2009 Rates for Pilotage on the Great Lakes, 18669-18682 [E9-9432]

Download as PDF Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Proposed Rules 4. Mail: John M. Mooney, Chief, Criteria Pollutant Section, Air Programs Branch (AR–18J), U.S. Environmental Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. 5. Hand Delivery: John M. Mooney, Chief, Criteria Pollutant Section, Air Programs Branch (AR–18J), U.S. Environmental Protection Agency, 77 West Jackson Boulevard, Chicago, Illinois 60604. Such deliveries are only accepted during the Regional Office normal hours of operation, and special arrangements should be made for deliveries of boxed information. The Regional Office official hours of business are Monday through Friday, 8:30 a.m. to 4:30 p.m., excluding Federal holidays. Please see the direct final rule which is located in the Rules section of this Federal Register for detailed instructions on how to submit comments. FOR FURTHER INFORMATION CONTACT: Gilberto Alvarez, Environmental Scientist, Criteria Pollutant Section, Air Programs Branch (AR–18J), U.S. Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312) 886–6143, alvarez.gilberto@epa.gov. In the Rules section of this Federal Register, EPA is approving the State’s SIP submittal as a direct final rule without prior proposal because the Agency views this as a noncontroversial submittal and anticipates no adverse comments. A detailed rationale for the approval is set forth in the direct final rule. If no adverse comments are received in response to this rule, no further activity is contemplated. If EPA receives adverse comments, the direct final rule will be withdrawn and all public comments received will be addressed in a subsequent final rule based on this proposed rule. EPA will not institute a second comment period. Any parties interested in commenting on this action should do so at this time. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment. For additional information, see the direct final rule which is located in the Rules section of this Federal Register. tjames on PRODPC75 with PROPOSALS SUPPLEMENTARY INFORMATION: VerDate Nov<24>2008 14:02 Apr 23, 2009 Jkt 217001 18669 Dated: April 9, 2009. Bharat Mathur, Acting Regional Administrator, Region 5. [FR Doc. E9–9363 Filed 4–23–09; 8:45 am] material to the docket, call Renee V. Wright, Program Manager, Docket Operations, telephone 202–366–9826. SUPPLEMENTARY INFORMATION: BILLING CODE 6560–50–P Table of Contents I. Public Participation and Request for Comments A. Submitting comments B. Viewing comments and documents C. Privacy Act D. Public Meeting: II. Abbreviations III. Background and Purpose IV. Discussion of the Proposed Rule V. Regulatory Analyses A. Regulatory Planning and Review B. Small Entities C. Assistance for Small Entities D. Collection of Information E. Federalism F. Unfunded Mandates Reform Act G. Taking of Private Property H. Civil Justice Reform I. Protection of Children J. Indian Tribal Governments K. Energy Effects L. Technical Standards M. Environment DEPARTMENT OF HOMELAND SECURITY Coast Guard 46 CFR Part 401 [Docket No. USCG–2008–1126] RIN 1625–AB29 2009 Rates for Pilotage on the Great Lakes Coast Guard, DHS. Notice of proposed rulemaking. AGENCY: ACTION: SUMMARY: The Coast Guard is proposing to update the rates for pilotage on the Great Lakes by 9.41%, effective August 1, 2009, to generate sufficient revenue to cover allowable expenses, target pilot compensation, and returns on investment. The proposed update reflects an August 1, 2009, increase in benchmark contractual wages and benefits, as well as an increase in the ratio of pilots to ‘‘bridge hours.’’ 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 May 26, 2009. ADDRESSES: You may submit comments identified by Coast Guard docket number USCG–2008–1126 to the Docket Management Facility at the U.S. Department of Transportation. To avoid duplication, please use only one of the following methods: (1) Federal eRulemaking Portal: http://www.regulations.gov. (2) Fax: 202–493–2251. (3) 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. (4) Hand delivery: Same as mail address above, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The telephone number is 202–366–9329. FOR FURTHER INFORMATION CONTACT: For questions on this proposed rule, call Mr. Woo S. Kim, 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 Woo.S.Kim@uscg.mil. If you have questions on viewing or submitting PO 00000 Frm 00011 Fmt 4702 Sfmt 4702 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 http:// www.regulations.gov and will include any personal information you have provided. We have an agreement with the Department of Transportation to use the Docket Management Facility. A. Submitting Comments If you submit a comment, please include the docket number for this rulemaking, (USCG–2008–1126), 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. 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 E:\FR\FM\24APP1.SGM 24APP1 18670 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Proposed Rules 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 http://www.regulations.gov at any time. Enter the docket number for this rulemaking (USCG–2008–1126) in the Search box, and click ‘‘Go >>.’’ If you do not have access to the Internet, you may view the docket online by visiting the Docket Management Facility in Room W12–140 on the ground floor of the Department of Transportation West Building, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. C. 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 a Privacy Act system of records notice regarding our public dockets in the January 17, 2008 issue of the Federal Register (73 FR 3316). D. 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. II. Abbreviations tjames on PRODPC75 with PROPOSALS AMOU American Maritime Officers Union MISLE Coast Guard Marine Inspection, Safety, and Law Enforcement NAICS North American Industry Classification System NEPA National Environmental Policy Act of 1969 NPRM Notice of Proposed Rulemaking NVMC National Vessel Movement Center OMB Office of Management and Budget III. Background and Purpose This notice of proposed rulemaking (NPRM) is issued pursuant to Coast Guard regulations in 46 CFR Parts 401– 404. Those regulations implement the Great Lakes Pilotage Act of 1960, 46 U.S.C. Chapter 93, which requires foreign-flag vessels and U.S.-flag vessels engaged in foreign trade to use federally registered Great Lakes pilots while VerDate Nov<24>2008 14:02 Apr 23, 2009 Jkt 217001 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 Coast Guard 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. 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 the vessel at the discretion of and subject to the customary authority of the master.’’ 46 U.S.C. 9302(a)(1)(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 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 PO 00000 Frm 00012 Fmt 4702 Sfmt 4702 of the pilotage associations and prepare and submit financial reports relevant to the ratemaking process. In those years when a full ratemaking is conducted, the Coast Guard generates the pilotage rates using Appendix A to 46 CFR Part 404. Between the five-year full ratemaking intervals, the Coast Guard annually reviews the pilotage rates using Appendix C to Part 404, and adjusts rates when deemed appropriate. Terms and formulas used in Appendix A and Appendix C are defined in Appendix B to Part 404. The last full ratemaking using the Appendix A methodology was published on April 3, 2006 (71 FR 16501). Rates for the 2007 season were adjusted based on an Appendix C review and the final rule was published on September 18, 2007 (72 FR 53158). Rates for the 2008 shipping season were also adjusted based on an Appendix C review published in an interim rule (73 FR 15092) on March 21, 2008 and a final rule (74 FR 220) on January 5, 2009. The present rulemaking proposes rate adjustments for the 2009 shipping season, based once again on an Appendix C review. IV. Discussion 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. A. Proposed Pilotage Rate Changes— Summarized The Appendix C to 46 CFR 404 ratemaking methodology is intended for use during the years between Appendix A full ratemaking reviews and adjustments. This section summarizes the rate changes proposed for 2009, and then discusses in detail how the proposed changes were calculated under Appendix C. We are proposing an increase of 9.41% across all Districts over the last pilotage rate adjustment. This reflects an August 1, 2009, increase in benchmark contractual wages and benefits, as well as an increase in the ratio of pilots to ‘‘bridge hours,’’ which are the number of hours a pilot is aboard a vessel providing pilotage service. Actual rate increases vary by Area, and are summarized in Table 1. E:\FR\FM\24APP1.SGM 24APP1 18671 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Proposed Rules TABLE 1—2009 AREA RATE CHANGES Then the proposed percentage increases over the current rate is: If pilotage service is required in: Area 1 (Designated waters) ........................................................................................................................................................... Area 2 (Undesignated waters) ....................................................................................................................................................... Area 4 (Undesignated waters) ....................................................................................................................................................... Area 5 (Designated waters) ........................................................................................................................................................... Area 6 (Undesignated waters) ....................................................................................................................................................... Area 7 (Designated waters) ........................................................................................................................................................... Area 8 (Undesignated waters) ....................................................................................................................................................... Overall Rate Change (percentage change in overall prospective unit costs/base unit costs; see Table 18) .............................. Rates for cancellation, delay, or interruption in rendering services (46 CFR 401.420), and basic rates and charges for carrying a U.S. pilot beyond the normal change point, or for boarding at other than the normal boarding point (46 CFR 401.428), have been increased by 9.41% in all Areas. B. Calculating the Rate Adjustment The Appendix C ratemaking calculation involves eight steps: Step 1: Calculate the total economic costs for the base period (i.e., pilot compensation expense plus all other recognized expenses plus the return element) and divide by the total bridge 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 2008 Appendix C review. The Coast Guard also used the most recent union contracts between the American Maritime Officers Union (AMOU) and vessel owners and operators on the Great Lakes to determine target pilot compensation. Bridge hour projections for the 2009 season have been obtained from historical data, pilots, and industry. All documents and records used in this rate calculation have been placed in the public docket for this 3.89 4.44 4.54 4.12 12.14 23.07 2.18 9.41 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 divide total economic costs for the base period by the total bridge hours used in setting the base period rates, to yield the base cost per bridge hour. Total base period economic costs include pilot compensation expenses, plus all other recognized expenses, plus the return on investment element set during the last Appendix A review (2006). The calculations providing the total base period economic costs for each Area are summarized in Table 16 of the 2008 final rule (74 FR 220; Jan. 5, 2009). Total bridge hours use in setting the base period rates were calculated in Table 13 of the 2008 final rule. Tables 2 through 4 summarize the Step 1 calculations: TABLE 2—TOTAL ECONOMIC COST FOR BASE PERIOD, DISTRICT ONE Area 1 St. Lawrence River Total base period economic costs ............................................................................................... Base bridge hours ....................................................................................................................... Base cost per bridge hour ........................................................................................................... Area 2 Lake Ontario $2,078,551 ÷ 5,661 = $367.17 $1,474,806 ÷ 5,650 = $261.03 Total District One $3,553,357 ÷ 11,311 = $314.15 TABLE 3—TOTAL ECONOMIC COST FOR BASE PERIOD, DISTRICT TWO tjames on PRODPC75 with PROPOSALS Area 4 Lake Erie Total base period economic costs ............................................................................................... Base bridge hours ....................................................................................................................... Base cost per bridge hour ........................................................................................................... VerDate Nov<24>2008 14:02 Apr 23, 2009 Jkt 217001 PO 00000 Frm 00013 Fmt 4702 Sfmt 4702 $1,251,203 ÷ 7,320 = $170.93 E:\FR\FM\24APP1.SGM 24APP1 Area 5 Southeast Shoal to Port Huron, MI $2,334,169 ÷ 5,097 = $457.95 Total District Two $3,585,372 ÷ 12,417 = $288.75 18672 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Proposed Rules TABLE 4—TOTAL ECONOMIC COST FOR BASE PERIOD, DISTRICT THREE Area 6 Lakes Huron and Michigan Total base period economic costs ................................................................... Base bridge hours ........................................................................................... Base cost per bridge hour ............................................................................... Step 2. Calculate the expense multiplier. In this step, for each Area, we calculate an expense multiplier by dividing the base operating expense, $2,884,724 ÷ 18,000 = $160.26 shown in Table 16, Column B of the 2008 final rule, by base pilot compensation, shown in Table 16, Column C of the 2008 final rule. Tables Area 7 St. Mary’s River $1,427,515 ÷ 3,863 = $369.54 Area 8 Lake Superior $1,944,032 ÷ 11,390 = $170.68 Total District Three $6,256,273 ÷ 33,253 = $188.14 5 through 7 show the Step 2 calculations. TABLE 5—EXPENSE MULTIPLIER, DISTRICT ONE Area 