Great Lakes Pilotage: 2011 Annual Review and Adjustment, 6351-6364 [2011-2456]

Download as PDF 6351 Federal Register / Vol. 76, No. 24 / Friday, February 4, 2011 / Rules and Regulations and pests, Reporting and recordkeeping requirements. PART 180—[AMENDED] Dated: January 24, 2011. Lois Rossi, Director, Registration Division, Office of Pesticide Programs. 2. In § 180.910, the table is amended by adding alphabetically the following inert ingredient: ■ ■ 1. The authority citation for part 180 continues to read as follows: Authority: 21 U.S.C. 321(q), 346a and 371. Therefore, 40 CFR chapter I is amended as follows: * Inert ingredients * * * * Limits * * * * (S,S)-Ethylenediamine disuccinic acid trisodium salt (CAS Reg. No. 178949– 82–1). * § 180.910 Inert ingredients used pre- and post-harvest; exemptions from the requirement of a tolerance. * * Uses * * Sequestrant or chelating agent. * * * * * II. Regulatory History [Docket No. USCG–2010–0517] If you have questions on this rule, call or e-mail Mr. Paul Wasserman, Chief, Great Lakes Pilotage Division, Commandant (CG–5522), Coast Guard; telephone 202– 372–1535, or e-mail Paul.M.Wasserman@uscg.mil. If you have questions on viewing the docket, call Renee V. Wright, Program Manager, Docket Operations, telephone 202–366– 9826. RIN 1625–AB48 SUPPLEMENTARY INFORMATION: The basis of this rulemaking is the Great Lakes Pilotage Act of 1960 (‘‘the Act’’) (46 U.S.C. chapter 93), which requires vessels engaged in foreign trade to use U.S. registered pilots while transiting the St. Lawrence Seaway and the Great Lakes system. The Act also 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 Secretary’s duties and authority under the Act have been delegated to the Coast Guard, and Coast Guard regulations implementing the Act appear in parts 401 through 404 of Title 46, Code of Federal Regulations (CFR). The Act requires annual pilotage rate reviews to be completed by March 1 of each year, with a ‘‘full ratemaking’’ to establish new base rates at least once every five years. The purpose of this rulemaking is to comply with 46 U.S.C. 9303(f) by applying the ratemaking methodology described in Appendix C to 46 CFR part 404, which will satisfy the requirement for the annual pilotage rate review for 2011. FOR FURTHER INFORMATION CONTACT: [FR Doc. 2011–2399 Filed 2–3–11; 8:45 am] BILLING CODE 6560–50–P DEPARTMENT OF HOMELAND SECURITY Coast Guard 46 CFR Part 401 Table of Contents for Preamble Great Lakes Pilotage: 2011 Annual Review and Adjustment Coast Guard, DHS. Final rule. AGENCY: ACTION: The Coast Guard is increasing the rates for pilotage service on the Great Lakes to generate sufficient revenue to cover allowable expenses, target pilot compensation, and return on investment. This increase reflects a projected August 1, 2011, increase in benchmark contractual wages and benefits and an adjustment for deflation. This rule promotes the Coast Guard’s strategic goal of maritime safety. DATES: This final rule is effective August 1, 2011. ADDRESSES: Comments and material received from the public, as well as documents mentioned in this preamble as being available in the docket, are part of docket USCG–2010–0517 and are available for inspection or copying at the Docket Management Facility (M–30), U.S. Department of Transportation, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. You may also find this docket on the Internet by going to http://www.regulations.gov, inserting USCG–2010–0517 in the ‘‘Keyword’’ box, and then clicking ‘‘Search.’’ jdjones on DSK8KYBLC1PROD with RULES SUMMARY: VerDate Mar<15>2010 14:40 Feb 03, 2011 Jkt 223001 I. Abbreviations II. Regulatory History III. Basis and Purpose IV. Background V. Discussion of Comments and Changes VI. Discussion of the Final Rule A. Summary B. Calculating the Rate Adjustment VII. 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. Abbreviations AMOU American Maritime Officer Union CFR Code of Federal Regulations FR Federal Register GLPAC Great Lakes Pilotage Advisory Committee MISLE Marine Information for Safety, and Law Enforcement NAICS North American Industry Classification System NPRM Notice of Proposed Rulemaking NTTAA National Technology Transfer and Advancement Act U.S.C. United States Code PO 00000 Frm 00041 Fmt 4700 Sfmt 4700 On August 19, 2010, we published a notice of proposed rulemaking (NPRM) entitled ‘‘Great Lakes Pilotage Rates: 2011 Annual Review and Adjustment’’ in the Federal Register (75 FR 51191). We received three comments on the proposed rule. No public meeting was requested and none was held. III. Basis and Purpose IV. Background 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 E:\FR\FM\04FER1.SGM 04FER1 jdjones on DSK8KYBLC1PROD with RULES 6352 Federal Register / Vol. 76, No. 24 / Friday, February 4, 2011 / Rules and Regulations important to note that, while we set rates, we do not control the actual number of pilots an association maintains, so long as the association is able to provide safe, efficient, and reliable pilotage service, nor do we control the actual compensation that pilots receive. The actual compensation 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 Act, 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 Act, 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). Our pilotage regulations implement the Act’s requirement for annual reviews of pilotage rates and a full ratemaking at least once every five years. 46 CFR 404.1. To assist in calculating pilotage rates, the regulations require pilotage associations to submit annual financial statements prepared by certified public accounting firms. In addition, every fifth year, in connection with the full ratemaking, we contract 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, we generate the pilotage rates using Appendix A to 46 CFR Part 404. The last Appendix A review was concluded in 2006 (71 FR 16501, April 3, 2006). Between the five-year full ratemaking intervals, we annually review the pilotage rates using Appendix C to Part 404 and adjust rates when deemed appropriate. We conducted Appendix C reviews in 2007, 2008, 2009, and 2010 and increased rates in each year. The VerDate Mar<15>2010 14:40 Feb 03, 2011 Jkt 223001 2010 final rule was published on February 23, 2010 (75 FR 7958) and took effect on August 1, 2010. The terms and formulas used in Appendix A and Appendix C are defined in Appendix B to Part 404. This final rule concludes the annual Appendix C rate review for 2011 and increases rates over those that took effect August 1, 2010. V. Discussion of Comments and Changes We received comments from three persons during the NPRM public comment period. Comments outside the scope of the rule. One commenter made several statements which, although they are outside the scope of this rule, require correction or clarification. The commenter said we improperly base our ratemaking calculations on union contracts, do not allow for consultation with pilots or industry, provide no meaningful opportunity for appealing decisions made by the Director, and no longer ‘‘maintain’’ the Great Lakes Pilotage Advisory Committee (GLPAC). The use of union contracts in calculating pilot benefits and compensation as part of the overall rate calculation is an explicit requirement of the current methodology. 46 CFR 404.5, 46 CFR part 404, App. A, step 2.A. All of our ratemakings are subject to notice and comment procedure, providing ample opportunity for input from pilots, industry, and the general public. Decisions of the Director may be appealed pursuant to 46 CFR subpart 1.03, and ultimately all Coast Guard decisions are subject to judicial review. The Coast Guard has not only taken all necessary steps to maintain GLPAC, but in recent years we have sharpened our focus on using GLPAC to provide us with the type of consultation the commenter appears to have in mind. Congress established GLPAC specifically for that purpose. Ratemaking methodology. Two commenters recommended that we suspend any rate increase until the ratemaking methodology is reviewed and updated as needed. We requested public comments in 2009 on the need for, and content of, any change to that methodology, and we forwarded those comments to GLPAC (74 FR 35838, July 21, 2009). GLPAC has these comments under consideration, but no action can be taken before the March 1, 2011 deadline for establishing the annual rate adjustment for 2011. Pilot dispute. One commenter recommended we suspend any rate increase until a dispute between two of the pilotage associations is resolved. PO 00000 Frm 00042 Fmt 4700 Sfmt 4700 The subject matter of this comment is not within the scope of this rulemaking. Calculations. One commenter disagreed with the way we applied the methodology in calculating bridge hours and the number of pilots in Areas 4 and 5. We performed all calculations in accordance with Appendix C to Part 404. We used our forecast of bridge hour demand and the Director’s discretion to determine the number of pilots. As we stated in the NPRM (75 FR at 51197), this determination applied the same reasoning we have used since the 2008 ratemaking, which was explained in the 2008 final rule (74 FR 220, 221–22, Jan. 5, 2009) and also discussed at length in the 2009 ratemaking final rule (74 FR 35812, 35813–14, Jul. 21, 2009). One commenter said that our ratemaking is arbitrary and capricious because we count delay and detention in calculating bridge hours for Areas 6, 7, and 8 but not in Areas 4 and 5. Under Step 1 of the Appendix C methodology, we do not count pilot delay or detention in the calculation of bridge hours. No information was provided by the commenter to substantiate this claim, which runs counter to our discussion of bridge hour calculations in ratemaking documents over many years, and which repeats an allegation made in 2007 and refuted in that year’s interim rule: ‘‘The Coast Guard has never considered delay, detention, or travel time to be included in the definition of bridge hours and has never knowingly included these items in its bridge hour computations.’’ (72 FR 8117, February 23, 2007). We did not consider delay, detention, or travel time in our bridge hour computations for this final rule. VI. Discussion of the Final Rule A. Summary We are increasing pilotage rates in accordance with the methodology outlined in Appendix C to 46 CFR Part 404 effective August 1, 2011. The new rates are unchanged from what we proposed in the NPRM. Table 1 shows the new rates for each Area. TABLE 1—2011 AREA RATE CHANGES If pilotage service is required in: Area Area Area Area Area Area Area E:\FR\FM\04FER1.SGM 1 2 4 5 6 7 8 (Designated waters) ..... (Undesignated waters) (Undesignated waters) (Designated waters) ..... (Undesignated waters) (Designated waters) ..... (Undesignated waters) 04FER1 Then the percentage of increase over the current rate is: 3.57% 3.77 3.75 3.52 4.89 3.56 5.26 Federal Register / Vol. 76, No. 24 / Friday, February 4, 2011 / Rules and Regulations 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 6.51 percent in all areas based upon the calculations appearing at Tables 19 through 21, which follow. B. Calculating the Rate Adjustment The Appendix C ratemaking calculation involves eight steps: Step 1: Calculate the total economic costs for the base period (pilot compensation expense plus all other recognized expenses plus the return element, which is net income plus interest) 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 2010 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 estimate target pilot compensation. However, the current AMOU contracts expire in July 2011, and the Coast Guard has been informed that the contract negotiations will not begin until sometime after that, which is well after the pilotage statute requires that we establish a rate. Accordingly, we have reviewed the terms of both existing and past AMOU contracts and have projected, for the purpose of this ratemaking, that the AMOU contracts effective in 2011 would provide increases in compensation equal to 3%, which is the increase called for in the AMOU contracts over the past two years. We project all other benefits to remain fixed at current levels with the 6353 exception of medical plan contributions. Medical plan contributions have increased 10% per year from 2006 through 2010 in the current AMOU contracts. Thus, we forecast an increase of 10% over 2010 medical plan contributions for the AMOU contracts in 2011. Bridge hour projections for the 2011 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 rounding for presentation in charts. The rounding does not affect the integrity or truncate the actual value of all calculations in the ratemaking methodology described below. Step 1: Calculate the total economic cost for the base period. In this step, for each area, we add the total cost of target pilot compensation, all other recognized expenses, and the return element (net income plus interest). We divide this sum by the total bridge hours for each area. The result is the cost in each area of providing pilotage service per bridge hour for the base period. Tables 2 through 4 summarize the Step 1 calculations: TABLE 2—TOTAL ECONOMIC COST FOR BASE PERIOD (2010), AREAS IN DISTRICT ONE Area 1 St. Lawrence River Area 2 Lake Ontario Base operating expense .......................................................................................................................................... Base target pilot compensation ............................................................................................................................... Base return element ................................................................................................................................................ $578,569 + $1,677,397 + $11,571 $590,032 + $1,020,120 + $17,701 Subtotal ............................................................................................................................................................. = $2,267,537 = $1,627,853 Base bridge hours ................................................................................................................................................... Base cost per bridge hour ....................................................................................................................................... ÷ 5,203 = $435.81 ÷ 5,650 = $288.12 TABLE 3—TOTAL ECONOMIC COST FOR BASE PERIOD (2010), AREAS IN DISTRICT TWO Area 4 Lake Erie Area 5 Southeast Shoal to Port Huron, MI $541,103 + $816,096 + $27,055 $848,469 + $1,677,397 + $33,939 Subtotal ............................................................................................................................................................. jdjones on DSK8KYBLC1PROD with RULES Base operating expense .......................................................................................................................................... Base target pilot compensation ............................................................................................................................... Base return element ................................................................................................................................................ = $1,384,254 = $2,559,805 Base bridge hours ................................................................................................................................................... Base cost per bridge hour ....................................................................................................................................... ÷ 7,320 = $189.11 ÷ 5,097 = $502.22 VerDate Mar<15>2010 14:40 Feb 03, 2011 Jkt 223001 PO 00000 Frm 00043 Fmt 4700 Sfmt 4700 E:\FR\FM\04FER1.SGM 04FER1 6354 Federal Register / Vol. 76, No. 24 / Friday, February 4, 2011 / Rules and Regulations TABLE 4—TOTAL ECONOMIC COST FOR BASE