Great Lakes Pilotage Rates-2013 Annual Review and Adjustment, 45539-45558 [2012-18714]

Download as PDF Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules Commodity Bean, dry, seed .................. Beet, sugar, roots ............... Beet, sugar, tops ................ Coffee, green bean ............. Cotton, undelinted seed ..... Cotton, hulls ........................ Peanut ................................ Pecan .................................. Sorghum, grain, bran .......... Sorghum, grain, grain ......... Sorghum, grain, stover ....... Soybean, seed .................... Sugarcane, cane ................ Sweet potato, roots ............ * * * * (4) Hand delivery: Same as mail address above, between 9 a.m. and 5 0.1 p.m., Monday through Friday, except 0.05 Federal holidays. The telephone number 1 is 202–366–9329. 0.1 To avoid duplication, please use only 0.1 one of these four methods. See the 0.3 ‘‘Public Participation and Request for 0.05 Comments’’ portion of the 0.5 SUPPLEMENTARY INFORMATION section 0.5 below for instructions on submitting 0.2 comments. 0.5 0.02 FOR FURTHER INFORMATION CONTACT: If 0.02 you have questions on this proposed 0.1 rule, call or email Mr. Todd Haviland, Management & Program Analyst, Office of Great Lakes Pilotage, Commandant (CG–WWM–2), Coast Guard; telephone 202–372–2037, email Todd.A.Haviland@uscg.mil, or fax 202– 372–1909. If you have questions on viewing or submitting material to the docket, call Renee V. Wright, Program Manager, Docket Operations, telephone 202–366–9826. SUPPLEMENTARY INFORMATION: Parts per million * [FR Doc. 2012–18508 Filed 7–31–12; 8:45 am] BILLING CODE 6560–50–P DEPARTMENT OF HOMELAND SECURITY Coast Guard 46 CFR Part 401 [USCG–2012–0409] Table of Contents for Preamble RIN 1625–AB89 I. Public Participation and Request for Comment A. Submitting Comments B. Viewing Comments and Documents C. Privacy Act D. Public Meeting II. Abbreviations III. Basis and Purpose IV. Background V. Discussion of Proposed Rule VI. 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 Great Lakes Pilotage Rates—2013 Annual Review and Adjustment Coast Guard, DHS. Notice of proposed rulemaking. AGENCY: ACTION: The Coast Guard proposes rate adjustments for pilotage services on the Great Lakes, which were last amended in February 2012. The proposed adjustments would establish new base rates and are made in accordance with a required full ratemaking procedure. The proposed update reflects changes in benchmark contractual wages and benefits and an adjustment for inflation. This rulemaking promotes the Coast Guard’s strategic goal of maritime safety. DATES: Comments and related material must either be submitted to our online docket via https://www.regulations.gov on or before October 1, 2012 or reach the Docket Management Facility by that date. ADDRESSES: You may submit comments identified by docket number USCG– 2012–0409 using any one of the following methods: (1) Federal eRulemaking Portal: https://www.regulations.gov. (2) Fax: 202–493–2251. (3) Mail: Docket Management Facility (M–30), U.S. Department of Transportation, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590– 0001. mstockstill on DSK4VPTVN1PROD with PROPOSALS SUMMARY: VerDate Mar<15>2010 17:06 Jul 31, 2012 Jkt 226001 45539 suggestion or recommendation. You may submit your comments and material online or by fax, mail, or hand delivery, but please use only one of these means. We recommend that you include your name and a mailing address, an email address, or a phone number in the body of your document so that we can contact you if we have questions regarding your submission. To submit your comment online, go to https://www.regulations.gov and insert ‘‘USCG–2012–0409’’ in the ‘‘Search’’ box. Click on ‘‘Submit a Comment’’ in the ‘‘Actions’’ column. If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 81⁄2 by 11 inches, suitable for copying and electronic filing. If you submit comments by mail and would like to know that they reached the Facility, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period and may change this proposed rule based on your comments. B. Viewing Comments and Documents To view comments, as well as documents mentioned in this preamble as being available in the docket, go to https://www.regulations.gov, insert ‘‘USCG–2012–0409’’ and click ‘‘Search.’’ Click the ‘‘Open Docket Folder’’ in the ‘‘Actions’’ column. If you do not have access to the Internet, you may view the docket online by visiting the Docket Management Facility in Room W12–140 on the ground floor of the Department of Transportation West Building, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. We have an agreement with the Department of Transportation to use the Docket Management Facility. I. Public Participation and Request for Comments We encourage you to participate in this rulemaking by submitting comments and related materials. All comments received will be posted without change to https:// www.regulations.gov and will include any personal information you have provided. C. Privacy Act Anyone can search the electronic form of comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review a Privacy Act notice regarding our public dockets in the January 17, 2008 issue of the Federal Register (73 FR 3316). A. Submitting Comments If you submit a comment, please include the docket number for this rulemaking (USCG–2012–0409), indicate the specific section of this document to which each comment applies, and provide a reason for each D. Public Meeting We do not now plan to hold a public meeting. But you may submit a request for one to the docket using one of the methods specified under ADDRESSES. In your request, explain why you believe a public meeting would be beneficial. If PO 00000 Frm 00027 Fmt 4702 Sfmt 4702 E:\FR\FM\01AUP1.SGM 01AUP1 45540 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register. II. Abbreviations AMOU American Maritime Officers Union CFR Code of Federal Regulations CPI Consumer Price Index FR Federal Register MISLE Marine Information for Safety and Law Enforcement NAICS North American Industry Classification System NPRM Notice of proposed rulemaking OMB Office of Management and Budget ROI Return on Investment § Section symbol U.S.C. United States Code mstockstill on DSK4VPTVN1PROD with PROPOSALS 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 U.S. vessels operating ‘‘on register’’ 1 and foreign vessels to use U.S. registered pilots while transiting the U.S. waters of the St. Lawrence Seaway and the Great Lakes system. 46 U.S.C. 9302(a)(1). The Act 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.’’ Rates must be established or reviewed and adjusted each year, not later than March 1. Base rates must be established by a full ratemaking at least once every 5 years, and in years when base rates are not established they must be reviewed and adjusted if necessary. 46 U.S.C. 9303(f). The Secretary’s duties and authority under the Act have been delegated to the Coast Guard. Department of Homeland Security Delegation No. 0170.1, paragraph (92)(f). Coast Guard regulations implementing the Act appear in parts 401 through 404 of Title 46, Code of Federal Regulations (CFR). Procedures for use in establishing base rates appear in 46 CFR part 404, Appendix A, and procedures for annual review and adjustment of existing base rates appear in 46 CFR part 404, Appendix C. The purpose of this rulemaking is to establish new base pilotage rates, using the 46 CFR part 404, Appendix A, methodology. IV. Background The vessels affected by this rulemaking are engaged in foreign trade 1 ‘‘On register’’ means that the vessel’s certificate of documentation has been endorsed with a registry endorsement, and therefore, may be employed in foreign trade or trade with Guam, American Samoa, Wake, Midway, or Kingman Reef. 46 U.S.C. 12105, 46 CFR 67.17. VerDate Mar<15>2010 17:06 Jul 31, 2012 Jkt 226001 upon the U.S. waters of the Great Lakes. U.S. and Canadian ‘‘Lakers,’’ 2 which account for most commercial shipping on the Great Lakes, are not affected. 46 U.S.C. 9302. The U.S. waters of the Great Lakes and the St. Lawrence Seaway are divided into three pilotage districts. Pilotage in each district is provided by an association certified by the Coast Guard Director of Great Lakes Pilotage to operate a pilotage pool. It is important to note that, while 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. Also, we do not 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. While working in those undesignated areas, pilots must only ‘‘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). This rulemaking is a full ratemaking to establish new base pilotage rates, using the 46 CFR part 404, Appendix A, methodology. The last full ratemaking established the current base rates in 2012 (Final Rule, 77 FR 11752, February 28, 2012). Among other things, the Appendix A methodology requires us to review detailed pilot association financial information, and we contract with independent accountants to assist in that review. We have now completed our review of the independent 2 A ‘‘Laker’’ is a commercial cargo vessel especially designed for and generally limited to use on the Great Lakes. PO 00000 Frm 00028 Fmt 4702 Sfmt 4702 accountant’s 2010 financial reports. The comments by the pilot associations on those reports and the independent accountant’s final findings are discussed in our document entitled ‘‘Summary— Independent Accountant’s Report on Pilot Association Expenses, with Pilot Association Comments and Accountant’s Responses,’’ which appears in the docket. V. Discussion of Proposed Rule A. Summary We propose establishing new base pilotage rates in accordance with the methodology outlined in Appendix A to 46 CFR part 404. The proposed new rates would be established by March 1, 2013 and effective August 1, 2013. They would average approximately 1.87 percent more, overall, than the February 2012 rate adjustments. Table 1 shows the proposed percent change for the new rates for each area. All figures in the tables that follow are based on calculations performed either by an independent accountant or by the Director’s staff. In both cases those calculations were performed using common commercial computer programs. Decimalization and rounding of the audited and calculated data affects the display in these tables but does not affect the calculations. The calculations are based on the actual figure that rounds values for presentation in the tables. TABLE 1—SUMMARY OF RATE ADJUSTMENTS If pilotage service is required in: Area 1 (Designated waters) Area 2 (Undesignated waters) .............................. Area 4 (Undesignated waters) .............................. Area 5 (Designated waters) Area 6 (Undesignated waters) .............................. Area 7 (Designated waters) Area 8 (Undesignated waters) .............................. Then the percent change over the current rate is: ¥1.41% ¥1.69 8.87 0.95 4.31 0.56 1.52 B. Discussion of Methodology The Appendix A methodology provides seven steps, with sub-steps, for calculating rate adjustments. The following discussion describes those steps and sub-steps and includes tables showing how we have applied them to the 2010 detailed pilot financial information. Step 1: Projection of Operating Expenses. In this step, we project the amount of vessel traffic annually. Based E:\FR\FM\01AUP1.SGM 01AUP1 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules upon that projection, we forecast the amount of necessary and reasonable operating expenses that pilotage rates should recover. Step 1.A: Submission of Financial Information. This sub-step requires each pilot association to provide us with detailed financial information in accordance with 46 CFR part 403. The associations complied with this requirement, supplying 2010 financial information in 2011; this is the most current and complete data set we have available. Step 1.B: Determination of Recognizable Expenses. This sub-step requires us to determine which reported association expenses will be recognized for ratemaking purposes, using the guidelines shown in 46 CFR 404.5. We contracted with an independent accountant to review the reported expenses and submit findings recommending which reported expenses should be recognized. The accountant also reviewed which reported expenses should be adjusted prior to recognition, or if they should not be allowed for ratemaking purposes. The independent accountant made preliminary findings; they were sent to the pilot associations, and the pilot associations reviewed and commented on the preliminary findings. 45541 Then, the independent accountant made final findings. The Coast Guard Director of Great Lakes Pilotage reviewed and accepted those final findings, resulting in the determination of recognizable expenses. The preliminary findings, the associations’ comments on those findings, and the final findings are all discussed in the ‘‘Summary— Independent Accountant’s Report on Pilot Association Expenses, with Pilot Association Comments and Accountant’s Responses,’’ which appears in the docket. Tables 2 through 4 show each association’s recognized expenses. TABLE 2—RECOGNIZED EXPENSES FOR DISTRICT ONE Area 1 Pilot Costs: Other pilotage costs: Pilot subsistence/Travel ........................................................................................................ License insurance ................................................................................................................. Payroll taxes ......................................................................................................................... Other ..................................................................................................................................... Area 2 St. Lawrence River Reported expenses for 2010 Lake Ontario Total $167,880 18,847 0 1,130 $380,595 42,727 0 2,562 Total other pilotage costs .............................................................................................. Pilot Boat and Dispatch Costs: Pilot boat expense ................................................................................................................ Dispatch expense ................................................................................................................. Payroll taxes ......................................................................................................................... 238,027 187,857 425,884 95,254 0 7,962 75,178 0 6,283 170,432 0 14,245 Total pilot and dispatch costs ....................................................................................... Administrative Expenses: Legal ..................................................................................................................................... Insurance .............................................................................................................................. Employee benefits ................................................................................................................ Payroll taxes ......................................................................................................................... Other taxes ........................................................................................................................... Travel .................................................................................................................................... Depreciation/auto leasing/other ............................................................................................ Interest .................................................................................................................................. Dues and subscriptions ........................................................................................................ Utilities .................................................................................................................................. Salaries ................................................................................................................................. Accounting/Professional fees ............................................................................................... Other ..................................................................................................................................... 103,216 81,461 184,677 7,959 13,971 19,454 4,816 4,504 215 17,440 12,576 13,075 5,130 49,840 4,997 9,408 6,282 11,026 15,354 3,801 3,554 169 13,765 9,926 10,319 4,049 39,336 3,943 7,425 14,241 24,997 34,808 8,617 8,058 384 31,205 22,502 23,394 9,179 89,176 8,940 16,833 Total Administrative Expenses ............................................................................................. 163,385 128,949 292,334 Total Operating Expenses ............................................................................................. Proposed Adjustments (independent CPA): Operating Expenses: Other Pilot Costs: Pilotage Subsistence/Travel ................................................................................................. Payroll taxes ......................................................................................................................... mstockstill on DSK4VPTVN1PROD with PROPOSALS $212,715 23,880 0 1,432 504,628 398,267 902,895 (7,747) 64,563 (6,114) 50,955 (13,861) 115,518 Total other pilotage costs .............................................................................................. Administrative Expenses: Legal ..................................................................................................................................... Employee benefits ................................................................................................................ Dues and subscriptions ........................................................................................................ 56,816 44,841 101,657 799 (1,537) (13,075) 631 (1,213) (10,319) 1,430 (2,750) (23,394) Total Administrative Expenses ...................................................................................... (13,813) (10,901) (24,714) Total CPA Adjustments ................................................................................................. 43,003 33,940 76,943 Total Operating Expenses ............................................................................................. 