Great Lakes Pilotage Rates-2010 Annual Review and Adjustment, 56153-56166 [E9-26212]

Download as PDF Federal Register / Vol. 74, No. 209 / Friday, October 30, 2009 / Proposed Rules Dated: October 22, 2009. Charlene Frizzera, Acting Administrator, Centers for Medicare & Medicaid Services. Approved: October 27, 2009. Kathleen Sebelius, Secretary. [FR Doc. E9–26297 Filed 10–29–09; 8:45 am] Table of Contents BILLING CODE 4120–01–P DEPARTMENT OF HOMELAND SECURITY Coast Guard 46 CFR Part 401 [Docket No. USCG–2009–0883] RIN 1625–AB39 Great Lakes Pilotage Rates—2010 Annual Review and Adjustment Coast Guard, DHS. Notice of proposed rulemaking. AGENCY: ACTION: SUMMARY: The Coast Guard proposes to update the rates for pilotage on the Great Lakes by 5.07% to generate sufficient revenue to cover allowable expenses, target pilot compensation, and return on investment. The proposed update reflects an August 1, 2010 increase in benchmark contractual wages and benefits and an adjustment for inflation. 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 November 30, 2009. You may submit comments identified by Coast Guard docket number USCG–2009–0883 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. Paul M. Wasserman, Chief, Great Lakes Pilotage Branch, Commandant (CG– sroberts on DSKD5P82C1PROD with PROPOSALS ADDRESSES: VerDate Nov<24>2008 16:11 Oct 29, 2009 54122), U.S. Coast Guard, at 202–372– 1535, by fax 202–372–1929, or by e-mail at Paul.M.Wasserman@uscg.mil. If you have questions on viewing or submitting material to the docket, call Renee V. Wright, Program Manager, Docket Operations, telephone 202–366–9826. SUPPLEMENTARY INFORMATION: Jkt 220001 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–2009–0883), indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online or by fax, mail, or hand delivery, but please use only one of these means. We recommend that you include your name and a mailing address, an e-mail address, or a phone number in the body of your document so that we can contact you if we have questions regarding your submission. To submit your comment online, go to http://www.regulations.gov, click on the ‘‘submit a comment’’ box, which will then become highlighted in blue. In the ‘‘Document Type’’ drop down menu select ‘‘Proposed Rule’’ and insert ‘‘USCG–2009–0883’’ in the ‘‘Keyword’’ PO 00000 Frm 00016 Fmt 4702 Sfmt 4702 56153 box. Click ‘‘Search’’ then click on the balloon shape in the ‘‘Actions’’ column. If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 81⁄2 by 11 inches, suitable for copying and electronic filing. If you submit comments by mail and would like to know that they reached the Facility, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period and may change this proposed rule based on your comments. 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, click on the ‘‘read comments’’ box, which will then become highlighted in blue. In the ‘‘Keyword’’ box insert ‘‘USCG–2009– 0883’’ and click ‘‘Search.’’ Click the ‘‘Open Docket Folder’’ in the ‘‘Actions’’ column. If you do not have access to the internet, you may view the docket online by visiting the Docket Management Facility in Room W12–140 on the ground floor of the Department of Transportation West Building, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. We have an agreement with the Department of Transportation to use the Docket Management Facility. 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 Marine Information for Safety and Law Enforcement NAICS North American Industry Classification System E:\FR\FM\30OCP1.SGM 30OCP1 56154 Federal Register / Vol. 74, No. 209 / Friday, October 30, 2009 / Proposed Rules 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). Since then, rates have been reviewed under Appendix C and adjusted annually: 2007 (72 FR 53158, Sep. 18, 2007); 2008 (interim rule 73 FR 15092, Mar. 21, 2008; final rule 74 FR 220, Jan. 5, 2009); 2009 (74 FR 18669, Jul. 21, 2009). The present rulemaking proposes a rate adjustment for the 2010 shipping season, based on an Appendix C review. At the conclusion of this ratemaking cycle and during the latter portion of the 2010 navigation season, we anticipate publishing an NPRM proposing a rate adjustment based upon an Appendix A 5-year review and full audit of the pilot association books and records. 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 2010, and then discusses in detail how the proposed changes were calculated under Appendix C. We are proposing an increase of 5.07% across all Districts over the last pilotage rate adjustment. This reflects an August 1, 2010, increase in benchmark contractual wages and benefits and an inflation adjustment. This rate increase would not go into effect until August 1, 2010. Actual rate increases vary by Area, and are summarized in Table 1. TABLE 1—2010 AREA RATE CHANGES Then the proposed percentage increases over the current rate is: sroberts on DSKD5P82C1PROD with PROPOSALS 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) ................................ VerDate Nov<24>2008 16:11 Oct 29, 2009 Jkt 220001 PO 00000 Frm 00017 Fmt 4702 Sfmt 4702 E:\FR\FM\30OCP1.SGM 30OCP1 4.65 5.33 5.47 4.96 5.27 4.73 5.17 5.07 Federal Register / Vol. 74, No. 209 / Friday, October 30, 2009 / Proposed Rules 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 5.07% 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 2009 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 2010 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. 56155 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. Also, please note that in previous rulemakings we calculated an expense multiplier for each District. This was unnecessary because Appendix C calculations are based on Area figures, not District figures. District figures, where they are shown in the following tables, now reflect only the arithmetical totals for each of the District’s Areas. Step 1: Calculate the total economic cost for the base period. In this step, for each Area, we add the total cost of target pilot compensation, all other recognized expenses, and the return element (net income plus interest). We divide this sum by the total bridge hours for each Area. The result is the cost in each Area of providing pilotage service per bridge hour for the base period. Tables 2 through 4 summarize the Step 1 calculations: TABLE 2—TOTAL ECONOMIC COST FOR BASE PERIOD (2009), AREAS IN DISTRICT ONE Area 1 St. Lawrence River Area 2 Lake Ontario Total* District One Base operating expense (less base return element) .......................................... Base target pilot compensation ........................................................................... Base return element ............................................................................................ $538,155 + $1,617,955 + $10,763 $547,489 + $981,589 + $16,425 $1,085,644 + $2,599,544 + $27,188 Subtotal* ........................................................................................................ Base bridge hours ............................................................................................... Base cost per bridge hour ................................................................................... = $2,166,873 ÷ 5,203 = $416.47 = $1,545,503 ÷ 5,650 = $273.54 = $3,712,376 ÷ 10,853 = $342.06 *As explained in the text preceding Step 1, District totals have been expressed differently from previous rulemakings. This accounts for slight differences between the District totals shown in Table 16 of the 2009 final rule and the District totals shown in this table. TABLE 3—TOTAL ECONOMIC COST FOR BASE PERIOD (2009), AREAS IN DISTRICT TWO Area 4 Lake Erie Area 5 Southeast Shoal to Port Huron, MI Total* District Two Base operating expense ...................................................................................... Base target pilot compensation ........................................................................... Base return element ............................................................................................ $502,087 + $785,271 + $25,104 $789,202 + $1,617,955 + $31,568 $1,291,289 + $2,403,226 + $56,672 Subtotal ......................................................................................................... Base bridge hours ............................................................................................... Base cost per bridge hour ................................................................................... = $1,312,463 ÷ 7,320 = $179.30 = $2,438,725 ÷ 5,097 = $478.46 = $3,751,188 ÷ 12,417 = $302.10 *See footnote to Table 2. sroberts on DSKD5P82C1PROD with PROPOSALS TABLE 4—TOTAL ECONOMIC COST FOR BASE PERIOD (2009), AREAS IN DISTRICT THREE Area 6 Lakes Huron and Michigan Area 7 St. Mary’s River Area 8 Lake Superior Total* District Three Base operating expense .................................................. Base target pilot compensation ....................................... Base return element ........................................................ $814,358 + $1,570,542 + $32,574 $398,461 + $1,078,637 + $11,954 $641,580 + $1,374,224 + $19,247 $1,854,399 + $4,023,403 + $63,776 Subtotal ..................................................................... = $2,417,474 = $1,489,052 = $2,035,052 = $5,941,578 VerDate Nov<24>2008 16:11 Oct 29, 2009 Jkt 220001 PO 00000 Frm 00018 Fmt 4702 Sfmt 4702 E:\FR\FM\30OCP1.SGM 30OCP1 56156 Federal Register / Vol. 74, No. 209 / Friday, October 30, 2009 / Proposed Rules TABLE 4—TOTAL ECONOMIC COST FOR BASE PERIOD (2009), AREAS IN DISTRICT THREE—Continued Area 6 Lakes Huron and Michigan ÷ 13,406 = $180.33 Base bridge hours ........................................................... Base cost per bridge hour ............................................... Area 7 St. Mary’s River Area 8 Lake Superior ÷ 3,259 = $456.90 ÷ 11,630 = $174.98 Total* District Three ÷ 28,295 = $209.99 *See footnote to Table 2. Step 2. Calculate the expense multiplier. In this step, for each Area, we add the base operating expense and the base return element. Then, we divide the sum by the base target pilot compensation to get the expense multiplier for each Area. Tables 5 through 7 show the Step 2 calculations. TABLE 5—EXPENSE MULTIPLIER, AREAS IN DISTRICT ONE Area 1 St. Lawrence River Area 2 Lake Ontario Total District One Base operating expense ...................................................................................... Base return element ............................................................................................ $538,155 + $10,763 $547,489 + $16,425 $1,085,644 + $27,188 Subtotal ......................................................................................................... Base target pilot compensation ........................................................................... Expense multiplier ............................................................................................... = $548,918 ÷ $1,617,955 0.33927 = $563,914 ÷ $981,589 0.57449 = $1,112,832 $2,599,544 n/a TABLE 6—EXPENSE MULTIPLIER, AREAS IN DISTRICT TWO Area 5 Southeast Shoal to Port Huron, MI Area 4 Lake Erie Total District Two Base operating expense ...................................................................................... Base return element ............................................................................................ $502,087 + $25,104 $789,202 + $31,568 $1,291,289 + $56,672 Subtotal ................................................................................................................ Base target pilot compensation ........................................................................... Expense multiplier ............................................................................................... = $527,192 ÷ $785,271 0.67135 = $820,770 ÷ $1,617,955 0.50729 = $1,347,962 $2,403,226 n/a TABLE 7—EXPENSE MULTIPLIER, AREAS IN DISTRICT THREE Area 6 Lakes Huron and Michigan Area 7 St. Mary’s River Area 8 Lake Superior Total District Three $814,358 + $32,574 $398,461 + $11,954 $641,580 + $19,247 $1,854,399 + $63,776 Subtotal ..................................................................... Base target pilot compensation ....................................... Expense multiplier ........................................................... sroberts on DSKD5P82C1PROD with PROPOSALS Base operating Expense ................................................. Base return element ........................................................ = $846,932 ÷ $1,570,542 0.53926 = $410,415 ÷ $1,078,637 0.38049 = $660,828 ÷ $1,374,224 0.48087 = $1,918,175 $4,023,403 n/a 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. For pilots in undesignated waters, we approximate the first mates’ compensation and, in designated waters, we approximate the master’s VerDate Nov<24>2008 16:11 Oct 29, 2009 Jkt 220001 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. As of May 2009, there are two current AMOU contracts, which we designate Agreement A and Agreement B. PO 00000 Frm 00019 Fmt 4702 Sfmt 4702 Agreement A applies to vessels operated by Key Lakes, Inc., and Agreement B applies to all vessels operated by American Steamship Co. and Mittal Steel USA, Inc. Both Agreement A and Agreement B provide for a 3% wage increase effective August 1, 2010. Under Agreement A, the daily wage rate will be increased from $262.73 to $270.61. Under Agreement B, the daily wage rate will be increased from $323.86 to $333.57. To calculate monthly wages, we apply Agreement A and Agreement B monthly multipliers of 54.5 and 49.5, respectively, to the daily rate. E:\FR\FM\30OCP1.SGM 30OCP1 Federal Register / Vol. 74, No. 209 / Friday, October 30, 2009 / Proposed Rules 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 56157 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, 2010. TABLE 8—WAGES Pilots on undesignated waters Monthly component AGREEMENT A: $270.61 daily rate × 54.5 days ................................................................................................................ AGREEMENT A: Monthly total × 9 months = total wages .................................................................................................. AGREEMENT B: $333.57 daily rate × 49.5 days ......................................................................................................... AGREEMENT B: Monthly total × 9 months = total wages ........................................................................................... Both Agreements A and B include a health benefits contribution rate of $88.76 effective August 1, 2010. 