PERIOD (2010), AREAS IN DISTRICT THREE Area 6 Lakes Huron and Michigan Area 7 St. Mary’s River Area 8 Lake Superior Base operating expense .............................................................................................................. Base target pilot compensation ................................................................................................... Base return element .................................................................................................................... $877,638 + $1,632,191 + $35,106 $428,384 + $1,118,265 + $12,852 $691,435 + $1,428,167 + $20,743 Subtotal ................................................................................................................................. = $2,544,935 = $1,559,501 = $2,140,345 Base bridge hours ....................................................................................................................... Base cost per bridge hour ........................................................................................................... ÷ 13,406 = $189.84 ÷ 3,259 = $478.52 ÷ 11,630 = $184.04 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 Base operating expense .......................................................................................................................................... Base return element ................................................................................................................................................ $578,569 + $11,571 $590,032 + $17,701 Subtotal ............................................................................................................................................................. = $590,140 = $607,733 Base target pilot compensation ............................................................................................................................... Expense multiplier ................................................................................................................................................... ÷ $1,677,397 0.35182 ÷ $1,020,120 0.59575 TABLE 6—EXPENSE MULTIPLIER, AREAS IN DISTRICT TWO Area 4 Lake Erie Area 5 Southeast Shoal to Port Huron, MI Base operating expense .......................................................................................................................................... Base return element ................................................................................................................................................ $541,103 + $27,055 $848,469 + $33,939 Subtotal ............................................................................................................................................................. = $568,158 = $882,408 Base target pilot compensation ............................................................................................................................... Expense multiplier ................................................................................................................................................... ÷ $816,096 0.69619 ÷ $1,677,397 0.52606 TABLE 7—EXPENSE MULTIPLIER, AREAS IN DISTRICT THREE Area 6 Lakes Huron and Michigan Area 7 St. Mary’s River Area 8 Lake Superior $877,638 + $35,106 $428,384 + $12,852 $691,435 + $20,743 Subtotal ................................................................................................................................. = $912,744 = $441,236 = $712,178 Base target pilot compensation ................................................................................................... Expense multiplier ....................................................................................................................... jdjones on DSK8KYBLC1PROD with RULES Base operating expense .............................................................................................................. Base return element .................................................................................................................... ÷ $1,632,191 0.55921 ÷ $1,118,265 0.39457 ÷ $1,428,167 0.49867 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. VerDate Mar<15>2010 14:40 Feb 03, 2011 Jkt 223001 (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 PO 00000 Frm 00044 Fmt 4700 Sfmt 4700 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 E:\FR\FM\04FER1.SGM 04FER1 Federal Register / Vol. 76, No. 24 / Friday, February 4, 2011 / Rules and Regulations 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 July 2010, 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 will expire on July 31, 2011. Based on the discussions with AMOU officials, these contracts are not expected to be negotiated until 2011. This does not provide sufficient time to incorporate new rates into the ratemaking process for the 2011 shipping season. The Coast Guard projects that when new AMOU contracts are negotiated in 2011, they will provide for a 3% wage increase effective August 1, 2011. This is in keeping with the recent contractual wage raises under the existing union contracts. Both 2009 and 2010 saw wage raises of 3%. Under Agreement A, we project that the daily wage rate would increase from $270.61 to $278.73. Under Agreement B, the daily wage rate would be increased from $333.58 to $343.59. All other benefits and calculations for these contracts are forecasted to remain identical to the current AMOU contracts, with the exception of the health benefit plan discussed below. The pension plan contribution, which has been a fixed amount, the 401k employers matching contribution of 5% of wages, which is also a set amount, and the monthly contract multipliers are all projected to remain fixed at current AMOU levels. These benefits have not 6355 changed their numerical or percentage values over the courses of the previous AMOU agreements still in effect. We do not project that the 2011 contracts will have any impact on these fixed costs. To calculate monthly wages, we apply Agreement A and Agreement B monthly multipliers of 54.5 and 49.5, respectively, to the daily rate. Agreement A’s 54.5 multiplier represents 30.5 average working days, 15.5 vacation days, 4 days for four weekends, 3 bonus days, and 1.5 holidays. Agreement B’s 49.5 multiplier represents 30.5 average working days, 16 vacation days, and 3 bonus days. To calculate average annual compensation, we multiply monthly figures by 9 months, the length of the Great Lakes shipping season. Table 8 shows new wage calculations based on Agreements A and B effective August 1, 2011. TABLE 8—WAGES Pilots on undesignated waters Monthly component Agreement A: $278.73 daily rate × 54.5 days ......................................................................................................................... Agreement A: Monthly total × 9 months = total wages ........................................................................................................... Agreement B: $343.59 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. On average, this benefit contribution has increased at a rate of 10% per year throughout the lives of the existing five-year contracts. Accordingly, for the purposes of the 2011 rate we project that when the new AMOU contracts are negotiated in 2011, this contribution would increase to $97.64 effective August 1, 2011. We project that Agreement A would continue to include a pension plan contribution rate of $33.35 per man-day. Agreement B would continue to include a pension plan contribution rate of $43.55 per man-day. Similarly, we expect both Agreements A and B to continue to provide a 5% 401k employer matching provision. Accordingly, for purposes of the 2011 rate, we will continue to use these values in calculating total pilot compensation. Currently, neither Pilots on designated waters (undesignated x 150%) $15,191 $22,786 136,716 205,074 17,008 25,511 153,068 229,602 Agreement A nor Agreement B includes a clerical contribution that appeared in earlier contracts, and we project that this would not be a feature of any new AMOU contracts negotiated in 2011. We project that the multiplier used to calculate monthly benefits would remain the same at 45.5 days. Table 9 shows new benefit calculations based on Agreements A and B, effective August 1, 2011. TABLE 9—BENEFITS Pilots on undesignated waters jdjones on DSK8KYBLC1PROD with RULES Monthly component Agreement A Employer contribution, 401k plan (Monthly Wages × 5%) ............................................................................... Pension = $33.35 × 45.5 days ......................................................................................................................... Health = $97.64 × 45.5 days ............................................................................................................................ Agreement B: Employer contribution, 401k plan (Monthly Wages × 5%) ............................................................................... Pension = $43.55 × 45.5 days ......................................................................................................................... Health = $97.64 × 45.5 days ............................................................................................................................ Agreement A: Monthly total benefits ....................................................................................................................................... VerDate Mar<15>2010 16:08 Feb 03, 2011 Jkt 223001 PO 00000 Frm 00045 Fmt 4700 Sfmt 4700 E:\FR\FM\04FER1.SGM 04FER1 Pilots on designated waters $759.53 1,517.43 4,442.62 $1,139.30 1,517.43 4,442.62 850.38 1,981.53 4,442.62 1,275.57 1,981.53 4,442.62 = 6,719.58 = 7,099.35 6356 Federal Register / Vol. 76, No. 24 / Friday, February 4, 2011 / Rules and Regulations TABLE 9—BENEFITS—Continued Pilots on undesignated waters Monthly component Agreement A: Monthly total benefits × 9 months .................................................................................................................... Agreement B: Monthly total benefits ....................................................................................................................................... Agreement B: Monthly total benefits × 9 months .................................................................................................................... Pilots on designated waters = 60,476 = 63,894 = 7,274.52 = 7,699.71 = 65,471 = 69,297 TABLE 10—TOTAL WAGES AND BENEFITS 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 $136,716 + 60,476 = 197,192 153,068 + 65,471 = 218,539 Pilots on designated waters $205,074 + 63,894 = 268,968 229,602 + 69,297 = 298,900 Agreement A, with the remaining two thirds operating under Agreement B. TABLE 11—DEADWEIGHT TONNAGE BY AMOU AGREEMENT Company Agreement A American Steamship Company ............................................................................................................................... Mittal Steel USA, Inc ............................................................................................................................................... Key Lakes, Inc ......................................................................................................................................................... 361,385 to the wages and benefits provided by each agreement, to determine the 815,600 38,826 ........................ 361,385 361,385 ÷ 1,215,811 = 29.7238% Total tonnage, each agreement ....................................................................................................................... Percent tonnage, each agreement .......................................................................................................................... Table 12 applies the percentage of tonnage represented by each agreement Agreement B 854,426 854,426 ÷ 1,215,811 = 70.2762% 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 ................................................................................................... jdjones on DSK8KYBLC1PROD with RULES 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 VerDate Mar<15>2010 14:40 Feb 03, 2011 Jkt 223001 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 PO 00000 Frm 00046 Fmt 4700 Sfmt 4700 Designated waters $197,192 × 29.7238% = $58,613 $268,968 × 29.7238% = $79,948 $218,539 × 70.2762% = $153,581 $58,613 + $153,581 = $212,194 $298,900 × 70.2762% = $210,055 $79,948 + $210,055 = $290,003 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 2011 E:\FR\FM\04FER1.SGM 04FER1 6357 Federal Register / Vol. 76, No. 24 / Friday, February 4, 2011 / Rules and Regulations navigation season in Districts 1 and 2 would remain unchanged from the 2010 projections noted in Table 13 of the 2010 final rule. In District 3, in both Areas 6 and 8, decreasing bridge hours require the removal of two unused authorizations for pilots, one for each Area. There are no pilots currently in either of these slots and no jobs are being lost as a result of this action. The removal of these two pilot billets merely those figures either by 1,000 or 1,800. As we have done since the 2008 ratemaking, and for the reasons described in detail in the 2008 final rule (74 FR 220, 221–22, Jan. 5, 2009), 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. attempts to mitigate a significant downward trend across the undesignated waters of District 3. The bridge hours for the designated waters of Area 7, like Districts 1 and 2, would remain unchanged from the 2010 projections. Table 13, below, shows the projected bridge hours needed for each area, and the total number of pilots needed for ratemaking purposes after dividing TABLE 13—NUMBER OF PILOTS NEEDED Projected 2011 bridge hours Pilotage area Area Area Area Area Area Area Area 1 2 4 5 6 7 8 .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... (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) 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 7 4 6 5,203 5,650 7,320 5,097 11,606 3,259 9,830 12) for pilots working in that Area. Table 14 shows this calculation. TABLE 14—PROJECTED TARGET PILOT COMPENSATION Pilots needed (Total = 38) Pilotage area Area Area Area Area Area Area Area 1 2 4 5 6 7 8 Multiplied by target rate of compensation Projected target pilot compensation 6 5 4 6 7 4 6 × $290,003 × 212,194 × 212,194 × 290,003 × 212,194 × 290,003 × 212,194 $1,740,018 1,060,970 848,776 1,740,018 1,485,357 1,160,012 1,273,164 .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... 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 pilot compensation jdjones on DSK8KYBLC1PROD with RULES Pilotage area Area Area Area Area Area Area Area 1 2 4 5 6 7 8 .