547,631 432,207 979,838 VerDate Mar<15>2010 17:06 Jul 31, 2012 Jkt 226001 PO 00000 Frm 00029 Fmt 4702 Sfmt 4702 E:\FR\FM\01AUP1.SGM 01AUP1 45542 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules TABLE 3—RECOGNIZED EXPENSES FOR DISTRICT TWO Area 4 Area 5 Lake Erie Southeast Shoal to Port Huron, MI Reported Expenses for 2010 Operating Expenses: Other pilotage costs: Pilot subsistence/Travel ........................................................................................................ License insurance ................................................................................................................. Payroll taxes ......................................................................................................................... Other ..................................................................................................................................... Total other pilotage costs .............................................................................................. Pilot Boat and Dispatch Costs: Pilot boat expense ................................................................................................................ Dispatch expense ................................................................................................................. Payroll taxes ......................................................................................................................... Total pilot and dispatch costs ....................................................................................... Administrative Expenses: Legal ..................................................................................................................................... Office rent ............................................................................................................................. Insurance .............................................................................................................................. Employee benefits ................................................................................................................ Payroll taxes ......................................................................................................................... Other taxes ........................................................................................................................... Depreciation/Auto leasing/Other ........................................................................................... Interest .................................................................................................................................. Dues and subscriptions ........................................................................................................ Utilities .................................................................................................................................. Salaries ................................................................................................................................. Accounting/Professional fees ............................................................................................... Other ..................................................................................................................................... Total $79,503 6,168 53,457 42,130 181,258 $119,254 9,252 80,186 63,195 271,887 $198,757 15,420 133,643 105,325 453,145 145,254 7,830 4,056 157,140 217,882 11,745 6,084 235,711 363,136 19,575 10,140 392,851 8,120 26,275 13,410 24,420 2,980 19,100 22,954 14,790 6,200 12,138 46,611 14,067 16,157 12,180 39,413 20,114 36,631 4,471 28,651 34,431 22,185 9,300 18,208 69,917 21,100 24,235 20,300 65,688 33,524 61,051 7,451 47,751 57,385 36,975 15,500 30,346 116,528 35,167 40,392 Total Administrative Expenses ...................................................................................... 227,223 340,835 568,058 Total Operating Expenses ............................................................................................. Proposed Adjustments (independent CPA): Operating Expenses: Other Pilot Costs: Pilotage subsistence/Travel .................................................................................................. 565,622 848,432 1,414,054 (3,999) (5,999) (9,998) Total other pilotage costs .............................................................................................. Pilot boat and dispatch costs: Pilot boat expense ................................................................................................................ (3,999) (5,999) (9,998) (767) (1,150) (1,917) Total pilot boat and dispatch costs ............................................................................... Administrative Expenses: Legal ..................................................................................................................................... Office rent ............................................................................................................................. Interest .................................................................................................................................. Dues and subscriptions ........................................................................................................ (767) (1,150) (1,917) (209) (809) (11,268) (6,200) (314) (1,213) (16,902) (9,300) (523) (2,022) (28,170) (15,500) Total Administrative Expenses ...................................................................................... (18,486) (27,729) (46,215) TOTAL CPA ADJUSTMENTS ....................................................................................... (23,252) (34,878) (58,130) Total Operating Expenses ............................................................................................. 542,369 813,554 1,355,924 Note: Numbers may not total due to rounding. TABLE 4—RECOGNIZED EXPENSES FOR DISTRICT THREE Area 6 mstockstill on DSK4VPTVN1PROD with PROPOSALS Area 7 Area 8 Lakes Huron and Michigan Reported expenses for 2010 St. Mary’s River Lake Superior Total Operating Expenses: Other Pilot Costs: Pilot subsistence/Travel ............................................................................ License insurance ..................................................................................... Payroll taxes ............................................................................................. Other ......................................................................................................... $170,162 9,204 27,774 630 $81,836 4,426 13,358 303 $108,514 5,869 17,712 402 $360,512 19,499 58,844 1,335 Total other pilotage costs .................................................................. 207,770 99,923 132,497 440,190 VerDate Mar<15>2010 17:06 Jul 31, 2012 Jkt 226001 PO 00000 Frm 00030 Fmt 4702 Sfmt 4702 E:\FR\FM\01AUP1.SGM 01AUP1 45543 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules TABLE 4—RECOGNIZED EXPENSES FOR DISTRICT THREE—Continued Area 6 Area 7 Area 8 Lakes Huron and Michigan Reported expenses for 2010 St. Mary’s River Lake Superior Pilot Boat and Dispatch Expenses: Pilot boat costs ......................................................................................... Dispatch expense ..................................................................................... Payroll taxes ............................................................................................. Total 197,244 72,550 8,068 94,861 34,891 3,880 125,785 46,266 5,145 417,890 153,707 17,093 Total pilot boat and dispatch costs ........................................................... Administrative Expenses: Legal ......................................................................................................... Office Rent ................................................................................................ Insurance .................................................................................................. Employee benefits .................................................................................... Payroll taxes ............................................................................................. Other taxes ............................................................................................... Depreciation/auto leasing ......................................................................... Interest ...................................................................................................... Dues and subscriptions ............................................................................ Utilities ...................................................................................................... Salaries ..................................................................................................... Accounting/professional fees .................................................................... Other ......................................................................................................... 277,862 133,632 177,196 588,690 28,089 4,673 6,581 57,942 5,709 15,381 23,495 1,537 13,676 13,223 49,802 11,894 5,574 13,509 2,247 3,165 27,866 2,746 7,397 11,299 739 6,577 6,359 23,951 5,720 2,681 17,913 2,980 4,197 36,950 3,641 9,808 14,983 980 8,721 8,432 31,759 7,585 3,555 59,511 9,900 13,943 122,758 12,096 32,586 49,777 3,256 28,974 28,014 105,512 25,199 11,810 Total administrative expenses ........................................................... Total Operating Expenses ................................................................. 237,576 723,208 114,256 347,811 151,504 461,197 503,336 1,532,216 Proposed Adjustments (independent CPA): Other Pilot Costs: Payroll taxes ............................................................................................. 26,213 12,606 16,716 55,535 26,213 12,606 16,716 55,535 (2,170) (1,044) (1,384) (4,598) Total other pilotage costs .................................................................. Pilot Boat and Dispatch Expenses: Dispatch costs .......................................................................................... Total pilot boat and dispatch costs ................................................... Administrative Expenses: Legal ......................................................................................................... Dues and subscriptions ............................................................................ Other ......................................................................................................... (2,170) (1,044) (1,384) (4,598) (1,454) (13,676) (1,255) (699) (6,577) (603) (927) (8,721) (800) (3,080) (28,974) (2,658) Total administrative expenses ........................................................... (16,385) (7,879) (10,448) (34,712) Total CPA Adjustments ..................................................................... 7,658 3,683 4,884 16,225 Total Operating Expenses ................................................................. 730,866 351,494 466,081 1,548,441 Note: Numbers may not total due to rounding. Step 1.C: Adjustment for Inflation or Deflation. In this sub-step we project rates of inflation or deflation for the succeeding navigation season. Because we used 2010 financial information, the ‘‘succeeding navigation season’’ for this ratemaking is 2011. We based our inflation adjustment of 3.2 percent on the 2011 change in the Consumer Price Index (CPI) for the Midwest Region of the United States, which can be found at: https://www.bls.gov/xg_shells/ ro5xg01.htm. This adjustment appears in Tables 5 through 7. TABLE 5—INFLATION ADJUSTMENT, DISTRICT ONE Area 1 mstockstill on DSK4VPTVN1PROD with PROPOSALS Total Operating Expenses ..................................................................................... 2011 change in the Consumer Price Index (CPI) for the Midwest Region of the United States. Inflation Adjustment ............................................................................................... VerDate Mar<15>2010 17:06 Jul 31, 2012 Jkt 226001 PO 00000 Frm 00031 Fmt 4702 Sfmt 4702 Area 2 St. Lawrence River Reported expenses for 2010 Lake Ontario Total × $547,631 .032 × $432,207 .032 × $979,838 .032 = $17,524 = $13,831 = $31,355 E:\FR\FM\01AUP1.SGM 01AUP1 45544 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules TABLE 6—INFLATION ADJUSTMENT, DISTRICT TWO Area 4 Area 5 Lake Erie Southeast Shoal to Port Huron, MI Reported expenses for 2010 Total Operating Expenses ..................................................................................... 2011 change in the Consumer Price Index (CPI) for the Midwest Region of the United States. Inflation Adjustment ............................................................................................... Total × $542,369 .032 × $813,554 .032 × $1,355,924 .032 = $17,356 = $26,034 = $43,390 TABLE 7—INFLATION ADJUSTMENT, DISTRICT THREE Area 6 Total Operating Expenses .................................................. 2011 change in the Consumer Price Index (CPI) for the Midwest Region of the United States. Inflation Adjustment ............................................................ Step 1.D: Projection of Operating Expenses. The final sub-step of Step 1 is to project the operating expenses for each pilotage area, on the basis of the preceding sub-steps and any other foreseeable circumstances that could affect the accuracy of the projection. Area 7 Area 8 Lake Huron and Michigan Reported expenses for 2010 St. Mary’s River Lake Superior Total × $730,866 .032 × $351,494 .032 × $466,081 .032 × $1,548,441 .032 = $23,388 = $11,248 = $14,915 = $49,550 Based on comments and supporting material received for the 2012 Appendix A NPRM, we determined that foreseeable circumstances exist in District One. Eight months of District One’s pilot boat mortgage payments and boat insurance qualify as foreseeable circumstances. For District One, the projected operating expenses are based on the calculations from Sub-steps 1.A through 1.C and the aforementioned foreseeable circumstances. Table 8 shows these projections. TABLE 8—PROJECTED OPERATING EXPENSES, DISTRICT ONE Area 1 Total operating expenses ...................................................................................... Inflation adjustment 3.2% ...................................................................................... Director’s adjustment & foreseeable circumstances Pilot boat mortgage payments ........................................................................ Pilot boat insurance ........................................................................................ Total projected expenses for 2012 pilotage season ............................... Area 2 St. Lawrence River Reported expenses for 2010 Lake Ontario Total + $547,631 17,524 + $432,207 13,831 + $979,838 31,355 + + 26,429 7,221 + + 20,815 5,687 + + 47,244 12,908 = $598,805 = $472,540 = $1,071,344 Note: Numbers may not total due to rounding. During the audit for the 2013 Appendix A rulemaking, the independent accountant informed us that District Two applied for and received a Consolidated Omnibus Budget Reconciliation Act (COBRA) subsidy for the first and second quarter of 2010. The American Recovery and Reinvestment Act of 2009 provided for a temporary premium subsidy for COBRA continuation coverage. The amount of the COBRA insurance subsidy for the period 2010 was $60,460. Federal taxes of $18,400 are accounted for in Step 6 (Federal Tax Allowance). For District Two, the projected operating expenses are based on the calculations from Sub-steps 1.A through 1.C, the COBRA subsidy, and Federal taxes. Table 9 shows these projections. TABLE 9—PROJECTED OPERATING EXPENSES, DISTRICT TWO mstockstill on DSK4VPTVN1PROD with PROPOSALS Area 4 Area 5 Lake Erie Southeast Shoal to Port Huron, MI Reported expenses for 2010 Total Operating Expenses ..................................................................................... Inflation Adjustment 3.2% ...................................................................................... Director’s adjustment & foreseeable circumstances American Recovery and Reinvestment Act Subsidy ...................................... Federal taxes (accounted for in Step 6) ......................................................... VerDate Mar<15>2010 18:33 Jul 31, 2012 Jkt 226001 PO 00000 Frm 00032 Fmt 4702 Sfmt 4702 Total + $542,369 17,356 + $813,554 26,034 + $1,355,924 43,390 + + (24,184) (7,360) + + (36,276) (11,040) + + (60,460) (18,400) E:\FR\FM\01AUP1.SGM 01AUP1 45545 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules TABLE 9—PROJECTED OPERATING EXPENSES, DISTRICT TWO—Continued Area 4 Area 5 Lake Erie Southeast Shoal to Port Huron, MI Reported expenses for 2010 Total projected expenses for 2013 pilotage season ............................... Because we are not now aware of any such foreseeable circumstances for = $528,182 District 3, its projected operating expenses are based exclusively on the = $792,272 Total = $1,320,454 calculations from Sub-steps 1.A through 1.C. Table 10 shows these projections. TABLE 10—PROJECTED OPERATING EXPENSES, DISTRICT THREE Area 6 Area 7 Area 8 Lakes Huron and Michigan Reported expenses for 2010 St. Mary’s River Lake Superior Total Total Expenses ................................................................... Inflation Adjustment 3.2% ................................................... + $730,866 23,388 + $351,494 11,248 + $466,081 14,915 + $1,548,441 49,550 Total projected expenses for 2013 pilotage season ... = $754,254 = $362,742 = $480,996 = $1,597,991 Step 2: Projection of Target Pilot Compensation. In Step 2, we project the annual amount of target pilot compensation that pilotage rates should provide in each area. These projections are based on our latest information on the conditions that will prevail in 2013. Step 2.A: Determination of Target Rate of Compensation. Target pilot compensation for pilots in undesignated waters approximates the average annual compensation for first mates on U.S. Great Lakes vessels. Compensation is determined based on the most current union contracts and includes wages and benefits received by first mates. We calculate target pilot compensation for pilots on designated waters by multiplying the average first mates’ wages by 150 percent and then adding the average first mates’ benefits. The most current union contracts available to us are American Maritime Officers Union (AMOU) contracts with three U.S. companies engaged in Great Lakes shipping. There are two separate AMOU contracts available—we refer to them as Agreements A and B and apportion the compensation provided by each agreement according to the percentage of tonnage represented by companies under each agreement. 