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 Pilots on designated waters (undesignated × 150%) $14,748 $22,123 $132,735 $199,103 $16,512 $24,768 $148,608 $222,912 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, 2010. 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 = $88.76 × 45.5 days ............................................................................................................ AGREEMENT B: Employer contribution, 401(K) plan (Monthly Wages × 5%) ............................................................ Pension = $43.55 × 45.5 days ......................................................................................................... Health = $88.76 × 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 $737.42 $1,517.43 $4,038.58 $1,106.13 $1,517.43 $4,038.58 $825.60 $1,981.53 $4,038.58 $1,238.40 $1,981.53 $4,038.58 = $6,293.42 = $6,662.13 = $56,641 = $59,959 = $6,845.71 = $7,258.51 = $61,611 = $65,327 TABLE 10—TOTAL WAGES AND BENEFITS sroberts on DSKD5P82C1PROD with PROPOSALS Pilots on undesignated waters AGREEMENT AGREEMENT AGREEMENT AGREEMENT AGREEMENT AGREEMENT A: A: A: B: B: B: Wages ......................................................................................................................... Benefits ....................................................................................................................... Total ............................................................................................................................ Wages ......................................................................................................................... Benefits ....................................................................................................................... Total ............................................................................................................................ Table 11 shows that approximately one third of U.S. Great Lakes shipping deadweight tonnage operates under VerDate Nov<24>2008 16:11 Oct 29, 2009 Jkt 220001 $132,735 +$56,641 = $189,376 $148,608 +$61,611 = $210,219 Agreement A, with the remaining two thirds operating under Agreement B. PO 00000 Frm 00020 Fmt 4702 Sfmt 4702 E:\FR\FM\30OCP1.SGM 30OCP1 Pilots on designated waters $199,103 +$59,959 = $259,062 $222,912 +$65,327 = $288,239 56158 Federal Register / Vol. 74, No. 209 / Friday, October 30, 2009 / Proposed Rules TABLE 11—DEADWEIGHT TONNAGE BY AMOU AGREEMENT Company Agreement A American Steamship Company .......................................................... Mittal Steel USA, Inc .......................................................................... Key Lakes, Inc .................................................................................... .......................................................... .......................................................... 361,385 ............................................ 815,600 38,826 Total tonnage, each agreement .................................................. 361,385 ............................................ 854,426 Percent tonnage, each agreement ..................................................... 361,385 ÷ 1,215,811 = 29.7238% ... 854,426 ÷ 1,215,811 = 70.2762% 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 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 for ratemaking purposes in each Area by dividing each Area’s projected bridge hours, either by 1,000 (designated waters) or by 1,800 (undesignated waters). Bridge hours are the number of hours a pilot is aboard a vessel providing Designated waters $189,376 × 29.7238% = $56,290 .... $259,062 × 29.7238% = $77,003 $210,219 × 70.2762% = $147,734 .. $56,290 + $147,734 = $204,024 ..... $288,239 × 70.2762% = $202,563 $77,003 + $202,563 = $279,566 pilotage service. Projected bridge hours are based on the vessel traffic that pilots are expected to serve. Based on historical data and information provided by pilots and industry, we project that vessel traffic in the 2010 navigation season, in all Areas, will remain unchanged from the 2009 projections noted in Table 13 of the 2009 final rule. Table 13, below, shows the projected bridge hours needed for each Area, and the total number of pilots needed for ratemaking purposes after dividing those figures either by 1,000 or 1,800. As in 2008 and 2009, and for the same reasons, we rounded up to the next whole pilot except in Area 2 where we rounded up from 3.14 to 5, and in Area 4 where we rounded down from 4.07 to 4. TABLE 13—NUMBER OF PILOTS NEEDED Pilotage area Area Area Area Area Area Area Area 1 2 4 5 6 7 8 .................................................................................................................. .................................................................................................................. .................................................................................................................. .................................................................................................................. .................................................................................................................. .................................................................................................................. .................................................................................................................. sroberts on DSKD5P82C1PROD with PROPOSALS (c) Determine the projected target pilot compensation for each Area. The projection of new total target pilot compensation is determined separately Divided by 1,000 (Designated waters) or 1,800 (undesignated waters) Projected 2010 bridge hours 5,203 5,650 7,320 5,097 13,406 3,259 11,630 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 Pilots needed (total = 40) 1,000 1,800 1,800 1,000 1,800 1,000 1,800 6 5 4 6 8 4 7 12) for pilots working in that Area. Table 14 shows this calculation. TABLE 14—PROJECTED TARGET PILOT COMPENSATION Area 1 .................................................................................................................. Area 2 .................................................................................................................. VerDate Nov<24>2008 16:11 Oct 29, 2009 Jkt 220001 PO 00000 Multiplied by target rate of compensation Pilots needed (total = 40) Pilotage area Frm 00021 Fmt 4702 Sfmt 4702 6 5 E:\FR\FM\30OCP1.SGM × $279,566 × 204,024 30OCP1 Projected target pilot compensation $1,677,397 1,020,120 Federal Register / Vol. 74, No. 209 / Friday, October 30, 2009 / Proposed Rules 56159 TABLE 14—PROJECTED TARGET PILOT COMPENSATION—Continued Multiplied by target rate of compensation Pilots needed (total = 40) Pilotage area Total, District One ................................................................................................ Area 4 .................................................................................................................. Area 5 .................................................................................................................. Total, District Two ................................................................................................ Area 6 .................................................................................................................. Area 7 .................................................................................................................. Area 8 .................................................................................................................. Total, District Three ............................................................................................. 11 4 6 10 8 4 7 19 Step 4: Increase the projected pilot compensation in Step 3 by the expense multiplier in Step 2. This step yields a projected pilot compensation. Table 15 shows this calculation. projected increase in operating costs necessary to support the increased n/a × 204,024 × 279,566 n/a × 204,024 × 279,566 × 204,024 n/a Projected target pilot compensation 2,697,517 816,096 1,677,397 2,493,493 1,632,191 1,118,265 1,428,167 4,178,623 TABLE 15—PROJECTED OPERATING EXPENSE Projected target pilot compensation Pilotage area Multiplied by expense multiplier Projected operating expense Area 1 .................................................................................................................. Area 2 .................................................................................................................. $1,677,397 1,020,120 × 0.33927 × 0.57449 = $569,084 = 586,050 Total, District One ......................................................................................... 2,697,517 n/a = 1,155,134 Area 4 .................................................................................................................. Area 5 .................................................................................................................. 816,096 1,677,397 × 0.67135 × 0.50729 = 547,886 = 850,924 Total, District Two ......................................................................................... 2,493,493 n/a = 1,398,810 Area 6 .................................................................................................................. Area 7 .................................................................................................................. Area 8 .................................................................................................................. Total, District Three ...................................................................................... 1,632,191 1,118,265 1,428,167 4,178,623 × 0.53926 × 0.38049 × 0.48087 n/a = 880,177 = 425,493 = 686,767 = 1,992,438 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 1.037 inflation factor, reflecting an average inflation rate of 3.7% in ‘‘Midwest Economy—Consumer Prices’’ between 2007 and 2008, the latest years for which data are available. Table 16 shows this calculation and the projected total economic cost. TABLE 16—PROJECTED TOTAL ECONOMIC COST B. Increase, multiplied by inflation factor (= A × 1.037) A. Projected operating expense Pilotage area C. Projected target pilot compensation D. Projected total economic cost (= B + C) $569,084 586,050 $590,140 607,733 $1,677,397 1,020,120 $2,267,537 1,627,853 Total, District One ..................................................................... 1,155,134 1,197,874 2,697,517 3,895,390 Area 4 .............................................................................................. Area 5 .............................................................................................. 547,886 850,924 568,158 882,408 816,096 1,677,397 1,384,253 2,559,805 Total, District Two ..................................................................... sroberts on DSKD5P82C1PROD with PROPOSALS Area 1 .............................................................................................. Area 2 .............................................................................................. 1,398,810 1,450,566 2,493,493 3,944,058 Area 6 .............................................................................................. Area 7 .............................................................................................. Area 8 .............................................................................................. 880,177 425,493 686,767 912,744 441,236 712,178 1,632,191 1,118,265 1,428,167 2,544,935 1,559,501 2,140,345 Total, District Three .................................................................. 1,992,438 2,066,158 4,178,623 6,244,781 Step 6: Divide the result in Step 5 by projected bridge hours to determine VerDate Nov<24>2008 16:11 Oct 29, 2009 Jkt 220001 total unit costs. Table 17 shows this calculation. PO 00000 Frm 00022 Fmt 4702 Sfmt 4702 E:\FR\FM\30OCP1.SGM 30OCP1 56160 Federal Register / Vol. 74, No. 209 / Friday, October 30, 2009 / Proposed Rules TABLE 17—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 .............................................................................................................................. $2,267,537 1,627,853 5,203 5,650 $435.81 288.12 Total, District One ..................................................................................................... 3,895,390 10,853 358.92 Area 4 .............................................................................................................................. Area 5 .............................................................................................................................. 1,384,253 2,559,805 7,320 5,097 189.11 502.22 Total, District Two ..................................................................................................... 3,944,058 12,417 317.63 Area 6 .............................................................................................................................. Area 7 .............................................................................................................................. Area 8 .............................................................................................................................. 2,544,935 1,559,501 2,140,345 13,406 3,259 11,630 189.84 478.52 184.04 Total, District Three .................................................................................................. 