1 St. Lawrence River Base operating expense .............................................................................................................. Base target pilot compensation ................................................................................................... Expense multiplier ....................................................................................................................... $516,138 ÷ $1,562,413 = .33035 Area 2b Lake Ontario $529,046 ÷ $945,760 = .55939 Total District One $1,045,185 ÷ $2,508,173 = .41671 TABLE 6—EXPENSE MULTIPLIER, DISTRICT TWO Area 4 Lake Erie Base operating expense .............................................................................................................. Base target pilot compensation ................................................................................................... Expense multiplier ....................................................................................................................... $494,595 ÷ $756,608 = .65370 Area 5 Southeast Shoal to Port Huron, MI Total District Two $771,756 ÷ $1,562,413 = .49395 $1,266,351 ÷ $2,319,021 = .54607 Area 7 St. Mary’s River Area 8 Lake Superior Total District Three $384,201 ÷ $1,041,609 = .36885 $619,968 ÷ $1,324,064 = .46823 $1,997,375 ÷ $4,257,193 = .46918 TABLE 7—EXPENSE MULTIPLIER, DISTRICT THREE Area 6 Lakes Huron and Michigan tjames on PRODPC75 with PROPOSALS Base operating expense .................................................................................. Base target pilot compensation ....................................................................... Expense multiplier ........................................................................................... Step 3. Calculate annual projection of target pilot compensation. In this step, we determine the new target rate of compensation and the new number of pilots needed in each pilotage Area, to determine the new target pilot compensation for each Area. (a) Determine new target rate of compensation. Target pilot compensation is based on the average annual compensation of first mates and masters on U.S. Great Lakes vessels. Compensation includes wages and benefits. For pilots in undesignated waters, we approximate the first mates’ compensation and, in designated waters, we approximate the master’s compensation (first mates’ wages multiplied by 150% plus benefits). To determine first mates’ and masters’ average annual compensation, we use data from the most recent AMOU contracts with the U.S. companies VerDate Nov<24>2008 14:02 Apr 23, 2009 Jkt 217001 $993,207 ÷ $1,891,520 = .52508 engaged in Great Lakes shipping. Where different AMOU agreements apply to different companies, we apportion the compensation provided by each agreement according to the percentage of tonnage represented by companies under each agreement. On August 16, 2007, the Coast Guard received the two most recent AMOU contracts. ‘‘Agreement A’’ covers vessels operated by American Steamship Co. and Inland Lakes Management, Inc. Inland Lakes Management operations continue to be covered by Agreement A, despite that company’s 2008 acquisition by Mittal Steel USA, Inc. ‘‘Agreement B’’ covers vessels operated by Key Lakes, Inc., and all other vessels operated by Mittal Steel. Both Agreement A and Agreement B provide for a 3% wage increase effective August 1, 2009. Under Agreement A, the daily wage rate will be increased from PO 00000 Frm 00014 Fmt 4702 Sfmt 4702 $255.28 to $262.73. Under Agreement B, the daily wage rate will be increased from $314.42 to $323.86. To calculate monthly wages, we apply Agreement A and Agreement B monthly multipliers of 54.5 and 49.5, respectively, to the daily rate. Agreement A’s 54.5 multiplier represents 30.5 average working days, 15.5 vacation days, 4 days for four weekends, 3 bonus days, and 1.5 holidays. Agreement B’s 49.5 multiplier represents 30.5 average working days, 16 vacation days, and 3 bonus days. To calculate average annual compensation, we multiply monthly figures by 9 months, the length of the Great Lakes shipping season. Table 8 shows new wage calculations based on Agreements A and B effective August 1, 2009. E:\FR\FM\24APP1.SGM 24APP1 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Proposed Rules 18673 TABLE 8—WAGES Pilots on undesignated waters $14,319 Both Agreements A and B include a health benefits contribution rate of $80.69 effective August 1, 2009. Agreement A includes a pension plan contribution rate of $33.35 per man-day. Agreement B includes a pension plan contribution rate of $43.55 per man-day. Both Agreements A and B provide a 401K employer matching rate, 5% of the wage rate. Neither Agreement A nor Agreement B includes a clerical contribution that appeared in earlier 193,305 16,031 24,046 144,278 AGREEMENT A: $262.73 daily rate × 54.5 days ................................................................................................... AGREEMENT A: Monthly total × 9 months = total wages ........................................................................................................... AGREEMENT B: 323.86 daily rate × 49.5 days ........................................................................................................................... AGREEMENT B: Monthly total × 9 months = total wages ........................................................................................................... $21,478 128,870 Monthly component Pilots on designated waters (undesignated × 150%) 216,417 contracts. Per the AMOU, the multiplier used to calculate monthly benefits is 45.5 days. Table 9 shows new benefit calculations based on Agreements A and B, effective August 1, 2009. 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 = 80.69 × 45.5 days .............................................................................................................................. AGREEMENT B: Employer contribution, 401(K) plan (Monthly Wages × 5%) ............................................................................ Pension = 43.55 × 45.5 days ........................................................................................................................... Health = 80.69 × 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 $715.95 1,517.43 3,671.40 $1,073.92 1,517.43 3,671.40 801.54 1,981.53 3,671.40 1,202.32 1,981.53 3,671.40 = 5,904.77 = 6,262.74 = 53,143 = 56,365 = 6,454.46 = 6,855.24 = 58,090 = 61,697 Table 10 totals the wages and benefits under each agreement. TABLE 10—TOTAL WAGES AND BENEFITS Pilots on undesignated waters Pilots on designated waters $128,870 + 53,143 $193,305 + 56,365 AGREEMENT A: Total ................................................................................................................................. AGREEMENT B: Wages ..................................................................................................................................... AGREEMENT B: Benefits ................................................................................................................................... = 182,013 144,278 + 58,090 = 249,670 216,417 + 61,697 AGREEMENT B: Total ................................................................................................................................. tjames on PRODPC75 with PROPOSALS AGREEMENT A: Wages ..................................................................................................................................... AGREEMENT A: Benefits ................................................................................................................................... = 202,368 = 278,114 Table 11 shows that approximately one third of U.S. Great Lakes shipping deadweight tonnage operates under VerDate Nov<24>2008 14:02 Apr 23, 2009 Jkt 217001 Agreement A, with the remaining two thirds operating under Agreement B. PO 00000 Frm 00015 Fmt 4702 Sfmt 4702 E:\FR\FM\24APP1.SGM 24APP1 18674 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Proposed Rules TABLE 11—DEADWEIGHT TONNAGE, AGREEMENT A AND AGREEMENT B Company Agreement A American Steamship Company ............................................................................................................................... Mittal Steel USA, Inc. (including Inland Lakes Management, Inc., vessels acquired by Mittal and continuing to operate under Agreement A) ............................................................................................................................... Key Lakes, Inc ......................................................................................................................................................... ........................ 664,215 12,656 361,385 96,544 Total tonnage, each agreement ....................................................................................................................... 374,041 760,759 Percent tonnage, each agreement ............................................................................................................ 374,041 ÷ 1,134,800 = 32.9600% 760,759 ÷ 1,134,800 = 67.0400% Table 12 applies the percentage of tonnage represented by each agreement to the wages and benefits provided by each agreement, to determine the Agreement B projected target rate of compensation on a tonnage-weighted basis. TABLE 12—PROJECTED TARGET RATE OF COMPENSATION, WEIGHTED BY AGREEMENT Undesignated waters AGREEMENT A: Total wages and benefits × percent tonnage .......................................................................... AGREEMENT B: Total wages and benefits × percent tonnage .......................................................................... Total weighted average wages and benefits = projected target rate of compensation ... (b) Determine number of pilots needed. Subject to adjustment by the Coast Guard Director of Great Lakes Pilotage to ensure uninterrupted service, we determine the number of pilots needed 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 vessel traffic in Districts 1 and 2, for the 2009 navigation season, will remain at the same level as in 2007. In District 3, the actual bridge hours for Areas 6 and 7 were down by more than 17% and 6%, respectively, when compared to the projected bridge hours in 2007. Consequently, District 3 has recommended, and we have agreed, to reduce the projected 2009 Area 6 and Designated waters $182,013 × 32.96% = $59,993 $249,670 × 32.96% = $82,294 $202,368 × 67.04% = $135,666 $278,114 × 67.04% = $186,445 $59,993 + $135,666 = $195,659 $82,294 + $186,445 = $268,738 Area 7 bridge hours by 10% from 2007. Consistent with this decrease in projected bridge hours, we are also reducing the number of pilots in Area 6 by two. We are projecting the same number of bridge hours for 2009 in Area 8 as we 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 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) Projected 2009 bridge hours .............................................................................................................................. .............................................................................................................................. .............................................................................................................................. .............................................................................................................................. .............................................................................................................................. .............................................................................................................................. .............................................................................................................................. 5,661 5,650 7,320 5,097 13,406 3,259 11,630 Pilots needed (total = 40) 1,000 1,800 1,800 1,000 1,800 1,000 1,800 tjames on PRODPC75 with PROPOSALS * As indicated in the 2008 Final Rule, the Director has exercised his discretion to maintain 5 pilots in Area 2, to ensure facilitation of traffic. (c) Determine the projected target pilot compensation for each Area. The projection of new total target pilot compensation is determined separately VerDate Nov<24>2008 14:02 Apr 23, 2009 Jkt 217001 for each pilotage Area by multiplying the number of pilots needed in each Area (see Table 13) by the projected target rate of compensation (see Table PO 00000 Frm 00016 Fmt 4702 Sfmt 4702 12) for pilots working in that Area. Table 14 shows this calculation. E:\FR\FM\24APP1.SGM 24APP1 6 *5 4 6 8 4 7 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Proposed Rules 18675 TABLE 14—PROJECTED TARGET PILOT COMPENSATION Multiplied by target rate of compensation Pilots needed (total = 40) Pilotage area Projected target pilot compensation Area 1 ........................................................................................................................ Area 2 ........................................................................................................................ 6 5 × $268,738 × 195,659 $1,612,431 978,294 Total, District One ............................................................................................... 11 .............................. 2,590,725 Area 4 ........................................................................................................................ Area 5 ........................................................................................................................ 4 6 × 195,659 × 268,738 782,635 1,612,431 Total, District Two ............................................................................................... 10 .............................. 2,395,066 Area 6 ........................................................................................................................ Area 7 ........................................................................................................................ Area 8 ........................................................................................................................ 8 4 7 × 195,659 × 268,738 × 195,659 1,565,271 1,074,954 1,369,612 Total, District Three ............................................................................................ 19 .............................. 