted with the additional costs of the rate adjustments, but instead receive the additional revenue benefits for operating expenses and pilot compensation. Therefore, the Coast Guard has found that this proposed rule would not have a significant impact on a substantial number of U.S. small entities under 5 U.S.C. 605(b). If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this proposed 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 proposed 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. E:\FR\FM\01FEP1.SGM 01FEP1 6097 Federal Register / Vol. 73, No. 22 / Friday, February 1, 2008 / Proposed Rules If the proposed rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call Mike Sakaio, Great Lakes Pilotage Branch, (CG–54122), U.S. Coast Guard, telephone 202–372–1538 or send him email at Michael.Sakaio@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 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 rule does not change the burden in the collection currently approved by the Office of Management and Budget (OMB) under OMB Control Number 1625–0086, Great Lakes Pilotage Methodology. sroberts on PROD1PC70 with PROPOSALS D. Federalism A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism because there are no similar State regulations, and the States do not have the authority to regulate and adjust rates for pilotage services in the Great Lakes system. E. Unfunded Mandates Reform Act The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531–1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this rule would not result in such expenditure, we do discuss the effects of this rule elsewhere in this preamble. F. Taking of Private Property This rule would not affect a taking of private property or otherwise have VerDate Aug<31>2005 19:34 Jan 31, 2008 Jkt 214001 taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights. G. Civil Justice Reform This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. H. Protection of Children We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children. I. Indian Tribal Governments This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. J. Energy Effects We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a ‘‘significant energy action’’ under that order because it is not a ‘‘significant regulatory action’’ under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211. K. Technical Standards The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling PO 00000 Frm 00042 Fmt 4702 Sfmt 4702 procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies. This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards. L. Environment We have analyzed this rule under Commandant Instruction M16475.lD, which guides 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 rule adjusts rates in accordance with applicable statutory and regulatory mandates. An ‘‘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. List of Subjects in 46 CFR Part 401 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) to read as follows: § 401.405 Basic rates and charges on the St. Lawrence River and Lake Ontario. * * * * * (a) Area 1 (Designated Waters): Service St. Lawrence River Basic Pilotage ........... $14 per Kilometer or $25 per mile. 1 E:\FR\FM\01FEP1.SGM 01FEP1 6098 Federal Register / Vol. 73, No. 22 / Friday, February 1, 2008 / Proposed Rules Service St. Lawrence River Each Lock Transited Harbor Movage ......... (b) Area 2 (Undesignated Waters): $310. 1 $1,016. 1 Service 1 The minimum basic rate for assignment of a pilot in the St. Lawrence River is $678, and the maximum basic rate for a through trip is $2,976. 3. In § 401.407 revise paragraphs (a) and (b) to read as follows: Lake Ontario Six-Hour Period .................... Docking or Undocking .......... $517 493 § 401.407 Basic rates and charges on Lake Erie and the navigable waters from Southeast Shoal to Port Huron, MI. * * * * * (a) Area 4 (Undesignated Waters): Lake Erie (East of Southeast Shoal) Service Six-Hour Period ....................................................................................................................................................... Docking or Undocking ............................................................................................................................................. Any Point on the Niagara River below the Black Rock Lock .................................................................................. Buffalo $695 536 N/A $695 536 $1,368 (b) Area 5 (Designated Waters): Any point on or in 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 ................................ Detroit Pilot Boat .................................................................. 1 When § 401.410 Basic rates and charges on Lakes Huron, Michigan, and Superior, and the St Mary’s River. * $1,835 $1,084 3,702 N/A 2,382 1,835 1 3,195 1 3,195 1,835 1,327 $2,382 2,400 2,400 1,084 N/A * * (a) Area 6 (Undesignated Waters): Lakes Huron and Michigan Service N/A $1,327 1,084 2,400 2,400 Six-Hour Period .................... $519 * c. In paragraph (c)(1), remove the number ‘‘$510’’ and add, in its place, Lake Superior the number ‘‘$552’’; in paragraph (c)(3), remove the number ‘‘$86’’ and add, in $503 its place, the number ‘‘$93’’; and, also 478 in paragraph (c)(3), remove the number ‘‘$1,349’’ and add, in its place, the number ‘‘$1,459’’. Six-Hour Period .................... Docking or Undocking .......... [Amended] 5. In § 401.420— a. In paragraph (a), remove the number ‘‘$86’’ and add, in its place, the number ‘‘$93’’; and remove the number ‘‘$1,349’’ and add, in its place, the number ‘‘$1,459’’. b. In paragraph (b), remove the number ‘‘$86’’ and add, in its place, the number ‘‘$93’’; and remove the number ‘‘$1,349’’ and add, in its place, the number ‘‘$1,459’’. VerDate Aug<31>2005 19:34 Jan 31, 2008 Jkt 214001 § 401.428 [Amended] 6. In § 401.428, remove the number ‘‘$520’’ and add, in its place, the number ‘‘$562’’. 7. Revise § 401.700 to read as follows: § 401.700 Operating requirements for U.S. registered pilots. Each U.S. registered pilot shall— (a) Provide pilotage service when dispatched by his pool; PO 00000 Frm 00043 Fmt 4702 Sfmt 4702 493 (b) Area 7 (Designated Waters): De Tour (c) Area 8 (Undesignated Waters): Service Lakes Huron and Michigan Docking or Undocking .......... 