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... Step 5: Adjust the result in Step 4, as required, for inflation or deflation, and VerDate Mar<15>2010 14:40 Feb 03, 2011 Jkt 223001 calculate projected total economic cost. Based on data from the U.S. Department PO 00000 Frm 00047 Fmt 4700 Sfmt 4700 $1,740,018 1,060,970 848,776 1,740,018 1,485,357 1,160,012 1,273,164 Multiplied by expense multiplier × × × × × × × 0.35182 0.59575 0.69619 0.52606 0.55921 0.39457 0.49867 Projected operating expense = $612,171 = 632,069 = 590,909 = 915,350 = 830,633 = 457,708 = 634,883 of Labor’s Bureau of Labor Statistics available at http://www.bls.gov/ E:\FR\FM\04FER1.SGM 04FER1 6358 Federal Register / Vol. 76, No. 24 / Friday, February 4, 2011 / Rules and Regulations xg_shells/ro5xg01.htm, we have multiplied the results in Step 4 by a 0.994 deflation factor, reflecting an average deflation rate of 0.6% between 2008 and 2009, 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 A. Projected operating expense Pilotage area Area Area Area Area Area Area Area 1 2 4 5 6 7 8 .............................................................................................................. .............................................................................................................. .............................................................................................................. .............................................................................................................. .............................................................................................................. .............................................................................................................. .............................................................................................................. Step 6: Divide the result in Step 5 by projected bridge hours to determine $612,171 632,069 590,909 915,350 830,633 457,708 634,883 B. Increase, multiplied by deflation factor (= A × 0.994) C. Projected target pilot compensation D. Projected total economic cost (= B+C) $608,498 628,277 587,364 909,858 825,649 454,962 631,074 $1,740,018 1,060,970 848,776 1,740,018 1,485,357 1,160,012 1,273,164 $2,348,516 1,689,246 1,436,140 2,649,876 2,311,006 1,614,974 1,904,237 total unit costs. Table 17 shows this calculation. TABLE 17—TOTAL UNIT COSTS A. Projected total economic cost Pilotage area Area Area Area Area Area Area Area 1 2 4 5 6 7 8 .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... 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 $2,348,516 1,689,246 1,436,140 2,649,876 2,311,006 1,614,974 1,904,237 B. Projected 2011 bridge hours 5,203 5,650 7,320 5,097 11,606 3,259 9,830 Prospective (total) unit costs (A divided by B) $451.38 298.98 196.19 519.89 199.12 495.54 193.72 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 jdjones on DSK8KYBLC1PROD with RULES Area Area Area Area Area Area Area 1 2 4 5 6 7 8 .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... .......................................................................................................................................... We use the percentage change between the prospective overall unit cost and the base overall unit cost to adjust rates for cancellation, delay, or interruption in rendering services (46 CFR 401.420) and basic rates and VerDate Mar<15>2010 14:40 Feb 03, 2011 Jkt 223001 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). This calculation is derived from the Appendix C ratemaking methodology found at 46 PO 00000 Frm 00048 Fmt 4700 Sfmt 4700 B. Base period unit costs C. Percentage change from base (A divided by B; result expressed as percentage) $451.38 298.98 196.19 519.89 199.12 495.54 193.72 $435.81 288.12 189.11 502.22 189.84 478.52 184.04 3.57 3.77 3.75 3.52 4.89 3.56 5.26 CFR 404.10 and differs from the area rate calculation by using total costs and total bridge hours for all areas. Tables 19 through 21 show this calculation. E:\FR\FM\04FER1.SGM 04FER1 Federal Register / Vol. 76, No. 24 / Friday, February 4, 2011 / Rules and Regulations 6359 TABLE 19—CALCULATION OF BASE PERIOD OVERALL UNIT COST A. Base period (2010) overall total economic costs C. Base period (2010) overall unit cost (A divided by B) $14,084,230 51,565 $273.14 A. Projected period (2011) overall total economic costs Sum of all Areas .......................................................................................................................... B. Base period (2010) overall bridge hours B. Projected period (2011) overall bridge hours C. Base period (2011) overall unit cost (A divided by B) $13,953,996 47,965 $290.92 TABLE 20—CALCULATION OF PROJECTED PERIOD OVERALL UNIT COST Sum of all Areas .......................................................................................................................... TABLE 21—PERCENTAGE CHANGE IN OVERALL PROSPECTIVE UNIT COSTS/BASE UNIT COST A. Prospective overall unit cost Across all Areas ........................................................................................................................... B. Base period overall unit cost C. Percentage change from overall base unit cost (A divided by B) $290.92 273.14 6.51% Step 8: Adjust the base period rates by the percentage change in unit costs in Step 7. Table 22 shows this calculation. TABLE 22—BASE PERIOD RATES ADJUSTED BY PERCENTAGE CHANGE IN UNIT COSTS * jdjones on DSK8KYBLC1PROD with RULES Pilotage area A. Base period rate B. Percentage change in unit costs (Multiplying factor) C. Increase in base rate (A × B%) D. Adjusted rate (A + C, rounded to nearest dollar) Area 1: —Basic pilotage ......................... —Each lock transited ................. —Harbor movage ....................... —Minimum basic rate, St. Lawrence River. —Maximum rate, through trip .... Area 2: —6-hr. period ............................. —Docking or undocking ............. Area 4: —6 hr. period ............................. —Docking or undocking ............. —Any point on Niagara River below Black Rock Lock. Area 5 between any point on or in: —Toledo or any point on Lake Erie W. of Southeast Shoal. —Toledo or any point on Lake Erie W. of Southeast Shoal & Southeast Shoal. —Toledo or any point on Lake Erie W. of Southeast Shoal & Detroit River. —Toledo or any point on Lake Erie W. of Southeast Shoal & Detroit Pilot Boat. —Port Huron Change Point & Southeast Shoal (when pilots are not changed at the Detroit Pilot Boat). ....................................... $17.73/km, $31.38/mi ... $393 .............................. $1,287 ........................... $858 .............................. 3.57(1.0357) ....................................... ....................................... ....................................... ....................................... $0.63/km, $1.12/mi ....... $14.03 ........................... $45.95 ........................... $30.63 ........................... $18.36/km, $32.50/mi $407 $1,333 $889 $3,767 ........................... ....................................... $861 .............................. $821 .............................. ....................................... $762 .............................. $587 .............................. $1,498 ........................... ....................................... 3.77(1.0377) ....................................... ....................................... 3.75(1.0375) ....................................... ....................................... ....................................... $134.48 ......................... $3,901 $32.46 ........................... $30.95 ........................... $893 $852 $28.58 ........................... $22.01 ........................... $56.18 ........................... $791 $609 $1,554 ....................................... $1,364 ........................... 3.52(1.0352) ....................................... $48.01 ........................... $1,412 $2,308 ........................... ....................................... $81.24 ........................... $2,389 $2,997 ........................... ....................................... $105.49 ......................... $3,102 $2,308 ........................... ....................................... $81.24 ........................... $2,389 $4,020 ........................... ....................................... $141.50 ......................... $4,162 VerDate Mar<15>2010 14:40 Feb 03, 2011 Jkt 223001 PO 00000 Frm 00049 Fmt 4700 Sfmt 4700 E:\FR\FM\04FER1.SGM 04FER1 6360 Federal Register / Vol. 76, No. 24 / Friday, February 4, 2011 / Rules and Regulations TABLE 22—BASE PERIOD RATES ADJUSTED BY PERCENTAGE CHANGE IN UNIT COSTS *—Continued A. Base period rate B. Percentage change in unit costs (Multiplying factor) C. Increase in base rate (A × B%) —Port Huron Change Point & Toledo or any point on Lake Erie W. of Southeast Shoal (when pilots are not changed at the Detroit Pilot Boat). —Port Huron Change Point & Detroit River. —Port Huron Change Point & Detroit Pilot Boat. —Port Huron Change Point & St. Clair River. —St. Clair River ......................... —St. Clair River & Southeast Shoal (when pilots are not changed at the Detroit Pilot Boat). —St. Clair River & Detroit River/ Detroit Pilot Boat. —Detroit, Windsor, or Detroit River. —Detroit, Windsor, or Detroit River & Southeast Shoal. —Detroit, Windsor, or Detroit River & Toledo or any point on Lake Erie W. of Southeast Shoal. —Detroit, Windsor, or Detroit River & St. Clair River. —Detroit Pilot Boat & Southeast Shoal. —Detroit Pilot Boat & Toledo or any point on Lake Erie W. of Southeast Shoal. —Detroit Pilot Boat & St. Clair River. Area 6: —6 hr. period ............................. —Docking or undocking ............. Area 7 between any point on or in: —Gros Cap & De Tour .............. —Algoma Steel Corp. Wharf, Sault Ste. Marie, Ont. & De Tour. —Algoma Steel Corp. Wharf, Sault Ste. Marie, Ont. & Gros Cap. —Any point in Sault Ste. Marie, Ont., except the Algoma Steel Corp. Wharf & De Tour. —Any point in Sault Ste. Marie, Ont., except the Algoma Steel Corp. Wharf & Gros Cap. —Sault Ste. Marie, MI & De Tour. —Sault Ste. Marie, MI & Gros Cap. —Harbor movage ....................... Area 8: —6 hr. period ............................. —Docking or undocking ............. jdjones on DSK8KYBLC1PROD with RULES Pilotage area D. Adjusted rate (A + C, rounded to nearest dollar) $4,657 ........................... ....................................... $163.93 ......................... $4,821 $3,020 ........................... ....................................... $106.30 ......................... $3,126 $2,349 ........................... ....................................... $82.68 ........................... $2,432 $1,670 ........................... ....................................... $58.78 ........................... $1,729 $1,364 ........................... $4,020 ........................... ....................................... ....................................... $48.01 ........................... $141.50 ......................... $1,412 $4,162 $3,020 ........................... ....................................... $106.30 ......................... $3,126 $1,364 ........................... ....................................... $48.01 ........................... $1,412 $2,308 ........................... ....................................... $81.24 ........................... $2,389 $2,997 ........................... ....................................... $105.49 ......................... $3,102 $3,020 ........................... ....................................... $106.30 ......................... $3,126 $1,670 ........................... ....................................... $58.78 ........................... $1,729 $2,308 ........................... ....................................... $81.24 ........................... $2,389 $3,020 ........................... ....................................... $106.30 ......................... $3,126 ....................................... $656 .............................. $623 .............................. ....................................... $2,559 ........................... $2,559 ........................... 4.89(1.0489) ....................................... ....................................... 3.56(1.0356) ....................................... ....................................... $32.08 ........................... $30.46 ........................... $688 $653 $91.10 ........................... $91.10 ........................... $2,650 $2,650 $964 .............................. ....................................... $34.32 ........................... $998 $2,145 ........................... ....................................... $76.36 ........................... $2,221 $964 .............................. ....................................... $34.32 ........................... $998 $2,145 ........................... ....................................... $76.36 ........................... $2,221 $964 .............................. ....................................... $34.32 ........................... $998 $964 .............................. ....................................... $578 .............................. $549 .............................. ....................................... 5.26(1.0526) ....................................... ....................................... $34.32 ........................... $998 $30.40 ........................... $28.88 ........................... $608 $578 * 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 6.51% across all areas (see Table 21). VII. Regulatory Analyses We developed this rule after considering numerous statutes and VerDate Mar<15>2010 14:40 Feb 03, 2011 Jkt 223001 executive orders related to rulemaking. Below, we summarize our analyses PO 00000 Frm 00050 Fmt 4700 Sfmt 4700 based on 13 of these statutes or executive orders. E:\FR\FM\04FER1.SGM 04FER1 6361 Federal Register / Vol. 76, No. 24 / Friday, February 4, 2011 / Rules and Regulations A. Regulatory Planning and Review This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. We received no comments that would alter our assessment of impacts in the NPRM. We have found no additional data or information that would change our assessment of the impacts in the NPRM. We have adopted the analysis in the NPRM for this rule as final. A summary of the analysis follows: The Coast Guard is required to conduct an annual review of pilotage rates on the Great Lakes and, if necessary, adjust these rates to align compensation levels between Great Lakes pilots and industry. See the ‘‘Background’’ section for a detailed explanation of the legal authority and requirements for the Coast Guard to conduct an annual review and provide possible adjustments of pilotage rates on the Great Lakes. Based on our annual review, we are adjusting the pilotage rates for the 2011 shipping season to generate sufficient revenue to cover allowable expenses, target pilot compensation, and returns on investment. This final rule will implement rate adjustments for the Great Lakes system over the current rates adjusted in the 2010 final rule that was published on February 23, 2010 (75 FR 7958) and took effect on August 1, 2010. 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 deflation and projected changes in association expenses to maintain these compensation levels. See ‘‘B. Calculating the Rate Adjustment’’ for details on these adjustments. 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. 