4,009,836 Step 4: Increase the projected pilot compensation in Step 3 by the expense multiplier in Step 2. This step yields a projected increase in operating costs necessary to support the increased projected pilot compensation. Table 15 shows this calculation. TABLE 15—PROJECTED PILOT COMPENSATION, MULTIPLIED BY THE EXPENSE MULTIPLIER EQUALS PROJECTED OPERATING EXPENSE Projected target pilot compensation Multiplied by expense multiplier Projected operating expense Area 1 ........................................................................................................................ Area 2 ........................................................................................................................ $1,612,431 978,294 × .33035 × .55939 $532,661 547,246 Total, District One ............................................................................................... 2,590,725 × .41671 1,079,585 Area 4 ........................................................................................................................ Area 5 ........................................................................................................................ 782,635 1,612,431 × .65370 × .49395 511,609 796,463 Total, District Two ............................................................................................... 2,395,066 × .54607 1,307,877 Area 6 ........................................................................................................................ Area 7 ........................................................................................................................ Area 8 ........................................................................................................................ 1,565,271 1,074,954 1,369,612 × .52508 × .36885 × .46823 821,898 396,501 641,295 Total, District Three ............................................................................................ 4,009,836 × .46918 1,881,322 Pilotage area Step 5: Adjust the result in Step 4, as required, for inflation or deflation, and calculate projected total economic cost. Based on data from the U.S. Department of Labor’s Bureau of Labor Statistics, we have multiplied the results in Step 4 by a 1.027 inflation factor, reflecting an average inflation rate of 2.7% in ‘‘Midwest Economy—Consumer Prices’’ between 2006 and 2007, the latest years for which data are available. Table 16 shows this calculation and the projected total economic cost. TABLE 16—PROJECTED OPERATING EXPENSE, ADJUSTED FOR INFLATION, AND ADDED TO PROJECTED TARGET PILOT COMPENSATION EQUALS PROJECTED TOTAL ECONOMIC COST A. Projected operating expense Pilotage area B. Increase, multiplied by inflation factor (= A × 1.027) C. Projected target pilot compensation D. Projected total economic cost (= B + C) tjames on PRODPC75 with PROPOSALS Area 1 ...................................................................................... Area 2 ...................................................................................... $532,661 547,246 $547,043 562,021 $1,612,431 978,294 $2,159,474 1,540,315 Total, District One ............................................................. 1,079,585 1,108,734 2,590,725 3,699,790 Area 4 ...................................................................................... Area 5 ...................................................................................... 511,609 796,463 525,422 817,967 782,635 1,612,431 1,308,058 2,430,398 Total, District Two ............................................................. 1,307,877 1,343,190 2,395,066 3,738,456 Sfmt 4702 E:\FR\FM\24APP1.SGM VerDate Nov<24>2008 14:02 Apr 23, 2009 Jkt 217001 PO 00000 Frm 00017 Fmt 4702 24APP1 18676 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Proposed Rules TABLE 16—PROJECTED OPERATING EXPENSE, ADJUSTED FOR INFLATION, AND ADDED TO PROJECTED TARGET PILOT COMPENSATION EQUALS PROJECTED TOTAL ECONOMIC COST—Continued B. Increase, multiplied by inflation factor (= A × 1.027) A. Projected operating expense Pilotage area C. Projected target pilot compensation D. Projected total economic cost (= B + C) Area 6 ...................................................................................... Area 7 ...................................................................................... Area 8 ...................................................................................... 821,898 396,501 641,295 844,090 407,206 658,610 1,565,271 1,074,954 1,369,612 2,409,360 1,482,160 2,028,221 Total, District Three .......................................................... 1,881,322 1,932,117 4,009,836 5,941,954 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 A. Projected total economic cost Pilotage area B. Projected 2009 bridge hours Prospective (total) unit costs (A divided by B) Area 1 .............................................................................................................................. Area 2 .............................................................................................................................. $2,159,474 1,540,315 5,661 5,650 $381.47 272.62 Total, District One ..................................................................................................... 3,699,790 11,311 327.10 Area 4 .............................................................................................................................. Area 5 .............................................................................................................................. 1,308,058 2,430,398 7,320 5,097 178.70 476.83 Total, District Two ..................................................................................................... 3,738,456 12,417 301.08 Area 6 .............................................................................................................................. Area 7 .............................................................................................................................. Area 8 .............................................................................................................................. 2,409,360 1,482,160 2,028,221 13,406 3,259 11,630 179.72 454.79 174.40 Total, District Three .................................................................................................. 5,941,954 28,295 210.00 Overall ............................................................................................................... 13,380,200 52,023 257.19 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 A. Prospective unit costs Pilotage area B. Base period unit costs C. Percentage change from base (A divided by B; result expressed as percentage) $381.47 272.62 $367.17 261.03 3.89 4.44 Total, District One ..................................................................................................... 327.07 314.15 4.11 Area 4 .............................................................................................................................. Area 5 .............................................................................................................................. 178.70 476.83 170.93 457.95 4.54 4.12 Total, District Two ..................................................................................................... tjames on PRODPC75 with PROPOSALS Area 1 .............................................................................................................................. Area 2 .............................................................................................................................. 301.06 288.75 4.26 Area 6 .............................................................................................................................. Area 7 .............................................................................................................................. Area 8 .............................................................................................................................. 179.72 454.79 174.40 160.26 369.54 170.68 12.14 23.07 2.18 Total, District Three .................................................................................................. 210.00 188.14 11.62 Overall ............................................................................................................... 257.19 235.08 9.41 VerDate Nov<24>2008 14:02 Apr 23, 2009 Jkt 217001 PO 00000 Frm 00018 Fmt 4702 Sfmt 4702 E:\FR\FM\24APP1.SGM 24APP1 18677 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Proposed Rules 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 * A. Base period rate Pilotage Area tjames on PRODPC75 with PROPOSALS —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) .................................................... —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 ........................................................................................ 14:02 Apr 23, 2009 Jkt 217001 C. Increase in base rate (A × B%) D. Adjusted rate (A + C, rounded to nearest dollar) $0.58/km, $1.04/mi 12.89 42.20 28.15 123.55 $15.52/km, $27.48/mi 343.92 1,126.09 751.12 3,297.07 34.66 33.06 814.89 777.30 31.28 24.11 61.53 719.63 554.60 1,415.68 51.28 1,295.03 (Multiplying factor) Area 1 .......................................................................................................... —Basic pilotage .................................................................................... VerDate Nov<24>2008 B. Percentage change in unit costs PO 00000 Frm 00019 Fmt 4702 ........................ $14.94/km, $26.44/mi 331.03 1,083.89 722.98 3,173.51 ........................ 780.23 744.24 ........................ 688.35 530.49 1,354.15 ........................ 1,243.75 3.89 (1.0389) ............................ 2,104.72 ............................ 86.77 2,191.49 2,732.79 ............................ 112.66 2,845.45 2,104.72 ............................ 86.77 2,191.49 3,665.60 ............................ 151.12 3,816.72 4,246.60 2,753.85 2,141.88 1,522.48 1,243.75 ............................ ............................ ............................ ............................ ............................ 175.07 113.53 88.30 62.77 51.28 4,421.67 2,867.38 2,230.18 1,585.25 1,295.03 3,665.60 2,753.85 1,243.75 2,104.72 ............................ ............................ ............................ ............................ 151.12 113.53 51.28 86.77 3,816.72 2,867.38 1,295.03 2,191.49 2,732.79 2,753.85 1,522.48 ............................ ............................ ............................ 112.66 113.53 62.77 2,845.45 2,867.38 1,585.25 2,104.72 2,753.85 ........................ 553.62 525.88 ........................ 1,975.83 1,975.83 744.10 ............................ ............................ 12.14 (1.1214) ............................ ............................ 23.07 (1.2307) ............................ ............................ ............................ 86.77 113.53 2,191.49 2,867.38 67.22 63.86 620.84 589.74 455.84 455.84 171.67 2,431.67 2,431.67 915.77 1,656.11 ............................ 382.08 2,038.19 744.10 1,656.11 744.10 744.10 ........................ 535.92 ............................ ............................ ............................ ............................ 2.18 (1.0218) ............................ 171.67 382.08 171.67 171.67 915.77 2,038.19 915.77 915.77 11.67 547.59 Sfmt 4702 ............................ ............................ ............................ ............................ 4.44 (1.0444) ............................ ............................ 4.54 (1.0454) ............................ ............................ ............................ 4.12 (1.0412) ............................ E:\FR\FM\24APP1.SGM 24APP1 18678 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Proposed Rules TABLE 19—BASE PERIOD RATES ADJUSTED BY PERCENTAGE CHANGE IN UNIT COSTS *—Continued A. Base period rate Pilotage B. Percentage change in unit costs Area C. Increase in base rate (A × B%) D. Adjusted rate (A + C, rounded to nearest dollar) 11.09 520.45 (Multiplying factor) —Docking or undocking ....................................................................... 509.36 ............................ * 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 9.41% across all areas. V. Regulatory Analyses We developed this proposed rule after considering numerous statutes and executive orders related to rulemaking. Below, we summarize our analyses based on 13 of these statutes or executive orders. tjames on PRODPC75 with PROPOSALS A. Regulatory Planning and Review Executive Order 12866, ‘‘Regulatory Planning and Review,’’ 58 FR 51735, October 4, 1993, requires a determination whether a regulatory action is ‘‘significant’’ and therefore subject to review by the Office of Management and Budget (OMB) and subject to the requirements of the Executive Order. This rulemaking is not significant under Executive Order 12866 and 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 and Purpose’’ section for a detailed explanation of the legal authority and requirements for the Coast Guard to conduct an annual review and provide possible adjustments of pilotage rates on the Great Lakes. Based on our annual review for this rulemaking, we are proposing an adjustment to the pilotage rates for the 2009 shipping season to generate sufficient revenue to cover allowable expenses, target pilot compensation, and returns on investment. This proposed rule would implement a 9.41 percent overall rate adjustment for the Great Lakes system over the current rate as adjusted in the 2008 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 VerDate Nov<24>2008 14:02 Apr 23, 2009 Jkt 217001 changes in association expenses to maintain these compensation levels. In general, we expect an increase in pilotage rates for a certain area to result in additional costs for shippers using pilotage services in that area, while a decrease would result in a cost reduction or savings for shippers in that area. This proposed rule would result in a distributional effect that transfers payments (income) from affected shippers (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. We found a case where the vessel operator purchased pilotage service in District One to presumably leave the Great Lakes PO 00000 Frm 00020 Fmt 4702 Sfmt 4702 system. We assume some vessel owners and operators may also choose to purchase pilotage services if their vessels are carrying hazardous substances or were navigating the Great Lakes system with inexperienced personnel. Based on information from the Coast Guard Office of Great Lakes Pilotage, we have determined that these vessels voluntarily chose to use pilots and, therefore, are exempt from pilotage requirements. We used 2006–2007 vessel arrival data from the Coast Guard’s Marine Inspection, Safety, and Law Enforcement (MISLE) system to estimate the average annual number of vessels affected by the rate adjustment to be 208 vessels that journey into the Great Lakes system. These vessels entered the Great Lakes by transiting through or in part of at least one of the three pilotage Districts before leaving the Great Lakes system. These vessels often make more than one distinct stop, docking, loading, and unloading at facilities in Great Lakes ports. Of the total trips for the 208 vessels, there were approximately 923 annual U.S. port arrivals before the vessels left the Great Lakes system, based on 2006-2007 vessel data from MISLE. The impact of the rate adjustment to shippers is estimated from the district pilotage revenues. These revenues represent the direct and indirect costs (‘‘economic costs’’) that shippers must pay for pilotage services. The Coast Guard sets rates so that revenues equal the estimated cost of pilotage. We estimate the additional impact (costs or savings) of the rate adjustment in this proposed rule to be the difference between the total projected revenue needed to cover costs based on the 2008 rate adjustment and the total projected revenue needed to cover costs in this proposed rule for 2009. Table 20 details additional costs or savings by area and district. E:\FR\FM\24APP1.SGM 24APP1 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Proposed Rules 18679 TABLE 20—RATE ADJUSTMENT AND ADDITIONAL IMPACT OF PROPOSED RULE [$U.S.; non-discounted] 1 Projected revenue in 2008 Area 1 Area 2 District Area 4 Area 5 District Area 6 Area 7 Area 8 District .............................................................................................................. .............................................................................................................. 