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 ............................................................................................................................ sroberts on PROD1PC70 with PROPOSALS St. Clair River $1,835 1,867 2,400 N/A N/A Service Area § 401.420 Detroit Pilot Boat Detroit River pilots are not changed at the Detroit Pilot Boat. 4. In § 401.410, revise paragraphs (a), (b), and (c) to read as follows: * Toledo or any point on Lake Erie west of Southeast Shoal Southeast Shoal $1,853 1,853 1,553 1,553 N/A Gros Any N/A 698 $698 698 N/A Cap harbor N/A N/A N/A N/A $698 (b) Comply with the dispatching orders of the Director under § 401.720(b); (c) Comply immediately and professionally, consistent with the safe navigation of the vessel, with all lawful requests and directions received from U.S. and Canadian Coast Guard units and personnel, vessel traffic service personnel, and other lawful authority; and (d) A violation of any of these provisions may be punished in accordance with 46 CFR 401.500 and be grounds for the suspension or revocation of a pilots registration pursuant to 46 CFR 401 subpart F. 8. In § 401.710, revise paragraphs (f) and (g) and add paragraphs (h) and (i) to read as follows: E:\FR\FM\01FEP1.SGM 01FEP1 Federal Register / Vol. 73, No. 22 / Friday, February 1, 2008 / Proposed Rules § 401.710 Operating requirements for holders of Certificates of Authorization FEDERAL COMMUNICATIONS COMMISSION Eloise.Gore@fcc.gov, of the Media Bureau, Policy Division, (202) 418– 2120. SUPPLEMENTARY INFORMATION: This is a summary of the Federal Communications Commission’s Third Further Notice of Proposed Rule Making (Third FNPRM) in CS Docket No. 98– 120, FCC 07–170, adopted September 11, 2007, and released November 30, 2007. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street, SW., CY–A257, Washington, DC 20554. These documents will also be available via ECFS (https://www.fcc.gov/ cgb/ecfs/). (Documents will be available electronically in ASCII, Word 97, and/ or Adobe Acrobat.) The complete text may be purchased from the Commission’s copy contractor, 445 12th Street, SW., Room CY–B402, Washington, DC 20554. To request this document in accessible formats (computer diskettes, large print, audio recording, and Braille), send an e-mail to fcc504@fcc.gov or call the Commission’s Consumer and Governmental Affairs Bureau at (202) 418–0530 (voice), (202) 418–0432 (TTY). 47 CFR Part 76 Summary of the Third Notice of Proposed Rule Making * * * * * (f) Comply with all accounting procedures and the reporting requirements in this chapter; (g) Make available to the Commandant all of its financial and operating records; (h) Comply immediately and professionally with all lawful requests and directions received from U.S. and Canadian Coast Guard units and personnel, vessel traffic service personnel, and other lawful authority; and (i) A violation of any of these provisions may be punished in accordance with 46 CFR 401.500 and be grounds for the suspension or revocation of a pilot association’s certificate of authorization to operate a pool pursuant to 46 CFR 401.335. Dated: January 29, 2008. Brian M. Salerno, Rear Admiral, U.S. Coast Guard, Assistant Commandant for Marine Safety, Security & Stewardship. [FR Doc. 08–474 Filed 1–30–08; 8:45am] BILLING CODE 4910–15–P [CS Docket No. 98–120; FCC 07–170] Carriage of Digital Television Broadcast Signals Federal Communications Commission. ACTION: Proposed rule. AGENCY: While the Third Report and Order resolves the major questions about material degradation and viewability after the transition, we now seek comment on a number of related issues which were not specifically raised in the Second Further Notice of Proposed Rulemaking. Now that the general rules are in place, the Commission believes it is appropriate to move toward an expeditious resolution of these outstanding matters so that all parties will have sufficient time to prepare for compliance with these new rules. DATES: Comment Date: March 3, 2008. Reply Comment Date: March 17, 2008. ADDRESSES: Federal Communications Commission, 445 12th Street, SW., Washington, DC 20554. FOR FURTHER INFORMATION CONTACT: For additional information on this proceeding, please contact Lyle Elder, Lyle.Elder@fcc.gov, or Eloise Gore, sroberts on PROD1PC70 with PROPOSALS SUMMARY: VerDate Aug<31>2005 19:34 Jan 31, 2008 Jkt 214001 A. Issues Related to Downconversion 1. Channel Placement: Section 614(b)(6) generally provides that commercial television stations carried pursuant to the mandatory carriage provision are entitled to be carried on a cable system on the same channel number on which the station broadcasts over-the-air. Under Section 615(g)(5) noncommercial television stations generally have the same right. The Act also permits commercial and noncommercial television stations to negotiate a mutually beneficial channel position with the cable operator. In the First Report and Order, the Commission found that it was unnecessary to place broadcast signals on a specific frequency in order to ensure nondiscriminatory treatment of television stations by cable operators. Instead, the Commission required that channel mapping information be passed through as part of the program and system information protocol (‘‘PSIP’’), linking the digital channel number with the appropriate primary video and program-related content. How should these channel positioning rules apply to operators carrying more than one version of a station’s signal? We seek comment on this question. For systems PO 00000 Frm 00044 Fmt 4702 Sfmt 4702 6099 that provide analog service, we propose that the analog version be physically located on the appropriate channel as determined by the channel placement rules, and that the version as broadcast appear on that same channel for digital subscribers who can view it. We seek comment on this proposal. We also seek comment on whether it will be technically possible for multiple digital versions to appear on the same channel from a subscriber perspective (e.g., channel 35 in HD for subscribers with HD, and the same channel 35 in SD for subscribers with SD). If so, should we adopt such a requirement? 2. Format: NAB and MSTV raise the point that ‘‘[w]hen digital programming is broadcast in a 16:9 format, downconversion of the signal to analog generally requires that the program be reformatted to fit the 4:3 analog aspect ratio.’’ Broadcasters may broadcast not only in different resolutions—HD, ED, SD—but also in different formats—16:9 or 4:3. When a digital signal is downconverted, particularly from HD to analog, it is likely to be a 16:9 signal being adjusted for display on a 4:3 screen. However, at times, particularly during the early years of the posttransition period, even HD broadcasters are likely to occasionally show images in a 4:3 aspect ratio, adding static bars to the edge of the broadcast picture to compensate. How should the downconverted signal be adjusted (letterboxing, centering, etc.), and if the Commission does not adopt a rule, who should make that decision? NAB proposes that, for signals converted at the headend, broadcasters make the determination, and for signals converted at a converter box, the boxes be required to allow the consumer to determine the format (as in the NTIA boxes). NCTA responds with a proposal to allow operators to determine the format of downconverted signals, arguing that operators are best able to determine how to ‘‘serve the needs of their analog viewing customers.’’ We seek comment on the appropriate approach for the Commission to take, and the costs and benefits of these proposals and any others offered by commenters. B. Material Degradation Issues 3. As NAB and MSTV note, the Commission found in 1993 that the material degradation rules apply equally to must carry stations and retransmission consent stations. They argue that this should be the case after the transition as well. NCTA, however, notes that in the First Report and Order, the Commission said that: E:\FR\FM\01FEP1.SGM 01FEP1