6,244,781 28,295 220.70 Overall ............................................................................................................... 14,084,230 51,565 273.14 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 IN 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) Area 1 .............................................................................................................................. Area 2 .............................................................................................................................. $435.81 288.12 $416.47 273.54 4.65 5.33 Total, District One ..................................................................................................... 358.92 342.06 4.93 Area 4 .............................................................................................................................. Area 5 .............................................................................................................................. 189.11 502.22 179.30 478.46 5.47 4.96 Total, District Two ..................................................................................................... 317.63 302.10 5.14 Area 6 .............................................................................................................................. Area 7 .............................................................................................................................. Area 8 .............................................................................................................................. 189.84 478.52 184.04 180.33 456.90 174.98 5.27 4.73 5.17 Total, District Three .................................................................................................. 220.70 209.99 5.10 Overall ............................................................................................................... 273.14 259.97 5.07 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* sroberts on DSKD5P82C1PROD with PROPOSALS Pilotage A. Base period rate Area 16:11 Oct 29, 2009 C. Increase in base rate (A × B%) D. Adjusted rate (A + C, rounded to nearest dollar) ....................................... $0.78/km, $1.39/mi ....... 17.44 ............................. 57.11 ............................. 38.09 ............................. $17.73/km, $31.38/mi. 393. 1,287. 858. (Multiplying Factor) Area 1: —Basic pilotage ........................ —Each lock transited ................ —Harbor movage ...................... —Minimum basic rate, St. Lawrence River. VerDate Nov<24>2008 B. Percentage change in unit costs ....................................... $16.95/km, $29.99/mi ... 375.47 ........................... 1,229.41 ........................ 820.04 ........................... Jkt 220001 PO 00000 Frm 00023 4.65 (1.0465) ................ ....................................... ....................................... ....................................... ....................................... Fmt 4702 Sfmt 4702 E:\FR\FM\30OCP1.SGM 30OCP1 Federal Register / Vol. 74, No. 209 / Friday, October 30, 2009 / Proposed Rules 56161 TABLE 19—BASE PERIOD RATES ADJUSTED BY PERCENTAGE CHANGE IN UNIT COSTS*—Continued Pilotage A. Base period rate sroberts on DSKD5P82C1PROD with PROPOSALS Area 16:11 Oct 29, 2009 C. Increase in base rate (A × B%) D. Adjusted rate (A + C, rounded to nearest dollar) 3,767. (Multiplying Factor) —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. VerDate Nov<24>2008 B. Percentage change in unit costs 3,599.58 ........................ ....................................... 817.63 ........................... 779.92 ........................... ....................................... 722.05 ........................... 556.46 ........................... 1,420.45 ........................ ....................................... 5.33 (1.0533) ................ ....................................... ....................................... 5.47 (1.0547) ................ ....................................... ....................................... ....................................... 167.20 ........................... ....................................... 43.56 ............................. 41.55 ............................. ....................................... 39.49 ............................. 30.44 ............................. 77.69 ............................. ....................................... 1,299.46 ........................ 4.96 (1.0496) ................ ....................................... ....................................... 64.51 ............................. 1,364. 2,198.99 ........................ ....................................... 109.16 ........................... 2,308. 2,855.20 ........................ ....................................... 141.74 ........................... 2,997. 2,198.99 ........................ ....................................... 109.16 ........................... 2,308. 3,829.80 ........................ ....................................... 190.12 ........................... 4,020. 4,436.82 ........................ ....................................... 220.26 ........................... 4,657. 2,877.20 ........................ ....................................... 142.83 ........................... 3,020. 2,237.82 ........................ ....................................... 111.09 ........................... 2,349. 1,590.68 ........................ ....................................... 78.97 ............................. 1,670. 1,299.46 ........................ 3,829.80 ........................ ....................................... ....................................... 64.51 ............................. 190.12 ........................... 1,364. 4,020. 2,877.20 ........................ ....................................... 142.83 ........................... 3,020. 1,299.46 ........................ ....................................... 64.51 ............................. 1,364. 2,198.99 ........................ ....................................... 109.16 ........................... 2,308. 2,855.20 ........................ ....................................... 141.74 ........................... 2,997. 2,877.20 ........................ ....................................... 142.83 ........................... 3,020. 1,590.68 ........................ ....................................... 78.97 ............................. 1,670. 2,198.99 ........................ ....................................... 109.16 ........................... 2,308. 2,877.20 ........................ ....................................... 142.83 ........................... 3,020. ....................................... 622.93 ........................... 591.72 ........................... ....................................... 2,442.98 ........................ 2,442.98 ........................ 5.27 (1.0527) ................ ....................................... ....................................... 4.73 (1.0473) ................ ....................................... ....................................... ....................................... 32.84 ............................. 31.20 ............................. ....................................... 115.57 ........................... 115.57 ........................... Jkt 220001 PO 00000 Frm 00024 Fmt 4702 Sfmt 4702 E:\FR\FM\30OCP1.SGM 30OCP1 861. 821. 762. 587. 1,498. 656. 623. 2,559. 2,559. 56162 Federal Register / Vol. 74, No. 209 / Friday, October 30, 2009 / Proposed Rules TABLE 19—BASE PERIOD RATES ADJUSTED BY PERCENTAGE CHANGE IN UNIT COSTS*—Continued Pilotage A. Base period rate Area B. Percentage change in unit costs C. Increase in base rate (A × B%) D. Adjusted rate (A + C, rounded to nearest dollar) (Multiplying Factor) —Algoma Steel Corp. Wharf, Sault Ste. Marie, Ont. & Gros Cap. —Any point in Sault Ste. Marie, Ont., except the Algoma Steel Corp. Wharf & De Tour. —Any point in Sault Ste. Marie, Ont., except the Algoma Steel Corp. Wharf & Gros Cap. —Sault Ste. Marie, MI & De Tour. —Sault Ste. Marie, MI & Gros Cap. —Harbor movage ...................... Area 8: —6 hr. period ............................ —Docking or undocking ............ 920.03 ........................... ....................................... 43.52 ............................. 964. 2,047.67 ........................ ....................................... 96.87 ............................. 2,145. 920.03 ........................... ....................................... 43.52 ............................. 964. 2,047.67 ........................ ....................................... 96.87 ............................. 2,145. 920.03 ........................... ....................................... 43.52 ............................. 964. 920.03 ........................... ....................................... 549.44 ........................... 522.20 ........................... ....................................... 5.17 (1.0517) ................ ....................................... ....................................... 43.52 ............................. ....................................... 28.42 ............................. 27.02 ............................. 964 578. 549. * 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 5.07% across all areas. sroberts on DSKD5P82C1PROD with PROPOSALS 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 2010 shipping season to generate sufficient revenue to cover allowable expenses, target pilot compensation, and returns on investment. This proposed rule would implement a 5.07 percent overall rate adjustment VerDate Nov<24>2008 16:11 Oct 29, 2009 Jkt 220001 for the Great Lakes system over the current rate as adjusted in the 2009 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 PO 00000 Frm 00025 Fmt 4702 Sfmt 4702 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 2006–2008 vessel arrival data from the Coast Guard’s Marine Information for Safety and Law Enforcement (MISLE) system to estimate the average annual number of vessels affected by the rate adjustment to be 208 vessels that journey into the Great Lakes system. These vessels entered the Great Lakes by transiting through or in part of at least one of the three pilotage Districts before leaving the Great Lakes E:\FR\FM\30OCP1.SGM 30OCP1 56163 Federal Register / Vol. 74, No. 209 / Friday, October 30, 2009 / Proposed Rules system. These vessels often make more than one distinct stop, docking, loading, and unloading at facilities in Great Lakes ports. Of the total trips for the 208 vessels, there were approximately 923 annual U.S. port arrivals before the vessels left the Great Lakes system, based on 2006–2008 vessel data from MISLE. The impact of the rate adjustment to shippers is estimated from 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 2009 rate adjustment and the total projected revenue needed to cover costs in this proposed rule for 2010. Table 20 details additional costs or savings by area and district. TABLE 20—RATE ADJUSTMENT AND ADDITIONAL IMPACT OF PROPOSED RULE ($U.S.; NON-DISCOUNTED)1 Total projected expenses in 2009 Proposed rate change Total projected expenses in 2010 2 Additional revenue or cost of this rulemaking 3 Area 1 .............................................................................................................. Area 2 .............................................................................................................. $2,166,873 1,545,503 1.0465 1.0533 $2,267,537 1,627,853 $100,664 82,350 Total, District One ..................................................................................... 3,712,376 ........................ 3,895,390 183,014 Area 4 .............................................................................................................. Area 5 .............................................................................................................. 1,312,463 2,438,725 1.0547 1.0496 1,384,253 2,559,805 71,791 121,080 Total, District Two ..................................................................................... 3,751,188 ........................ 3,944,058 192,870 Area 6 .............................................................................................................. Area 7 .............................................................................................................. Area 8 .............................................................................................................. 2,417,474 1,489,052 2,035,052 1.0527 1.0473 1.0517 2,544,935 1,559,501 2,140,345 127,461 70,449 105,293 Total, District Three .................................................................................. 5,941,578 ........................ 6,244,781 303,203 All Districts ......................................................................................... 13,405,142 ........................ 14,084,230 679,088 1 Some values may not total due to rounding. Rate changes are calculated for areas only. District totals reflect arithmetic totals and are for informational and discussion purposes. See discussion in proposed rule for further details. 3 Additional Revenue or Cost of this Rulemaking = ‘Total Projected Expenses in 2010’¥‘Total Projected Expenses in 2009’. sroberts on DSKD5P82C1PROD with PROPOSALS 2 After applying the rate change in this proposed rule, the resulting difference between the projected revenue in 2009 and the projected revenue in 2010 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 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 nondiscounted costs of the rate adjustments in Districts 1 and 2 would be approximately $183,000 and $193,000, respectively, while District 3 would experience an annual non-discounted cost of approximately $300,000. 