1 ........................................................................................................... .............................................................................................................. .............................................................................................................. 2 ........................................................................................................... .............................................................................................................. .............................................................................................................. .............................................................................................................. 3 ........................................................................................................... Proposed rate change $2,078,551 1,474,806 3,553,357 1,251,203 2,334,169 3,585,372 2,884,724 1,427,515 1,944,032 6,256,273 1.0389 1.0444 1.0412 1.0454 1.0412 1.0427 0.8352 1.0383 1.0433 0.9498 Projected revenue in 2009 $2,159,474 1,540,315 3,699,790 1,308,058 2,430,398 3,738,456 2,409,360 1,482,160 2,028,221 5,941,954 Additional costs or savings of proposed rule 2 $80,923 65,509 146,433 56,855 96,229 153,084 3 (475,364) 54,645 84,189 3 (314,319) 1 Some values may not total due to rounding. cost or savings of this rule = ‘Projected revenue in 2009’ ¥ ‘Projected Revenue in 2008’. 3 Area 6 incurs a substantial cost savings that results in a net cost savings for pilotage services in District 3 and the system. The sum of the additional impacts from this rulemaking result in a net savings for the system of about $15,000. tjames on PRODPC75 with PROPOSALS 2 Additional After applying the rate change in this proposed rule, the resulting difference between the projected revenue in 2008 and the projected revenue in 2009 is the annual impact to shippers from this proposed rule. This figure will be equivalent to the total additional payments or savings that shippers will incur for pilotage services from this proposed rule. As discussed earlier, we consider a reduction in payments to be a cost savings. The impact of the rate adjustment in this proposed rule to shippers varies by area and district. The annual costs of the rate adjustments in Districts 1 and 2 are approximately $146,000 and $153,000, respectively, while District 3 will experience an annual savings of approximately $314,000. To calculate an exact cost or savings per vessel is difficult because of the variation in vessel types, routes, port arrivals, commodity carriage, time of season, conditions during navigation, and preferences for the extent of pilotage services on designated and undesignated portions of the Great Lakes system. Some owners and operators will pay more and some will pay less depending on the distance and port arrivals of their vessels’ trips. However, the annual cost or savings reported above does capture all of the additional cost the shippers face as a result of the rate adjustment in this proposed rule. As Table 20 indicates, all areas will experience an increased annual cost due to this proposed rate change except Area 6, which will experience a savings. The projected savings for Area 6 is approximately $475,000. This will cause a net savings for District 3, and is due to a decrease in actual bridge hours in VerDate Nov<24>2008 14:02 Apr 23, 2009 Jkt 217001 Area 6 from 2008 to 2009. This decrease in bridge hours led to a decrease in the number of pilots needed, from 10 pilots in 2008 to 8 pilots in 2009. This decrease in the number of pilots would reduce the projected revenue needed to cover costs of pilotage services in Area 6. The effects of a rate adjustment on costs and savings vary by year and area. A decrease in projected expenses for individual areas or districts is common in past pilotage rate adjustments. Most recently, in the 2008 Final Rule, District 2 experienced a decrease in projected expenses due to an adjustment in bridge hours from the 2008 Interim Rule, which led to a savings for that district. However, this savings was not large enough to outweigh the costs to the other districts. This proposed rate adjustment will result in a savings for District 3 that will outweigh the combined costs of Districts 1 and 2. We measure the impact of this rulemaking by examining the changes in costs to shippers for pilotage services. With savings in District 3 exceeding the combined costs in Districts 1 and 2, the net impact of this rulemaking would be a cost savings for pilotage services in the Great Lakes system. B. 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 people. PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 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 2006–2007 Coast Guard MISLE data and business revenue and size data provided by Reference USA and Dunn and Bradstreet. We were able to gather revenue and size data or link the entities to large shipping conglomerates for 22 of the 24 affected entities in the United States. We found that large, mostly foreign-owned, shipping conglomerates or their subsidiaries owned or operated all vessels engaged in foreign trade on the Great Lakes. We assume that new industry entrants will be comparable in ownership and size to these shippers. There are three U.S. entities affected by the proposed rule that receive revenue from pilotage services. These are the three pilot associations that provide and manage pilotage services within the Great Lakes districts. Two of the associations operate as partnerships and one operates as a corporation. These associations are classified with the same NAICS industry classification and small entity size standards described above, but they have far fewer than 500 E:\FR\FM\24APP1.SGM 24APP1 18680 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Proposed Rules employees: approximately 65 total employees combined. We expect no adverse impact to these entities from this proposed rule since all associations receive enough revenue to balance the projected expenses associated with the projected number of bridge hours and pilots. Therefore, the Coast Guard has determined that this proposed rule would not have a significant economic impact on a substantial number of 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. C. Assistance for Small Entities Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104–121), we offer to assist small entities in understanding the proposed rule so that they could better evaluate its effects on them and participate in the rulemaking. If the proposed rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call Mr. Woo Kim, Great Lakes Pilotage Branch, (CG–54122), U.S. Coast Guard, telephone 202–372–1538 or send him email at Woo.S.Kim@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). tjames on PRODPC75 with PROPOSALS D. 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. VerDate Nov<24>2008 14:02 Apr 23, 2009 Jkt 217001 E. Federalism K. Energy Effects 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. 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. F. Unfunded Mandates Reform Act The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531–1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this rule would not result in such expenditure, we do discuss the effects of this rule elsewhere in this preamble. G. Taking of Private Property This rule would not affect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights. H. Civil Justice Reform This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. I. Protection of Children We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children. J. Indian Tribal Governments This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. PO 00000 Frm 00022 Fmt 4702 Sfmt 4702 L. Technical Standards The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies. This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards. M. Environment We have analyzed this proposed rule under Department of Homeland Security Directive 0023.1 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321–4370f), and have made a preliminary determination that this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment, and that therefore the proposed rule will 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. A preliminary ‘‘Environmental Analysis Check List’’ supporting this determination is E:\FR\FM\24APP1.SGM 24APP1 18681 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Proposed Rules available in the docket where indicated under the ‘‘Public Participation and Request for Comments’’ section of this preamble. We seek any comments or information that may lead to discovery of a significant environmental impact from this proposed rule. 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: 2. In § 401.405, revise paragraphs (a) and (b), including the footnote to Table (a), to read as follows: 3. In § 401.407 revise paragraphs (a) and (b), including the footnote to Table (b), to read as follows: § 401.405 Basic rates and charges on the St. Lawrence River and Lake Ontario. § 401.407 Basic rates and charges on Lake Erie and the navigable waters from Southeast Shoal to Port Huron, MI. * * * * * (a) Area 1 (Designated Waters): Service St. Lawrence River Basic Pilotage ........... $15.52 per Kilometer or $27.48 per mile 1 $344 1 $1,126 1 Each Lock Transited Harbor Movage ......... 1 The PART 401—GREAT LAKES PILOTAGE REGULATIONS minimum basic rate for assignment of a pilot in the St. Lawrence River is $751, and the maximum basic rate for a through trip is $3,298. (b) Area 2 (Undesignated Waters): 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. Service * * * * § 401.410 Basic rates and charges on Lakes Huron, Michigan, and Superior, and the St Mary’s River. Toledo or any Point on Lake Erie west of Southeast Shoal $2,192 Six-Hour Period Docking or Undocking. Any Point on the Niagara River below the Black Rock Lock. $720 ............... $555 ............... $720 $555 N/A ................. $1,416 1 $4,422 1 $3,817 N/A $2,846 $2,192 $2,192 $1,585 Detroit pilot boat Detroit River $2,846 $2,868 $2,868 $1,295 N/A (a) Area 6 (Undesignated Waters): St. Clair River $2,192 $2,230 $2,868 N/A N/A N/A $1,586 $1,295 $2,868 $2,868 * * Lakes Huron and Michigan Service Six-Hour Period .................... $621 * (c) Area 8 (Undesignated Waters): Service Lake Superior Six-Hour Period .................... Docking or Undocking .......... $548 $521 [Amended] 5. In § 401.420— a. In paragraph (a), remove the number ‘‘$102’’ and add, in its place, the number ‘‘$112’’; and remove the VerDate Nov<24>2008 14:02 Apr 23, 2009 Jkt 217001 Docking or Undocking .......... number ‘‘$1,604’’ and add, in its place, the number ‘‘$1,755’’. b. In paragraph (b), remove the number ‘‘$102’’ and add, in its place, the number ‘‘$112’’; and remove the number ‘‘$1,604’’ and add, in its place, the number ‘‘$1,755’’. c. In paragraph (c)(1), remove the number ‘‘$606’’ and add, in its place, the number ‘‘$663’’; in paragraph (c)(3), remove the number ‘‘$102’’ and add, in its place, the number ‘‘$112’’; and, also Frm 00023 Fmt 4702 Sfmt 4702 $590 (b) Area 7 (Designated Waters): De tour PO 00000 Lakes Huron and Michigan Service 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 ............................................................................................................................ tjames on PRODPC75 with PROPOSALS Buffalo (b) Area 5 (Designated Waters): $1,295 1 $3,817 Area § 401.420 Lake Erie (east of southeast Shoal) Service pilots are not changed at the Detroit Pilot Boat. 4. In § 401.410, revise paragraphs (a), (b), and (c) to read as follows: * $815 $777 * * * * (a) Area 4 (Undesignated Waters): * Southeast Shoal Toledo or any port on Lake Erie west of Southeast Shoal Port Huron Change Point .................................................... St. Clair River ....................................................................... Detroit or Windsor or the Detroit River ................................ Detroit Pilot Boat .................................................................. * Lake Ontario Six-Hour Period .................... Docking or Undocking .......... Any point on or in 1 When * Gros cap $2,432 $2,432 $2,038 $2,038 N/A N/A $916 $916 $916 N/A Any harbor N/A N/A N/A N/A $916 in paragraph (c)(3), remove the number ‘‘$1,604’’ and add, in its place, the number ‘‘$1,755’’. § 401.428 [Amended] 6. In § 401.428, remove the number ‘‘$618’’ and add, in its place, the number ‘‘$676’’. E:\FR\FM\24APP1.SGM 24APP1 18682 Federal Register / Vol. 74, No. 78 / Friday, April 24, 2009 / Proposed Rules Dated: April 21, 2009. James A. Watson, Rear Admiral, U.S. Coast Guard, Director of Prevention Policy. [FR Doc. E9–9432 Filed 4–21–09; 4:15 pm] tjames on PRODPC75 with PROPOSALS BILLING CODE 4910–15–P VerDate Nov<24>2008 14:02 Apr 23, 2009 Jkt 217001 PO 00000 Frm 00024 Fmt 4702 Sfmt 4702 E:\FR\FM\24APP1.SGM 24APP1