Agencies

[Federal Register Volume 73, Number 22 (Friday, February 1, 2008)]
[Proposed Rules]
[Pages 6085-6099]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 08-474]

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

DEPARTMENT OF HOMELAND SECURITY

Coast Guard

46 CFR Part 401

[Docket No. USCG-2007-0039]
RIN 1625-AB23

2008 Rates for Pilotage on the Great Lakes

AGENCY: Coast Guard, DHS.

ACTION: 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 8.17% for the 2008 shipping season to
generate sufficient revenue to cover allowable expenses, target pilot
compensation, and returns on investment. We also are proposing a
clarification of the duty of pilots and pilot associations to cooperate
with lawful authority. This rulemaking promotes the Coast Guard
strategic goal of maritime safety.

DATES: Comments and related material must reach the Docket Management
Facility on or before March 3, 2008.

ADDRESSES: You may submit comments identified by Coast Guard docket
number USCG-2007-0039 to the Docket Management Facility at the U.S.
Department of Transportation. To avoid duplication, please use only one
of the following methods:
(1) Online: https://www.regulations.gov.
(2) Mail: Docket Management Facility (M-30), U.S. Department of
Transportation, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue, SE., Washington, DC 20590-0001.
(3) Hand delivery: Room W12-140 on the Ground Floor of the West
Building, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9
a.m. and 5 p.m., Monday through Friday, except Federal holidays. The
telephone number is 202-366-9329.
(4) Fax: 202-493-2251.

FOR FURTHER INFORMATION CONTACT: For questions on this proposed rule,
call Mr. Michael Sakaio, Program Analyst, Great Lakes Pilotage Branch,
Commandant (CG-54122), U.S. Coast Guard, at 202-372-1538, by fax 202-
372-1929, or by e-mail at Michael.Sakaio@uscg.mil. For questions on
viewing or submitting material to the docket, call Renee V. Wright,
Program Manager, Docket Operations, telephone 202-366-9826.

SUPPLEMENTARY INFORMATION:

[[Page 6086]]

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: Calculate total economic cost for the base period (cost
per bridge hour by area for the base period).
Step 2. Calculate the expense multiplier.
Step 3. Calculate annual projection of target pilot
compensation.
Step 4: Increase the projected target pilot compensation in Step
3 by the expense multiplier in Step 2.
Step 5: Adjust the result in Step 4, as required, for inflation
or deflation, and calculate projected total economic cost.
Step 6: Divide the result in Step 5 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.
C. Amending 46 CFR 401.700 and 710
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
I. Indian Tribal Governments
J. Energy Effects
K. Technical Standards
L. Environment

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://www.regulations.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 the docket number for this
rulemaking (USCG-2007-0039), indicate the specific section of this
document to which each comment applies, and give the reason for each
comment. We recommend that you include your name and a mailing address,
an e-mail address, or a phone number in the body of your document so
that we can contact you if we have questions regarding your submission.
For example, we may ask you to resubmit your comment if we are not able
to read your original submission. 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 proposed 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://www.regulations.gov at
any time and click on ``Search for Dockets,'' and enter the docket
number for this rulemaking (USCG-2007-0039) in the Docket ID box, and
click enter. You may also visit the Docket Management Facility in Room
W12-140 on the ground floor of the DOT West Building, 1200 New Jersey
Avenue, SE., Washington, DC 20590, 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://
DocketsInfo.dot.gov.

II. Program History

This notice of proposed rulemaking (NPRM) is issued pursuant to
Coast Guard regulations in 46 CFR Chapter III, Parts 401-404. Those
regulations implement the Great Lakes Pilotage Act of 1960, 46 U.S.C.
Chapter 93, which requires foreign-flag vessels and U.S.-flag vessels
in foreign trade to use federally registered Great Lakes pilots while
transiting the St. Lawrence Seaway and the Great Lakes system, and
which requires the Secretary of Homeland Security to ``prescribe by
regulation rates and charges for pilotage services, giving
consideration to the public interest and the costs of providing the
services.'' 46 U.S.C. 9303(f).
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 setting of new rates at least once every five
years, or sooner, if annual

[[Page 6087]]

reviews show a need. 46 CFR 404.1. To assist in calculating pilotage
rates, the pilotage associations are required to submit to the Coast
Guard annual financial statements prepared by certified public
accounting firms. In addition, every fifth year, in connection with the
mandatory rate adjustment, the Coast Guard contracts with an
independent accounting firm to conduct a full audit of the accounts and
records of the pilotage associations and prepare and submit financial
reports relevant to the ratemaking process. In those years when a full
ratemaking is conducted, the Coast Guard generates the pilotage rates
using Appendix A to 46 CFR Part 404. Between the five-year full
ratemaking intervals, the Coast Guard annually reviews the pilotage
rates using Appendix C to Part 404, and adjusts rates when deemed
appropriate. Terms and formulas used in Appendix A and Appendix C are
defined in Appendix B to Part 404.
The last full ratemaking using the Appendix A methodology was
concluded on April 3, 2006 (71 FR 16501). Rates for the 2007 shipping
season were adjusted based on an Appendix C review (interim rule, 72 FR
8115, Feb. 23, 2007; final rule, 72 FR 53158, Sep. 18, 2007). The
present rulemaking proposes rate adjustments for the 2008 shipping
season, based once again on an Appendix C review.

III. Purpose of the Proposed Rule

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
previous ratemaking, no adjustment to the rates will be initiated.
However, if the annual review indicates that an adjustment is
necessary, then the Coast Guard will establish new pilotage rates
pursuant to 46 CFR 404.10 and applying either Appendix A or Appendix C.