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 would pay more and some VerDate Nov<24>2008 16:11 Oct 29, 2009 Jkt 220001 would pay less depending on the distance and port arrivals of their vessels’ trips. However, the annual cost or savings reported above does capture all of the additional cost the shippers face as a result of the rate adjustment in this rule. As Table 20 indicates, all areas would experience an increased annual cost due to this proposed rulemaking. The overall impact of the proposed rule would be an additional cost to shippers of just over $679,000 across all three districts, due primarily to an increase in benchmark contractual wages and benefits and an inflation adjustment. 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 00026 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 2006–2008 Coast Guard MISLE data and business revenue and size data provided by Reference USA and Dunn and Bradstreet. We were able to gather revenue and size data or link the entities to large shipping conglomerates for 22 of the 24 affected entities in the United States. We found that large, mostly foreign-owned, shipping conglomerates or their subsidiaries owned or operated all vessels engaged in foreign trade on the Great Lakes. We assume that new E:\FR\FM\30OCP1.SGM 30OCP1 56164 Federal Register / Vol. 74, No. 209 / Friday, October 30, 2009 / Proposed Rules sroberts on DSKD5P82C1PROD with PROPOSALS 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 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. Paul M. Wasserman, Chief,Great Lakes Pilotage Branch, Commandant (CG– 54122), U.S. Coast Guard, at 202–372– 1525, by fax 202–372–1929, or by e-mail at Paul.M.Wasserman@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 VerDate Nov<24>2008 16:11 Oct 29, 2009 Jkt 220001 employees of the Coast Guard, call 1– 888–REG–FAIR (1–888–734–3247). 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. E. Federalism A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism because there are no similar State regulations, and the States do not have the authority to regulate and adjust rates for pilotage services in the Great Lakes system. 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. PO 00000 Frm 00027 Fmt 4702 Sfmt 4702 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. K. Energy Effects We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a ‘‘significant energy action’’ under that order because it is not a ‘‘significant regulatory action’’ under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211. 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 rule under Department of Homeland Security Management Directive 023–01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA)(42 U.S.C. 4321–4370f), and have concluded that this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This rule is categorically E:\FR\FM\30OCP1.SGM 30OCP1 56165 Federal Register / Vol. 74, No. 209 / Friday, October 30, 2009 / Proposed Rules excluded under section 2.B.2, figure 2– 1, paragraph (34)(a) of the Instruction. Paragraph 34(a) pertains to minor regulatory changes that are editorial or procedural in nature. This rule adjusts rates in accordance with applicable statutory and regulatory mandates. An environmental analysis checklist and a categorical exclusion determination are available in the docket where indicated under ADDRESSES. List of Subjects in 46 CFR Part 401 PART 401—GREAT LAKES PILOTAGE REGULATIONS Service Harbor Movage ......... 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. For the reasons discussed in the preamble, the Coast Guard proposes to amend 46 CFR Part 401 as follows: (b) Area 2 (Undesignated Waters): Lake Ontario Six-Hour Period ........................ Docking or Undocking .............. $861 821 3. In § 401.407, revise paragraphs (a) and (b) to read as follows: * * * * (a) Area 1 (Designated Waters): Service St. Lawrence River Basic Pilotage ........... $17.73 per Kilometer or $31.38 per mile.1 $393.1 Each Lock Transited minimum basic rate for assignment of a pilot in the St. Lawrence River is $858, and the maximum basic rate for a through trip is $3,767. Service 2. In § 401.405, revise paragraphs (a) and (b) to read as follows: * $1287.1 1 The § 401.405 Basic rates and charges on the St. Lawrence River and Lake Ontario. Administrative practice and procedure, Great Lakes, Navigation (water), Penalties, Reporting and recordkeeping requirements, Seamen. St. Lawrence River § 401.407 Basic rates and charges on Lake Erie and the navigable waters from Southeast Shoal to Port Huron, MI. * * * * * (a) Area 4 (Undesignated Waters): Lake Erie (East of Southeast Shoal) Service Six-Hour Period ....................................................................................................................................................... Docking or Undocking ............................................................................................................................................. Any Point on the Niagara River below the Black Rock Lock. ................................................................................. Buffalo $762 587 N/A $762 587 1,498 (b) Area 5 (Designated Waters): Southeast Shoal Any point on or in Toledo or any point on Lake Erie west of Southeast Shoal ................... Port Huron Change Point ........................................................................ St. Clair River ........................................................................................... Detroit or Windsor or the Detroit River .................................................... Detroit Pilot Boat ...................................................................................... 1 When $2,997 3,020 3,020 1,364 N/A $2,308 2,349 3,020 N/A N/A $1,364 1 4,657 1 4,020 Detroit Pilot Boat N/A 2,997 2,308 2,308 1,670 (a) Area 6 (Undesignated Waters): * * Lakes Huron and Michigan Service N/A 1,670 1,364 3,020 3,020 Six-Hour Period ........................ * Docking or Undocking .............. $656 De Tour Gros Cap ................................................................................................................................................. Algoma Steel Corporation Wharf at Sault Ste. Marie Ontario ................................................................ Any point in Sault Ste. Marie, Ontario, except the Algoma Steel Corporation Wharf ............................ Sault Ste. Marie, MI ................................................................................................................................. Harbor Movage ........................................................................................................................................ (c) Area 8 (Undesignated Waters): Lake Superior Service Six-Hour Period ........................ VerDate Nov<24>2008 16:11 Oct 29, 2009 Jkt 220001 PO 00000 Frm 00028 Fmt 4702 Sfmt 4702 $578 623 (b) Area 7 (Designated Waters): Area sroberts on DSKD5P82C1PROD with PROPOSALS St. Clair River Lakes Huron and Michigan Service § 401.410 Basic rates and charges on Lakes Huron, Michigan, and Superior, and the St. Mary’s River. * $2,308 1 4,020 Detroit River pilots are not changed at the Detroit Pilot Boat. 4. In § 401.410, revise paragraphs (a), (b), and (c) to read as follows: * Toledo or any point on Lake Erie west of Southeast Shoal $2,559 2,559 2,145 2,145 N/A Gros Cap N/A 964 964 964 N/A Service Docking or Undocking .............. E:\FR\FM\30OCP1.SGM 30OCP1 Any Harbor N/A N/A N/A N/A $964 Lake Superior 549 56166 § 401.420 Federal Register / Vol. 74, No. 209 / Friday, October 30, 2009 / Proposed Rules [Amended] 5. In § 401.420— a. In paragraph (a), remove the number ‘‘$113’’ and add, in its place, the number ‘‘$119’’; and remove the number ‘‘$1,777’’ and add, in its place, the number ‘‘$1,867’’. b. In paragraph (b), remove the number ‘‘$113’’ and add, in its place, the number ‘‘$119’’; and remove the number ‘‘$1,777’’ and add, in its place, the number ‘‘$1,867’’. c. In paragraph (c)(1), remove the number ‘‘$671’’ and add, in its place, the number ‘‘$705’’. d. In paragraph (c)(3), remove the number ‘‘$113’’ and add, in its place, the number ‘‘$119’’; and, also in paragraph (c)(3), remove the number ‘‘$1,777’’ and add, in its place, the number ‘‘$1,867’’. § 401.428 [Amended] 6. In § 401.428, remove the number ‘‘$684’’ and add, in its place, the number ‘‘$719’’. Dated: October 26, 2009. Kevin S. Cook, Rear Admiral, U.S. Coast Guard, Director of Prevention Policy. [FR Doc. E9–26212 Filed 10–29–09; 8:45 am] BILLING CODE 4910–15–P DEPARTMENT OF TRANSPORTATION National Highway Traffic Safety Administration 49 CFR Part 571 [Docket No. NHTSA–09–0117] RIN 2127–AK42 Federal Motor Vehicle Safety Standards; New Pneumatic and Certain Specialty Tires sroberts on DSKD5P82C1PROD with PROPOSALS AGENCY: National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT). ACTION: Notice of proposed rulemaking (NPRM). SUMMARY: This NPRM proposes to amend Federal Motor Vehicle Safety Standard (FMVSS) No. 109, New pneumatic and certain specialty tires, to change the test pressure for the physical dimensions test for T-type tires (temporary use spare tires) from 52 pounds per square inch (psi) to 60 psi. A 60-psi test pressure for the physical dimensions test would marginally increase the stringency of the test while harmonizing FMVSS No. 109 with international and voluntary consensus standards. This NPRM responds to a VerDate Nov<24>2008 16:11 Oct 29, 2009 Jkt 220001 petition for rulemaking from the Tire & Rim Association. DATES: You should submit your comments early enough to ensure that the Docket receives them no later than December 29, 2009. ADDRESSES: You may submit comments (identified by the DOT Docket ID Number above) by any of the following methods: • Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting comments. • Mail: Docket Management Facility: U.S. Department of Transportation, 1200 New Jersey Avenue, SE., West Building Ground Floor, Room W12–140, Washington, DC 20590–0001 • Hand Delivery or Courier: West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue, SE., between 9 a.m. and 5 p.m. ET, Monday through Friday, except Federal holidays. • Fax: 202–493–2251 Instructions: For detailed instructions on submitting comments and additional information on the rulemaking process, see the Public Participation heading of the Supplementary Information section of this document. Note that all comments received will be posted without change to http:// www.regulations.gov, including any personal information provided. Please see the Privacy Act heading below. Privacy Act: Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT’s complete Privacy Act Statement in the Federal Register published on April 11, 2000 (65 FR 19477–78), or at http://www.dot.gov/ privacy.html. Docket: For access to the docket to read background documents or comments received, go to http:// www.regulations.gov or the street address listed above. Follow the online instructions for accessing the dockets. FOR FURTHER INFORMATION CONTACT: Santiago Navarro or George Soodoo, NHTSA Office of Rulemaking, telephone 202–366–2720, fax 202–493– 2739. For legal issues, you may call Deirdre Fujita, NHTSA Office of Chief Counsel, telephone 202–366–2992, fax 202–366–3820. You may send mail to these officials at the National Highway Traffic Safety Administration, 1200 New Jersey Avenue, SE., West Building, Washington, DC, 20590. SUPPLEMENTARY INFORMATION: PO 00000 Frm 00029 Fmt 4702 Sfmt 4702 I. Background a. T-Type Spare Tires NHTSA regulates ‘‘T-type’’ spare tires under FMVSS No. 109, New pneumatic and certain specialty tires. A ‘‘T-type’’ spare tire refers to a type of spare tire that is manufactured to be used as a temporary substitute by the consumer for a conventional tire that failed. For Ttype spare tires, FMVSS No. 109 specifies tire dimensions and laboratory test requirements for bead unseating resistance, strength, endurance, and high speed performance. The standard also defines tire load ratings and specifies labeling requirements for the tires. NHTSA amended FMVSS No. 109 to permit the manufacture of T-type (then known as ‘‘60-psi’’) spare tires in 1977, describing them as ‘‘differ[ing] substantially in specification and construction from conventional tires * * * [with] a higher inflation pressure (60 psi), different dimensions, and a shorter treadwear life than conventional tires.’’ 1 The agency adopted endurance and high-speed performance tests, strength requirements, a resistance to bead unseating test, and a physical dimensions test, which were appropriate for the temporary use tires. Today’s NPRM proposes an amendment to the physical dimensions test. b. Physical Dimensions Test The purpose of the physical dimensions test is to measure the tire’s growth under inflated conditions and to determine if it is within allowable growth limits. If a tire exceeds allowable growth limits in the physical dimensions test, that indicates that there could be a safety risk from that tire not matching well with its rim, or not fitting well with the vehicle to which it is attached. Either of these mis-matches could present safety risks. All T-type tires must comply with growth limits as specified by S4.2.2.2 of FMVSS No. 109, which states that the tire’s actual section width and overall width may not exceed the specified section width 2 by more than 7 percent or 10 millimeters (0.4 inches), 1 42 FR 12869, 12870 (March 7, 1977). states that the measured section width ‘‘shall not exceed the section width specified in a submission made by an individual manufacturer, pursuant to S4.4.1(a) or in one of the publications described in S4.4.1(b) for its size designation and type * * *.’’ (Emphasis added.) The ‘‘publications described in S4.4.1(b)’’ refer to the year books published by various tire manufacturer associations, such as T&RA. As a practical matter, individual tire manufacturers generally submit section width information to associations like T&RA for inclusion in the year books, rather than submitting such information directly to NHTSA, although FMVSS No. 109 allows the latter option. 2 S4.2.2.2 E:\FR\FM\30OCP1.SGM 30OCP1