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 Agreements A and B expire on July 31, 2016. For the 2011 Appendix C and 2012 Appendix A rulemakings we did not have the current contracts and projected target pilot compensation based on historic data. We have adjusted our projections and recalculated compensation based upon the new contracts. Under Agreement A, we project that the daily wage rate would decrease from $278.73 to $270.61. Under Agreement B, the daily wage rate would increase from $343.59 to $368.05. Because we are interested in annual compensation, we must convert these daily rates. Agreements A and B both use monthly multipliers to convert daily rates into monthly figures that represent actual working days and vacation, holiday, weekend, or bonus days. The monthly multiplier for Agreement A is 54.5 days and the monthly multiplier for Agreement B is 49.5 days. We multiply the monthly figures by 9, which represents the average length (in months) of the Great Lakes shipping season. Table 11 shows our calculations. TABLE 11—PROJECTED WAGE COMPONENTS Pilots on undesignated waters Monthly component mstockstill on DSK4VPTVN1PROD with PROPOSALS Agreement A: $270.61 daily rate × 54.5 days ..................................................................................................................... Monthly total × 9 months = total wages ....................................................................................................... Agreement B: $368.05 daily rate x 49.5 days ..................................................................................................................... Monthly total x 9 months = total wages ....................................................................................................... Based on the contracts of both Agreements A and B, we will adjust their health benefits and pension contributions and leave 401K-plan contributions unchanged. Health benefits for Agreement A will decrease this benefit from $107.40 to $52.96 per VerDate Mar<15>2010 17:06 Jul 31, 2012 Jkt 226001 day, and Agreement B will decrease this benefit from $107.40 to $105.61 per day. The multiplier that both agreements use to calculate monthly benefits from daily rates is currently 45.5 days, and we project that will remain unchanged. Agreement A eliminated pension PO 00000 Frm 00033 Fmt 4702 Sfmt 4702 Pilots on designated waters $14,748.25 132,734 $22,122.38 199,101 18,218.48 163,966 27,327.71 245,949 contributions, and Agreement B increased the pension contribution from $43.55 to $44.61 per day. Agreements A and B maintained 401K plan contributions at 5 percent of the monthly wage. We use a 9-month multiplier to calculate the annual value E:\FR\FM\01AUP1.SGM 01AUP1 45546 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules of these benefits. Table 12 shows our calculations. TABLE 12—PROJECTED BENEFITS COMPONENTS Pilots on undesignated waters Monthly component Agreement A: Employer contribution, 401K plan (Monthly wages × 5%) ............................................................................... Pension = $0.00 × 45.5 days ........................................................................................................................... Health = $52.96 × 45.5 days ............................................................................................................................ Monthly total benefits ....................................................................................................................................... Monthly total benefits × 9 months .................................................................................................................... Agreement B: Employer contribution, 401K plan (Monthly wages × 5%) ............................................................................... Pension = $44.61 × 45.5 days ......................................................................................................................... Health = $105.61 × 45.5 days .......................................................................................................................... Monthly total benefits ....................................................................................................................................... Monthly total benefits × 9 months .................................................................................................................... Pilots on designated waters $737.41 0.00 2,409.68 3,147.09 28,323.81 $1,106.12 0.00 2,409.68 3,515.80 31,642.20 910.92 2,029.76 4,805.26 7,745.94 69,713.46 1,366.38 2,029.76 4,805.26 8,201.40 73,812.60 Table 13 combines our projected wage and benefit components of annual target pilot compensation. TABLE 13—PROJECTED WAGE AND BENEFITS COMPONENTS, COMBINED Pilots on undesignated waters Agreement A: Wages ............................................................................................................................................................... Benefits ............................................................................................................................................................. Pilots on designated waters $132,734 28,324 $199,101 31,642 Total ........................................................................................................................................................... Agreement B: Wages ............................................................................................................................................................... Benefits ............................................................................................................................................................. 161,058 230,744 163,966 69,713 245,949 73,813 Total ........................................................................................................................................................... 233,680 319,762 Agreements A and B affect three companies. Of the tonnage operating under those three companies, approximately 30 percent operates under Agreement A and approximately 70 percent operates under Agreement B. Table 14 provides details. TABLE 14—SHIPPING TONNAGE APPORTIONED BY CONTRACT Company Agreement A Agreement B American Steamship Company ....................................................... Mittal Steel USA, Inc ....................................................................... Key Lakes, Inc ................................................................................. ............................................................ ............................................................ 361,385 815,600 38,826 ............................................................ Total tonnage, each agreement ............................................... Percent tonnage, each agreement .................................................. 361,385 361,385 ÷ 1,215,811 = 29.7238% 854,426 854,426 ÷ 1,215,811 = 70.2762% mstockstill on DSK4VPTVN1PROD with PROPOSALS We use the percentages from Table 14 to apportion the projected wage and benefit components from Table 13. This gives us a single tonnage-weighted set of figures. Table 15 shows our calculations. TABLE 15—TONNAGE-WEIGHTED WAGE AND BENEFIT COMPONENTS Undesignated waters Agreement A: Total wages and benefits ................................................................................................................... Percent tonnage ................................................................................................................................. VerDate Mar<15>2010 17:06 Jul 31, 2012 Jkt 226001 PO 00000 Frm 00034 Fmt 4702 Sfmt 4702 E:\FR\FM\01AUP1.SGM × 01AUP1 $161,058 29.7238% Designated waters × $230,744 29.7238% 45547 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules TABLE 15—TONNAGE-WEIGHTED WAGE AND BENEFIT COMPONENTS—Continued Undesignated waters Designated waters Total ............................................................................................................................................ Agreement B: Total wages and benefits ................................................................................................................... Percent tonnage ................................................................................................................................. = $47,873 = $68,586 × $233,680 70.2762% × $319,762 70.2762% Total ............................................................................................................................................ Projected Target Rate of Compensation Agreement A total weighted average wages and benefits ................................................................ Agreement B total weighted average wages and benefits ................................................................ = $164,221 = $224,717 + $47,873 $164,221 + $68,586 $224,717 Total ............................................................................................................................................ = $212,094 = $293,302 reason and as we explained most recently in the 2011 ratemaking’s final rule, we do not include, and never have included, pilot delay, detention, or cancellation in calculating bridge hours. See 76 FR 6351 at 6352 col. 3 (February 4, 2011). Projected bridge hours are based on the vessel traffic that pilots are expected to serve. We use historical data, input from the pilots and industry, periodicals and trade magazines, and information from conferences to project demand for pilotage services for the coming year. In our 2012 final rule, we determined that 38 pilots would be needed for ratemaking purposes. We have determined that 38 remains the proper Step 2.B: Determination of the Number of Pilots Needed. Subject to adjustment by the Coast Guard Director of Great Lakes Pilotage to ensure uninterrupted service or for other reasonable circumstances, we determine the number of pilots needed for ratemaking purposes in each area by dividing projected bridge hours for each area, by either 1,000 (designated waters) or 1,800 (undesignated waters) bridge hours. We round the mathematical results and express our determination as whole pilots. ‘‘Bridge hours are the number of hours a pilot is aboard a vessel providing pilotage service,’’ 46 CFR part 404, Appendix A, Step 2.B(1). For that number to use for ratemaking purposes in 2013. This includes five pilots in Area 2, where rounding up alone would result in only four pilots. For the same reasons we explained at length in the final rule for the 2008 ratemaking, 74 FR 220 at 221–22 (January 5, 2009) which is available in the docket, we have determined that this adjustment is essential for ensuring uninterrupted pilotage service in Area 2. Table 16 shows the bridge hours we project will be needed for each area and our calculations to determine the number of whole pilots needed for ratemaking purposes. TABLE 16—NUMBER OF PILOTS NEEDED Pilotage area Area Area Area Area Area Area Area 1 2 4 5 6 7 8 Divided by 1,000 (designated waters) or 1,800 (undesignated waters) Projected 2013 bridge hours (Designated waters) ............................................................ (Undesignated waters) ........................................................ (Undesignated waters) ........................................................ (Designated waters) ............................................................ (Undesignated waters) ........................................................ (Designated waters) ............................................................ (Undesignated waters) ........................................................ Step 2.C: Projection of Target Pilot Compensation. In Table 17 we project total target pilot compensation ÷ ÷ ÷ ÷ ÷ ÷ ÷ 5,216 5,509 6,814 5,102 11,411 3,223 9,540 1,000 1,800 1,800 1,000 1,800 1,000 1,800 separately for each area, by multiplying the number of pilots needed in each Calculated value of pilot demand = = = = = = = 5.216 3.061 3.785 5.102 6.339 3.223 5.300 Pilots needed (total = 38) 6 5 4 6 7 4 6 area, as shown in Table 16, by the target pilot compensation shown in Table 15. TABLE 17—PROJECTION OF TARGET PILOT COMPENSATION BY AREA mstockstill on DSK4VPTVN1PROD with PROPOSALS Area Area Area Area Area Area 1 2 4 5 6 7 (Designated waters) .......................................................................................... (Undesignated waters) ...................................................................................... (Undesignated waters) ...................................................................................... (Designated waters) .......................................................................................... (Undesignated waters) ...................................................................................... (Designated waters) .......................................................................................... VerDate Mar<15>2010 18:33 Jul 31, 2012 Jkt 226001 PO 00000 Target rate of pilot compensation Pilots needed (total = 38) Pilotage area Frm 00035 Fmt 4702 Sfmt 4702 6 5 4 6 7 4 E:\FR\FM\01AUP1.SGM × × × × × × 01AUP1 $293,302 212,094 212,094 293,302 212,094 293,302 Projected target pilot compensation = = = = = = $1,759,814 1,060,469 848,375 1,759,814 1,484,657 1,173,209 45548 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules TABLE 17—PROJECTION OF TARGET PILOT COMPENSATION BY AREA—Continued Target rate of pilot compensation Pilots needed (total = 38) Pilotage area Area 8 (Undesignated waters) ...................................................................................... × 6 212,094 Projected target pilot compensation = 1,272,563 Note: Numbers may not total due to rounding. Step 3 and 3.A: Projection of Revenue. In this step, we project the revenue that would be received in 2013 if demand for pilotage services matches the bridge hours we projected in Table 16, and if 2012 pilotage rates were left unchanged. Table 18 shows this calculation. TABLE 18—PROJECTION OF REVENUE BY AREA Projected 2013 bridge hours Pilotage area Area Area Area Area Area Area Area 1 2 4 5 6 7 8 (Designated waters) .................................................................................... (Undesignated waters) ................................................................................ (Undesignated waters) ................................................................................ (Designated waters) .................................................................................... (Undesignated waters) ................................................................................ (Designated waters) .................................................................................... (Undesignated waters) ................................................................................ 5,216 5,509 6,814 5,102 11,411 3,223 9,540 Total ................................................................................................................. .......................... Step 4: Calculation of Investment Base. This step calculates each association’s investment base, the recognized capital investment in the assets employed by the association required to support pilotage operations. This step uses a formula set out in 46 CFR part 404, Appendix B. The first part Revenue projection for 2013 2012 Pilotage rates $467.58 289.72 188.54 504.11 191.69 480.26 183.87 × × × × × × = = = = = = = .......................... $2,438,897 1,596,067 1,284,712 2,571,969 2,187,375 1,547,878 1,754,120 13,381,018 of the formula identifies each association’s total sources of funds. Tables 19 through 21 follow the formula up to that point. TABLE 19—TOTAL SOURCES OF FUNDS, DISTRICT ONE Area 1 Recognized Assets: Total Current Assets .......................................................................................................................... Total Current Liabilities ...................................................................................................................... Current Notes Payable ...................................................................................................................... Total Property and Equipment (NET) ................................................................................................ Land ................................................................................................................................................... Total Other Assets ............................................................................................................................. Area 2 ¥ + + ¥ + $681,485 78,005 22,168 374,021 12,315 0 ¥ + + ¥ + $537,847 61,564 17,496 295,189 9,720 0 Total Recognized Assets ............................................................................................................ Non-Recognized Assets: Total Investments and Special Funds ............................................................................................... = 987,354 = 779,248 + 6,103 + 4,817 Total Non-Recognized Assets .................................................................................................... Total Assets: Total Recognized Assets ................................................................................................................... Total Non-Recognized Assets ........................................................................................................... = 6,103 = 4,817 + 987,354 6,103 + 779,248 4,817 = 993,457 = 784,065 + + + + 659,702 323,902 22,168 0 0 + + + + 520,656 255,633 17,496 0 0 = 1,005,772 = 793,785 + + + 0 0 0 0 + + + 0 0 0 0 = 0 = 0 mstockstill on DSK4VPTVN1PROD with PROPOSALS Total Assets ................................................................................................................................ Recognized Sources of Funds: Total Stockholder Equity .................................................................................................................... Long-Term Debt ................................................................................................................................. Current Notes Payable ...................................................................................................................... Advances from Affiliated Companies ................................................................................................. Long-Term Obligations—Capital Leases ........................................................................................... Total Recognized Sources ......................................................................................................... Non-Recognized