A. Proposed Pilotage Rate Changes--Summarized

The Appendix C ratemaking methodology is intended for use during
the years between Appendix A full ratemaking reviews and adjustments.
This section summarizes the rate changes proposed for 2008, and then
discusses in detail how the proposed changes were calculated under
Appendix C. We are proposing an average increase of 8.17 percent across
all Districts over the last pilotage rate adjustment. Table 1
summarizes the rate increases proposed for each Area.

Table 1.--2008 Area Rate Changes
----------------------------------------------------------------------------------------------------------------
Then the percentage increases over the current rate
If pilotage service is required in: is:
----------------------------------------------------------------------------------------------------------------
Area 1 (Designated waters)................................. 7.78
Area 2 (Undesignated waters)............................... 8.41
Area 4 (Undesignated waters)............................... 8.50
Area 5 (Designated waters)................................. 7.98
Area 6 (Undesignated waters)............................... 8.37
Area 7 (Designated waters)................................. 7.83
Area 8 (Undesignated waters)............................... 8.31
----------------------------------------------------------------------------------------------------------------

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
8.17 percent. These changes are the same in every Area.

B. Calculating the Rate Adjustment

The Appendix C ratemaking calculation involves eight steps:
Step 1: Calculate the total economic costs for the base period
(i.e. pilot compensation expense plus all other recognized expenses
plus the return element) and divide by the total bridge hours used in
setting the base period rates;
Step 2: Calculate the ``expense multiplier,'' the ratio of other
expenses and the return element to pilot compensation for the base
period;
Step 3: Calculate an annual ``projection of target pilot
compensation'' using the same procedures found in Step 2 of Appendix A;
Step 4: Increase the projected pilot compensation in Step 3 by the
expense multiplier in Step 2;
Step 5: Adjust the result in Step 4, as required, for inflation or
deflation;
Step 6: Divide the result in Step 5 by projected bridge hours to
determine total unit costs;
Step 7: Divide prospective unit costs in Step 6 by the base period
unit costs in Step 1; and
Step 8: Adjust the base period rates by the percentage changes in
unit cost in Step 7.
The base data used to calculate each of the eight steps comes from
the 2007 Appendix C review. The Coast Guard also used the most recent
union contracts between the American Maritime Officers' (AMO) union and
vessel owners and operators on the Great Lakes to determine target
pilot compensation. Bridge hour projections for the 2008 season have
been obtained from historical data, pilots, and industry. Bridge hours
are the number of hours a pilot is aboard a vessel providing pilotage
service. All documents and records used in this rate calculation have
been placed in the public docket for this rulemaking and are available
for review at the addresses listed under ADDRESSES.
Some values may not total exactly due to format rounding for
presentation in charts and explanations in this section. The rounding
does not affect the integrity or truncate the real value of all
calculations in the ratemaking methodology described below.
Step 1: Calculate the total economic cost for the base period. In
this step, for each Area, we add the total cost of target pilot
compensation, all other recognized expenses, and the return element
(net income plus interest). We divide this sum by the total bridge
hours for each Area. The result is the cost in each Area of providing
pilotage service per bridge hour. Tables 2 through 4 summarize the Step
1 calculations:

[[Page 6088]]

Table 2.--Total Economic Cost for Base Period, District One
----------------------------------------------------------------------------------------------------------------
Area 1 St. Area 2 Lake Total
Lawrence River Ontario District One
----------------------------------------------------------------------------------------------------------------
Base operating expense.......................................... $431,313 $436,283 $867,596
Base target pilot compensation.................................. +$1,368,253 +$825,760 +2,194,013
Base return element............................................. +$8,802 +$13,493 +$22,295
-----------------------------------------------
Subtotal.................................................... =$1,808,368 =$1,275,536 =$3,083,904
Base bridge hours............................................... /5,661 /7,993 /13,654
Base cost per bridge hour....................................... =$319.44 =$159.58 =$225.86
----------------------------------------------------------------------------------------------------------------

Table 3.--Total Economic Cost for Base Period, District Two
----------------------------------------------------------------------------------------------------------------
Area
Area 4 Lake Southeast Total
Erie Shoal to Port District Two
Huron, MI
----------------------------------------------------------------------------------------------------------------
Base operating expense.......................................... $499,328 $737,052 $1,236,380
Base target pilot compensation.................................. +$825,760 +$1,596,295 +$2,422,055
Base return element............................................. +$26,280 +$30,711 +$56,991
-----------------------------------------------
Subtotal.................................................... =$1,351,368 =$2,364,058 =$3,715,426
Base bridge hours............................................... /8,490 /6,395 /14,885
Base cost per bridge hour....................................... =$159.17 =$369.67 =$249.61
----------------------------------------------------------------------------------------------------------------

Table 4.--Total Economic Cost for Base Period, District Three
----------------------------------------------------------------------------------------------------------------
Area 6 Lakes
Huron and Area 7 St. Area 8 Lake Total
Michigan Mary's River Superior District Three
----------------------------------------------------------------------------------------------------------------
Base operating expense.......................... $810,612 $319,193 $511,262 $1,641,067
Base target pilot compensation.................. +$1,651,520 +$912,168 +$1,156,064 +$3,719,752
Base return element............................. +$33,776 +$9,872 +$15,812 +$59,460
---------------------------------------------------------------
Subtotal.................................... =$2,495,908 =$1,241,233 =$1,683,138 =$5,420,279
Base bridge hours............................... /18,000 /3,863 /11,390 /33,253
Base cost per bridge hour....................... =$138.66 =$321.50 =$147.77 =$163.00
----------------------------------------------------------------------------------------------------------------

Step 2. Calculate the expense multiplier. In this step, for each
Area, we add the base operating expense and the base return element.
Then we divide the sum by the base target pilot compensation to get the
expense multiplier for each Area. The expense multiplier expresses, in
percentage form, the relationship between all non-pilot compensation,
all expenses, and pilot compensation for the base period. Tables 5
through 7 show the Step 2 calculations.