Agencies

[Federal Register Volume 74, Number 209 (Friday, October 30, 2009)]
[Proposed Rules]
[Pages 56153-56166]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-26212]


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

DEPARTMENT OF HOMELAND SECURITY

Coast Guard

46 CFR Part 401

[Docket No. USCG-2009-0883]
RIN 1625-AB39


Great Lakes Pilotage Rates--2010 Annual Review and Adjustment

AGENCY: Coast Guard, DHS.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: The Coast Guard proposes to update the rates for pilotage on 
the Great Lakes by 5.07% to generate sufficient revenue to cover 
allowable expenses, target pilot compensation, and return on 
investment. The proposed update reflects an August 1, 2010 increase in 
benchmark contractual wages and benefits and an adjustment for 
inflation. 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 November 30, 2009.

ADDRESSES: You may submit comments identified by Coast Guard docket 
number USCG-2009-0883 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. Paul M. Wasserman, Chief, Great Lakes Pilotage Branch, 
Commandant (CG-54122), U.S. Coast Guard, at 202-372-1535, by fax 202-
372-1929, or by e-mail at Paul.M.Wasserman@uscg.mil. If you have 
questions on viewing or submitting material to the docket, call Renee 
V. Wright, Program Manager, Docket Operations, telephone 202-366-9826.

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-2009-0883), indicate the specific section of this 
document to which each comment applies, and provide a reason for each 
suggestion or recommendation. You may submit your comments and material 
online or by fax, mail, or hand delivery, but please use only one of 
these means. We recommend that you include your name and a mailing 
address, an e-mail address, or a phone number in the body of your 
document so that we can contact you if we have questions regarding your 
submission.
    To submit your comment online, go to http://www.regulations.gov, 
click on the ``submit a comment'' box, which will then become 
highlighted in blue. In the ``Document Type'' drop down menu select 
``Proposed Rule'' and insert ``USCG-2009-0883'' in the ``Keyword'' box. 
Click ``Search'' then click on the balloon shape in the ``Actions'' 
column. If you submit your comments by mail or hand delivery, submit 
them in an unbound format, no larger than 8\1/2\ by 11 inches, suitable 
for copying and electronic filing. If you submit comments by mail and 
would like to know that they reached the Facility, please enclose a 
stamped, self-addressed postcard or envelope.
    We will consider all comments and material received during the 
comment period and may change this proposed rule based on your 
comments.

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, 
click on the ``read comments'' box, which will then become highlighted 
in blue. In the ``Keyword'' box insert ``USCG-2009-0883'' and click 
``Search.'' Click the ``Open Docket Folder'' in the ``Actions'' column. 
If you do not have access to the internet, you may view the docket 
online by visiting the Docket Management Facility in Room W12-140 on 
the ground floor of the Department of Transportation West Building, 
1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 
p.m., Monday through Friday, except Federal holidays. We have an 
agreement with the Department of Transportation to use the Docket 
Management Facility.