Agencies

[Federal Register Volume 74, Number 78 (Friday, April 24, 2009)]
[Proposed Rules]
[Pages 18669-18682]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-9432]


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

DEPARTMENT OF HOMELAND SECURITY

Coast Guard

46 CFR Part 401

[Docket No. USCG-2008-1126]
RIN 1625-AB29


2009 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 by 9.41%, effective August 1, 2009, to generate 
sufficient revenue to cover allowable expenses, target pilot 
compensation, and returns on investment. The proposed update reflects 
an August 1, 2009, increase in benchmark contractual wages and 
benefits, as well as an increase in the ratio of pilots to ``bridge 
hours.'' 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 May 26, 2009.

ADDRESSES:  You may submit comments identified by Coast Guard docket 
number USCG-2008-1126 to the Docket Management Facility at the U.S. 
Department of Transportation. To avoid duplication, please use only one 
of the following methods:
    (1) Federal eRulemaking Portal: http://www.regulations.gov.
    (2) Fax: 202-493-2251.
    (3) 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.
    (4) Hand delivery: Same as mail address above, between 9 a.m. and 5 
p.m., Monday through Friday, except Federal holidays. The telephone 
number is 202-366-9329.

FOR FURTHER INFORMATION CONTACT:  For questions on this proposed rule, 
call Mr. Woo S. Kim, 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 Woo.S.Kim@uscg.mil. If you have questions on 
viewing or submitting material to the docket, call Renee V. Wright, 
Program Manager, Docket Operations, telephone 202-366-9826.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Public Participation and Request for Comments
    A. Submitting comments
    B. Viewing comments and documents
    C. Privacy Act
    D. Public Meeting:
II. Abbreviations
III. Background and Purpose
IV. Discussion of the Proposed Rule
V. Regulatory Analyses
    A. Regulatory Planning and Review
    B. Small Entities
    C. Assistance for Small Entities
    D. Collection of Information
    E. Federalism
    F. Unfunded Mandates Reform Act
    G. Taking of Private Property
    H. Civil Justice Reform
    I. Protection of Children
    J. Indian Tribal Governments
    K. Energy Effects
    L. Technical Standards
    M. Environment

I. 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 http://www.regulations.gov and will include any 
personal information you have provided. We have an agreement with the 
Department of Transportation to use the Docket Management Facility.

A. Submitting Comments

    If you submit a comment, please include the docket number for this 
rulemaking, (USCG-2008-1126), 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. 
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

[[Page 18670]]

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 http://www.regulations.gov at 
any time. Enter the docket number for this rulemaking (USCG-2008-1126) 
in the Search box, and click ``Go >>.'' If you do not have access to 
the Internet, you may view the docket online by visiting the Docket 
Management Facility in Room W12-140 on the ground floor of the 
Department of Transportation West Building, 1200 New Jersey Avenue, 
SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through 
Friday, except Federal holidays.

C. 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 a Privacy Act system of 
records notice regarding our public dockets in the January 17, 2008 
issue of the Federal Register (73 FR 3316).

D. 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.

II. Abbreviations

AMOU American Maritime Officers Union
MISLE Coast Guard Marine Inspection, Safety, and Law Enforcement
NAICS North American Industry Classification System
NEPA National Environmental Policy Act of 1969
NPRM Notice of Proposed Rulemaking
NVMC National Vessel Movement Center
OMB Office of Management and Budget

III. Background and Purpose

    This notice of proposed rulemaking (NPRM) is issued pursuant to 
Coast Guard regulations in 46 CFR Parts 401-404. Those regulations 
implement the Great Lakes Pilotage Act of 1960, 46 U.S.C. Chapter 93, 
which requires foreign-flag vessels and U.S.-flag vessels engaged in 
foreign trade to use federally registered Great Lakes pilots while 
transiting the St. Lawrence Seaway and the Great Lakes system, and 
which requires the Secretary of Homeland Security to ``prescribe by 
regulation rates and charges for pilotage services, giving 
consideration to the public interest and the costs of providing the 
services.'' 46 U.S.C. 9303(f).
    The U.S. waters of the Great Lakes and the St. Lawrence Seaway are 
divided into three pilotage Districts. Pilotage in each District is 
provided by an association certified by the Coast Guard Director of 
Great Lakes Pilotage to operate a pilotage pool. It is important to 
note that, while 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. 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 the vessel at the discretion of and subject 
to the customary authority of the master.'' 46 U.S.C. 9302(a)(1)(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 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 
published on April 3, 2006 (71 FR 16501). Rates for the 2007 season 
were adjusted based on an Appendix C review and the final rule was 
published on September 18, 2007 (72 FR 53158). Rates for the 2008 
shipping season were also adjusted based on an Appendix C review 
published in an interim rule (73 FR 15092) on March 21, 2008 and a 
final rule (74 FR 220) on January 5, 2009. The present rulemaking 
proposes rate adjustments for the 2009 shipping season, based once 
again on an Appendix C review.

IV. Discussion 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.

A. Proposed Pilotage Rate Changes--Summarized

    The Appendix C to 46 CFR 404 ratemaking methodology is intended for 
use during the years between Appendix A full ratemaking reviews and 
adjustments. This section summarizes the rate changes proposed for 
2009, and then discusses in detail how the proposed changes were 
calculated under Appendix C. We are proposing an increase of 9.41% 
across all Districts over the last pilotage rate adjustment. This 
reflects an August 1, 2009, increase in benchmark contractual wages and 
benefits, as well as an increase in the ratio of pilots to ``bridge 
hours,'' which are the number of hours a pilot is aboard a vessel 
providing pilotage service. Actual rate increases vary by Area, and are 
summarized in Table 1.