Table 5.--Expense Multiplier, District One
----------------------------------------------------------------------------------------------------------------
Area 1 St. Area 2 Lake Total
Lawrence River Ontario District One
----------------------------------------------------------------------------------------------------------------
Base operating expense.......................................... $431,313 $436,283 $867,596
Base return element............................................. +$8,802 +$13,493 +$22,295
-----------------------------------------------
Subtotal.................................................... =$440,115 =$449,776 =$889,891
Base target pilot compensation.................................. /$1,368,253 /$825,760 /$2,194,013
Expense multiplier.............................................. =.32166 =.54468 =.40560
----------------------------------------------------------------------------------------------------------------

Table 6.--Expense Multiplier, District Two
----------------------------------------------------------------------------------------------------------------
Area 5
Area 4 Lake Southeast Total
Erie Shoal to Port District Two
Huron, MI
----------------------------------------------------------------------------------------------------------------
Base operating expense.......................................... $499,328 $737,052 $1,236,380
Base return element............................................. +$26,280 +$30,711 +$56,991
-----------------------------------------------

[[Page 6089]]

Subtotal.................................................... =$525,608 =$767,763 =$1,293,371
Base target pilot compensation.................................. /$825,760 /$1,596,295 /$2,422,055
Expense multiplier.............................................. =.63651 =.48097 =.53400
----------------------------------------------------------------------------------------------------------------

Table 7.--Expense Multiplier, District Three
----------------------------------------------------------------------------------------------------------------
Area 6 Lakes
Huron and Area 7 St. Area 8 Lake Total
Michigan Mary's River Superior District Three
----------------------------------------------------------------------------------------------------------------
Base operating expense.......................... $810,612 $319,193 $511,262 $1,641,067
Base return element............................. +$33,776 +$9,872 +$15,812 +$59,460
---------------------------------------------------------------
Subtotal.................................... =$844,388 =$329,065 =$527,074 =$1,701,247
Base target pilot compensation.................. /$1,651,520 /$912,168 /$1,156,064 /$3,719,752
Expense multiplier.............................. =.51128 =.36075 =.45592 =.45716
----------------------------------------------------------------------------------------------------------------

Step 3. Calculate annual projection of target pilot compensation.
In this step, which duplicates Step 2 from Appendix A, we determine the
new target rate of compensation and the new number of pilots needed in
each pilotage Area, in order to determine the new target pilot
compensation for each Area.
a. Determine new target rate of compensation. Target pilot
compensation for pilots is based on the average annual compensation of
first mates and masters on U.S. Great Lakes vessels. Compensation
includes wages and benefits. For pilots in undesignated waters, we
approximate the first mates' compensation, and in designated waters we
approximate the masters' compensation (first mates' wages multiplied by
150% plus benefits). To determine first mates' and masters' average
annual compensation, we use data from the most recent AMO union
contracts with the U.S. companies engaged in Great Lakes shipping.
Where different AMO union agreements apply to different companies, we
apportion the compensation provided by each agreement according to the
percentage of tonnage represented by companies under each agreement.
Our research for the 2007 ratemaking showed six companies operating
under contract with the AMO union. Three of the six operated under one
set of agreements and the other three operated under modified
agreements. Since the 2007 ratemaking, one of the six companies has
gone out of business, and a second no longer operates under an AMO
union contract.
On August 16, 2007, the Coast Guard received two new sets of
agreements that updated wage and benefit information for the four
companies now operating under AMO union contracts. The agreements
involved a 5% wage rate increase effective August 1, 2006 and a 3%
increase effective August 1, 2007. Under one set of agreements
(``Agreement A''), the daily wage rate increased from $226.96 to
$245.46, while under the other set of agreements (``Agreement B'') the
daily wage rate was raised from $279.55 to $302.33.
To calculate monthly wages, we apply the new Agreement A and
Agreement B monthly multiplier of 49.5 to the daily rate. The new
monthly multiplier is decreased from the multiplier of 54 that was
contained in the 2003 contracts. It represents 30.5 average working
days per month, 16 vacation days, and 3 bonus days. To calculate
average annual compensation, we multiply monthly figures by 9 months,
the length of the Great Lakes shipping season.
Table 8 shows new wage calculations based on Agreements A and B.

Table 8.--Wages
------------------------------------------------------------------------
Pilots on
Pilots on designated waters
Monthly component undesignated (undesignated x
waters 150%)
------------------------------------------------------------------------
AGREEMENT A:
$245.46 daily rate x 49.5 days $12,150 $18,225
AGREEMENT A:
Monthly total x 9 months = 109,352 164,029
total wages..................
AGREEMENT B:
$302.33 daily rate x 49.5 days 14,965 22,488
AGREEMENT B:
Monthly total x 9 months = 134,688 202,032
total wages..................
------------------------------------------------------------------------

Benefits under Agreements A and B include a health contribution
rate of $66.69 per man-day and a pension plan contribution rate of
$33.35 per man-day under Agreement A, and $43.55 per man-day under
Agreement B. The AMO 401K employer matching rate remained at 5% of the
wage rate. A clerical contribution included in the 2003 contracts was
eliminated. Per the AMO union, the multiplier used to calculate monthly
benefits is 45.5 days.

[[Page 6090]]

Table 9.--Benefits
------------------------------------------------------------------------
Pilots on
Monthly component undesignated Pilots on
waters designated waters
------------------------------------------------------------------------
AGREEMENT A:
Employer contribution, 401(K) $607.51 $911.27
plan (Monthly Wages x 5%)....
Pension = $33.35 x 45.5 days.. $1,517.43 $1,517.43
Health = $66.69 x 45.5 days... $3,034.40 $3,034.40
AGREEMENT B:
Employer contribution, 401(K) $748.27 $1,122.40
plan (Monthly Wages x 5%)....
Pension = $43.55 x 45.5 days.. 1,981.53 1,981.53
Health = $66.69 x 45.5 days... $3,034.40 $3,034.40
AGREEMENT A:
Monthly total benefits........ =$5,159.33 =$5,463.09
AGREEMENT A:
Monthly total benefits x 9 =$46,434 =$49,168
months.......................
AGREEMENT B:
Monthly total benefits........ =$5,764.19 =$6,138.32
AGREEMENT B:
Monthly total benefits x 9 =$51,878 =$55,245
months.......................
------------------------------------------------------------------------

Table 10 totals the wages and benefits under each agreement.