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 Marine Information for Safety and Law Enforcement
NAICS North American Industry Classification System

[[Page 56154]]

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). Since then, rates have been 
reviewed under Appendix C and adjusted annually: 2007 (72 FR 53158, 
Sep. 18, 2007); 2008 (interim rule 73 FR 15092, Mar. 21, 2008; final 
rule 74 FR 220, Jan. 5, 2009); 2009 (74 FR 18669, Jul. 21, 2009). The 
present rulemaking proposes a rate adjustment for the 2010 shipping 
season, based on an Appendix C review. At the conclusion of this 
ratemaking cycle and during the latter portion of the 2010 navigation 
season, we anticipate publishing an NPRM proposing a rate adjustment 
based upon an Appendix A 5-year review and full audit of the pilot 
association books and records.

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 
2010, and then discusses in detail how the proposed changes were 
calculated under Appendix C.
    We are proposing an increase of 5.07% across all Districts over the 
last pilotage rate adjustment. This reflects an August 1, 2010, 
increase in benchmark contractual wages and benefits and an inflation 
adjustment. This rate increase would not go into effect until August 1, 
2010. Actual rate increases vary by Area, and are summarized in Table 
1.

                     Table 1--2010 Area Rate Changes
------------------------------------------------------------------------
                                                            Then the
                                                            proposed
                                                           percentage
          If pilotage service is required in:            increases over
                                                        the current rate
                                                               is:
------------------------------------------------------------------------
Area 1 (Designated waters)............................              4.65
Area 2 (Undesignated waters)..........................              5.33
Area 4 (Undesignated waters)..........................              5.47
Area 5 (Designated waters)............................              4.96
Area 6 (Undesignated waters)..........................              5.27
Area 7 (Designated waters)............................              4.73
Area 8 (Undesignated waters)..........................              5.17
Overall Rate Change (percentage change in overall                   5.07
 prospective unit costs/base unit costs; see Table 18)
------------------------------------------------------------------------


[[Page 56155]]

    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 
5.07% 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 2009 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 2010 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. Also, 
please note that in previous rulemakings we calculated an expense 
multiplier for each District. This was unnecessary because Appendix C 
calculations are based on Area figures, not District figures. District 
figures, where they are shown in the following tables, now reflect only 
the arithmetical totals for each of the District's Areas.
    Step 1: Calculate the total economic cost for the base period. In 
this step, for each Area, we add the total cost of target pilot 
compensation, all other recognized expenses, and the return element 
(net income plus interest). We divide this sum by the total bridge 
hours for each Area. The result is the cost in each Area of providing 
pilotage service per bridge hour for the base period. Tables 2 through 
4 summarize the Step 1 calculations:

                   Table 2--Total Economic Cost for Base Period (2009), Areas in District One
----------------------------------------------------------------------------------------------------------------
                                                          Area 1 St.          Area 2 Lake       Total* District
                                                        Lawrence River          Ontario               One
----------------------------------------------------------------------------------------------------------------
Base operating expense (less base return element)...            $538,155            $547,489          $1,085,644
Base target pilot compensation......................        + $1,617,955          + $981,589        + $2,599,544
Base return element.................................           + $10,763           + $16,425           + $27,188
                                                     -----------------------------------------------------------
    Subtotal\*\.....................................        = $2,166,873        = $1,545,503        = $3,712,376
Base bridge hours...................................             / 5,203             / 5,650            / 10,853
Base cost per bridge hour...........................           = $416.47           = $273.54           = $342.06
----------------------------------------------------------------------------------------------------------------
*As explained in the text preceding Step 1, District totals have been expressed differently from previous
  rulemakings. This accounts for slight differences between the District totals shown in Table 16 of the 2009
  final rule and the District totals shown in this table.


                   Table 3--Total Economic Cost for Base Period (2009), Areas in District Two
----------------------------------------------------------------------------------------------------------------
                                                                           Area 5 Southeast
                                                       Area 4 Lake Erie      Shoal to Port      Total* District
                                                                               Huron, MI              Two
----------------------------------------------------------------------------------------------------------------
Base operating expense..............................            $502,087            $789,202          $1,291,289
Base target pilot compensation......................          + $785,271        + $1,617,955        + $2,403,226
Base return element.................................           + $25,104           + $31,568           + $56,672
                                                     -----------------------------------------------------------
    Subtotal........................................        = $1,312,463        = $2,438,725        = $3,751,188
Base bridge hours...................................             / 7,320             / 5,097            / 12,417
Base cost per bridge hour...........................           = $179.30           = $478.46           = $302.10
----------------------------------------------------------------------------------------------------------------
*See footnote to Table 2.


                  Table 4--Total Economic Cost for Base Period (2009), Areas in District Three
----------------------------------------------------------------------------------------------------------------
                                  Area 6 Lakes Huron   Area 7 St. Mary's      Area 8 Lake       Total* District
                                     and Michigan            River             Superior              Three
----------------------------------------------------------------------------------------------------------------
Base operating expense..........            $814,358            $398,461            $641,580          $1,854,399
Base target pilot compensation..        + $1,570,542        + $1,078,637        + $1,374,224        + $4,023,403
Base return element.............           + $32,574           + $11,954           + $19,247           + $63,776
                                 -------------------------------------------------------------------------------
    Subtotal....................        = $2,417,474        = $1,489,052        = $2,035,052        = $5,941,578

[[Page 56156]]

 
Base bridge hours...............            / 13,406             / 3,259            / 11,630            / 28,295
Base cost per bridge hour.......           = $180.33           = $456.90           = $174.98           = $209.99
----------------------------------------------------------------------------------------------------------------
*See footnote to Table 2.

    Step 2. Calculate the expense multiplier. In this step, for each 
Area, we add the base operating expense and the base return element. 
Then, we divide the sum by the base target pilot compensation to get 
the expense multiplier for each Area. Tables 5 through 7 show the Step 
2 calculations.

                               Table 5--Expense Multiplier, Areas in District One
----------------------------------------------------------------------------------------------------------------
                                                          Area 1 St.          Area 2 Lake
                                                        Lawrence River          Ontario       Total District One
----------------------------------------------------------------------------------------------------------------
Base operating expense..............................            $538,155            $547,489          $1,085,644
Base return element.................................           + $10,763           + $16,425           + $27,188
                                                     -----------------------------------------------------------
    Subtotal........................................          = $548,918          = $563,914        = $1,112,832
Base target pilot compensation......................        / $1,617,955          / $981,589          $2,599,544
Expense multiplier..................................             0.33927             0.57449                 n/a
----------------------------------------------------------------------------------------------------------------


                               Table 6--Expense Multiplier, Areas in District Two
----------------------------------------------------------------------------------------------------------------
                                                                           Area 5 Southeast
                                                       Area 4 Lake Erie      Shoal to Port    Total District Two
                                                                               Huron, MI
----------------------------------------------------------------------------------------------------------------
Base operating expense..............................            $502,087            $789,202          $1,291,289
Base return element.................................           + $25,104           + $31,568           + $56,672
                                                     -----------------------------------------------------------
Subtotal............................................          = $527,192          = $820,770        = $1,347,962
Base target pilot compensation......................          / $785,271        / $1,617,955          $2,403,226
Expense multiplier..................................             0.67135             0.50729                 n/a
----------------------------------------------------------------------------------------------------------------


                              Table 7--Expense Multiplier, Areas in District Three
----------------------------------------------------------------------------------------------------------------
                                  Area 6 Lakes Huron   Area 7 St. Mary's      Area 8 Lake       Total District
                                     and Michigan            River             Superior              Three
----------------------------------------------------------------------------------------------------------------
Base operating Expense..........            $814,358            $398,461            $641,580          $1,854,399
Base return element.............           + $32,574           + $11,954           + $19,247           + $63,776
                                 -------------------------------------------------------------------------------
    Subtotal....................          = $846,932          = $410,415          = $660,828        = $1,918,175
Base target pilot compensation..        / $1,570,542        / $1,078,637        / $1,374,224          $4,023,403
Expense multiplier..............             0.53926             0.38049             0.48087                 n/a
----------------------------------------------------------------------------------------------------------------

    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. 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.
    As of May 2009, there are two current AMOU contracts, which we 
designate Agreement A and Agreement B. Agreement A applies to vessels 
operated by Key Lakes, Inc., and Agreement B applies to all vessels 
operated by American Steamship Co. and Mittal Steel USA, Inc.
    Both Agreement A and Agreement B provide for a 3% wage increase 
effective August 1, 2010. Under Agreement A, the daily wage rate will 
be increased from $262.73 to $270.61. Under Agreement B, the daily wage 
rate will be increased from $323.86 to $333.57.
    To calculate monthly wages, we apply Agreement A and Agreement B 
monthly multipliers of 54.5 and 49.5, respectively, to the daily rate.

[[Page 56157]]

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, 2010.

                             Table 8--Wages
------------------------------------------------------------------------
                                                           Pilots on
                                       Pilots on       designated waters
        Monthly component            undesignated       (undesignated x
                                        waters               150%)
------------------------------------------------------------------------
AGREEMENT A:
$270.61 daily rate x 54.5 days..             $14,748             $22,123
AGREEMENT A:
Monthly total x 9 months = total            $132,735            $199,103
 wages..........................
AGREEMENT B:
    $333.57 daily rate x 49.5                $16,512             $24,768
     days.......................
AGREEMENT B:
    Monthly total x 9 months =              $148,608            $222,912
     total wages................
------------------------------------------------------------------------

    Both Agreements A and B include a health benefits contribution rate 
of $88.76 effective August 1, 2010. 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, 2010.