Sources of Funds: Pension Liability ................................................................................................................................. Other Non-Current Liabilities ............................................................................................................. Deferred Federal Income Taxes ........................................................................................................ Other Deferred Credits ...................................................................................................................... Total Non-Recognized Sources .................................................................................................. Total Sources of Funds: Total Recognized Sources ................................................................................................................. VerDate Mar<15>2010 17:06 Jul 31, 2012 Jkt 226001 PO 00000 Frm 00036 Fmt 4702 Sfmt 4702 E:\FR\FM\01AUP1.SGM 1,005,772 01AUP1 793,785 45549 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules TABLE 19—TOTAL SOURCES OF FUNDS, DISTRICT ONE—Continued Area 1 Area 2 Total Non-Recognized Sources ......................................................................................................... + 0 + 0 Total Sources of Funds .............................................................................................................. = 1,005,772 = 793,785 TABLE 20—TOTAL SOURCES OF FUNDS, DISTRICT TWO Area 4 Recognized Assets: Total Current Assets .......................................................................................................................... Total Current Liabilities ...................................................................................................................... Current Notes Payable ...................................................................................................................... Total Property and Equipment (NET) ................................................................................................ Land ................................................................................................................................................... Total Other Assets ............................................................................................................................. Area 5 ¥ + + ¥ + $454,842 449,157 0 312,858 0 0 ¥ + + ¥ + $1,026,731 1,013,899 0 706,224 0 0 Total Recognized Assets ............................................................................................................ Non-Recognized Assets: Total Investments and Special Funds ............................................................................................... = 318,543 = 719,056 + 0 + 0 Total Non-Recognized Assets .................................................................................................... Total Assets: Total Recognized Assets ................................................................................................................... Total Non-Recognized Assets ........................................................................................................... = 0 = 0 + 318,543 0 + 719,056 0 = 318,543 = 719,056 + + + + 60,920 257,622 0 0 0 + + + + 137,517 581,540 0 0 0 = 318,542 = 719,057 + + + 0 0 0 0 + + + 0 0 0 0 Total Non-Recognized Sources .................................................................................................. Total Sources of Funds: Total Recognized Sources ................................................................................................................. Total Non-Recognized Sources ......................................................................................................... = 0 = 0 + 318,542 0 + 719,057 0 Total Sources of Funds .............................................................................................................. = 318,542 = 719,057 Total Assets ................................................................................................................................ Recognized Sources of Funds: Total Stockholder Equity .................................................................................................................... Long-Term Debt ................................................................................................................................. Current Notes Payable ...................................................................................................................... Advances from Affiliated Companies ................................................................................................. Long-Term Obligations—Capital Leases ........................................................................................... Total Recognized Sources ......................................................................................................... Non-Recognized Sources of Funds: Pension Liability ................................................................................................................................. Other Non-Current Liabilities ............................................................................................................. Deferred Federal Income Taxes ........................................................................................................ Other Deferred Credits ...................................................................................................................... TABLE 21—TOTAL SOURCES OF FUNDS, DISTRICT THREE Area 6 mstockstill on DSK4VPTVN1PROD with PROPOSALS Recognized Assets: Total Current Assets ....................................................................................... Total Current Liabilities ................................................................................... Current Notes Payable ................................................................................... Total Property and Equipment (NET) ............................................................. Land ................................................................................................................ Total Other Assets .......................................................................................... Area 7 Area 8 ¥ + + ¥ + $1,009,619 123,906 0 35,709 0 354 ¥ + + ¥ + $485,558 59,590 0 17,174 0 170 ¥ + + ¥ + $643,846 79,016 0 22,772 0 226 Total Recognized Assets ......................................................................... Non-Recognized Assets: Total Investments and Special Funds ............................................................ = 921,776 = 443,312 = 587,828 + 0 + 0 + 0 Total Non-Recognized Assets ................................................................. Total Assets: Total Recognized Assets ................................................................................ Total Non-Recognized Assets ........................................................................ = 0 = 0 = 0 + 921,776 0 + 443,312 0 + 587,828 0 = 921,776 = 443,312 = 587,828 Total Assets ............................................................................................. Recognized Sources of Funds: Total Stockholder Equity ................................................................................. VerDate Mar<15>2010 17:06 Jul 31, 2012 Jkt 226001 PO 00000 Frm 00037 Fmt 4702 Sfmt 4702 921,776 E:\FR\FM\01AUP1.SGM 443,321 01AUP1 587,828 45550 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules TABLE 21—TOTAL SOURCES OF FUNDS, DISTRICT THREE—Continued Area 6 Area 7 Area 8 Long-Term Debt .............................................................................................. Current Notes Payable ................................................................................... Advances from Affiliated ................................................................................. Companies ...................................................................................................... Long-Term Obligations—Capital Leases ........................................................ + + + 0 0 0 + + + 0 0 0 + + + 0 0 0 + 0 + 0 + 0 Total Recognized Sources ...................................................................... Non-Recognized Sources of Funds: Pension Liability .............................................................................................. Other Non-Current Liabilities .......................................................................... Deferred Federal Income Taxes ..................................................................... Other Deferred Credits ................................................................................... = 921,776 = 443,321 = 587,828 + + + 0 0 0 0 + + + 0 0 0 0 + + + 0 0 0 0 Total Non-Recognized Sources .............................................................. Total Sources of Funds: Total Recognized Sources ............................................................................. Total Non-Recognized Sources ...................................................................... = 0 = 0 = 0 + 921,776 0 + 443,321 0 + 587,828 0 Total Sources of Funds ........................................................................... = 921,776 = 443,321 = 587,828 Tables 19 through 21 also relate to the second part of the formula for calculating the investment base. The second part establishes a ratio between recognized sources of funds and total sources of funds. Since no nonrecognized sources of funds (sources we do not recognize as required to support pilotage operations) exist for any of the pilot associations for this year’s rulemaking, the ratio between recognized sources of funds and total sources of funds is ‘‘1:1’’ (or a multiplier of ‘‘1’’) in all cases. Table 22 applies the multiplier of ‘‘1,’’ and shows that the investment base for each association equals its total recognized assets. Table 22 also expresses these results by area, because area results will be needed in subsequent steps. TABLE 22—INVESTMENT BASE BY AREA AND DISTRICT District Total recognized assets ($) Area Recognized sources of funds ($) Total sources of funds ($) Multiplier (ratio of recognized to total sources) Investment base ($) 1 One ...................................................................... 1 2 987,354 779,248 1,005,772 793,785 1,005,772 793,785 1 1 987,354 779,248 Total .............................................................. Two 2 .................................................................... ............ 4 5 ........................ 318,543 719,056 ........................ 318,542 719,057 ........................ 318,542 719,057 ........................ 1 1 1,766,602 318,543 719,056 Total .............................................................. Three .................................................................... ............ 6 7 ........................ 921,776 443,312 ........................ 921,776 443,312 ........................ 921,776 443,312 ........................ 1 1 1,037,599 921,776 443,312 8 587,828 587,828 587,828 1 587,828 ............ ........................ ........................ ........................ ........................ 1,952,916 Total .............................................................. ‘‘Investment base’’ = ‘‘Total recognized assets’’ × ‘‘Multiplier (ratio of recognized to total sources)’’. The pilot associations that provide pilotage services in Districts One and Three operate as partnerships. The pilot association that provides pilotage service for District Two operates as a corporation. 1 Note: mstockstill on DSK4VPTVN1PROD with PROPOSALS 2 Note: Step 5: Determination of Target Rate of Return. We determine a marketequivalent return on investment (ROI) that will be allowed for the recognized net capital invested in each association by its members. We do not recognize capital that is unnecessary or unreasonable for providing pilotage services. There are no non-recognized investments in this year’s calculations. The allowed ROI is based on the VerDate Mar<15>2010 17:06 Jul 31, 2012 Jkt 226001 preceding year’s average annual rate of return for new issues of high-grade corporate securities. For 2011, the preceding year, the allowed ROI was a little more than 4.64 percent, based on the average rate of return that year on Moody’s AAA corporate bonds, which can be found at: https:// research.stlouisfed.org/fred2/series/ AAA/downloaddata?cid=119. PO 00000 Frm 00038 Fmt 4702 Sfmt 4702 Step 6: Adjustment Determination. The first Sub-step in the adjustment determination requires an initial calculation, applying a formula described in Appendix A. The formula uses the results from Steps 1, 2, 3, and 4 to project the ROI that can be expected in each area, if no further adjustments are made. This calculation is shown in Tables 23 through 25. E:\FR\FM\01AUP1.SGM 01AUP1 45551 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules TABLE 23—PROJECTED ROI, AREAS IN DISTRICT ONE Area 1 Revenue (from Step 3) ............................................................................................................................. Operating Expenses (from Step 1) ........................................................................................................... Pilot Compensation (from Step 2) ............................................................................................................ Operating Profit/(Loss) .............................................................................................................................. Interest Expense (from audits) .................................................................................................................. Earnings Before Tax ................................................................................................................................. Federal Tax Allowance ............................................................................................................................. Net Income ................................................................................................................................................ Return Element (Net Income + Interest) ................................................................................................... Investment Base (from Step 4) ................................................................................................................. Projected Return on Investment ............................................................................................................... + ¥ ¥ = ¥ = ¥ = ÷ = Area 2 $2,438,897 598,805 1,759,814 80,278 12,576 67,702 0 67,702 80,278 987,354 0.08 + ¥ ¥ = ¥ = ¥ = ÷ = $1,596,067 472,540 1,060,469 63,059 9,926 53,133 0 53,133 63,059 779,248 0.08 TABLE 24—PROJECTED ROI, AREAS IN DISTRICT TWO Area 4 Revenue (from Step 3) ............................................................................................................................. Operating Expenses (from Step 1) ........................................................................................................... Pilot Compensation (from Step 2) ............................................................................................................ Operating Profit/(Loss) .............................................................................................................................. Interest Expense (from audits) .................................................................................................................. Earnings Before Tax ................................................................................................................................. Federal Tax Allowance ............................................................................................................................. Net Income ................................................................................................................................................ Return Element (Net Income + Interest) ................................................................................................... Investment Base (from Step 4) ................................................................................................................. Projected Return on Investment ............................................................................................................... + ¥ ¥ = ¥ = ¥ = ÷ = Area 5 $1,284,712 $528,181 $848,375 ($91,845) $3,522 ($95,367) $7,360 ($102,727) ($99,205) $318,543 (0.31) + ¥ ¥ = ¥ = ¥ = ÷ = $2,571,969 $792,272 $1,759,814 $19,883 $5,283 $14,600 $11,040 $3,560 $8,843 $719,056 0.01 TABLE 25—PROJECTED ROI, AREAS IN DISTRICT THREE Area 6 Revenue (from Step 3) .......................................................................................... Operating Expenses (from Step 1) ........................................................................ Pilot Compensation (from Step 2) ......................................................................... Operating Profit/(Loss) ........................................................................................... Interest Expense (from audits) .............................................................................. Earnings Before Tax .............................................................................................. Federal Tax Allowance .......................................................................................... Net Income ............................................................................................................. Return Element (Net Income + Interest) ............................................................... Investment Base (from Step 4) .............................................................................. Projected Return on Investment ............................................................................ The second sub-step required for Step 6 compares the results of Tables 23 through 25 with the target ROI + ¥ ¥ = ¥ = ¥ = ÷ = Area 7 $2,187,375 $754,254 $1,484,657 ($51,536) $1,537 ($53,073) $0 ($53,073) ($51,536) $921,776 (0.06) (approximately 4.64 percent) we obtained in Step 5 to determine if an adjustment to the base pilotage rate is + ¥ ¥ = ¥ = ¥ = ÷ = Area 8 $1,547,878 $362,742 $1,173,209 $11,927 $739 $11,188 $0 $11,188 $11,927 $443,312 0.03 + ¥ ¥ = ¥ = ¥ = ÷ = $1,754,120 $480,996 $1,272,563 561 $980 ($419) $0 ($419) $561 $587,828 0.00 necessary. Table 26 shows this comparison for each area. TABLE 26—COMPARISON OF PROJECTED ROI AND TARGET ROI, BY AREA 1 Area 2 Area 4 Area 5 Area 6 Area 7 Area 8 St. Lawrence River mstockstill on DSK4VPTVN1PROD with PROPOSALS Area 1 Lake Ontario Lake Erie Southeast Shoal to Port Huron, MI Lakes Huron and Michigan St. Mary’s River Lake Superior 0.028 0.046 (0.019) (0.056) 0.046 (0.102) Projected return on investment ...... Target return on investment .......... Difference in return on investment 0.081 0.046 0.035 0.081 0.046 0.035 (0.288) 0.046 (0.335) 0.027 0.046 (0.019) 0.001 0.046 (0.045) 1 Note: Decimalization and rounding of the target ROI affects the display in this table but does not affect our calculations, which are based on the actual figure. Because Table 26 shows a significant difference between the projected and target ROIs, an adjustment to the base pilotage rates is necessary. Step 6 now VerDate Mar<15>2010 18:33 Jul 31, 2012 Jkt 226001 requires us to determine the pilotage revenues that are needed to make the target return on investment equal to the projected return on investment. This PO 00000 Frm 00039 Fmt 4702 Sfmt 4702 calculation is shown in Table 27. It adjusts the investment base we used in Step 4, multiplying it by the target ROI from Step 5, and applies the result to E:\FR\FM\01AUP1.SGM 01AUP1 45552 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules the operating expenses and target pilot compensation determined in Steps 1 and 2. TABLE 27—REVENUE NEEDED TO RECOVER TARGET ROI, BY AREA Operating expenses (Step 1) Pilotage area Area Area Area Area Area Area Area 1 2 4 5 6 7 8 Investment base (step 4) × 4.64% (target ROI Step 5) Target pilot compensation (Step 2) Federal tax allowance Revenue needed (Designated waters) .................... (Undesignated waters) ................ (Undesignated waters) ................ (Designated waters) .................... (Undesignated waters) ................ (Designated waters) .................... (Undesignated waters) ................ $598,805 472,540 528,181 792,272 754,254 362,742 480,996 + + + + + + + $1,759,814 1,060,469 848,375 1,759,814 1,484,657 1,173,209 1,272,563 + + + + + + + $45,805 36,151 14,778 33,358 42,763 20,566 27,270 + + + + + + + $0 0 7,360 11,040 0 0 0 = = = = = = = $2,404,424 1,569,160 1,398,694 2,596,484 2,281,673 1,556,517 1,780,829 Total ................................................. 3,989,788 + 9,358,902 + 220,691 + 18,400 = 13,587,781 The ‘‘Revenue Needed’’ column of Table 27 is more than the revenue we projected in Table 18. For purposes of transparency, we verify Table 27’s calculations by rerunning the first part of Step 6, using the revenue needed from Table 27 instead of the Table 18 revenue projections we used in Tables 23 through 25. Tables 28 through 30 show that attaining the Table 27 revenue needed is sufficient to recover target ROI. TABLE 28—BALANCING REVENUE NEEDED AND TARGET ROI, DISTRICT ONE Area 1 Revenue Needed ...................................................................................................................................... Operating Expenses (from Step 1) ........................................................................................................... Pilot Compensation (from Step 2) ............................................................................................................ Operating Profit/(Loss) .............................................................................................................................. Interest Expense (from audits) .................................................................................................................. Earnings Before Tax ................................................................................................................................. Federal Tax Allowance ............................................................................................................................. Net Income ................................................................................................................................................ Return Element (Net Income + Interest) ................................................................................................... Investment Base (from Step 4) ................................................................................................................. Return on Investment ................................................................................................................................ + ¥ ¥ = ¥ = ¥ = ÷ = $2,404,424 $598,805 $1,759,814 $45,805 $12,576 $33,229 $0 $33,229 $45,805 $987,354 0.0464 Area 2 + ¥ ¥ = ¥ = ¥ = ÷ = $1,569,160 $472,540 $1,060,469 $36,151 $9,926 $26,225 $0 $26,225 $36,151 $779,248 0.0464 TABLE 29—BALANCING REVENUE NEEDED AND TARGET ROI, DISTRICT TWO Area 4 Revenue Needed ...................................................................................................................................... Operating Expenses (from Step 1) ........................................................................................................... Pilot Compensation (from Step 2) ............................................................................................................ Operating Profit/(Loss) .............................................................................................................................. Interest Expense (from audits) .................................................................................................................. Earnings Before Tax ................................................................................................................................. Federal Tax Allowance ............................................................................................................................. Net Income ................................................................................................................................................ Return Element (Net Income + Interest) ................................................................................................... Investment Base (from Step 4) ................................................................................................................. Return on Investment ................................................................................................................................ + ¥ ¥ = ¥ = ¥ = ÷ = $1,398,694 $528,181 $848,375 $22,138 $3,522 $18,616 $7,360 $11,256 $14,778 $318,543 0.0464 Area 5 + ¥ ¥ = ¥ = ¥ = ÷ = $2,596,484 $792,272 $1,759,814 $44,398 $5,283 $39,115 $11,040 $28,075 $33,358 $719,056 0.0464 TABLE 30—BALANCING REVENUE NEEDED AND TARGET ROI, DISTRICT THREE mstockstill on DSK4VPTVN1PROD with PROPOSALS Area 6 Revenue Needed ................................................................................................... Operating Expenses (from Step 1) ........................................................................ Pilot Compensation (from Step 2) ......................................................................... Operating Profit/(Loss) ........................................................................................... Interest Expense (from audits) .............................................................................. Earnings Before Tax .............................................................................................. Federal Tax Allowance .......................................................................................... Net Income ............................................................................................................. Return Element (Net Income + Interest) ............................................................... Investment Base (from Step 4) .............................................................................. VerDate Mar<15>2010 17:06 Jul 31, 2012 Jkt 226001 PO 00000 Frm 00040 Fmt 4702 Sfmt 4702 + ¥ ¥ = ¥ = ¥ = ÷ $2,281,673 $754,254 $1,484,657 $42,763 $1,537 $41,226 $0 $41,226 $42,763 $921,776 E:\FR\FM\01AUP1.SGM Area 7 + ¥ ¥ = ¥ = ¥ = ÷ 01AUP1 $1,556,517 $362,742 $1,173,209 $20,566 $739 $19,827 $0 $19,827 $20,566 $443,312 Area 8 + ¥ ¥ = ¥ = ¥ = ÷ $1,780,829 $480,996 $1,272,563 $27,270 $980 $26,290 $0 $26,290 $27,270 $587,828 45553 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules TABLE 30—BALANCING REVENUE NEEDED AND TARGET ROI, DISTRICT THREE—Continued Area 6 Return on Investment ............................................................................................ Step 7: Adjustment of Pilotage Rates. Finally, and subject to negotiation with Canada or adjustment for other = Area 7 0.0464 supportable circumstances, we calculate rate adjustments by dividing the Step 6 revenue needed (Table 27) by the Step = 0.0464 Area 8 = 0.0464 3 revenue projection (Table 18), to give us a rate multiplier for each area. Tables 31 through 33 show these calculations. TABLE 31—RATE MULTIPLIER, AREAS IN DISTRICT ONE Area 1 Revenue Needed (from Step 6) ................................................................................................................ Revenue (from Step 3) ............................................................................................................................. Rate Multiplier ........................................................................................................................................... Area 2 St. Lawrence River Ratemaking projections Lake Ontario $2,404,424 $2,438,897 0.9859 ÷ = ÷ = $1,569,160 $1,596,067 0.9831 TABLE 32—RATE MULTIPLIER, AREAS IN DISTRICT TWO Area 4 Area 5 Lake Erie Southeast Shoal to Port Huron, MI Ratemaking projections Revenue Needed (from Step 6) ................................................................................................................ Revenue (from Step 3) ............................................................................................................................. Rate Multiplier ........................................................................................................................................... $1,398,694 $1,284,712 1.0887 ÷ = ÷ = $2,596,484 $2,571,969 1.0095 TABLE 33—RATE MULTIPLIER, AREAS IN DISTRICT THREE Area 6 Lakes Huron and Michigan Ratemaking projections Revenue Needed (from Step 6) ............................................................................ Revenue (from Step 3) .......................................................................................... Rate Multiplier ........................................................................................................ 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 ÷ = $2,281,673 $2,187,375 1.0431 (46 CFR 401.428), would increase by 1.55 percent in all areas. We calculate a rate multiplier for adjusting the basic rates and charges described in 46 CFR 401.420 and 401.428 and applicable in all areas. We divide total revenue needed (Step 6, Table 27) by total projected revenue Area 7 St. Mary’s River ÷ = $1,556,517 $1,547,878 1.0056 Area 8 Lake Superior ÷ = $1,780,829 $1,754,120 1.0152 (Step 3 & 3A, Table 18). Our proposed rate changes for 46 CFR 401.420 and 401.428 reflect the multiplication of the rates we established for those sections in our 2012 final rule, by the rate multiplier shown as the result of our calculation in Table 34. TABLE 34—RATE MULTIPLIER FOR BASIC RATES AND CHARGES IN 46 CFR 401.420 AND 401.428 Ratemaking Projections mstockstill on DSK4VPTVN1PROD with PROPOSALS Total Revenue Needed (from Step 6) .......................................................................................................................................... Total revenue (from Step 3) ......................................................................................................................................................... Rate Multiplier .............................................................................................................................................................................. We multiply the existing rates we established in our 2012 final rule by the VerDate Mar<15>2010 17:06 Jul 31, 2012 Jkt 226001 rate multipliers from Tables 31 through 33 to calculate the area by area rate PO 00000 Frm 00041 Fmt 4702 Sfmt 4702 ÷ = $13,587,781 $13,381,018 1.0155 changes we propose for 2013. Tables 35 through 37 show these calculations. E:\FR\FM\01AUP1.SGM 01AUP1 45554 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules TABLE 35—PROPOSED ADJUSTMENT OF PILOTAGE RATES, AREAS IN DISTRICT ONE 2012 Rate Area 1 St. Lawrence River: Basic Pilotage ........................................................................................................... Each lock Transited .................................................................................................. Harbor movage ......................................................................................................... Minimum basic rate, St. Lawrence River ................................................................. Maximum rate, through trip ...................................................................................... Area 2 Lake Ontario: 6-Hour period ............................................................................................................ Docking or Undocking .............................................................................................. Adjusted rate for 2013 Rate multiplier $19.02/km, $33.67/mi $422 $1,381 $921 $4,041 × 0.986 = × × × × 0.986 0.986 0.986 0.986 = = = = $18.75/km, $33.19/mi $416 $1,361 $908 $3,984 $865 $826 × × 0.983 0.983 = = $851 $812 Note: Numbers may not total due to rounding. TABLE 36—PROPOSED ADJUSTMENT OF PILOTAGE RATES, AREAS IN DISTRICT TWO 2012 Rate Area 4 Lake Erie: 6-Hour period ......................................................................................................... Docking or undocking ............................................................................................ Any point on Niagara River below Black Rock Lock ............................................. Area 5 Southeast Shoal to Port Huron, MI between any point on or in: Toledo or any point on Lake Erie W. of Southeast Shoal ..................................... Toledo or any point on Lake Erie W. of Southeast Shoal & Southeast Shoal ..... Toledo or any point on Lake Erie W. of Southeast Shoal & Detroit River ............ Toledo or any point on Lake Erie W. of Southeast Shoal & Detroit Pilot Boat .... Port Huron Change Point & Southeast Shoal (when pilots are not changed at the Detroit Pilot Boat). Port Huron Change Point & Toledo or any point on Lake Erie W. of Southeast Shoal (when pilots are not changed at the Detroit Pilot Boat). Port Huron Change Point & Detroit River .............................................................. Port Huron Change Point & Detroit Pilot Boat ...................................................... Port Huron Change Point & St. Clair River ........................................................... St. Clair River ......................................................................................................... St. Clair River & Southeast Shoal (when pilots are not changed at the Detroit Pilot Boat). St. Clair River & Detroit River/Detroit Pilot Boat ................................................... Detroit, Windsor, or Detroit River ........................................................................... Detroit, Windsor, or Detroit River & Southeast Shoal ........................................... Detroit, Windsor, or Detroit River & Toledo or any point on Lake Erie W. of Southeast Shoal. Detroit, Windsor, or Detroit River & St. Clair River ............................................... Detroit Pilot Boat & Southeast Shoal ..................................................................... Detroit Pilot Boat & Toledo or any point on Lake Erie W. of Southeast Shoal .... Detroit Pilot Boat & St. Clair River ......................................................................... Adjusted rate for 2013 Rate multiplier $760 585 1,493 × × × 1.089 1.089 1.089 = = = $828 637 1,626 1,369 2,317 3,008 2,317 4,036 × × × × × 1.010 1.010 1.010 1.010 1.010 = = = = = 1,382 2,339 3,037 2,339 4,074 4,675 × 1.010 = 4,719 3,031 2,358 1,677 1,369 4,036 × × × × × 1.010 1.010 1.010 1.010 1.010 = = = = = 3,060 2,381 1,693 1,382 4,074 3,031 1,369 2,317 3,008 × × × × 1.010 1.010 1.010 1.010 = = = = 3,060 1,382 2,339 3,037 3,031 1,677 2,317 3,031 × × × × 1.010 1.010 1.010 1.010 = = = = 3,060 1,693 2,339 3,060 Note: Numbers may not total due to rounding. TABLE 37—PROPOSED ADJUSTMENT OF PILOTAGE RATES, AREAS IN DISTRICT THREE mstockstill on DSK4VPTVN1PROD with PROPOSALS 2011 Rate Area 6 Lakes Huron and Michigan: 6-Hour Period ......................................................................................................... Docking or undocking ............................................................................................ Area 7 St. Mary’s River 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 St. Marie, Ont., except the Algoma Steel Corp. Wharf & De Tour. Any point in Sault St. 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 Lake Superior: 6-Hour period ......................................................................................................... VerDate Mar<15>2010 18:33 Jul 31, 2012 Jkt 226001 PO 00000 Frm 00042 Fmt 4702 Sfmt 4702 Adjusted rate for 2012 Rate multiplier $662 629 × × 1.043 1.043 = = $691 656 2,568 2,568 967 2,153 × × × × 1.006 1.006 1.006 1.006 = = = = 2,583 2,583 973 2,165 967 × 1.006 = 973 2,153 967 967 × × × 1.006 1.006 1.006 = = = 2,165 973 973 577 × 1.015 = 586 E:\FR\FM\01AUP1.SGM 01AUP1 45555 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules TABLE 37—PROPOSED ADJUSTMENT OF PILOTAGE RATES, AREAS IN DISTRICT THREE—Continued 2011 Rate Docking or undocking ............................................................................................ Adjusted rate for 2012 Rate multiplier 549 × 1.015 = 557 Note: Numbers may not total due to rounding. VI. Regulatory Analyses We developed this proposed rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 14 of these statutes or executive orders. A. Regulatory Planning and Review Executive Orders 12866 (‘‘Regulatory Planning and Review’’) and 13563 (‘‘Improving Regulation and Regulatory Review’’) direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule is not a ‘‘significant regulatory action’’ under section 3(f) of Executive Order 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget. A draft regulatory assessment follows. The Coast Guard is required to review and adjust pilotage rates on the Great Lakes annually. See Parts III and IV of this preamble for detailed discussions of the Coast Guard’s legal basis and purpose for this rulemaking and for background information on Great Lakes pilotage ratemaking. Based on our annual review for this proposed rulemaking, we are adjusting the pilotage rates for the 2013 shipping season to generate sufficient revenue to cover allowable expenses, target pilot compensation, and returns on investment. The rate adjustments in this proposed rule would, if codified, lead to a cost in all three districts with an estimated cost to shippers of approximately $148,000 across all three districts. The proposed rule would apply the 46 CFR part 404, Appendix A, full ratemaking methodology and increase Great Lakes pilotage rates, on average, approximately 1.87 percent overall from the current rates set in the 2012 final rule. The Appendix A methodology is discussed and applied in detail in Part V of this preamble. Among other factors described in Part V, it reflects audited 2010 financial data from the pilotage associations (the most recent year available for auditing), projected association expenses, and regional inflation or deflation. The last full Appendix A ratemaking was concluded in 2011 and used financial data from the 2009 base accounting year. The last annual rate review, conducted under 46 CFR part 404, Appendix C, was completed early in 2011. 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 foreign trade) and owners and operators of foreign vessels on a route within the Great Lakes system. These owners and operators must have pilots or pilotage service as required by 46 U.S.C. 9302. There is no minimum tonnage limit or exemption for these vessels. The Coast Guard’s interpretation is that the statute applies only to commercial vessels and not to recreational vessels. Owners and operators of other vessels that are not affected by this rule, such as recreational boats and vessels only operating within the Great Lakes system may elect to purchase pilotage services. However, this election is voluntary and does not affect the Coast Guard’s calculation of the rate and is not a part of our estimated national cost to shippers. Coast Guard sampling of pilot data suggests there are very few U.S. domestic vessels, without registry and operating only in the Great Lakes that voluntarily purchase pilotage services. We used 2008–2010 vessel arrival data from the Coast Guard’s Marine Information for Safety and Law Enforcement (MISLE) system to estimate the average annual number of vessels affected by the rate adjustment to be 204 vessels that journey into the Great Lakes system. These vessels entered the Great Lakes by transiting through or in part of at least one of the three pilotage districts before leaving the Great Lakes system. These vessels often make more than one distinct stop, docking, loading, and unloading at facilities in Great Lakes ports. Of the total trips for the 204 vessels, there were approximately 319 annual U.S. port arrivals before the vessels left the Great Lakes system, based on 2008–2010 vessel data from MISLE. The impact of the rate adjustment to shippers is estimated from the District pilotage revenues. These revenues represent the direct and indirect costs (‘‘economic costs’’) that shippers must pay for pilotage services. The Coast Guard sets rates so that revenues equal the estimated cost of pilotage. We estimate the additional impact (costs or savings) of the rate adjustment in this proposed rule to be the difference between the total projected revenue needed to cover costs in 2013 based on the 2012 rate adjustment and the total projected revenue needed to cover costs in 2013 as set forth in this proposed rule. Table 38 details additional costs or savings by area and district. mstockstill on DSK4VPTVN1PROD with PROPOSALS TABLE 38—RATE ADJUSTMENT AND ADDITIONAL IMPACT OF THE PROPOSED RULE BY AREA AND DISTRICT [$U.S.; Non-discounted] Projected revenue needed in 2012 * Area 1 .......................................................................................................................................... VerDate Mar<15>2010 18:33 Jul 31, 2012 Jkt 226001 PO 00000 Frm 00043 Fmt 4702 Sfmt 4702 $2,308,357 E:\FR\FM\01AUP1.SGM 01AUP1 Projected revenue needed in 2013 ** $2,404,424 Additional costs or savings of this proposed rule $96,067 45556 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules TABLE 38—RATE ADJUSTMENT AND ADDITIONAL IMPACT OF THE PROPOSED RULE BY AREA AND DISTRICT—Continued [$U.S.; Non-discounted] Projected revenue needed in 2012 * Projected revenue needed in 2013 ** Additional costs or savings of this proposed rule Area 2 .......................................................................................................................................... 1,614,791 1,569,160 (45,631) Total, District One ................................................................................................................. 3,923,148 3,973,583 50,435 Area 4 .......................................................................................................................................... Area 5 .......................................................................................................................................... 1,310,549 2,600,490 1,398,694 2,596,484 88,145 (4,006) Total, District Two ................................................................................................................. 3,911,039 3,995,178 84,139 Area 6 .......................................................................................................................................... Area 7 .......................................................................................................................................... Area 8 .......................................................................................................................................... 2,227,555 1,565,906 1,811,863 2,281,673 1,556,517 1,780,829 54,118 (9,389) (31,034) Total, District Three .............................................................................................................. 5,605,324 5,619,020 13,696 mstockstill on DSK4VPTVN1PROD with PROPOSALS * These 2012 estimates are detailed in Table 18 of the 2012 final rule (76 FR 6351). ** These 2013 estimates are detailed in Table 27 of this rulemaking. Some values may not total due to rounding. ‘‘Additional Revenue or Cost of this Rulemaking’’ = ‘‘Revenue needed in 2012’’ minus ‘‘Revenue needed in 2011.’’ After applying the rate change in this proposed rule, the resulting difference between the projected revenue in 2012 and the projected revenue in 2013 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 proposed rule. As discussed earlier, we consider a reduction in payments to be a cost savings. The impact of the rate adjustment in this proposed rule to shippers varies by area and district. The rate adjustments would lead to a cost in all three districts, with affected shippers operating in District One, District Two, and District Three experiencing costs of $50,435, $84,139, and $13,696, respectively. To calculate an exact cost or savings per vessel is difficult because of the variation in vessel types, routes, port arrivals, commodity carriage, time of season, conditions during navigation, and preferences for the extent of pilotage services on designated and undesignated portions of the Great Lakes system. Some owners and operators would pay more and some would pay less depending on the distance and port arrivals of their vessels’ trips. However, the additional savings reported earlier in this NPRM does capture the adjustment the shippers would experience as a result of the proposed rate adjustment. As Table 38 indicates, shippers operating in all areas would experience an annual cost due to this rulemaking. The overall impact of the proposed rule would be a VerDate Mar<15>2010 18:33 Jul 31, 2012 Jkt 226001 cost to shippers of approximately $148,270 across all three districts. This proposed rulemaking would allow the U.S. Coast Guard to meet the statutory requirements to review the rates for pilotage services on the Great Lakes—ensuring proper pilot compensation. B. Small Entities Under the Regulatory Flexibility Act (5 U.S.C. 601–612), we have considered whether this proposed rule would have a significant economic impact on a substantial number of small entities. The term ‘‘small entities’’ comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000 people. We expect entities affected by the proposed rule would be classified under the North American Industry Classification System (NAICS) code subsector 483—Water Transportation, which includes the following 6-digit NAICS codes for freight transportation: 483111—Deep Sea Freight Transportation, 483113—Coastal and Great Lakes Freight Transportation, and 483211—Inland Water Freight Transportation. According to the Small Business Administration’s definition, a U.S. company with these NAICS codes and employing less than 500 employees is considered a small entity. For the proposed rule, we reviewed recent company size and ownership data from 2008–2010 Coast Guard MISLE data and business revenue and PO 00000 Frm 00044 Fmt 4702 Sfmt 4702 size data provided by publicly available sources such as MANTA and Reference USA. 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 would be comparable in ownership and size to these shippers. There are three U.S. entities affected by the proposed rule that receive revenue from pilotage services. These are the three pilot associations that provide and manage pilotage services within the Great Lakes districts. Two of the associations operate as partnerships and one operates as a corporation. These associations are designated the same NAICS industry classification and small entity size standards described above, but they have far fewer than 500 employees; they have approximately 65 total employees combined. We expect no adverse impact to these entities from this proposed rule because all associations receive enough revenue to balance the 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 proposed rule would not have a significant economic impact on a substantial number of small entities. If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this proposed rule would have a significant economic impact on it, please submit a comment to the Docket Management Facility at the address under ADDRESSES. In your E:\FR\FM\01AUP1.SGM 01AUP1 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules comment, explain why you think it qualifies, as well as how and to what degree this proposed rule would economically affect it. C. Assistance for Small Entities Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104–121), we want to assist small entities in understanding this proposed rule so that they can better evaluate its effects on them and participate in the rulemaking. If the proposed rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please consult Mr. Todd Haviland, Management & Program Analyst, Office of Great Lakes Pilotage, Commandant (CG–WWM–2), Coast Guard; telephone 202–372–2037, email Todd.A.Haviland@uscg.mil, or fax 202–372–1909. 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 proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3520). This rule does not change the burden in the collection currently approved by the Office of Management and Budget Under OMB Control Number 1625–0086, Great Lakes Pilotage Methodology. mstockstill on DSK4VPTVN1PROD with PROPOSALS E. Federalism A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under that Order and have determined that it does not have implications for federalism because States are expressly prohibited by 46 U.S.C. 9306 from regulating pilotage on the Great Lakes. VerDate Mar<15>2010 18:33 Jul 31, 2012 Jkt 226001 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 proposed rule would not result in such expenditure, we do discuss the effects of this rule elsewhere in this preamble. G. Taking of Private Property This proposed rule would 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 proposed rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. I. Protection of Children We have analyzed this proposed rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might disproportionately affect children. J. Indian Tribal Governments This proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would 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 proposed rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a ‘‘significant energy action’’ under that order because it is not a ‘‘significant regulatory action’’ under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office PO 00000 Frm 00045 Fmt 4702 Sfmt 4702 45557 of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211. L. Technical Standards The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies. This proposed rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards. M. Environment We have analyzed this proposed rule under Department of Homeland Security Management Directive 023–01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321–4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. A preliminary environmental analysis checklist supporting this determination is available in the docket where indicated under the ‘‘Public Participation and Request for Comments’’ section of this preamble. 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 proposed rule adjusts rates in accordance with applicable statutory and regulatory mandates. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule. List of Subjects in 46 CFR Part 401 Administrative practice and procedure, Great Lakes, Navigation (water), Penalties, Reporting and recordkeeping requirements, Seamen. For the reasons discussed in the preamble, the Coast Guard proposes to amend 46 CFR part 401 as follows: E:\FR\FM\01AUP1.SGM 01AUP1 45558 Federal Register / Vol. 77, No. 148 / Wednesday, August 1, 2012 / Proposed Rules PART 401—GREAT LAKES PILOTAGE REGULATIONS Service Basic Pilotage ........... 1. The authority citation for part 401 continues to read as follows: Authority: 46 U.S.C. 2104(a), 6101, 7701, 8105, 9303, 9304; Department of Homeland Security Delegation No. 0170.1; 46 CFR 401.105 also issued under the authority of 44 U.S.C. 3507. 2. In § 401.405, revise paragraphs (a) and (b), including the footnote to table (a), to read as follows: § 401.405 Basic rates and charges on the St. Lawrence River and Lake Ontario. * * * * * (a) Area 1 (Designated Waters): Each Lock Transited Harbor Movage ......... Service 6-Hour Period ............ Docking or Undocking * * * * * (a) Area 4 (Undesignated Waters): Lake Ontario $851 812 Southeast Shoal Service $2,339 $1,382 1 4,074 1 4,719 1 4,074 Detroit River $3,037 3,060 3,060 1,382 N/A N/A 3,037 2,339 $828 637 637 N/A 1,626 Detroit Pilot Boat St. Clair River $2,339 2,339 3,060 N/A N/A (a) Area 6 (Undesignated Waters): N/A 1,693 1,382 3,060 3,060 * * Lakes Huron and Michigan Service 6-Hour Period ........................... * Docking or Undocking .............. $691 De Tour c. In paragraph (c)(1), remove the text ‘‘$733’’ and add, in its place, the text Lake ‘‘$744’’; and in paragraph (c)(3), remove Superior the text ‘‘$124’’ and add, in its place, the $586 text ‘‘$126’’, and remove the text 557 ‘‘$1,942’’ and add, in its place, the text ‘‘$1,972’’. (c) Area 8 (Undesignated Waters): 6-Hour Period ........................... Docking or Undocking .............. [Amended] § 401.428 5. Amend § 401.420 as follows: a. In paragraph (a), remove the text ‘‘$124’’ and add, in its place, the text ‘‘$126’’; and remove the text ‘‘$1,942’’ and add, in its place, the text ‘‘$1,972’’; b. In paragraph (b), remove the text ‘‘$124’’ and add, in its place, the text ‘‘$126’’; and remove the text ‘‘$1,942’’ and add, in its place, the text ‘‘$1,972’’; and VerDate Mar<15>2010 17:06 Jul 31, 2012 Jkt 226001 656 (b) Area 7 (Designated Waters): Gros Cap ................................................................................................................................................. Algoma Steel Corporation Wharf at Sault Ste. Marie, Ontario ............................................................... Any point in Sault Ste. Marie, Ontario, except the Algoma Steel Corporation Wharf ............................ Sault Ste. Marie, MI ................................................................................................................................. Harbor Movage ........................................................................................................................................ Service Lakes Huron and Michigan Service Area mstockstill on DSK4VPTVN1PROD with PROPOSALS $828 pilots are not changed at the Detroit Pilot Boat. § 401.410 Basic rates and charges on Lakes Huron, Michigan, and Superior; and the St. Mary’s River. § 401.420 Buffalo (b) Area 5 (Designated Waters): Toledo or any point on Lake Erie west of Southeast Shoal 2,339 1,693 Lake Erie (east of Southeast Shoal) 6-Hour Period ... Docking or Undocking ..... Any point on the Niagara River below the Black Rock Lock ............... 3. In § 401.407 revise paragraphs (a) and (b), including the footnote to Table (b), to read as follows: 4. In § 401.410, revise paragraphs (a), (b), and (c) to read as follows: * per kilometer or $33.19 per mile. 1 $416. 1 $1,361. (b) Area 2 (Undesignated Waters): 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 $18.75 § 401.407 Basic rates and charges on Lake Erie and the navigable waters from Southeast Shoal to Port Huron, MI. 1 The minimum basic rate for assignment of a pilot in the St. Lawrence River is $908, and the maximum basic rate for a through trip is $3,984. Any point on or in 1 When St. Lawrence river Gros Cap $2,583 2,583 2,165 2,165 N/A Any harbor N/A 973 973 973 N/A N/A N/A N/A N/A $973 FEDERAL COMMUNICATIONS COMMISSION 47 CFR Parts 2 and 90 [WP Docket No. 07–100; PS Docket No. 06– 229; WT Docket No. 06–150; FCC 12–61] 4.9 GHz Band [Amended] Federal Communications Commission. ACTION: Proposed rule. 6. In § 401.428, remove the text ‘‘$748’’ and add, in its place, the text ‘‘$744’’. AGENCY: Dated: July 9, 2012. Dana A. Goward, Director, Marine Transportation Systems Management, U.S. Coast Guard. SUMMARY: [FR Doc. 2012–18714 Filed 7–31–12; 8:45 am] BILLING CODE 9110–04–P PO 00000 Frm 00046 Fmt 4702 Sfmt 4702 The Commission allocated the 4940–4990 MHz (4.9 GHz) band in 2002 for fixed and mobile use and dedicated the band for public safety broadband communications. In the ten years since, the band has gone underutilized. The E:\FR\FM\01AUP1.SGM 01AUP1