[[Page 18671]]



                     Table 1--2009 Area Rate Changes
------------------------------------------------------------------------
                                                       Then the proposed
                                                           percentage
                                                         increases over
         If pilotage service is required in:            the current rate
                                                              is:
 
------------------------------------------------------------------------
 Area 1 (Designated waters)..........................               3.89
 Area 2 (Undesignated waters)........................               4.44
 Area 4 (Undesignated waters)........................               4.54
 Area 5 (Designated waters)..........................               4.12
 Area 6 (Undesignated waters)........................              12.14
 Area 7 (Designated waters)..........................              23.07
 Area 8 (Undesignated waters)........................               2.18
 Overall Rate Change (percentage change in overall                  9.41
 prospective unit costs/base unit costs; see Table
 18).................................................
------------------------------------------------------------------------

    Rates for cancellation, delay, or interruption in rendering 
services (46 CFR 401.420), and basic rates and charges for carrying a 
U.S. pilot beyond the normal change point, or for boarding at other 
than the normal boarding point (46 CFR 401.428), have been increased by 
9.41% in all Areas.

B. Calculating the Rate Adjustment

    The Appendix C ratemaking calculation involves eight steps:
    Step 1: Calculate the total economic costs for the base period 
(i.e., pilot compensation expense plus all other recognized expenses 
plus the return element) and divide by the total bridge 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 2008 Appendix C review. The Coast Guard also used the most recent 
union contracts between the American Maritime Officers Union (AMOU) and 
vessel owners and operators on the Great Lakes to determine target 
pilot compensation. Bridge hour projections for the 2009 season have 
been obtained from historical data, pilots, and industry. All documents 
and records used in this rate calculation have been placed in the 
public docket for this rulemaking and are available for review at the 
addresses listed under ADDRESSES.
    Some values may not total exactly due to format rounding for 
presentation in charts and explanations in this section. The rounding 
does not affect the integrity or truncate the real value of all 
calculations in the ratemaking methodology described below.
    Step 1: Calculate the total economic cost for the base period. In 
this step, for each Area, we divide total economic costs for the base 
period by the total bridge hours used in setting the base period rates, 
to yield the base cost per bridge hour. Total base period economic 
costs include pilot compensation expenses, plus all other recognized 
expenses, plus the return on investment element set during the last 
Appendix A review (2006). The calculations providing the total base 
period economic costs for each Area are summarized in Table 16 of the 
2008 final rule (74 FR 220; Jan. 5, 2009). Total bridge hours use in 
setting the base period rates were calculated in Table 13 of the 2008 
final rule. Tables 2 through 4 summarize the Step 1 calculations:

                           Table 2--Total Economic Cost for Base Period, District One
----------------------------------------------------------------------------------------------------------------
                                                                    Area 1 St.      Area 2 Lake   Total District
                                                                  Lawrence River      Ontario           One
----------------------------------------------------------------------------------------------------------------
Total base period economic costs................................      $2,078,551      $1,474,806      $3,553,357
Base bridge hours...............................................         / 5,661         / 5,650        / 11,311
Base cost per bridge hour.......................................       = $367.17       = $261.03       = $314.15
----------------------------------------------------------------------------------------------------------------


                           Table 3--Total Economic Cost for Base Period, District Two
----------------------------------------------------------------------------------------------------------------
                                                                                      Area 5
                                                                    Area 4 Lake      Southeast    Total District
                                                                       Erie        Shoal to Port        Two
                                                                                     Huron, MI
----------------------------------------------------------------------------------------------------------------
Total base period economic costs................................      $1,251,203      $2,334,169      $3,585,372
Base bridge hours...............................................         / 7,320         / 5,097        / 12,417
Base cost per bridge hour.......................................       = $170.93       = $457.95       = $288.75
----------------------------------------------------------------------------------------------------------------


[[Page 18672]]


                          Table 4--Total Economic Cost for Base Period, District Three
----------------------------------------------------------------------------------------------------------------
                                                   Area 6 Lakes
                                                     Huron and      Area 7 St.      Area 8 Lake   Total District
                                                     Michigan      Mary's River      Superior          Three
----------------------------------------------------------------------------------------------------------------
Total base period economic costs................      $2,884,724      $1,427,515      $1,944,032      $6,256,273
Base bridge hours...............................        / 18,000         / 3,863        / 11,390        / 33,253
Base cost per bridge hour.......................       = $160.26       = $369.54       = $170.68       = $188.14
----------------------------------------------------------------------------------------------------------------

    Step 2. Calculate the expense multiplier. In this step, for each 
Area, we calculate an expense multiplier by dividing the base operating 
expense, shown in Table 16, Column B of the 2008 final rule, by base 
pilot compensation, shown in Table 16, Column C of the 2008 final rule. 
Tables 5 through 7 show the Step 2 calculations.

                                    Table 5--Expense Multiplier, District One
----------------------------------------------------------------------------------------------------------------
                                                                    Area 1 St.     Area 2b Lake   Total District
                                                                  Lawrence River      Ontario           One
----------------------------------------------------------------------------------------------------------------
Base operating expense..........................................        $516,138        $529,046      $1,045,185
Base target pilot compensation..................................    / $1,562,413      / $945,760    / $2,508,173
Expense multiplier..............................................        = .33035        = .55939        = .41671
----------------------------------------------------------------------------------------------------------------


                                    Table 6--Expense Multiplier, District Two
----------------------------------------------------------------------------------------------------------------
                                                                                      Area 5
                                                                    Area 4 Lake      Southeast    Total District
                                                                       Erie        Shoal to Port        Two
                                                                                     Huron, MI
----------------------------------------------------------------------------------------------------------------
Base operating expense..........................................        $494,595        $771,756      $1,266,351
Base target pilot compensation..................................      / $756,608    / $1,562,413    / $2,319,021
Expense multiplier..............................................        = .65370        = .49395        = .54607
----------------------------------------------------------------------------------------------------------------


                                   Table 7--Expense Multiplier, District Three
----------------------------------------------------------------------------------------------------------------
                                                   Area 6 Lakes
                                                     Huron and      Area 7 St.      Area 8 Lake   Total District
                                                     Michigan      Mary's River      Superior          Three
----------------------------------------------------------------------------------------------------------------
Base operating expense..........................        $993,207        $384,201        $619,968      $1,997,375
Base target pilot compensation..................    / $1,891,520    / $1,041,609    / $1,324,064    / $4,257,193
Expense multiplier..............................        = .52508        = .36885        = .46823        = .46918
----------------------------------------------------------------------------------------------------------------

    Step 3. Calculate annual projection of target pilot compensation. 
In this step, we determine the new target rate of compensation and the 
new number of pilots needed in each pilotage Area, to determine the new 
target pilot compensation for each Area.
    (a) Determine new target rate of compensation. Target pilot 
compensation is based on the average annual compensation of first mates 
and masters on U.S. Great Lakes vessels. Compensation includes wages 
and benefits. For pilots in undesignated waters, we approximate the 
first mates' compensation and, in designated waters, we approximate the 
master's compensation (first mates' wages multiplied by 150% plus 
benefits). To determine first mates' and masters' average annual 
compensation, we use data from the most recent AMOU contracts with the 
U.S. companies engaged in Great Lakes shipping. Where different AMOU 
agreements apply to different companies, we apportion the compensation 
provided by each agreement according to the percentage of tonnage 
represented by companies under each agreement.
    On August 16, 2007, the Coast Guard received the two most recent 
AMOU contracts. ``Agreement A'' covers vessels operated by American 
Steamship Co. and Inland Lakes Management, Inc. Inland Lakes Management 
operations continue to be covered by Agreement A, despite that 
company's 2008 acquisition by Mittal Steel USA, Inc. ``Agreement B'' 
covers vessels operated by Key Lakes, Inc., and all other vessels 
operated by Mittal Steel.
    Both Agreement A and Agreement B provide for a 3% wage increase 
effective August 1, 2009. Under Agreement A, the daily wage rate will 
be increased from $255.28 to $262.73. Under Agreement B, the daily wage 
rate will be increased from $314.42 to $323.86.
    To calculate monthly wages, we apply Agreement A and Agreement B 
monthly multipliers of 54.5 and 49.5, respectively, to the daily rate. 
Agreement A's 54.5 multiplier represents 30.5 average working days, 
15.5 vacation days, 4 days for four weekends, 3 bonus days, and 1.5 
holidays. Agreement B's 49.5 multiplier represents 30.5 average working 
days, 16 vacation days, and 3 bonus days.
    To calculate average annual compensation, we multiply monthly 
figures by 9 months, the length of the Great Lakes shipping season.
    Table 8 shows new wage calculations based on Agreements A and B 
effective August 1, 2009.

[[Page 18673]]



                             Table 8--Wages
------------------------------------------------------------------------
                                                             Pilots on
                                             Pilots on      designated
            Monthly component              undesignated       waters
                                              waters       (undesignated
                                                              x 150%)
------------------------------------------------------------------------
AGREEMENT A: $262.73 daily rate x 54.5           $14,319         $21,478
 days...................................
AGREEMENT A:
    Monthly total x 9 months = total             128,870         193,305
     wages..............................
AGREEMENT B:
    323.86 daily rate x 49.5 days.......          16,031          24,046
AGREEMENT B:
    Monthly total x 9 months = total             144,278         216,417
     wages..............................
------------------------------------------------------------------------

    Both Agreements A and B include a health benefits contribution rate 
of $80.69 effective August 1, 2009. Agreement A includes a pension plan 
contribution rate of $33.35 per man-day. Agreement B includes a pension 
plan contribution rate of $43.55 per man-day. Both Agreements A and B 
provide a 401K employer matching rate, 5% of the wage rate. Neither 
Agreement A nor Agreement B includes a clerical contribution that 
appeared in earlier contracts. Per the AMOU, the multiplier used to 
calculate monthly benefits is 45.5 days.
    Table 9 shows new benefit calculations based on Agreements A and B, 
effective August 1, 2009.

                            Table 9--Benefits
------------------------------------------------------------------------
                                             Pilots on       Pilots on
            Monthly component              undesignated     designated
                                              waters          waters
------------------------------------------------------------------------
AGREEMENT A:
    Employer contribution, 401(K) plan           $715.95       $1,073.92
     (Monthly Wages x 5%)...............
    Pension = 33.35 x 45.5 days.........        1,517.43        1,517.43
    Health = 80.69 x 45.5 days..........        3,671.40        3,671.40
AGREEMENT B:
    Employer contribution, 401(K) plan            801.54        1,202.32
     (Monthly Wages x 5%)...............
    Pension = 43.55 x 45.5 days.........        1,981.53        1,981.53
    Health = 80.69 x 45.5 days..........        3,671.40        3,671.40
AGREEMENT A:
    Monthly total benefits..............      = 5,904.77      = 6,262.74
AGREEMENT A:
    Monthly total benefits x 9 months...        = 53,143        = 56,365
AGREEMENT B:
    Monthly total benefits..............      = 6,454.46      = 6,855.24
AGREEMENT B:
    Monthly total benefits x 9 months...        = 58,090        = 61,697
------------------------------------------------------------------------

    Table 10 totals the wages and benefits under each agreement.