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. In the NPRM, we estimated the average annual number of vessels affected by the rate adjustment to be about 208 vessels. These vessels entered the Great Lakes by transiting through or in part of at least one of the pilotage areas before leaving the Great Lakes system. These vessels often make more than one distinct stop, docking, loading, and unloading at facilities in Great Lakes ports. Of the total trips by the 208 vessels, there were an estimated 923 annual U.S. port arrivals before the vessels left the Great Lakes system, based on findings in the NPRM. The impact of the rate adjustment to shippers is estimated from pilotage revenues. These revenues represent the costs that shippers must pay for pilotage services. The Coast Guard sets rates so that revenues equal the estimated costs of pilotage. We estimate the additional impact (costs or savings) of the rate adjustment in this final rule to be the difference between the projected total economic cost needed to cover costs based on the 2010 rate adjustment and the projected total economic cost needed to cover costs in this final rule for 2011. Table 23 details additional costs or savings by area. TABLE 23—ADDITIONAL IMPACT OF THE FINAL RULE BY AREA [$U.S.; non-discounted] Projected total economic costs in 2010 Area Area Area Area Area Area Area 1 2 4 5 6 7 8 .............................................................................................................. .............................................................................................................. .............................................................................................................. .............................................................................................................. .............................................................................................................. .............................................................................................................. .............................................................................................................. Change in projected expenses $2,267,537 1,627,853 1,384,253 2,559,805 2,544,935 1,559,501 2,140,345 1.0357 1.0377 1.0375 1.0352 0.9081 1.0356 0.8897 Projected total economic costs in 2011 * Additional cost or savings of this rule $2,348,516 1,689,246 1,436,140 2,649,876 2,311,006 1,614,974 1,904,237 $80,979 61,393 51,887 90,071 (233,929) 55,473 (236,108) jdjones on DSK8KYBLC1PROD with RULES Notes to Table 23: * The derivation of these values is detailed in Table 16. Some values may not total due to rounding. See ‘‘B. Calculating the Rate Adjustment’’ for further details on the rate adjustment methodology. ‘‘Additional Cost or Savings of this Rule’’ = ‘‘Projected Total Economic Cost in 2011’’ minus ‘‘Projected Total Economic Cost in 2010.’’ After applying the rate change in this final rule, the resulting difference between the projected total economic cost in 2010 and the projected total economic cost in 2011 is the annual impact to shippers from this rule. This figure would be equivalent to the total additional payments or savings that shippers would incur for pilotage services from this final rule. As discussed earlier, we consider a reduction in payments to be a cost savings. VerDate Mar<15>2010 14:40 Feb 03, 2011 Jkt 223001 The impact of the rate adjustment in this final rule to shippers varies by area. The annual costs of the rate adjustments range from $51,887 to $90,071 for most affected areas. However, Areas 6 and 8 would experience annual cost savings of approximately $234,000 and $236,000, respectively. The annual savings is due to a projected decrease in the number of billeted pilots in Areas 6 and 8 from 2010 to 2011. This decrease in the number of pilots would reduce the projected revenue needed to cover costs of pilotage services in Areas 6 and 8. PO 00000 Frm 00051 Fmt 4700 Sfmt 4700 This rate adjustment would result in a savings for Areas 6 and 8 that would outweigh the combined costs of the other areas. We measure the impact of this rule by examining the changes in costs to shippers for pilotage services. With savings in Areas 6 and 8 exceeding the combined costs in other areas, the net impact of this rule would be a cost savings for pilotage services in the Great Lakes system. The overall impact of the final rule would be a cost savings to shippers of about $130,000 if we sum across all affected areas. E:\FR\FM\04FER1.SGM 04FER1 6362 Federal Register / Vol. 76, No. 24 / Friday, February 4, 2011 / Rules and Regulations jdjones on DSK8KYBLC1PROD with RULES B. Small Entities Under the Regulatory Flexibility Act (5 U.S.C. 601–612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term ‘‘small entities’’ comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. In the NPRM, we certified under 5 U.S.C. 605(b) that the proposed rule would not have a significant economic impact on a substantial number of small entities. We received no public comments that would alter our certification in the NPRM. We have found no additional data or information that would change our findings in the NPRM. We have adopted the certification in the NPRM for this final rule. See the ‘‘Small Entities’’ section of the NPRM for additional details. A summary of the NPRM analysis follows. We found entities affected by the rule to 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. In the NPRM, we found that large, mostly foreign-owned, shipping conglomerates or their subsidiaries owned or operated all vessels engaged in foreign trade on the Great Lakes. We assume that new industry entrants will be comparable in ownership and size to these shippers. There are three U.S. entities affected by the 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 final rule since all associations receive enough revenue to balance the VerDate Mar<15>2010 14:40 Feb 03, 2011 Jkt 223001 projected expenses associated with the projected number of bridge hours and pilots. Therefore, the Coast Guard certifies under 5 U.S.C. 605(b) that this final rule will not have a significant economic impact on a substantial number of small entities. C. Assistance for Small Entities Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104–121), we offered to assist small entities in understanding the rule so that they could better evaluate its effects on them and participate in the rulemaking. The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency’s responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1– 888–REG–FAIR (1–888–734–3247). D. Collection of Information This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501– 3520). 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 (adjusted for inflation) or more in any one year. Though this rule PO 00000 Frm 00052 Fmt 4700 Sfmt 4700 will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble. G. Taking of Private Property This rule will not cause a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights. H. Civil Justice Reform This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. I. Protection of Children We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children. J. Indian Tribal Governments This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. 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 (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 E:\FR\FM\04FER1.SGM 04FER1 6363 Federal Register / Vol. 76, No. 24 / Friday, February 4, 2011 / Rules and Regulations 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 (42 U.S.C. 4321–4370f), and have concluded that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule is categorically 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. § 401.405 Basic rates and charges on the St. Lawrence River and Lake Ontario. List of Subjects in 46 CFR Part 401 Each Lock Transited. Harbor Movage * * * * * (a) Area 1 (Designated Waters): Service St. Lawrence River Basic pilotage ... Administrative practice and procedure, Great Lakes, Navigation (water), Penalties, Reporting and recordkeeping requirements, Seamen. For the reasons discussed in the preamble, the Coast Guard amends 46 CFR part 401 as follows: $18.36 per Kilometer or $32.50 per mile.1 $407.1 $1,333.1 1 The minimum basic rate for assignment of a pilot in the St. Lawrence River is $889, and the maximum basic rate for a through trip is $3,901. (b) Area 2 (Undesignated Waters): Service PART 401—GREAT LAKES PILOTAGE REGULATIONS Lake Ontario Six-hour period ..................... Docking or undocking ........... 1. The authority citation for part 401 continues to read as follows: ■ Authority: 46 U.S.C. 2104(a), 6101, 7701, 8105, 9303, 9304; Department of Homeland Security Delegation No. 0170.1; 46 CFR 401.105 also issued under the authority of 44 U.S.C. 3507. 2. In § 401.405, revise paragraphs (a) and (b), including the footnote to Table (a), to read as follows: ■ $893 852 3. In § 401.407, revise paragraphs (a) and (b), including the footnote to Table (b), to read as follows: ■ § 401.407 Basic rates and charges on Lake Erie and the navigable waters from Southeast Shoal to Port Huron, MI. * * * * * (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 $791 609 N/A $791 609 1,554 (b) Area 5 (Designated Waters): Southeast shoal Any point on or in Toledo or any port on Lake Erie west of Southeast Shoal ..................... Port Huron Change Point ........................................................................ St. Clair River ........................................................................................... Detroit or Windsor or the Detroit River .................................................... Detroit Pilot Boat ...................................................................................... 1 When 4. In § 401.410, revise paragraphs (a), (b), and (c) to read as follows: jdjones on DSK8KYBLC1PROD with RULES $3,102 3,126 3,126 1,412 N/A $2,389 2,432 3,126 N/A N/A $1,412 1 4,821 1 4,162 Detroit pilot boat N/A 3,102 2,389 2,389 1,729 (a) Area 6 (Undesignated Waters): St. Clair River N/A $1,729 1,412 3,126 3,126 * * Lakes Huron and Michigan Service Six-hour period ......................... * Docking or undocking ............... $688 De tour Gros Cap ................................................................................................................................................. 14:40 Feb 03, 2011 Jkt 223001 PO 00000 Frm 00053 Fmt 4700 Sfmt 4700 653 (b) Area 7 (Designated Waters): Area VerDate Mar<15>2010 Lakes Huron and Michigan Service § 401.410 Basic rates and charges on Lakes Huron, Michigan, and Superior, and the St Mary’s River. * $2,389 1 4,162 Detroit River pilots are not changed at the Detroit Pilot Boat. ■ * Toledo or any point on Lake Erie west of Southeast Shoal E:\FR\FM\04FER1.SGM $2,650 04FER1 Gros cap N/A Any harbor N/A 6364 Federal Register / Vol. 76, No. 24 / Friday, February 4, 2011 / Rules and Regulations Area De tour 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 ........................................................................................................................................ jdjones on DSK8KYBLC1PROD with RULES (c) Area 8 (Undesignated Waters): exclusive economic zone (EEZ) of the Gulf of Mexico (Gulf) to commercial Lake king mackerel fishing using run-around Service Superior gillnets. This closure is necessary to Six-Hour Period ........................ $608 protect the Gulf king mackerel resource. Docking or Undocking .............. 578 DATES: The closure is effective 6 a.m., local time, February 2, 2011, through 6 a.m., local time, January 17, 2012. § 401.420 [Amended] FOR FURTHER INFORMATION CONTACT: ■ 5. In § 401.420— Susan Gerhart, telephone: 727–824– ■ a. In paragraph (a), remove the text 5305, fax: 727–824–5308, e-mail: ‘‘$119’’ and add, in its place, the text Susan.Gerhart@noaa.gov. ‘‘$127’’; and remove the text ‘‘$1,867’’ SUPPLEMENTARY INFORMATION: The and add, in its place, the text ‘‘$1,989’’; ■ b. In paragraph (b), remove the text fishery for coastal migratory pelagic fish ‘‘$119’’ and add, in its place, the text (king mackerel, Spanish mackerel, cero, ‘‘$127’’; and remove the text ‘‘$1,867’’ cobia, little tunny, and, in the Gulf of and add, in its place, the text ‘‘$1,989’’; Mexico only, dolphin and bluefish) is and managed under the Fishery ■ c. In paragraph (c)(1), remove the text Management Plan for the Coastal ‘‘$705’’ and add, in its place, the text Migratory Pelagic Resources of the Gulf ‘‘$751’’; and in paragraph (c)(3), remove of Mexico and South Atlantic (FMP). the text ‘‘$119’’ and add, in its place, the The FMP was prepared by the Gulf of text ‘‘$127’’, and remove the text Mexico and South Atlantic Fishery ‘‘$1,867’’ and add, in its place, the text Management Councils (Councils) and is ‘‘$1,989’’. implemented under the authority of the Magnuson-Stevens Fishery § 401.428 [Amended] Conservation and Management Act ■ 6. In § 401.428, remove the text ‘‘$719’’ (Magnuson-Stevens Act) by regulations and add, in its place, the text ‘‘$766’’. at 50 CFR part 622. Dated: January 28, 2011. Based on the Councils’ recommended total allowable catch and the allocation Dana A. Goward, ratios in the FMP, on April 30, 2001 (66 Director Marine Transportation Systems FR 17368, March 30, 2001), NMFS Management, U.S. Coast Guard. implemented a commercial quota of [FR Doc. 2011–2456 Filed 2–3–11; 8:45 am] 2.25 million lb (1.02 million kg) for the BILLING CODE 9110–04–P eastern zone (Florida) of the Gulf migratory group of king mackerel. That quota is further divided into separate DEPARTMENT OF COMMERCE quotas for the Florida east coast subzone and the northern and southern Florida National Oceanic and Atmospheric west coast subzones. On April 27, 2000, Administration NMFS implemented the final rule (65 FR 16336, March 28, 2000) that divided 50 CFR Part 622 the Florida west coast subzone of the [Docket No. 001005281–0369–02] eastern zone into northern and southern RIN 0648–XA195 subzones, and established their separate quotas. The quota implemented for the Fisheries of the Caribbean, Gulf of southern Florida west coast subzone is Mexico, and South Atlantic; Coastal 1,040,625 lb (472,020 kg). That quota is Migratory Pelagic Resources of the further divided into two equal quotas of Gulf of Mexico and South Atlantic 520,312 lb (236,010 kg) for vessels in each of two groups fishing with runAGENCY: National Marine Fisheries around gillnets and hook-and-line gear Service (NMFS), National Oceanic and (50 CFR 622.42(c)(1)(i)(A)(2)(i)). Atmospheric Administration (NOAA), The southern subzone is that part of Commerce. the Florida west coast subzone, which ACTION: Temporary rule; closure. from November 1 through March 31, SUMMARY: NMFS closes the southern extends south and west from 26°19.8′ N. Florida west coast subzone in the lat. (a line directly west from the Lee/ VerDate Mar<15>2010 16:08 Feb 03, 2011 Jkt 223001 PO 00000 Frm 00054 Fmt 4700 Sfmt 4700 $2,650 2,221 2,221 N/A Gros cap $998 998 998 N/A Any harbor N/A N/A N/A $998 Collier County, FL, boundary) to 25°20.4′ N. lat. (a line directly east from the Monroe/Miami-Dade County, FL, boundary), i.e., the area off Collier and Monroe Counties. From April 1 through October 31, the southern subzone is that part of the Florida west coast subzone which is between 26°19.8′ N. lat. (a line directly west from the Lee/Collier County, FL, boundary) and 25°48′ N. lat. (a line directly west from the Collier/ Monroe County, FL, boundary), i.e., the area off Collier County (50 CFR 622.42(c)(1)(i)(A)(3)). Under 50 CFR 622.43(a)(3), NMFS is required to close any segment of the king mackerel commercial sector when its quota has been reached, or is projected to be reached, by filing a notification at the Office of the Federal Register. NMFS has determined that the commercial quota of 520,312 lb (236,010 kg) for Gulf group king mackerel for vessels using run-around gillnet gear in the southern Florida west coast subzone will be reached on February 3, 2011. Accordingly, commercial fishing for such vessels in the southern Florida west coast subzone is closed at 6 a.m., local time, February 3, 2011, through 6 a.m., local time, January 17, 2012, the beginning of the next fishing season, i.e., the day after the 2012 Martin Luther King Jr. Federal holiday. Classification This action responds to the best available information recently obtained from the fisheries. The Assistant Administrator for Fisheries, NOAA (AA), finds that the need to immediately implement this action to close the fishery constitutes good cause to waive the requirements to provide prior notice and opportunity for public comment pursuant to the authority set forth in 5 U.S.C. 553(b)(B). Such procedures would be unnecessary because the rule implementing the quota and the associated requirement for closure of the commercial harvest when the quota is reached or projected to be reached has already been subject to notice and comment, and all that remains is to notify the public of the closure. Providing prior notice and opportunity for public comment on this action would be contrary to the public interest because any delay in the closure of the commercial harvest could result E:\FR\FM\04FER1.SGM 04FER1