Table 10.--Total Wages and Benefits Under Each Agreement
------------------------------------------------------------------------
Pilots on Pilots on
undesignated designated
waters waters
------------------------------------------------------------------------
AGREEMENT A: Wages.................. $109,352 $164,029
AGREEMENT A: Benefits............... +$46,434 +$49,168
AGREEMENT A: Total.................. =$155,786 =$213,196
AGREEMENT B: Wages.................. $134,688 $202,032
AGREEMENT B: Benefits............... +$51,878 +$55,245
AGREEMENT B: Total.................. =$186,566 =$257,277
------------------------------------------------------------------------

Table 11 shows that, for the four U.S. Great Lakes shipping
companies currently operating under AMO union contracts, approximately
29% of their total deadweight tonnage belongs to companies operating
under Agreement A, and approximately 71% belongs to companies operating
under Agreement B.

Table 11.--Deadweight Tonnage by AMO Union Agreement
------------------------------------------------------------------------
Company Agreement A Agreement B
------------------------------------------------------------------------
American Steamship Company.......... ................ 664,215
Mittal Steel USA, Inc............... ................ 96,544
HMC Ship Management................. 12,656 ................
Key Lakes, Inc...................... 303,145 ................
Total tonnage, each agreement... 315,801 760,759
Percent tonnage, each agreement. 315,801 / 760,759 /
1,076,560 1,076,560
=29.3343% =70.6657%
------------------------------------------------------------------------

Table 12 applies the percentage of tonnage represented by each
agreement to the wages and benefits provided by each agreement, to
determine the projected target rate of compensation on a tonnage-
weighted basis.

Table 12.--Projected Target Rate of Compensation
------------------------------------------------------------------------
Undesignated Designated
waters waters
------------------------------------------------------------------------
AGREEMENT A: Total wages and $155,786 x $213,196 x
benefits x percent tonnage......... 29.3343% = 29.3343% =
$45,699 $62,540
AGREEMENT B: Total wages and $186,566 x $257,277 x
benefits x percent tonnage......... 70.6657% = 70.6657% =
$131,838 $181,807
-----------------------------------

[[Page 6091]]

Total weighted average wages and $45,699 + $62,540 +
benefits = projected target $131,838 = $181,807 =
rate of compensation........... $177,537 $244,346
------------------------------------------------------------------------

b. Determine number of pilots needed. Subject to adjustment by the
Director of Great Lakes Pilotage to ensure uninterrupted service, we
determine the number of pilots needed in each Area by dividing each
Area's projected bridge hours, either by 1,000 (designated waters) or
by 1,800 (undesignated waters).
Bridge hours are the number of hours a pilot is aboard a vessel
providing pilotage service. Projected bridge hours are based on the
vessel traffic that pilots are expected to serve. Based on historical
data and information provided by pilots and industry, the Coast Guard
projects that traffic for the 2008 navigation season will remain the
same as it did in 2007.
Table 13 shows the projected bridge hours needed for each Area, and
the total number of pilots needed after dividing those figures either
by 1,000 or 1,800 and rounding up to the next whole pilot:

Table 13.--Number of Pilots Needed
------------------------------------------------------------------------
Divided by
1,000
Projected (designated Pilots
Pilotage area 2008 bridge waters) or needed
hours 1,800 (total =
(undesignated 44)
waters)
------------------------------------------------------------------------
Area 1......................... 5,661 1,000 6
Area 2......................... 7,993 1,800 5
Area 4......................... 8,490 1,800 5
Area 5......................... 6,395 1,000 7
Area 6......................... 18,000 1,800 10
Area 7......................... 3,863 1,000 4
Area 8......................... 11,390 1,800 7
------------------------------------------------------------------------

c. Determine the projected target pilot compensation for each Area.
The projection of new total target pilot compensation is determined
separately for each pilotage Area by multiplying the number of pilots
needed in each Area by the projected target rate of compensation for
pilots working in that Area. Table 14 shows this calculation.

Table 14.--Projected Target Pilot Compensation
----------------------------------------------------------------------------------------------------------------
Multiplied by Projected target
Pilotage area Pilots needed target rate of pilot
(total = 44) compensation compensation
----------------------------------------------------------------------------------------------------------------
Area 1.................................................... 6 x $244,346 $1,466,077
Area 2.................................................... 5 x $177,537 887,684
-----------------------------------------------------
Total, District One................................... ................ ................ 2,353,761

Area 4.................................................... 5 x $177,537 887,684
Area 5.................................................... 7 x $244,346 1,710,424
-----------------------------------------------------
Total, District Two................................... ................ ................ 2,598,108

Area 6.................................................... 10 x $177,537 1,775,368
Area 7.................................................... 4 x $244,346 977,385
Area 8.................................................... 7 x $177,537 1,242,758
-----------------------------------------------------
Total, District Three................................. ................ ................ 3,995,511
----------------------------------------------------------------------------------------------------------------

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

[[Page 6092]]

Table 15.--Projected Pilot Compensation, Multiplied by the Expense Multiplier Equals Projected Operating Expense
----------------------------------------------------------------------------------------------------------------
Projected target Multiplied by Projected
Pilotage area pilot expense operating
compensation multiplier expense
----------------------------------------------------------------------------------------------------------------
Area 1.................................................... $1,466,077 x .32166 = $471,581
Area 2.................................................... 887,684 x .54468 = $483,505
-----------------------------------------------------
Total, District One................................... 2,353,761 x .40560 = $954,685

Area 4.................................................... 887,684 x .63651 = $565,024
Area 5.................................................... 1,710,424 x .48097 = $822,655
-----------------------------------------------------
Total, District Two................................... 2,598,108 x .53400 = $1,387,383

Area 6.................................................... 1,775,368 x .51128 = $907,709
Area 7.................................................... 977,385 x .36075 = $352,592
Area 8.................................................... 1,242,758 x .45592 = $566,600
-----------------------------------------------------
Total, District Three................................. 3,995,511 x .45716 = $1,826,593
----------------------------------------------------------------------------------------------------------------

Step 5: Adjust the result in Step 4, as required, for inflation or
deflation, and calculate projected total economic cost. Based on data
from the U.S. Department of Labor's Bureau of Labor Statistics, we have
multiplied the results in Step 4 by a 1.024 inflation factor,
reflecting an average inflation rate of 2.4% in ``Midwest Economy--
``Consumer Prices'' between 2005 and 2006, the latest years for which
data are available. Table 16 shows this calculation and the projected
total economic cost.