                   Table 10--Total Wages and Benefits
------------------------------------------------------------------------
                                           Pilots on        Pilots on
                                          undesignated      designated
                                             waters           waters
------------------------------------------------------------------------
AGREEMENT A: Wages....................         $128,870         $193,305
AGREEMENT A: Benefits.................         + 53,143         + 56,365
                                       ---------------------------------
    AGREEMENT A: Total................        = 182,013        = 249,670
AGREEMENT B: Wages....................          144,278          216,417
AGREEMENT B: Benefits.................         + 58,090         + 61,697
                                       ---------------------------------
    AGREEMENT B: Total................        = 202,368        = 278,114
------------------------------------------------------------------------

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

[[Page 18674]]



        Table 11--Deadweight Tonnage, Agreement A and Agreement B
------------------------------------------------------------------------
                 Company                    Agreement A     Agreement B
------------------------------------------------------------------------
American Steamship Company..............  ..............         664,215
Mittal Steel USA, Inc. (including Inland          12,656          96,544
 Lakes Management, Inc., vessels
 acquired by Mittal and continuing to
 operate under Agreement A).............
Key Lakes, Inc..........................         361,385
                                         -------------------------------
    Total tonnage, each agreement.......         374,041         760,759
------------------------------------------------------------------------
        Percent tonnage, each agreement.       374,041 /       760,759 /
                                             1,134,800 =     1,134,800 =
                                                32.9600%        67.0400%
------------------------------------------------------------------------

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

                     Table 12--Projected Target Rate of Compensation, Weighted by Agreement
----------------------------------------------------------------------------------------------------------------
                                                                  Undesignated waters       Designated waters
----------------------------------------------------------------------------------------------------------------
AGREEMENT A:
Total wages and benefits x percent tonnage....................        $182,013 x 32.96%        $249,670 x 32.96%
                                                                              = $59,993                = $82,294
AGREEMENT B:
Total wages and benefits x percent tonnage....................        $202,368 x 67.04%        $278,114 x 67.04%
                                                                             = $135,666               = $186,445
                                                               -------------------------------------------------
    Total weighted average wages and benefits = projected            $59,993 + $135,666       $82,294 + $186,445
     target rate of compensation..............................               = $195,659               = $268,738
----------------------------------------------------------------------------------------------------------------

    (b) Determine number of pilots needed. Subject to adjustment by the 
Coast Guard Director of Great Lakes Pilotage to ensure uninterrupted 
service, we determine the number of pilots needed 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 vessel traffic in Districts 1 and 2, for the 2009 
navigation season, will remain at the same level as in 2007. In 
District 3, the actual bridge hours for Areas 6 and 7 were down by more 
than 17% and 6%, respectively, when compared to the projected bridge 
hours in 2007. Consequently, District 3 has recommended, and we have 
agreed, to reduce the projected 2009 Area 6 and Area 7 bridge hours by 
10% from 2007. Consistent with this decrease in projected bridge hours, 
we are also reducing the number of pilots in Area 6 by two. We are 
projecting the same number of bridge hours for 2009 in Area 8 as we 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
                                                                                 (designated
                       Pilotage area                         Projected 2009   waters) or 1,800    Pilots needed
                                                              bridge hours      (undesignated     (total = 40)
                                                                                   waters)
----------------------------------------------------------------------------------------------------------------
Area 1....................................................             5,661             1,000                 6
Area 2....................................................             5,650             1,800               * 5
Area 4....................................................             7,320             1,800                 4
Area 5....................................................             5,097             1,000                 6
Area 6....................................................            13,406             1,800                 8
Area 7....................................................             3,259             1,000                 4
Area 8....................................................            11,630             1,800                 7
----------------------------------------------------------------------------------------------------------------
* As indicated in the 2008 Final Rule, the Director has exercised his discretion to maintain 5 pilots in Area 2,
  to ensure facilitation of traffic.

    (c) Determine the projected target pilot compensation for each 
Area. The projection of new total target pilot compensation is 
determined separately for each pilotage Area by multiplying the number 
of pilots needed in each Area (see Table 13) by the projected target 
rate of compensation (see Table 12) for pilots working in that Area. 
Table 14 shows this calculation.

[[Page 18675]]



                                  Table 14--Projected Target Pilot Compensation
----------------------------------------------------------------------------------------------------------------
                                                                              Multiplied by     Projected target
                     Pilotage area                         Pilots needed      target rate of         pilot
                                                            (total = 40)       compensation       compensation
----------------------------------------------------------------------------------------------------------------
Area 1.................................................                  6         x $268,738         $1,612,431
Area 2.................................................                  5          x 195,659            978,294
                                                        --------------------------------------------------------
    Total, District One................................                 11  .................          2,590,725
----------------------------------------------------------------------------------------------------------------
Area 4.................................................                  4          x 195,659            782,635
Area 5.................................................                  6          x 268,738          1,612,431
                                                        --------------------------------------------------------
    Total, District Two................................                 10  .................          2,395,066
----------------------------------------------------------------------------------------------------------------
Area 6.................................................                  8          x 195,659          1,565,271
Area 7.................................................                  4          x 268,738          1,074,954
Area 8.................................................                  7          x 195,659          1,369,612
                                                        --------------------------------------------------------
    Total, District Three..............................                 19  .................          4,009,836
----------------------------------------------------------------------------------------------------------------

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

 Table 15--Projected Pilot Compensation, Multiplied by the Expense Multiplier Equals Projected Operating Expense
----------------------------------------------------------------------------------------------------------------
                                                          Projected target    Multiplied by
                     Pilotage area                             pilot             expense           Projected
                                                            compensation        multiplier     operating expense
----------------------------------------------------------------------------------------------------------------
Area 1.................................................         $1,612,431           x .33035           $532,661
Area 2.................................................            978,294           x .55939            547,246
                                                        --------------------------------------------------------
    Total, District One................................          2,590,725           x .41671          1,079,585
----------------------------------------------------------------------------------------------------------------
Area 4.................................................            782,635           x .65370            511,609
Area 5.................................................          1,612,431           x .49395            796,463
                                                        --------------------------------------------------------
    Total, District Two................................          2,395,066           x .54607          1,307,877
----------------------------------------------------------------------------------------------------------------
Area 6.................................................          1,565,271           x .52508            821,898
Area 7.................................................          1,074,954           x .36885            396,501
Area 8.................................................          1,369,612           x .46823            641,295
                                                        --------------------------------------------------------
    Total, District Three..............................          4,009,836           x .46918          1,881,322
----------------------------------------------------------------------------------------------------------------

    Step 5: Adjust the result in Step 4, as required, for inflation or 
deflation, and calculate projected total economic cost. Based on data 
from the U.S. Department of Labor's Bureau of Labor Statistics, we have 
multiplied the results in Step 4 by a 1.027 inflation factor, 
reflecting an average inflation rate of 2.7% in ``Midwest Economy--
Consumer Prices'' between 2006 and 2007, the latest years for which 
data are available. Table 16 shows this calculation and the projected 
total economic cost.

 Table 16--Projected Operating Expense, Adjusted for Inflation, and Added to Projected Target Pilot Compensation
                                      Equals Projected Total Economic Cost
----------------------------------------------------------------------------------------------------------------
                                                            B. Increase,
                                         A. Projected      multiplied by       C. Projected       D. Projected
            Pilotage area             operating expense   inflation factor     target pilot      total economic
                                                           (= A x 1.027)       compensation      cost (= B + C)
----------------------------------------------------------------------------------------------------------------
Area 1..............................           $532,661           $547,043         $1,612,431         $2,159,474
Area 2..............................            547,246            562,021            978,294          1,540,315
                                     ---------------------------------------------------------------------------
    Total, District One.............          1,079,585          1,108,734          2,590,725          3,699,790
----------------------------------------------------------------------------------------------------------------
Area 4..............................            511,609            525,422            782,635          1,308,058
Area 5..............................            796,463            817,967          1,612,431          2,430,398
                                     ---------------------------------------------------------------------------
    Total, District Two.............          1,307,877          1,343,190          2,395,066          3,738,456
----------------------------------------------------------------------------------------------------------------

[[Page 18676]]

 
Area 6..............................            821,898            844,090          1,565,271          2,409,360
Area 7..............................            396,501            407,206          1,074,954          1,482,160
Area 8..............................            641,295            658,610          1,369,612          2,028,221
                                     ---------------------------------------------------------------------------
    Total, District Three...........          1,881,322          1,932,117          4,009,836          5,941,954
----------------------------------------------------------------------------------------------------------------

    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      2009 bridge    costs (A divided
                                                                  cost              hours             by B)
----------------------------------------------------------------------------------------------------------------
Area 1....................................................        $2,159,474             5,661           $381.47
Area 2....................................................         1,540,315             5,650            272.62
                                                           -----------------------------------------------------
    Total, District One...................................         3,699,790            11,311            327.10
----------------------------------------------------------------------------------------------------------------
Area 4....................................................         1,308,058             7,320            178.70
Area 5....................................................         2,430,398             5,097            476.83
                                                           -----------------------------------------------------
    Total, District Two...................................         3,738,456            12,417            301.08
----------------------------------------------------------------------------------------------------------------
Area 6....................................................         2,409,360            13,406            179.72
Area 7....................................................         1,482,160             3,259            454.79
Area 8....................................................         2,028,221            11,630            174.40
                                                           -----------------------------------------------------
    Total, District Three.................................         5,941,954            28,295            210.00
                                                           -----------------------------------------------------
        Overall...........................................        13,380,200            52,023            257.19
----------------------------------------------------------------------------------------------------------------