Agencies

[Federal Register Volume 76, Number 24 (Friday, February 4, 2011)]
[Rules and Regulations]
[Pages 6351-6364]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-2456]


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

DEPARTMENT OF HOMELAND SECURITY

Coast Guard

46 CFR Part 401

[Docket No. USCG-2010-0517]
RIN 1625-AB48


Great Lakes Pilotage: 2011 Annual Review and Adjustment

AGENCY: Coast Guard, DHS.

ACTION: Final rule.

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

SUMMARY:  The Coast Guard is increasing the rates for pilotage service 
on the Great Lakes to generate sufficient revenue to cover allowable 
expenses, target pilot compensation, and return on investment. This 
increase reflects a projected August 1, 2011, increase in benchmark 
contractual wages and benefits and an adjustment for deflation. This 
rule promotes the Coast Guard's strategic goal of maritime safety.

DATES: This final rule is effective August 1, 2011.

ADDRESSES: Comments and material received from the public, as well as 
documents mentioned in this preamble as being available in the docket, 
are part of docket USCG-2010-0517 and are available for inspection or 
copying at the Docket Management Facility (M-30), U.S. Department of 
Transportation, West Building Ground Floor, Room W12-140, 1200 New 
Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 5 p.m., 
Monday through Friday, except Federal holidays. You may also find this 
docket on the Internet by going to http://www.regulations.gov, 
inserting USCG-2010-0517 in the ``Keyword'' box, and then clicking 
``Search.''

FOR FURTHER INFORMATION CONTACT: If you have questions on this rule, 
call or e-mail Mr. Paul Wasserman, Chief, Great Lakes Pilotage 
Division, Commandant (CG-5522), Coast Guard; telephone 202-372-1535, or 
e-mail Paul.M.Wasserman@uscg.mil. If you have questions on viewing the 
docket, call Renee V. Wright, Program Manager, Docket Operations, 
telephone 202-366-9826.

SUPPLEMENTARY INFORMATION:

Table of Contents for Preamble

I. Abbreviations
II. Regulatory History
III. Basis and Purpose
IV. Background
V. Discussion of Comments and Changes
VI. Discussion of the Final Rule
    A. Summary
    B. Calculating the Rate Adjustment
VII. 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. Abbreviations

AMOU American Maritime Officer Union
CFR Code of Federal Regulations
FR Federal Register
GLPAC Great Lakes Pilotage Advisory Committee
MISLE Marine Information for Safety, and Law Enforcement
NAICS North American Industry Classification System
NPRM Notice of Proposed Rulemaking
NTTAA National Technology Transfer and Advancement Act
U.S.C. United States Code

II. Regulatory History

    On August 19, 2010, we published a notice of proposed rulemaking 
(NPRM) entitled ``Great Lakes Pilotage Rates: 2011 Annual Review and 
Adjustment'' in the Federal Register (75 FR 51191). We received three 
comments on the proposed rule. No public meeting was requested and none 
was held.

III. Basis and Purpose

    The basis of this rulemaking is the Great Lakes Pilotage Act of 
1960 (``the Act'') (46 U.S.C. chapter 93), which requires vessels 
engaged in foreign trade to use U.S. registered pilots while transiting 
the St. Lawrence Seaway and the Great Lakes system. The Act also 
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 Secretary's duties and authority 
under the Act have been delegated to the Coast Guard, and Coast Guard 
regulations implementing the Act appear in parts 401 through 404 of 
Title 46, Code of Federal Regulations (CFR).
    The Act requires annual pilotage rate reviews to be completed by 
March 1 of each year, with a ``full ratemaking'' to establish new base 
rates at least once every five years. The purpose of this rulemaking is 
to comply with 46 U.S.C. 9303(f) by applying the ratemaking methodology 
described in Appendix C to 46 CFR part 404, which will satisfy the 
requirement for the annual pilotage rate review for 2011.