Table 16.--Projected Operating Expense, Adjusted for Inflation, and Added to Projected Target Pilot Compensation
Equals Projected Total Economic Cost
----------------------------------------------------------------------------------------------------------------
B. increase,
A. projected multiplied by C. projected D. projected
Pilotage area operating inflation factor target pilot total economic
expense (= A x 1.024) compensation cost (= B+C)
----------------------------------------------------------------------------------------------------------------
Area 1.................................. $471,581 $482,899 $1,466,077 $1,948,977
Area 2.................................. 483,505 495,109 887,684 1,382,793
-----------------------------------------------------------------------
Total, District One................. 954,685 977,597 2,353,761 3,331,359

Area 4.................................. 565,024 578,584 887,684 1,466,268
Area 5.................................. 822,655 842,399 1,710,424 2,552,822
-----------------------------------------------------------------------
Total, District Two................. 1,387,383 1,420,680 2,598,108 4,018,788

Area 6.................................. 907,709 929,494 1,775,368 2,704,862
Area 7.................................. 352,592 361,054 977,385 1,338,439
Area 8.................................. 566,600 580,198 1,242,758 1,822,956
-----------------------------------------------------------------------
Total, District Three............... 1,826,593 1,870,432 3,995,511 5,865,942

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

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

Table 17.--Prospective (Total) Unit Costs
----------------------------------------------------------------------------------------------------------------
Prospective
A. projected B. projected (total) unit
Pilotage area total economic 2008 bridge costs (A divided
cost hours by B)
----------------------------------------------------------------------------------------------------------------
Area 1.................................................... $1,948,977 5,661 $344.28
Area 2.................................................... 1,382,793 7,993 173.00
-----------------------------------------------------
Total, District One................................... 3,331,359 13,654 243.98

Area 4.................................................... 1,466,268 8,490 172.71
Area 5.................................................... 2,552,822 6,395 399.19
-----------------------------------------------------
Total, District Two................................... 4,018,788 14,885 269.99

Area 6.................................................... 2,704,862 18,000 150.27
Area 7.................................................... 1,338,439 3,863 346.48
Area 8.................................................... 1,822,956 11,390 160.05
-----------------------------------------------------

[[Page 6093]]

Total, District Three................................. 5,865,942 33,253 176.40
----------------------------------------------------------------------------------------------------------------

Step 7: Divide prospective unit costs (total unit costs) in Step 6
by the base period unit costs in Step 1. Table 18 shows this
calculation, which expresses the percentage change between the total
unit costs and the base unit costs. The results, for each Area, are
identical with the percentage increases listed in Table 1.

Table 18.--Percentage Change, Prospective vs. Base Period Unit Costs
----------------------------------------------------------------------------------------------------------------
C. percentage
change from base
Pilotage area A. prospective B. base period (A divided by B;
unit costs unit costs result expressed
as percentage)
----------------------------------------------------------------------------------------------------------------
Area 1.................................................... $344.28 $319.44 7.78
Area 2.................................................... 173.00 159.5 8.41
-----------------------------------------------------
Total, District One................................... 243.98 225.86 8.02

Area 4.................................................... 172.71 159.17 8.50
Area 5.................................................... 399.19 369.67 7.98
-----------------------------------------------------
Total, District Two................................... 269.99 249.61 8.16

Area 6.................................................... 150.27 138.66 8.37
Area 7.................................................... 346.48 321.31 7.83
Area 8.................................................... 160.05 147.77 8.31
-----------------------------------------------------
Total, District Three................................. 176.40 163.00 8.22
----------------------------------------------------------------------------------------------------------------

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

Table 19.--Base Period Rates Adjusted by Percentage Change in Unit Costs\1\
----------------------------------------------------------------------------------------------------------------
B. percentage
A. base period change in unit C. increase in D. adjusted rate
Pilotage area rate costs (multiplying base rate (A x B%) (A + C, rounded to
factor) nearest dollar)
----------------------------------------------------------------------------------------------------------------
Area 1.......................... .................. 7.78 (1.0778) .................. ..................
Basic pilotage.............. $13/km, $23/mi .................. $1.01/km, $1.79/mi $14/km, $25/mi
Each lock transited......... 288 .................. 22.41 310
Harbor movage............... 943 .................. 73.37 1,016
Minimum basic rate, St. 629 .................. 48.94 678
Lawrence River.............
Maximum rate, through trip.. 2,761 .................. 214.81 2,976
Area 2.......................... .................. 8.41 (1.0841) .................. ..................
6-hr. period................ 477 .................. 40.12 517
Docking or undocking........ 455 .................. 38.27 493
Area 4.......................... .................. 8.50 (1.0850) .................. ..................
6 hr. period................ 641 .................. 54.49 695
Docking or undocking........ 494 .................. 41.99 536
Any point on Niagara River 1,261 .................. 107.19 1,368
below Black Rock Lock......
Area 5 between any point on or .................. 7.98 (1.0798) .................. ..................
in:............................
Toledo or any point on Lake 1,004 .................. 80.12 1,084
Erie W. of Southeast Shoal.
Toledo or any point on Lake 1,699 .................. 135.58 1,835
Erie W. of Southeast Shoal
& Southeast Shoal..........
Toledo or any point on Lake 2,206 .................. 176.04 2,382
Erie W. of Southeast Shoal
& Detroit River............
Toledo or any point on Lake 1,699 .................. 135.58 1,835
Erie W. of Southeast Shoal
& Detroit Pilot Boat.......
Port Huron Change Point & 2,959 .................. 236.13 3,195
Southeast Shoal (when
pilots are not changed at
the Detroit Pilot Boat)....