    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
                                                             A. Prospective    B. Base period   (A divided by B;
                       Pilotage area                           unit costs        unit costs          result
                                                                                                  expressed as
                                                                                                   percentage)
----------------------------------------------------------------------------------------------------------------
Area 1....................................................           $381.47           $367.17              3.89
Area 2....................................................            272.62            261.03              4.44
                                                           -----------------------------------------------------
    Total, District One...................................            327.07            314.15              4.11
----------------------------------------------------------------------------------------------------------------
Area 4....................................................            178.70            170.93              4.54
Area 5....................................................            476.83            457.95              4.12
                                                           -----------------------------------------------------
    Total, District Two...................................            301.06            288.75              4.26
----------------------------------------------------------------------------------------------------------------
Area 6....................................................            179.72            160.26             12.14
Area 7....................................................            454.79            369.54             23.07
Area 8....................................................            174.40            170.68              2.18
                                                           -----------------------------------------------------
    Total, District Three.................................            210.00            188.14             11.62
                                                           -----------------------------------------------------
        Overall...........................................            257.19            235.08              9.41
----------------------------------------------------------------------------------------------------------------


[[Page 18677]]

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

                    Table 19--Base Period Rates Adjusted by Percentage Change in Unit Costs *
----------------------------------------------------------------------------------------------------------------
                                                                                                    D. Adjusted
                                                                  B. Percentage   C. Increase in   rate (A + C,
                   Pilotage                     A. Base period   change in unit    base rate  (A    rounded to
                                                     rate             costs            x B%)          nearest
                                                                                                      dollar)
----------------------------------------------------------------------------------------------------------------
Area                                                                (Multiplying
                                                                         factor)
----------------------------------------------------------------------------------------------------------------
Area 1........................................  ..............     3.89 (1.0389)
    --Basic pilotage..........................      $14.94/km,  ................       $0.58/km,      $15.52/km,
                                                     $26.44/mi                          $1.04/mi       $27.48/mi
    --Each lock transited.....................          331.03  ................           12.89          343.92
    --Harbor movage...........................        1,083.89  ................           42.20        1,126.09
    --Minimum basic rate, St. Lawrence River..          722.98  ................           28.15          751.12
    --Maximum rate, through trip..............        3,173.51  ................          123.55        3,297.07
Area 2........................................  ..............     4.44 (1.0444)
    --6-hr. period............................          780.23  ................           34.66          814.89
    --Docking or undocking....................          744.24  ................           33.06          777.30
Area 4........................................  ..............     4.54 (1.0454)
    --6-hr. period............................          688.35  ................           31.28          719.63
    --Docking or undocking....................          530.49  ................           24.11          554.60
    --Any point on Niagara River below Black          1,354.15  ................           61.53        1,415.68
     Rock Lock................................
Area 5 between any point on or in.............  ..............     4.12 (1.0412)
    --Toledo or any point on Lake Erie W. of          1,243.75  ................           51.28        1,295.03
     Southeast Shoal..........................
    --Toledo or any point on Lake Erie W. of          2,104.72  ................           86.77        2,191.49
     Southeast Shoal & Southeast Shoal........
    --Toledo or any point on Lake Erie W. of          2,732.79  ................          112.66        2,845.45
     Southeast Shoal & Detroit River..........
    --Toledo or any point on Lake Erie W. of          2,104.72  ................           86.77        2,191.49
     Southeast Shoal & Detroit Pilot Boat.....
    --Port Huron Change Point & Southeast             3,665.60  ................          151.12        3,816.72
     Shoal (when pilots are not changed at the
     Detroit Pilot Boat)......................
    --Port Huron Change Point & Toledo or any         4,246.60  ................          175.07        4,421.67
     point on Lake Erie W. of Southeast Shoal
     (when pilots are not changed at the
     Detroit Pilot Boat)......................
    --Port Huron Change Point & Detroit River.        2,753.85  ................          113.53        2,867.38
    --Port Huron Change Point & Detroit Pilot         2,141.88  ................           88.30        2,230.18
     Boat.....................................
    --Port Huron Change Point & St. Clair             1,522.48  ................           62.77        1,585.25
     River....................................
    --St. Clair River.........................        1,243.75  ................           51.28        1,295.03
    --St. Clair River & Southeast Shoal (when         3,665.60  ................          151.12        3,816.72
     pilots are not changed at the Detroit
     Pilot Boat)..............................
    --St. Clair River & Detroit River/Detroit         2,753.85  ................          113.53        2,867.38
     Pilot Boat...............................
    --Detroit, Windsor, or Detroit River......        1,243.75  ................           51.28        1,295.03
    --Detroit, Windsor, or Detroit River &            2,104.72  ................           86.77        2,191.49
     Southeast Shoal..........................
    --Detroit, Windsor, or Detroit River &            2,732.79  ................          112.66        2,845.45
     Toledo or any point on Lake Erie W. of
     Southeast Shoal..........................
    --Detroit, Windsor, or Detroit River & St.        2,753.85  ................          113.53        2,867.38
     Clair River..............................
    --Detroit Pilot Boat & Southeast Shoal....        1,522.48  ................           62.77        1,585.25
    --Detroit Pilot Boat & Toledo or any point        2,104.72  ................           86.77        2,191.49
     on Lake Erie W. of Southeast Shoal.......
    --Detroit Pilot Boat & St. Clair River....        2,753.85  ................          113.53        2,867.38
Area 6........................................  ..............    12.14 (1.1214)
    --6-hr. period............................          553.62  ................           67.22          620.84
    --Docking or undocking....................          525.88  ................           63.86          589.74
Area 7 between any point on or in.............  ..............    23.07 (1.2307)
    --Gros Cap & De Tour......................        1,975.83  ................          455.84        2,431.67
    --Algoma Steel Corp. Wharf, Sault Ste.            1,975.83  ................          455.84        2,431.67
     Marie, Ont. & De Tour....................
    --Algoma Steel Corp. Wharf, Sault Ste.              744.10  ................          171.67          915.77
     Marie, Ont. & Gros Cap...................
    --Any point in Sault Ste. Marie, Ont.,            1,656.11  ................          382.08        2,038.19
     except the Algoma Steel Corp. Wharf & De
     Tour.....................................
    --Any point in Sault Ste. Marie, Ont.,              744.10  ................          171.67          915.77
     except the Algoma Steel Corp. Wharf &
     Gros Cap.................................
    --Sault Ste. Marie, MI & De Tour..........        1,656.11  ................          382.08        2,038.19
    --Sault Ste. Marie, MI & Gros Cap.........          744.10  ................          171.67          915.77
    --Harbor movage...........................          744.10  ................          171.67          915.77
Area 8........................................  ..............     2.18 (1.0218)
    --6-hr. period............................          535.92  ................           11.67          547.59

[[Page 18678]]

 
    --Docking or undocking....................          509.36  ................           11.09          520.45
----------------------------------------------------------------------------------------------------------------
* 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 9.41% across all
  areas.

V. Regulatory Analyses

    We developed this proposed rule after considering numerous statutes 
and executive orders related to rulemaking. Below, we summarize our 
analyses based on 13 of these statutes or executive orders.

A. Regulatory Planning and Review

    Executive Order 12866, ``Regulatory Planning and Review,'' 58 FR 
51735, October 4, 1993, requires a determination whether a regulatory 
action is ``significant'' and therefore subject to review by the Office 
of Management and Budget (OMB) and subject to the requirements of the 
Executive Order. This rulemaking is not significant under Executive 
Order 12866 and 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 and Purpose'' section for a detailed explanation of the 
legal authority and requirements for the Coast Guard to conduct an 
annual review and provide possible adjustments of pilotage rates on the 
Great Lakes. Based on our annual review for this rulemaking, we are 
proposing an adjustment to the pilotage rates for the 2009 shipping 
season to generate sufficient revenue to cover allowable expenses, 
target pilot compensation, and returns on investment.
    This proposed rule would implement a 9.41 percent overall rate 
adjustment for the Great Lakes system over the current rate as adjusted 
in the 2008 final rule. These adjustments to Great Lakes pilotage rates 
meet the requirements set forth in 46 CFR part 404 for similar 
compensation levels between Great Lakes pilots and industry. They also 
include adjustments for inflation and changes in association expenses 
to maintain these compensation levels.
    In general, we expect an increase in pilotage rates for a certain 
area to result in additional costs for shippers using pilotage services 
in that area, while a decrease would result in a cost reduction or 
savings for shippers in that area. This proposed rule would result in a 
distributional effect that transfers payments (income) from affected 
shippers (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. We found a case where the vessel operator purchased pilotage 
service in District One to presumably leave the Great Lakes system. We 
assume some vessel owners and operators may also choose to purchase 
pilotage services if their vessels are carrying hazardous substances or 
were navigating the Great Lakes system with inexperienced personnel. 
Based on information from the Coast Guard Office of Great Lakes 
Pilotage, we have determined that these vessels voluntarily chose to 
use pilots and, therefore, are exempt from pilotage requirements.
    We used 2006-2007 vessel arrival data from the Coast Guard's Marine 
Inspection, Safety, and Law Enforcement (MISLE) system to estimate the 
average annual number of vessels affected by the rate adjustment to be 
208 vessels that journey into the Great Lakes system. These vessels 
entered the Great Lakes by transiting through or in part of at least 
one of the three pilotage Districts before leaving the Great Lakes 
system. These vessels often make more than one distinct stop, docking, 
loading, and unloading at facilities in Great Lakes ports. Of the total 
trips for the 208 vessels, there were approximately 923 annual U.S. 
port arrivals before the vessels left the Great Lakes system, based on 
2006-2007 vessel data from MISLE.
    The impact of the rate adjustment to shippers is estimated from the 
district pilotage revenues. These revenues represent the direct and 
indirect costs (``economic costs'') that shippers must pay for pilotage 
services. The Coast Guard sets rates so that revenues equal the 
estimated cost of pilotage.
    We estimate the additional impact (costs or savings) of the rate 
adjustment in this proposed rule to be the difference between the total 
projected revenue needed to cover costs based on the 2008 rate 
adjustment and the total projected revenue needed to cover costs in 
this proposed rule for 2009. Table 20 details additional costs or 
savings by area and district.

[[Page 18679]]



                        Table 20--Rate Adjustment and Additional Impact of Proposed Rule
                                           [$U.S.; non-discounted] \1\
----------------------------------------------------------------------------------------------------------------
                                                                                                    Additional
                                                     Projected                       Projected       costs or
                                                    revenue in     Proposed rate    revenue in      savings of
                                                       2008           change           2009        proposed rule
                                                                                                        \2\
----------------------------------------------------------------------------------------------------------------
 Area 1