IV. Background

    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

[[Page 6352]]

important to note that, while we set rates, we do not control the 
actual number of pilots an association maintains, so long as the 
association is able to provide safe, efficient, and reliable pilotage 
service, nor do we control the actual compensation that pilots receive. 
The actual compensation 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 Act, 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 
Act, 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).
    Our pilotage regulations implement the Act's requirement for annual 
reviews of pilotage rates and a full ratemaking at least once every 
five years. 46 CFR 404.1. To assist in calculating pilotage rates, the 
regulations require pilotage associations to submit annual financial 
statements prepared by certified public accounting firms. In addition, 
every fifth year, in connection with the full ratemaking, we contract 
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, we generate the pilotage 
rates using Appendix A to 46 CFR Part 404. The last Appendix A review 
was concluded in 2006 (71 FR 16501, April 3, 2006). Between the five-
year full ratemaking intervals, we annually review the pilotage rates 
using Appendix C to Part 404 and adjust rates when deemed appropriate. 
We conducted Appendix C reviews in 2007, 2008, 2009, and 2010 and 
increased rates in each year. The 2010 final rule was published on 
February 23, 2010 (75 FR 7958) and took effect on August 1, 2010. The 
terms and formulas used in Appendix A and Appendix C are defined in 
Appendix B to Part 404.
    This final rule concludes the annual Appendix C rate review for 
2011 and increases rates over those that took effect August 1, 2010.

V. Discussion of Comments and Changes

    We received comments from three persons during the NPRM public 
comment period.
    Comments outside the scope of the rule. One commenter made several 
statements which, although they are outside the scope of this rule, 
require correction or clarification. The commenter said we improperly 
base our ratemaking calculations on union contracts, do not allow for 
consultation with pilots or industry, provide no meaningful opportunity 
for appealing decisions made by the Director, and no longer 
``maintain'' the Great Lakes Pilotage Advisory Committee (GLPAC). The 
use of union contracts in calculating pilot benefits and compensation 
as part of the overall rate calculation is an explicit requirement of 
the current methodology. 46 CFR 404.5, 46 CFR part 404, App. A, step 
2.A. All of our ratemakings are subject to notice and comment 
procedure, providing ample opportunity for input from pilots, industry, 
and the general public. Decisions of the Director may be appealed 
pursuant to 46 CFR subpart 1.03, and ultimately all Coast Guard 
decisions are subject to judicial review. The Coast Guard has not only 
taken all necessary steps to maintain GLPAC, but in recent years we 
have sharpened our focus on using GLPAC to provide us with the type of 
consultation the commenter appears to have in mind. Congress 
established GLPAC specifically for that purpose.
    Ratemaking methodology. Two commenters recommended that we suspend 
any rate increase until the ratemaking methodology is reviewed and 
updated as needed. We requested public comments in 2009 on the need 
for, and content of, any change to that methodology, and we forwarded 
those comments to GLPAC (74 FR 35838, July 21, 2009). GLPAC has these 
comments under consideration, but no action can be taken before the 
March 1, 2011 deadline for establishing the annual rate adjustment for 
2011.
    Pilot dispute. One commenter recommended we suspend any rate 
increase until a dispute between two of the pilotage associations is 
resolved. The subject matter of this comment is not within the scope of 
this rulemaking.
    Calculations. One commenter disagreed with the way we applied the 
methodology in calculating bridge hours and the number of pilots in 
Areas 4 and 5. We performed all calculations in accordance with 
Appendix C to Part 404. We used our forecast of bridge hour demand and 
the Director's discretion to determine the number of pilots. As we 
stated in the NPRM (75 FR at 51197), this determination applied the 
same reasoning we have used since the 2008 ratemaking, which was 
explained in the 2008 final rule (74 FR 220, 221-22, Jan. 5, 2009) and 
also discussed at length in the 2009 ratemaking final rule (74 FR 
35812, 35813-14, Jul. 21, 2009).
    One commenter said that our ratemaking is arbitrary and capricious 
because we count delay and detention in calculating bridge hours for 
Areas 6, 7, and 8 but not in Areas 4 and 5. Under Step 1 of the 
Appendix C methodology, we do not count pilot delay or detention in the 
calculation of bridge hours. No information was provided by the 
commenter to substantiate this claim, which runs counter to our 
discussion of bridge hour calculations in ratemaking documents over 
many years, and which repeats an allegation made in 2007 and refuted in 
that year's interim rule: ``The Coast Guard has never considered delay, 
detention, or travel time to be included in the definition of bridge 
hours and has never knowingly included these items in its bridge hour 
computations.'' (72 FR 8117, February 23, 2007). We did not consider 
delay, detention, or travel time in our bridge hour computations for 
this final rule.

VI. Discussion of the Final Rule

A. Summary

    We are increasing pilotage rates in accordance with the methodology 
outlined in Appendix C to 46 CFR Part 404 effective August 1, 2011. The 
new rates are unchanged from what we proposed in the NPRM. Table 1 
shows the new rates for each Area.

                     Table 1--2011 Area Rate Changes
------------------------------------------------------------------------
                                                               Then the
                                                              percentage
                                                             of increase
            If pilotage service is required in:                over the
                                                               current
                                                               rate is:
------------------------------------------------------------------------
Area 1 (Designated waters).................................        3.57%
Area 2 (Undesignated waters)...............................         3.77
Area 4 (Undesignated waters)...............................         3.75
Area 5 (Designated waters).................................         3.52
Area 6 (Undesignated waters)...............................         4.89
Area 7 (Designated waters).................................         3.56
Area 8 (Undesignated waters)...............................         5.26
------------------------------------------------------------------------


[[Page 6353]]

    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 
6.51 percent in all areas based upon the calculations appearing at 
Tables 19 through 21, which follow.

B. Calculating the Rate Adjustment

    The Appendix C ratemaking calculation involves eight steps:
    Step 1: Calculate the total economic costs for the base period 
(pilot compensation expense plus all other recognized expenses plus the 
return element, which is net income plus interest) 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 2010 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 estimate target pilot 
compensation. However, the current AMOU contracts expire in July 2011, 
and the Coast Guard has been informed that the contract negotiations 
will not begin until sometime after that, which is well after the 
pilotage statute requires that we establish a rate. Accordingly, we 
have reviewed the terms of both existing and past AMOU contracts and 
have projected, for the purpose of this ratemaking, that the AMOU 
contracts effective in 2011 would provide increases in compensation 
equal to 3%, which is the increase called for in the AMOU contracts 
over the past two years. We project all other benefits to remain fixed 
at current levels with the exception of medical plan contributions. 
Medical plan contributions have increased 10% per year from 2006 
through 2010 in the current AMOU contracts. Thus, we forecast an 
increase of 10% over 2010 medical plan contributions for the AMOU 
contracts in 2011. Bridge hour projections for the 2011 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 rounding for presentation 
in charts. The rounding does not affect the integrity or truncate the 
actual value of all calculations in the ratemaking methodology 
described below.
    Step 1: Calculate the total economic cost for the base period. In 
this step, for each area, we add the total cost of target pilot 
compensation, all other recognized expenses, and the return element 
(net income plus interest). We divide this sum by the total bridge 
hours for each area. The result is the cost in each area of providing 
pilotage service per bridge hour for the base period. Tables 2 through 
4 summarize the Step 1 calculations:

 Table 2--Total Economic Cost for Base Period (2010), Areas in District
                                   One
------------------------------------------------------------------------
                                            Area 1 St.      Area 2 Lake
                                          Lawrence River      Ontario
------------------------------------------------------------------------
Base operating expense..................        $578,569        $590,032
Base target pilot compensation..........    + $1,677,397    + $1,020,120
Base return element.....................       + $11,571       + $17,701
                                         -------------------------------
    Subtotal............................    = $2,267,537    = $1,627,853
                                         ===============================
Base bridge hours.......................         / 5,203         / 5,650
Base cost per bridge hour...............       = $435.81       = $288.12
------------------------------------------------------------------------


 Table 3--Total Economic Cost for Base Period (2010), Areas in District
                                   Two
------------------------------------------------------------------------
                                                              Area 5
                                            Area 4 Lake      Southeast
                                               Erie        Shoal to Port
                                                             Huron, MI
------------------------------------------------------------------------
Base operating expense..................        $541,103        $848,469
Base target pilot compensation..........      + $816,096    + $1,677,397
Base return element.....................       + $27,055       + $33,939
                                         -------------------------------
    Subtotal............................    = $1,384,254    = $2,559,805
                                         ===============================
Base bridge hours.......................         / 7,320         / 5,097
Base cost per bridge hour...............       = $189.11       = $502.22
------------------------------------------------------------------------


[[Page 6354]]


                  Table 4--Total Economic Cost for Base Period (2010), Areas in District Three
----------------------------------------------------------------------------------------------------------------
                                                                   Area 6 Lakes
                                                                     Huron and      Area 7 St.      Area 8 Lake
                                                                     Michigan      Mary's River      Superior
----------------------------------------------------------------------------------------------------------------
Base operating expense..........................................        $877,638        $428,384        $691,435
Base target pilot compensation..................................    + $1,632,191    + $1,118,265    + $1,428,167
Base return element.............................................       + $35,106       + $12,852       + $20,743
                                                                 -----------------------------------------------
    Subtotal....................................................    = $2,544,935    = $1,559,501    = $2,140,345
                                                                 ===============================================
Base bridge hours...............................................        / 13,406         / 3,259        / 11,630
Base cost per bridge hour.......................................       = $189.84       = $478.52       = $184.04
----------------------------------------------------------------------------------------------------------------

    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
------------------------------------------------------------------------
Base operating expense..................        $578,569        $590,032
Base return element.....................       + $11,571       + $17,701
                                         -------------------------------
    Subtotal............................      = $590,140      = $607,733
                                         ===============================
Base target pilot compensation..........    / $1,677,397    / $1,020,120
Expense multiplier......................         0.35182         0.59575
------------------------------------------------------------------------


           Table 6--Expense Multiplier, Areas in District Two
------------------------------------------------------------------------
                                                              Area 5
                                            Area 4 Lake      Southeast
                                               Erie        Shoal to Port
                                                             Huron, MI
------------------------------------------------------------------------
Base operating expense..................        $541,103        $848,469
Base return element.....................       + $27,055       + $33,939
                                         -------------------------------
    Subtotal............................      = $568,158      = $882,408
                                         ===============================
Base target pilot compensation..........      / $816,096    / $1,677,397
Expense multiplier......................         0.69619         0.52606
------------------------------------------------------------------------


                              Table 7--Expense Multiplier, Areas in District Three
----------------------------------------------------------------------------------------------------------------
                                                                   Area 6 Lakes
                                                                     Huron and      Area 7 St.      Area 8 Lake
                                                                     Michigan      Mary's River      Superior
----------------------------------------------------------------------------------------------------------------
Base operating expense..........................................        $877,638        $428,384        $691,435
Base return element.............................................       + $35,106       + $12,852       + $20,743
                                                                 -----------------------------------------------
    Subtotal....................................................      = $912,744      = $441,236      = $712,178
                                                                 ===============================================
Base target pilot compensation..................................    / $1,632,191    / $1,118,265    / $1,428,167
Expense multiplier..............................................         0.55921         0.39457         0.49867
----------------------------------------------------------------------------------------------------------------