[[Page 6094]]

Port Huron Change Point & 3,428 .................. 273.55 3,702
Toledo or any point on Lake
Erie W. of Southeast Shoal
(when pilots are not
changed at the Detroit
Pilot Boat)................
Port Huron Change Point & 2,223 .................. 177.40 2,400
Detroit River..............
Port Huron Change Point & 1,729 .................. 137.97 1,867
Detroit Pilot Boat.........
Port Huron Change Point & 1,229 .................. 98.07 1,327
St. Clair River............
St. Clair River............. 1,004 .................. 80.12 1,084
St. Clair River & Southeast 2,959 .................. 236.13 3,195
Shoal (when pilots are not
changed at the Detroit
Pilot Boat)................
St. Clair River & Detroit 2,223 .................. 177.40 2,400
River/Detroit Pilot Boat...
Detroit, Windsor, or Detroit 1,004 .................. 80.12 1,084
River......................
Detroit, Windsor, or Detroit 1,699 .................. 135.58 1,835
River & Southeast Shoal....
Detroit, Windsor, or Detroit 2,206 .................. 176.04 2,382
River & Toledo or any point
on Lake Erie W. of
Southeast Shoal............
Detroit, Windsor, or Detroit 2,223 .................. 177.40 2,400
River & St. Clair River....
Detroit Pilot Boat & 1,229 .................. 98.07 1,327
Southeast Shoal............
Detroit Pilot Boat & Toledo 1,699 .................. 135.58 1,835
or any point on Lake Erie
W. of Southeast Shoal......
Detroit Pilot Boat & St. 2,223 .................. 177.40 2,400
Clair River................
Area 6.......................... .................. 8.37 (1.0837) .................. ..................
6 hr. period................ 479 .................. 40.09 519
Docking or undocking........ 455 .................. 38.08 493
Area 7 between any point on or .................. 7.83 (1.0783) .................. ..................
in:............................
Gros Cap & De Tour.......... 1,718 .................. 134.52 1,853
Algoma Steel Corp. Wharf, 1,718 .................. 134.52 1,853
Sault Ste. Marie, Ont. & De
Tour.......................
Algoma Steel Corp. Wharf, 647 .................. 50.66 698
Sault Ste. Marie, Ont. &
Gros Cap...................
Any point in Sault Ste. 1,440 .................. 112.75 1,553
Marie, Ont., except the
Algoma Steel Corp. Wharf &
De Tour....................
Any point in Sault Ste. 647 .................. 50.66 698
Marie, Ont., except the
Algoma Steel Corp. Wharf &
Gros Cap...................
Sault Ste. Marie, MI & De 1,440 .................. 112.75 1,553
Tour.......................
Sault Ste. Marie, MI & Gros 647 .................. 50.66 698
Cap........................
Harbor movage............... 647 .................. 50.66 698
Area 8.......................... .................. 8.31 (1.0831) .................. ..................
6 hr. period................ 464 .................. 38.56 503
Docking or undocking........ 441 .................. 36.65 478
----------------------------------------------------------------------------------------------------------------
\1\ Rates for ``Cancellation, delay or interruption in rendering services ( Sec. 401.420)'' and ``Basic Rates
and charges for carrying a U.S. pilot beyond the normal change point, or for boarding at other than the normal
boarding point (Sec. 401.428)'' are not reflected in this table but have been increased by 8.17% across all
areas.

C. Amending 46 CFR 401.700 and 710

The Coast Guard also proposes to amend 46 CFR 401.700 and 401.710
to clarify the obligation imposed on Great Lakes registered pilots and
authorized pilotage pools to fully and professionally cooperate in the
course of performing their duties with U.S. and Canadian Coast Guard
units and personnel, vessel traffic service personnel, and other lawful
authority.
This amendment is required because foreign trade vessels piloted by
U.S. pilots on the St. Lawrence Seaway and Great Lakes system routinely
cross and re-cross the international boundary between the U.S. and
Canada. Frequently numerous crossings are made in a single voyage with
both sovereigns exercising authority at various points of a transit.
The post 9/11 period of heightened security makes it imperative to
clearly state the obligation of U.S. Great Lakes pilots and their
associations to immediately and professionally comply with any legal
directions received, and requests for information, from both U.S. and
Canadian law enforcement authority and with those administrative
personnel responsible for ensuring the safety and security of the
system.

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 will not be 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
``Background'' section for a detailed explanation of the legal
authority and requirements for the Coast Guard to conduct an annual
review and provide possible adjustments of pilotage rates on the Great
Lakes.) Based on our review, we are proposing an adjustment to the
pilotage rates for the 2008 shipping season to generate sufficient
revenue to cover allowable expenses, target pilot compensation, and
returns on investment.
This proposed rule would implement an 8.17 percent average rate
adjustment

[[Page 6095]]

per area for the Great Lakes system over the rate adjustment found in
the 2007 final rule. These adjustments to Great Lakes pilotage rates
meet the requirements set forth in 46 CFR part 404 for similar
compensation levels between Great Lakes pilots and industry. They also
include adjustments for inflation and changes in association expenses
to maintain these compensation levels.
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 updated our estimates of affected vessels for the proposed rule
by using recent vessel characteristics, documentation, and arrival
data. We used 2005-2006 vessel arrival data from the National Vessel
Movement Center (NVMC) and the Coast Guard's Marine Inspection, Safety,
and Law Enforcement (MISLE) system to estimate the average annual
number of vessels affected by the rate adjustment to be 217 vessels
that journey into the Great Lakes system. These vessels entered the
Great Lakes by transiting through or in part of at least one of the
three pilotage Districts before leaving the Great Lakes system. These
vessels often make more than one distinct stop, docking, loading, and
unloading at facilities in Great Lakes ports. Of the total trips for
the 217 vessels, there were approximately 917 annual U.S. port arrivals
before the vessels left the Great Lakes system, based on 2005-2006
vessel data from the NVMC and MISLE.
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.

Table 1.--District Revenues
[$U.S.]
----------------------------------------------------------------------------------------------------------------
Year District one District two District three Total
----------------------------------------------------------------------------------------------------------------
1998............................ 2,127,577 3,202,374 4,026,802 9,356,753
1999............................ 2,009,180 2,727,688 3,599,993 8,336,861
2000............................

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