Agencies

[Federal Register Volume 77, Number 148 (Wednesday, August 1, 2012)]
[Proposed Rules]
[Pages 45539-45558]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-18714]

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

DEPARTMENT OF HOMELAND SECURITY

Coast Guard

46 CFR Part 401

[USCG-2012-0409]
RIN 1625-AB89

Great Lakes Pilotage Rates--2013 Annual Review and Adjustment

AGENCY: Coast Guard, DHS.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: The Coast Guard proposes rate adjustments for pilotage
services on the Great Lakes, which were last amended in February 2012.
The proposed adjustments would establish new base rates and are made in
accordance with a required full ratemaking procedure. The proposed
update reflects changes in benchmark contractual wages and benefits and
an adjustment for inflation. This rulemaking promotes the Coast Guard's
strategic goal of maritime safety.

DATES: Comments and related material must either be submitted to our
online docket via https://www.regulations.gov on or before October 1,
2012 or reach the Docket Management Facility by that date.

ADDRESSES: You may submit comments identified by docket number USCG-
2012-0409 using any one of the following methods:
(1) Federal eRulemaking Portal: https://www.regulations.gov.
(2) Fax: 202-493-2251.
(3) Mail: Docket Management Facility (M-30), U.S. Department of
Transportation, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590-0001.
(4) Hand delivery: Same as mail address above, between 9 a.m. and 5
p.m., Monday through Friday, except Federal holidays. The telephone
number is 202-366-9329.
To avoid duplication, please use only one of these four methods.
See the ``Public Participation and Request for Comments'' portion of
the SUPPLEMENTARY INFORMATION section below for instructions on
submitting comments.

FOR FURTHER INFORMATION CONTACT: If you have questions on this proposed
rule, call or email Mr. Todd Haviland, Management & Program Analyst,
Office of Great Lakes Pilotage, Commandant (CG-WWM-2), Coast Guard;
telephone 202-372-2037, email Todd.A.Haviland@uscg.mil, or fax 202-372-
1909. If you have questions on viewing or submitting material to the
docket, call Renee V. Wright, Program Manager, Docket Operations,
telephone 202-366-9826.

SUPPLEMENTARY INFORMATION:

Table of Contents for Preamble

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

I. Public Participation and Request for Comments

We encourage you to participate in this rulemaking by submitting
comments and related materials. All comments received will be posted
without change to https://www.regulations.gov and will include any
personal information you have provided.

A. Submitting Comments

If you submit a comment, please include the docket number for this
rulemaking (USCG-2012-0409), indicate the specific section of this
document to which each comment applies, and provide a reason for each
suggestion or recommendation. You may submit your comments and material
online or by fax, mail, or hand delivery, but please use only one of
these means. We recommend that you include your name and a mailing
address, an email address, or a phone number in the body of your
document so that we can contact you if we have questions regarding your
submission.
To submit your comment online, go to https://www.regulations.gov and
insert ``USCG-2012-0409'' in the ``Search'' box. Click on ``Submit a
Comment'' in the ``Actions'' column. If you submit your comments by
mail or hand delivery, submit them in an unbound format, no larger than
8\1/2\ by 11 inches, suitable for copying and electronic filing. If you
submit comments by mail and would like to know that they reached the
Facility, please enclose a stamped, self-addressed postcard or
envelope.
We will consider all comments and material received during the
comment period and may change this proposed rule based on your
comments.