                            Table 9--Benefits
------------------------------------------------------------------------
                                       Pilots on
        Monthly component            undesignated          Pilots on
                                        waters         designated waters
------------------------------------------------------------------------
AGREEMENT A:
    Employer contribution,                   $737.42           $1,106.13
     401(K) plan (Monthly Wages
     x 5%)......................
    Pension = $33.35 x 45.5 days           $1,517.43           $1,517.43
    Health = $88.76 x 45.5 days.           $4,038.58           $4,038.58
AGREEMENT B:
    Employer contribution,                   $825.60           $1,238.40
     401(K) plan (Monthly Wages
     x 5%)......................
    Pension = $43.55 x 45.5 days           $1,981.53           $1,981.53
    Health = $88.76 x 45.5 days.           $4,038.58           $4,038.58
AGREEMENT A:
    Monthly total benefits......         = $6,293.42         = $6,662.13
AGREEMENT A:
    Monthly total benefits x 9             = $56,641           = $59,959
     months.....................
AGREEMENT B:
    Monthly total benefits......         = $6,845.71         = $7,258.51
AGREEMENT B:
    Monthly total benefits x 9             = $61,611           = $65,327
     months.....................
------------------------------------------------------------------------


                   Table 10--Total Wages and Benefits
------------------------------------------------------------------------
                                       Pilots on
                                     undesignated          Pilots on
                                        waters         designated waters
------------------------------------------------------------------------
AGREEMENT A: Wages..............            $132,735            $199,103
AGREEMENT A: Benefits...........            +$56,641            +$59,959
AGREEMENT A: Total..............          = $189,376          = $259,062
AGREEMENT B: Wages..............            $148,608            $222,912
AGREEMENT B: Benefits...........            +$61,611            +$65,327
AGREEMENT B: Total..............          = $210,219          = $288,239
------------------------------------------------------------------------

    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 56158]]



                                                     Table 11--Deadweight Tonnage by AMOU Agreement
--------------------------------------------------------------------------------------------------------------------------------------------------------
                 Company                                        Agreement A                                             Agreement B
--------------------------------------------------------------------------------------------------------------------------------------------------------
American Steamship Company..............  ......................................................  815,600
Mittal Steel USA, Inc...................  ......................................................  38,826
Key Lakes, Inc..........................  361,385...............................................  ......................................................
                                         ---------------------------------------------------------------------------------------------------------------
    Total tonnage, each agreement.......  361,385...............................................  854,426
                                         ---------------------------------------------------------------------------------------------------------------
Percent tonnage, each agreement.........  361,385 / 1,215,811 = 29.7238%........................  854,426 / 1,215,811 = 70.2762%
--------------------------------------------------------------------------------------------------------------------------------------------------------

    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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Undesignated waters                                      Designated waters
--------------------------------------------------------------------------------------------------------------------------------------------------------
AGREEMENT A:
    Total wages and benefits x percent    $189,376 x 29.7238% = $56,290.........................  $259,062 x 29.7238% = $77,003
     tonnage.
AGREEMENT B:
    Total wages and benefits x percent    $210,219 x 70.2762% = $147,734........................  $288,239 x 70.2762% = $202,563
     tonnage.
    Total weighted average wages and      $56,290 + $147,734 = $204,024.........................  $77,003 + $202,563 = $279,566
     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 for ratemaking 
purposes in each Area by dividing each Area's projected bridge hours, 
either by 1,000 (designated waters) or by 1,800 (undesignated waters).
    Bridge hours are the number of hours a pilot is aboard a vessel 
providing pilotage service. Projected bridge hours are based on the 
vessel traffic that pilots are expected to serve. Based on historical 
data and information provided by pilots and industry, we project that 
vessel traffic in the 2010 navigation season, in all Areas, will remain 
unchanged from the 2009 projections noted in Table 13 of the 2009 final 
rule.
    Table 13, below, shows the projected bridge hours needed for each 
Area, and the total number of pilots needed for ratemaking purposes 
after dividing those figures either by 1,000 or 1,800. As in 2008 and 
2009, and for the same reasons, we rounded up to the next whole pilot 
except in Area 2 where we rounded up from 3.14 to 5, and in Area 4 
where we rounded down from 4.07 to 4.

                                        Table 13--Number of Pilots Needed
----------------------------------------------------------------------------------------------------------------
                                                                           Divided by 1,000
                                                                              (Designated
                    Pilotage area                       Projected 2010     waters) or 1,800      Pilots needed
                                                         bridge hours        (undesignated       (total = 40)
                                                                                waters)
----------------------------------------------------------------------------------------------------------------
Area 1..............................................               5,203               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
----------------------------------------------------------------------------------------------------------------

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

                                  Table 14--Projected Target Pilot Compensation
----------------------------------------------------------------------------------------------------------------
                                                                             Multiplied by
                    Pilotage area                        Pilots needed      target rate of     Projected target
                                                         (total = 40)        compensation     pilot compensation
----------------------------------------------------------------------------------------------------------------
Area 1..............................................                   6          x $279,566          $1,677,397
Area 2..............................................                   5           x 204,024           1,020,120

[[Page 56159]]

 
Total, District One.................................                  11                 n/a           2,697,517
Area 4..............................................                   4           x 204,024             816,096
Area 5..............................................                   6           x 279,566           1,677,397
Total, District Two.................................                  10                 n/a           2,493,493
Area 6..............................................                   8           x 204,024           1,632,191
Area 7..............................................                   4           x 279,566           1,118,265
Area 8..............................................                   7           x 204,024           1,428,167
Total, District Three...............................                  19                 n/a           4,178,623
----------------------------------------------------------------------------------------------------------------

    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 Operating Expense
----------------------------------------------------------------------------------------------------------------
                                                       Projected target      Multiplied by         Projected
                    Pilotage area                     pilot compensation  expense multiplier   operating expense
----------------------------------------------------------------------------------------------------------------
Area 1..............................................          $1,677,397           x 0.33927          = $569,084
Area 2..............................................           1,020,120           x 0.57449           = 586,050
                                                     -----------------------------------------------------------
    Total, District One.............................           2,697,517                 n/a         = 1,155,134
                                                     -----------------------------------------------------------
Area 4..............................................             816,096           x 0.67135           = 547,886
Area 5..............................................           1,677,397           x 0.50729           = 850,924
                                                     -----------------------------------------------------------
    Total, District Two.............................           2,493,493                 n/a         = 1,398,810
                                                     -----------------------------------------------------------
Area 6..............................................           1,632,191           x 0.53926           = 880,177
Area 7..............................................           1,118,265           x 0.38049           = 425,493
Area 8..............................................           1,428,167           x 0.48087           = 686,767
    Total, District Three...........................           4,178,623                 n/a         = 1,992,438
----------------------------------------------------------------------------------------------------------------

    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 1.037 inflation factor, 
reflecting an average inflation rate of 3.7% in ``Midwest Economy--
Consumer Prices'' between 2007 and 2008, the latest years for which 
data are available. Table 16 shows this calculation and the projected 
total economic cost.

                                     Table 16--Projected Total Economic Cost
----------------------------------------------------------------------------------------------------------------
                                                              B. Increase,
                                            A. Projected      multiplied by     C. Projected      D. Projected
              Pilotage area                   operating     inflation factor    target pilot     total economic
                                               expense        (= A x 1.037)     compensation     cost (= B + C)
----------------------------------------------------------------------------------------------------------------
Area 1..................................          $569,084          $590,140        $1,677,397        $2,267,537
Area 2..................................           586,050           607,733         1,020,120         1,627,853
                                         -----------------------------------------------------------------------
    Total, District One.................         1,155,134         1,197,874         2,697,517         3,895,390
                                         -----------------------------------------------------------------------
Area 4..................................           547,886           568,158           816,096         1,384,253
Area 5..................................           850,924           882,408         1,677,397         2,559,805
                                         -----------------------------------------------------------------------
    Total, District Two.................         1,398,810         1,450,566         2,493,493         3,944,058
                                         -----------------------------------------------------------------------
Area 6..................................           880,177           912,744         1,632,191         2,544,935
Area 7..................................           425,493           441,236         1,118,265         1,559,501
Area 8..................................           686,767           712,178         1,428,167         2,140,345
                                         -----------------------------------------------------------------------
    Total, District Three...............         1,992,438         2,066,158         4,178,623         6,244,781
----------------------------------------------------------------------------------------------------------------

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

[[Page 56160]]



                                           Table 17--Total Unit Costs
----------------------------------------------------------------------------------------------------------------
                                                                                                   Prospective
                                                              A. Projected      B. Projected      (total) unit
                       Pilotage area                         total economic      2009 bridge        costs  (A
                                                                  cost              hours         divided by B)
----------------------------------------------------------------------------------------------------------------
Area 1....................................................        $2,267,537             5,203           $435.81
Area 2....................................................         1,627,853             5,650            288.12
                                                           -----------------------------------------------------
    Total, District One...................................         3,895,390            10,853            358.92
                                                           -----------------------------------------------------
Area 4....................................................         1,384,253             7,320            189.11
Area 5....................................................         2,559,805             5,097            502.22
                                                           -----------------------------------------------------
    Total, District Two...................................         3,944,058            12,417            317.63
                                                           -----------------------------------------------------
Area 6....................................................         2,544,935            13,406            189.84
Area 7....................................................         1,559,501             3,259            478.52
Area 8....................................................         2,140,345            11,630            184.04
                                                           -----------------------------------------------------
    Total, District Three.................................         6,244,781            28,295            220.70
                                                           =====================================================
        Overall...........................................        14,084,230            51,565            273.14
----------------------------------------------------------------------------------------------------------------