    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

[[Page 6355]]

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 July 2010, 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 will expire on July 31, 2011. 
Based on the discussions with AMOU officials, these contracts are not 
expected to be negotiated until 2011. This does not provide sufficient 
time to incorporate new rates into the ratemaking process for the 2011 
shipping season. The Coast Guard projects that when new AMOU contracts 
are negotiated in 2011, they will provide for a 3% wage increase 
effective August 1, 2011. This is in keeping with the recent 
contractual wage raises under the existing union contracts. Both 2009 
and 2010 saw wage raises of 3%. Under Agreement A, we project that the 
daily wage rate would increase from $270.61 to $278.73. Under Agreement 
B, the daily wage rate would be increased from $333.58 to $343.59. All 
other benefits and calculations for these contracts are forecasted to 
remain identical to the current AMOU contracts, with the exception of 
the health benefit plan discussed below. The pension plan contribution, 
which has been a fixed amount, the 401k employers matching contribution 
of 5% of wages, which is also a set amount, and the monthly contract 
multipliers are all projected to remain fixed at current AMOU levels. 
These benefits have not changed their numerical or percentage values 
over the courses of the previous AMOU agreements still in effect. We do 
not project that the 2011 contracts will have any impact on these fixed 
costs.
    To calculate monthly wages, we apply Agreement A and Agreement B 
monthly multipliers of 54.5 and 49.5, respectively, to the daily rate. 
Agreement A's 54.5 multiplier represents 30.5 average working days, 
15.5 vacation days, 4 days for four weekends, 3 bonus days, and 1.5 
holidays. Agreement B's 49.5 multiplier represents 30.5 average working 
days, 16 vacation days, and 3 bonus days.
    To calculate average annual compensation, we multiply monthly 
figures by 9 months, the length of the Great Lakes shipping season.
    Table 8 shows new wage calculations based on Agreements A and B 
effective August 1, 2011.

                             Table 8--Wages
------------------------------------------------------------------------
                                                             Pilots on
                                             Pilots on      designated
            Monthly component              undesignated       waters
                                              waters       (undesignated
                                                              x 150%)
------------------------------------------------------------------------
Agreement A:
    $278.73 daily rate x 54.5 days......         $15,191         $22,786
Agreement A:
    Monthly total x 9 months = total             136,716         205,074
     wages..............................
Agreement B:
    $343.59 daily rate x 49.5 days......          17,008          25,511
Agreement B:
    Monthly total x 9 months = total             153,068         229,602
     wages..............................
------------------------------------------------------------------------

    Both Agreements A and B include a health benefits contribution rate 
of $88.76. On average, this benefit contribution has increased at a 
rate of 10% per year throughout the lives of the existing five-year 
contracts. Accordingly, for the purposes of the 2011 rate we project 
that when the new AMOU contracts are negotiated in 2011, this 
contribution would increase to $97.64 effective August 1, 2011. We 
project that Agreement A would continue to include a pension plan 
contribution rate of $33.35 per man-day. Agreement B would continue to 
include a pension plan contribution rate of $43.55 per man-day. 
Similarly, we expect both Agreements A and B to continue to provide a 
5% 401k employer matching provision. Accordingly, for purposes of the 
2011 rate, we will continue to use these values in calculating total 
pilot compensation. Currently, neither Agreement A nor Agreement B 
includes a clerical contribution that appeared in earlier contracts, 
and we project that this would not be a feature of any new AMOU 
contracts negotiated in 2011. We project that the multiplier used to 
calculate monthly benefits would remain the same at 45.5 days.
    Table 9 shows new benefit calculations based on Agreements A and B, 
effective August 1, 2011.

                            Table 9--Benefits
------------------------------------------------------------------------
                                             Pilots on       Pilots on
            Monthly component              undesignated     designated
                                              waters          waters
------------------------------------------------------------------------
Agreement A
    Employer contribution, 401k plan             $759.53       $1,139.30
     (Monthly Wages x 5%)...............
    Pension = $33.35 x 45.5 days........        1,517.43        1,517.43
    Health = $97.64 x 45.5 days.........        4,442.62        4,442.62
Agreement B:
    Employer contribution, 401k plan              850.38        1,275.57
     (Monthly Wages x 5%)...............
    Pension = $43.55 x 45.5 days........        1,981.53        1,981.53
    Health = $97.64 x 45.5 days.........        4,442.62        4,442.62
                                          ..............  ..............
Agreement A:
    Monthly total benefits..............      = 6,719.58      = 7,099.35

[[Page 6356]]

 
Agreement A:
    Monthly total benefits x 9 months...        = 60,476        = 63,894
Agreement B:
    Monthly total benefits..............      = 7,274.52      = 7,699.71
Agreement B:
    Monthly total benefits x 9 months...        = 65,471        = 69,297
------------------------------------------------------------------------


                   Table 10--Total Wages and Benefits
------------------------------------------------------------------------
                                             Pilots on       Pilots on
                                           undesignated     designated
                                              waters          waters
------------------------------------------------------------------------
Agreement A: Wages......................        $136,716        $205,074
Agreement A: Benefits...................        + 60,476        + 63,894
Agreement A: Total......................       = 197,192       = 268,968
Agreement B: Wages......................         153,068         229,602
Agreement B: Benefits...................        + 65,471        + 69,297
Agreement B: Total......................       = 218,539       = 298,900
------------------------------------------------------------------------

    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.

             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         854,426
                                             / 1,215,811     / 1,215,811
                                              = 29.7238%      = 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     Designated
                                              waters          waters
------------------------------------------------------------------------
Agreement A:
    Total wages and benefits x percent          $197,192        $268,968
     tonnage............................      x 29.7238%      x 29.7238%
                                               = $58,613       = $79,948
Agreement B:
    Total wages and benefits x percent          $218,539        $298,900
     tonnage............................      x 70.2762%      x 70.2762%
                                              = $153,581      = $210,055
    Total weighted average wages and             $58,613         $79,948
     benefits = projected target rate of      + $153,581      + $210,055
     compensation.......................      = $212,194      = $290,003
------------------------------------------------------------------------

     (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 2011

[[Page 6357]]

navigation season in Districts 1 and 2 would remain unchanged from the 
2010 projections noted in Table 13 of the 2010 final rule. In District 
3, in both Areas 6 and 8, decreasing bridge hours require the removal 
of two unused authorizations for pilots, one for each Area. There are 
no pilots currently in either of these slots and no jobs are being lost 
as a result of this action. The removal of these two pilot billets 
merely attempts to mitigate a significant downward trend across the 
undesignated waters of District 3. The bridge hours for the designated 
waters of Area 7, like Districts 1 and 2, would remain unchanged from 
the 2010 projections.
    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 we have done 
since the 2008 ratemaking, and for the reasons described in detail in 
the 2008 final rule (74 FR 220, 221-22, Jan. 5, 2009), 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 2011    waters) or     Pilots needed
                                                                   bridge hours        1,800       (total = 40)
                                                                                   (undesignated
                                                                                      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..........................................................          11,606           1,800               7
Area 7..........................................................           3,259           1,000               4
Area 8..........................................................           9,830           1,800               6
----------------------------------------------------------------------------------------------------------------

     (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     Projected
                          Pilotage area                            Pilots needed  target rate of   target pilot
                                                                   (Total = 38)    compensation    compensation
----------------------------------------------------------------------------------------------------------------
Area 1..........................................................               6      x $290,003      $1,740,018
Area 2..........................................................               5       x 212,194       1,060,970
Area 4..........................................................               4       x 212,194         848,776
Area 5..........................................................               6       x 290,003       1,740,018
Area 6..........................................................               7       x 212,194       1,485,357
Area 7..........................................................               4       x 290,003       1,160,012
Area 8..........................................................               6       x 212,194       1,273,164
----------------------------------------------------------------------------------------------------------------

    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     Multiplied by     Projected
                          Pilotage area                            target pilot       expense        operating
                                                                   compensation     multiplier        expense
----------------------------------------------------------------------------------------------------------------
Area 1..........................................................      $1,740,018       x 0.35182      = $612,171
Area 2..........................................................       1,060,970       x 0.59575       = 632,069
Area 4..........................................................         848,776       x 0.69619       = 590,909
Area 5..........................................................       1,740,018       x 0.52606       = 915,350
Area 6..........................................................       1,485,357       x 0.55921       = 830,633
Area 7..........................................................       1,160,012       x 0.39457       = 457,708
Area 8..........................................................       1,273,164       x 0.49867       = 634,883
----------------------------------------------------------------------------------------------------------------

    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 
available at http://www.bls.gov/

[[Page 6358]]

xg--shells/ro5xg01.htm, we have multiplied the results in Step 4 by a 
0.994 deflation factor, reflecting an average deflation rate of 0.6% 
between 2008 and 2009, 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       deflation     target pilot   total economic
                                                      expense     factor  (= A x   compensation    cost (= B+C)
                                                                      0.994)
----------------------------------------------------------------------------------------------------------------
Area 1..........................................        $612,171        $608,498      $1,740,018      $2,348,516
Area 2..........................................         632,069         628,277       1,060,970       1,689,246
Area 4..........................................         590,909         587,364         848,776       1,436,140
Area 5..........................................         915,350         909,858       1,740,018       2,649,876
Area 6..........................................         830,633         825,649       1,485,357       2,311,006
Area 7..........................................         457,708         454,962       1,160,012       1,614,974
Area 8..........................................         634,883         631,074       1,273,164       1,904,237
----------------------------------------------------------------------------------------------------------------

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

                                           Table 17--Total Unit Costs
----------------------------------------------------------------------------------------------------------------
                                                                                                    Prospective
                                                                   A. Projected    B. Projected    (total)  unit
                          Pilotage area                           total economic    2011 bridge      costs  (A
                                                                       cost            hours       divided by B)
----------------------------------------------------------------------------------------------------------------
Area 1..........................................................      $2,348,516           5,203         $451.38
Area 2..........................................................       1,689,246           5,650          298.98
Area 4..........................................................       1,436,140           7,320          196.19
Area 5..........................................................       2,649,876           5,097          519.89
Area 6..........................................................       2,311,006          11,606          199.12
Area 7..........................................................       1,614,974           3,259          495.54
Area 8..........................................................       1,904,237           9,830          193.72
----------------------------------------------------------------------------------------------------------------

    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  (A
                          Pilotage area                           A. Prospective  B. Base period   divided by B;
                                                                    unit costs      unit costs        result
                                                                                                   expressed as
                                                                                                    percentage)
----------------------------------------------------------------------------------------------------------------
Area 1..........................................................         $451.38         $435.81            3.57
Area 2..........................................................          298.98          288.12            3.77
Area 4..........................................................          196.19          189.11            3.75
Area 5..........................................................          519.89          502.22            3.52
Area 6..........................................................          199.12          189.84            4.89
Area 7..........................................................          495.54          478.52            3.56
Area 8..........................................................          193.72          184.04            5.26
----------------------------------------------------------------------------------------------------------------

    We use the percentage change between the prospective overall unit 
cost and the base overall unit cost to adjust 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). This calculation is derived from the Appendix C ratemaking 
methodology found at 46 CFR 404.10 and differs from the area rate 
calculation by using total costs and total bridge hours for all areas. 
Tables 19 through 21 show this calculation.