    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 in Unit Costs
----------------------------------------------------------------------------------------------------------------
                                                                                                  C. Percentage
                                                                                                change from base
                       Pilotage area                         A. Prospective    B. Base period   (A divided by B;
                                                               unit costs        unit costs     result expressed
                                                                                                 as percentage)
----------------------------------------------------------------------------------------------------------------
Area 1....................................................           $435.81           $416.47              4.65
Area 2....................................................            288.12            273.54              5.33
                                                           -----------------------------------------------------
    Total, District One...................................            358.92            342.06              4.93
                                                           -----------------------------------------------------
Area 4....................................................            189.11            179.30              5.47
Area 5....................................................            502.22            478.46              4.96
                                                           -----------------------------------------------------
    Total, District Two...................................            317.63            302.10              5.14
                                                           -----------------------------------------------------
Area 6....................................................            189.84            180.33              5.27
Area 7....................................................            478.52            456.90              4.73
Area 8....................................................            184.04            174.98              5.17
                                                           -----------------------------------------------------
    Total, District Three.................................            220.70            209.99              5.10
                                                           =====================================================
        Overall...........................................            273.14            259.97              5.07
----------------------------------------------------------------------------------------------------------------

    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*
----------------------------------------------------------------------------------------------------------------
                                                 B. Percentage    C. Increase in
           Pilotage             A. Base period   change in unit   base rate (A x     D. Adjusted rate (A + C,
                                     rate            costs             B%)          rounded to nearest dollar)
----------------------------------------------------------------------------------------------------------------
Area                                              (Multiplying
                                                     Factor)
----------------------------------------------------------------------------------------------------------------
Area 1:                        ...............  4.65 (1.0465)..  ...............  ..............................
    --Basic pilotage.........  $16.95/km,       ...............  $0.78/km, $1.39/ $17.73/km, $31.38/mi.
                                $29.99/mi.                        mi.
    --Each lock transited....  375.47.........  ...............  17.44..........  393.
    --Harbor movage..........  1,229.41.......  ...............  57.11..........  1,287.
    --Minimum basic rate, St.  820.04.........  ...............  38.09..........  858.
     Lawrence River.

[[Page 56161]]

 
    --Maximum rate, through    3,599.58.......  ...............  167.20.........  3,767.
     trip.
Area 2:                        ...............  5.33 (1.0533)..  ...............  ..............................
    --6-hr. period...........  817.63.........  ...............  43.56..........  861.
    --Docking or undocking...  779.92.........  ...............  41.55..........  821.
Area 4:                        ...............  5.47 (1.0547)..  ...............  ..............................
    --6-hr. period...........  722.05.........  ...............  39.49..........  762.
    --Docking or undocking...  556.46.........  ...............  30.44..........  587.
    --Any point on Niagara     1,420.45.......  ...............  77.69..........  1,498.
     River below Black Rock
     Lock.
Area 5 between any point on    ...............  4.96 (1.0496)..  ...............  ..............................
 or in:
    --Toledo or any point on   1,299.46.......  ...............  64.51..........  1,364.
     Lake Erie W. of
     Southeast Shoal.
    --Toledo or any point on   2,198.99.......  ...............  109.16.........  2,308.
     Lake Erie W. of
     Southeast Shoal &
     Southeast Shoal.
    --Toledo or any point on   2,855.20.......  ...............  141.74.........  2,997.
     Lake Erie W. of
     Southeast Shoal &
     Detroit River.
    --Toledo or any point on   2,198.99.......  ...............  109.16.........  2,308.
     Lake Erie W. of
     Southeast Shoal &
     Detroit Pilot Boat.
    --Port Huron Change Point  3,829.80.......  ...............  190.12.........  4,020.
     & Southeast Shoal (when
     pilots are not changed
     at the Detroit Pilot
     Boat).
    --Port Huron Change Point  4,436.82.......  ...............  220.26.........  4,657.
     & Toledo or any point on
     Lake Erie W. of
     Southeast Shoal (when
     pilots are not changed
     at the Detroit Pilot
     Boat).
    --Port Huron Change Point  2,877.20.......  ...............  142.83.........  3,020.
     & Detroit River.
    --Port Huron Change Point  2,237.82.......  ...............  111.09.........  2,349.
     & Detroit Pilot Boat.
    --Port Huron Change Point  1,590.68.......  ...............  78.97..........  1,670.
     & St. Clair River.
    --St. Clair River........  1,299.46.......  ...............  64.51..........  1,364.
    --St. Clair River &        3,829.80.......  ...............  190.12.........  4,020.
     Southeast Shoal (when
     pilots are not changed
     at the Detroit Pilot
     Boat).
    --St. Clair River &        2,877.20.......  ...............  142.83.........  3,020.
     Detroit River/Detroit
     Pilot Boat.
    --Detroit, Windsor, or     1,299.46.......  ...............  64.51..........  1,364.
     Detroit River.
    --Detroit, Windsor, or     2,198.99.......  ...............  109.16.........  2,308.
     Detroit River &
     Southeast Shoal.
    --Detroit, Windsor, or     2,855.20.......  ...............  141.74.........  2,997.
     Detroit River & Toledo
     or any point on Lake
     Erie W. of Southeast
     Shoal.
    --Detroit, Windsor, or     2,877.20.......  ...............  142.83.........  3,020.
     Detroit River & St.
     Clair River.
    --Detroit Pilot Boat &     1,590.68.......  ...............  78.97..........  1,670.
     Southeast Shoal.
    --Detroit Pilot Boat &     2,198.99.......  ...............  109.16.........  2,308.
     Toledo or any point on
     Lake Erie W. of
     Southeast Shoal.
    --Detroit Pilot Boat &     2,877.20.......  ...............  142.83.........  3,020.
     St. Clair River.
Area 6:                        ...............  5.27 (1.0527)..  ...............  ..............................
    --6-hr. period...........  622.93.........  ...............  32.84..........  656.
    --Docking or undocking...  591.72.........  ...............  31.20..........  623.
Area 7 between any point on    ...............  4.73 (1.0473)..  ...............  ..............................
 or in:
    --Gros Cap & De Tour.....  2,442.98.......  ...............  115.57.........  2,559.
    --Algoma Steel Corp.       2,442.98.......  ...............  115.57.........  2,559.
     Wharf, Sault Ste. Marie,
     Ont. & De Tour.

[[Page 56162]]

 
    --Algoma Steel Corp.       920.03.........  ...............  43.52..........  964.
     Wharf, Sault Ste. Marie,
     Ont. & Gros Cap.
    --Any point in Sault Ste.  2,047.67.......  ...............  96.87..........  2,145.
     Marie, Ont., except the
     Algoma Steel Corp. Wharf
     & De Tour.
    --Any point in Sault Ste.  920.03.........  ...............  43.52..........  964.
     Marie, Ont., except the
     Algoma Steel Corp. Wharf
     & Gros Cap.
    --Sault Ste. Marie, MI &   2,047.67.......  ...............  96.87..........  2,145.
     De Tour.
    --Sault Ste. Marie, MI &   920.03.........  ...............  43.52..........  964.
     Gros Cap.
    --Harbor movage..........  920.03.........  ...............  43.52..........  964
Area 8:                        ...............  5.17 (1.0517)..  ...............  ..............................
    --6 hr. period...........  549.44.........  ...............  28.42..........  578.
    --Docking or undocking...  522.20.........  ...............  27.02..........  549.
----------------------------------------------------------------------------------------------------------------
* 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 5.07% 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 2010 shipping 
season to generate sufficient revenue to cover allowable expenses, 
target pilot compensation, and returns on investment.
    This proposed rule would implement a 5.07 percent overall rate 
adjustment for the Great Lakes system over the current rate as adjusted 
in the 2009 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 2006-2008 vessel arrival data from the Coast Guard's Marine 
Information for Safety and Law Enforcement (MISLE) system to estimate 
the average annual number of vessels affected by the rate adjustment to 
be 208 vessels that journey into the Great Lakes system. These vessels 
entered the Great Lakes by transiting through or in part of at least 
one of the three pilotage Districts before leaving the Great Lakes

[[Page 56163]]

system. These vessels often make more than one distinct stop, docking, 
loading, and unloading at facilities in Great Lakes ports. Of the total 
trips for the 208 vessels, there were approximately 923 annual U.S. 
port arrivals before the vessels left the Great Lakes system, based on 
2006-2008 vessel data from MISLE.
    The impact of the rate adjustment to shippers is estimated from 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 2009 rate 
adjustment and the total projected revenue needed to cover costs in 
this proposed rule for 2010. Table 20 details additional costs or 
savings by area and district.

           Table 20--Rate Adjustment and Additional Impact of Proposed Rule ($U.S.; non-discounted)\1\
----------------------------------------------------------------------------------------------------------------
                                                       Total                           Total        Additional
                                                     projected     Proposed rate     projected      revenue or
                                                    expenses in