[[Page 6359]]



                             Table 19--Calculation of Base Period Overall Unit Cost
----------------------------------------------------------------------------------------------------------------
                                                                A. Base period                    C. Base period
                                                                (2010) overall   B. Base period   (2010) overall
                                                                total economic   (2010) overall   unit cost  (A
                                                                    costs         bridge hours    divided by B)
----------------------------------------------------------------------------------------------------------------
Sum of all Areas.............................................     $14,084,230           51,565          $273.14
----------------------------------------------------------------------------------------------------------------


                           Table 20--Calculation of Projected Period Overall Unit Cost
----------------------------------------------------------------------------------------------------------------
                                                                 A. Projected     B. Projected    C. Base period
                                                                period (2011)    period (2011)    (2011) overall
                                                                overall total    overall bridge   unit cost  (A
                                                                economic costs       hours        divided by B)
----------------------------------------------------------------------------------------------------------------
Sum of all Areas.............................................     $13,953,996           47,965          $290.92
----------------------------------------------------------------------------------------------------------------


                  Table 21--Percentage Change in Overall Prospective Unit Costs/Base Unit Cost
----------------------------------------------------------------------------------------------------------------
                                                                                                  C. Percentage
                                                                A. Prospective   B. Base period    change from
                                                                 overall unit     overall unit     overall base
                                                                     cost             cost        unit cost  (A
                                                                                                  divided by B)
----------------------------------------------------------------------------------------------------------------
Across all Areas.............................................         $290.92           273.14            6.51%
----------------------------------------------------------------------------------------------------------------

    Step 8: Adjust the base period rates by the percentage change in 
unit costs in Step 7. Table 22 shows this calculation.

                    Table 22--Base Period Rates Adjusted by Percentage Change in Unit Costs *
----------------------------------------------------------------------------------------------------------------
                                                         B. Percentage
                                                        change in unit      C. Increase in     D. Adjusted rate
          Pilotage area             A. Base period           costs          base rate  (A x   (A + C, rounded to
                                         rate            (Multiplying             B%)           nearest dollar)
                                                            factor)
----------------------------------------------------------------------------------------------------------------
Area 1:                           ..................  3.57(1.0357)
    --Basic pilotage............  $17.73/km, $31.38/  ..................  $0.63/km, $1.12/mi  $18.36/km, $32.50/
                                   mi.                                                         mi
    --Each lock transited.......  $393..............  ..................  $14.03............  $407
    --Harbor movage.............  $1,287............  ..................  $45.95............  $1,333
    --Minimum basic rate, St.     $858..............  ..................  $30.63............  $889
     Lawrence River.
    --Maximum rate, through trip  $3,767............  ..................  $134.48...........  $3,901
Area 2:                           ..................  3.77(1.0377)
    --6-hr. period..............  $861..............  ..................  $32.46............  $893
    --Docking or undocking......  $821..............  ..................  $30.95............  $852
Area 4:                           ..................  3.75(1.0375)
    --6 hr. period..............  $762..............  ..................  $28.58............  $791
    --Docking or undocking......  $587..............  ..................  $22.01............  $609
    --Any point on Niagara River  $1,498............  ..................  $56.18............  $1,554
     below Black Rock Lock.
Area 5 between any point on or    ..................  3.52(1.0352)
 in:
    --Toledo or any point on      $1,364............  ..................  $48.01............  $1,412
     Lake Erie W. of Southeast
     Shoal.
    --Toledo or any point on      $2,308............  ..................  $81.24............  $2,389
     Lake Erie W. of Southeast
     Shoal & Southeast Shoal.
    --Toledo or any point on      $2,997............  ..................  $105.49...........  $3,102
     Lake Erie W. of Southeast
     Shoal & Detroit River.
    --Toledo or any point on      $2,308............  ..................  $81.24............  $2,389
     Lake Erie W. of Southeast
     Shoal & Detroit Pilot Boat.
    --Port Huron Change Point &   $4,020............  ..................  $141.50...........  $4,162
     Southeast Shoal (when
     pilots are not changed at
     the Detroit Pilot Boat).

[[Page 6360]]

 
    --Port Huron Change Point &   $4,657............  ..................  $163.93...........  $4,821
     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 &   $3,020............  ..................  $106.30...........  $3,126
     Detroit River.
    --Port Huron Change Point &   $2,349............  ..................  $82.68............  $2,432
     Detroit Pilot Boat.
    --Port Huron Change Point &   $1,670............  ..................  $58.78............  $1,729
     St. Clair River.
    --St. Clair River...........  $1,364............  ..................  $48.01............  $1,412
    --St. Clair River &           $4,020............  ..................  $141.50...........  $4,162
     Southeast Shoal (when
     pilots are not changed at
     the Detroit Pilot Boat).
    --St. Clair River & Detroit   $3,020............  ..................  $106.30...........  $3,126
     River/Detroit Pilot Boat.
    --Detroit, Windsor, or        $1,364............  ..................  $48.01............  $1,412
     Detroit River.
    --Detroit, Windsor, or        $2,308............  ..................  $81.24............  $2,389
     Detroit River & Southeast
     Shoal.
    --Detroit, Windsor, or        $2,997............  ..................  $105.49...........  $3,102
     Detroit River & Toledo or
     any point on Lake Erie W.
     of Southeast Shoal.
    --Detroit, Windsor, or        $3,020............  ..................  $106.30...........  $3,126
     Detroit River & St. Clair
     River.
    --Detroit Pilot Boat &        $1,670............  ..................  $58.78............  $1,729
     Southeast Shoal.
    --Detroit Pilot Boat &        $2,308............  ..................  $81.24............  $2,389
     Toledo or any point on Lake
     Erie W. of Southeast Shoal.
    --Detroit Pilot Boat & St.    $3,020............  ..................  $106.30...........  $3,126
     Clair River.
Area 6:                           ..................  4.89(1.0489)
    --6 hr. period..............  $656..............  ..................  $32.08............  $688
    --Docking or undocking......  $623..............  ..................  $30.46............  $653
Area 7 between any point on or    ..................  3.56(1.0356)
 in:
    --Gros Cap & De Tour........  $2,559............  ..................  $91.10............  $2,650
    --Algoma Steel Corp. Wharf,   $2,559............  ..................  $91.10............  $2,650
     Sault Ste. Marie, Ont. & De
     Tour.
    --Algoma Steel Corp. Wharf,   $964..............  ..................  $34.32............  $998
     Sault Ste. Marie, Ont. &
     Gros Cap.
    --Any point in Sault Ste.     $2,145............  ..................  $76.36............  $2,221
     Marie, Ont., except the
     Algoma Steel Corp. Wharf &
     De Tour.
    --Any point in Sault Ste.     $964..............  ..................  $34.32............  $998
     Marie, Ont., except the
     Algoma Steel Corp. Wharf &
     Gros Cap.
    --Sault Ste. Marie, MI & De   $2,145............  ..................  $76.36............  $2,221
     Tour.
    --Sault Ste. Marie, MI &      $964..............  ..................  $34.32............  $998
     Gros Cap.
    --Harbor movage.............  $964..............  ..................  $34.32............  $998
Area 8:                           ..................  5.26(1.0526)
    --6 hr. period..............  $578..............  ..................  $30.40............  $608
    --Docking or undocking......  $549..............  ..................  $28.88............  $578
----------------------------------------------------------------------------------------------------------------
* 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 6.51% across all
  areas (see Table 21).

VII. Regulatory Analyses

    We developed this 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.

[[Page 6361]]

A. Regulatory Planning and Review

    This rule is not a significant regulatory action under section 3(f) 
of Executive Order 12866, Regulatory Planning and Review, and does not 
require an assessment of potential costs and benefits under section 
6(a)(3) of that Order. The Office of Management and Budget has not 
reviewed it under that Order.
    We received no comments that would alter our assessment of impacts 
in the NPRM. We have found no additional data or information that would 
change our assessment of the impacts in the NPRM. We have adopted the 
analysis in the NPRM for this rule as final. A summary of the analysis 
follows:
    The Coast Guard is required to conduct an annual review of pilotage 
rates on the Great Lakes and, if necessary, adjust these rates to align 
compensation levels between Great Lakes pilots and industry. See the 
``Background'' section for a detailed explanation of the legal 
authority and requirements for the Coast Guard to conduct an annual 
review and provide possible adjustments of pilotage rates on the Great 
Lakes. Based on our annual review, we are adjusting the pilotage rates 
for the 2011 shipping season to generate sufficient revenue to cover 
allowable expenses, target pilot compensation, and returns on 
investment.
    This final rule will implement rate adjustments for the Great Lakes 
system over the current rates adjusted in the 2010 final rule that was 
published on February 23, 2010 (75 FR 7958) and took effect on August 
1, 2010. 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 deflation and projected changes in association expenses 
to maintain these compensation levels. See ``B. Calculating the Rate 
Adjustment'' for details on these adjustments.
    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. 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.
    In the NPRM, we estimated the average annual number of vessels 
affected by the rate adjustment to be about 208 vessels. These vessels 
entered the Great Lakes by transiting through or in part of at least 
one of the pilotage areas before leaving the Great Lakes system. These 
vessels often make more than one distinct stop, docking, loading, and 
unloading at facilities in Great Lakes ports. Of the total trips by the 
208 vessels, there were an estimated 923 annual U.S. port arrivals 
before the vessels left the Great Lakes system, based on findings in 
the NPRM.
    The impact of the rate adjustment to shippers is estimated from 
pilotage revenues. These revenues represent the costs that shippers 
must pay for pilotage services. The Coast Guard sets rates so that 
revenues equal the estimated costs of pilotage.
    We estimate the additional impact (costs or savings) of the rate 
adjustment in this final rule to be the difference between the 
projected total economic cost needed to cover costs based on the 2010 
rate adjustment and the projected total economic cost needed to cover 
costs in this final rule for 2011. Table 23 details additional costs or 
savings by area.

                              Table 23--Additional Impact of the Final Rule by Area
                                             [$U.S.; non-discounted]
----------------------------------------------------------------------------------------------------------------
                                                                                     Projected      Additional
                                                     Projected       Change in    total economic      cost or
                                                  total economic     projected     costs in 2011    savings of
                                                   costs in 2010     expenses            *           this rule
----------------------------------------------------------------------------------------------------------------
Area 1..........................................      $2,267,537          1.0357      $2,348,516         $80,979
Area 2..........................................       1,627,853          1.0377       1,689,246          61,393
Area 4..........................................       1,384,253          1.0375       1,436,140          51,887
Area 5..........................................       2,559,805          1.0352       2,649,876          90,071
Area 6..........................................       2,544,935          0.9081       2,311,006       (233,929)
Area 7..........................................