B. Viewing Comments and Documents

To view comments, as well as documents mentioned in this preamble
as being available in the docket, go to https://www.regulations.gov,
insert ``USCG-2012-0409'' and click ``Search.'' Click the ``Open Docket
Folder'' in the ``Actions'' column. If you do not have access to the
Internet, you may view the docket online by visiting the Docket
Management Facility in Room W12-140 on the ground floor of the
Department of Transportation West Building, 1200 New Jersey Avenue SE.,
Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday,
except Federal holidays. We have an agreement with the Department of
Transportation to use the Docket Management Facility.

C. Privacy Act

Anyone can search the electronic form of comments received into any
of our dockets by the name of the individual submitting the comment (or
signing the comment, if submitted on behalf of an association,
business, labor union, etc.). You may review a Privacy Act notice
regarding our public dockets in the January 17, 2008 issue of the
Federal Register (73 FR 3316).

D. Public Meeting

We do not now plan to hold a public meeting. But you may submit a
request for one to the docket using one of the methods specified under
ADDRESSES. In your request, explain why you believe a public meeting
would be beneficial. If

[[Page 45540]]

we determine that one would aid this rulemaking, we will hold one at a
time and place announced by a later notice in the Federal Register.

II. Abbreviations

AMOU American Maritime Officers Union
CFR Code of Federal Regulations
CPI Consumer Price Index
FR Federal Register
MISLE Marine Information for Safety and Law Enforcement
NAICS North American Industry Classification System
NPRM Notice of proposed rulemaking
OMB Office of Management and Budget
ROI Return on Investment
Sec. Section symbol
U.S.C. United States Code

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 U.S. vessels
operating ``on register'' \1\ and foreign vessels to use U.S.
registered pilots while transiting the U.S. waters of the St. Lawrence
Seaway and the Great Lakes system. 46 U.S.C. 9302(a)(1). The Act
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.'' Rates must be established or reviewed and adjusted each
year, not later than March 1. Base rates must be established by a full
ratemaking at least once every 5 years, and in years when base rates
are not established they must be reviewed and adjusted if necessary. 46
U.S.C. 9303(f). The Secretary's duties and authority under the Act have
been delegated to the Coast Guard. Department of Homeland Security
Delegation No. 0170.1, paragraph (92)(f). Coast Guard regulations
implementing the Act appear in parts 401 through 404 of Title 46, Code
of Federal Regulations (CFR). Procedures for use in establishing base
rates appear in 46 CFR part 404, Appendix A, and procedures for annual
review and adjustment of existing base rates appear in 46 CFR part 404,
Appendix C.
---------------------------------------------------------------------------

\1\ ``On register'' means that the vessel's certificate of
documentation has been endorsed with a registry endorsement, and
therefore, may be employed in foreign trade or trade with Guam,
American Samoa, Wake, Midway, or Kingman Reef. 46 U.S.C. 12105, 46
CFR 67.17.
---------------------------------------------------------------------------

The purpose of this rulemaking is to establish new base pilotage
rates, using the 46 CFR part 404, Appendix A, methodology.

IV. Background

The vessels affected by this rulemaking are engaged in foreign
trade upon the U.S. waters of the Great Lakes. U.S. and Canadian
``Lakers,'' \2\ which account for most commercial shipping on the Great
Lakes, are not affected. 46 U.S.C. 9302.
---------------------------------------------------------------------------

\2\ A ``Laker'' is a commercial cargo vessel especially designed
for and generally limited to use on the Great Lakes.
---------------------------------------------------------------------------

The U.S. waters of the Great Lakes and the St. Lawrence Seaway are
divided into three pilotage districts. Pilotage in each district is
provided by an association certified by the Coast Guard Director of
Great Lakes Pilotage to operate a pilotage pool. It is important to
note that, while 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. Also, we do not
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. While working
in those undesignated areas, pilots must only ``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).
This rulemaking is a full ratemaking to establish new base pilotage
rates, using the 46 CFR part 404, Appendix A, methodology. The last
full ratemaking established the current base rates in 2012 (Final Rule,
77 FR 11752, February 28, 2012). Among other things, the Appendix A
methodology requires us to review detailed pilot association financial
information, and we contract with independent accountants to assist in
that review. We have now completed our review of the independent
accountant's 2010 financial reports. The comments by the pilot
associations on those reports and the independent accountant's final
findings are discussed in our document entitled ``Summary--Independent
Accountant's Report on Pilot Association Expenses, with Pilot
Association Comments and Accountant's Responses,'' which appears in the
docket.

V. Discussion of Proposed Rule

A. Summary

We propose establishing new base pilotage rates in accordance with
the methodology outlined in Appendix A to 46 CFR part 404. The proposed
new rates would be established by March 1, 2013 and effective August 1,
2013. They would average approximately 1.87 percent more, overall, than
the February 2012 rate adjustments. Table 1 shows the proposed percent
change for the new rates for each area.
All figures in the tables that follow are based on calculations
performed either by an independent accountant or by the Director's
staff. In both cases those calculations were performed using common
commercial computer programs. Decimalization and rounding of the
audited and calculated data affects the display in these tables but
does not affect the calculations. The calculations are based on the
actual figure that rounds values for presentation in the tables.

Table 1--Summary of Rate Adjustments
------------------------------------------------------------------------
Then the
percent change
If pilotage service is required in: over the
current rate
is:
------------------------------------------------------------------------
Area 1 (Designated waters).............................. -1.41%
Area 2 (Undesignated waters)............................ -1.69
Area 4 (Undesignated waters)............................ 8.87
Area 5 (Designated waters).............................. 0.95
Area 6 (Undesignated waters)............................ 4.31
Area 7 (Designated waters).............................. 0.56
Area 8 (Undesignated waters)............................ 1.52
------------------------------------------------------------------------

B. Discussion of Methodology

The Appendix A methodology provides seven steps, with sub-steps,
for calculating rate adjustments. The following discussion describes
those steps and sub-steps and includes tables showing how we have
applied them to the 2010 detailed pilot financial information.
Step 1: Projection of Operating Expenses. In this step, we project
the amount of vessel traffic annually. Based

[[Page 45541]]

upon that projection, we forecast the amount of necessary and
reasonable operating expenses that pilotage rates should recover.
Step 1.A: Submission of Financial Information. This sub-step
requires each pilot association to provide us with detailed financial
information in accordance with 46 CFR part 403. The associations
complied with this requirement, supplying 2010 financial information in
2011; this is the most current and complete data set we have available.
Step 1.B: Determination of Recognizable Expenses. This sub-step
requires us to determine which reported association expenses will be
recognized for ratemaking purposes, using the guidelines shown in 46
CFR 404.5. We contracted with an independent accountant to review the
reported expenses and submit findings recommending which reported
expenses should be recognized. The accountant also reviewed which
reported expenses should be adjusted prior to recognition, or if they
should not be allowed for ratemaking purposes. The independent
accountant made preliminary findings; they were sent to the pilot
associations, and the pilot associations reviewed and commented on the
preliminary findings. Then, the independent accountant made final
findings. The Coast Guard Director of Great Lakes Pilotage reviewed and
accepted those final findings, resulting in the determination of
recognizable expenses. The preliminary findings, the associations'
comments on those findings, and the final findings are all discussed in
the ``Summary--Independent Accountant's Report on Pilot Association
Expenses, with Pilot Association Comments and Accountant's Responses,''
which appears in the docket. Tables 2 through 4 show each association's
recognized expenses.

Table 2--Recognized Expenses for District One
----------------------------------------------------------------------------------------------------------------
Area 1 Area 2
--------------------------------
Reported expenses for 2010 St. Lawrence Total
River Lake Ontario
----------------------------------------------------------------------------------------------------------------
Pilot Costs:
Other pilotage costs:
Pilot subsistence/Travel.................................... $212,715 $167,880 $380,595
License insurance........................................... 23,880 18,847 42,727
Payroll taxes............................................... 0 0 0
Other....................................................... 1,432 1,130 2,562
-----------------------------------------------
Total other pilotage costs.............................. 238,027 187,857 425,884
Pilot Boat and Dispatch Costs:
Pilot boat expense.......................................... 95,254 75,178 170,432
Dispatch expense............................................ 0 0 0
Payroll taxes............................................... 7,962 6,283 14,245
-----------------------------------------------
Total pilot and dispatch costs.......................... 103,216 81,461 184,677
Administrative Expenses:
Legal....................................................... 7,959 6,282 14,241
Insurance................................................... 13,971 11,026 24,997
Employee benefits........................................... 19,454 15,354 34,808
Payroll taxes............................................... 4,816 3,801 8,617
Other taxes................................................. 4,504 3,554 8,058
Travel...................................................... 215 169 384
Depreciation/auto leasing/other............................. 17,440 13,765 31,205
Interest.................................................... 12,576 9,926 22,502
Dues and subscriptions...................................... 13,075 10,319 23,394
Utilities................................................... 5,130 4,049 9,179
Salaries.................................................... 49,840 39,336 89,176
Accounting/Professional fees................................ 4,997 3,943 8,940
Other....................................................... 9,408 7,425 16,833
----------------------------------------------------------------------------------------------------------------
Total Administrative Expenses............................... 163,385 128,949 292,334
-----------------------------------------------
Total Operating Expenses................................ 504,628 398,267 902,895
Proposed Adjustments (independent CPA):
Operating Expenses:
Other Pilot Costs:
Pilotage Subsistence/Travel................................. (7,747) (6,114) (13,861)
Payroll taxes............................................... 64,563 50,955 115,518
-----------------------------------------------
Total other pilotage costs.............................. 56,816 44,841 101,657
Administrative Expenses:
Legal....................................................... 799 631 1,430
Employee benefits........................................... (1,537) (1,213) (2,750)
Dues and subscriptions...................................... (13,075) (10,319) (23,394)
-----------------------------------------------
Total Administrative Expenses........................... (13,813) (10,901) (24,714)
-----------------------------------------------
Total CPA Adjustments................................... 43,003 33,940 76,943
-----------------------------------------------
Total Operating Expenses................................ 547,631 432,207 979,838
----------------------------------------------------------------------------------------------------------------

[[Page 45542]]

Table 3--Recognized Expenses for District Two
----------------------------------------------------------------------------------------------------------------
Area 4 Area 5
--------------------------------
Reported Expenses for 2010 Southeast Total
Lake Erie Shoal to Port
Huron, MI
----------------------------------------------------------------------------------------------------------------
Operating Expenses:
Other pilotage costs:
Pilot subsistence/Travel.................................... $79,503 $119,254 $198,757
License insurance........................................... 6,168 9,252 15,420
Payroll taxes............................................... 53,457 80,186 133,643
Other....................................................... 42,130 63,195 105,325
Total other pilotage costs.............................. 181,258 271,887 453,145
Pilot Boat and Dispatch Costs:
Pilot boat expense.......................................... 145,254 217,882 363,136
Dispatch expense............................................ 7,830 11,745 19,575
Payroll taxes............................................... 4,056 6,084 10,140
Total pilot and dispatch costs.......................... 157,140 235,711 392,851
Administrative Expenses:
Legal....................................................... 8,120 12,180 20,300
Office rent................................................. 26,275 39,413 65,688
Insurance................................................... 13,410 20,114 33,524
Employee benefits........................................... 24,420 36,631 61,051
Payroll taxes............................................... 2,980 4,471 7,451
Other taxes................................................. 19,100 28,651 47,751
Depreciation/Auto leasing/Other............................. 22,954 34,431 57,385
Interest.................................................... 14,790 22,185 36,975
Dues and subscriptions...................................... 6,200 9,300 15,500
Utilities................................................... 12,138 18,208 30,346
Salaries.................................................... 46,611 69,917 116,528
Accounting/Professional fees................................ 14,067 21,100 35,167
Other....................................................... 16,157 24,235 40,392
-----------------------------------------------
Total Administrative Expenses........................... 227,223 340,835 568,058
-----------------------------------------------
Total Operating Expenses................................ 565,622 848,432 1,414,054
Proposed Adjustments (independent CPA):
Operating Expenses:
Other Pilot Costs:
Pilotage subsistence/Travel................................. (3,999) (5,999) (9,998)
-----------------------------------------------
Total other pilotage costs.............................. (3,999) (5,999) (9,998)
Pilot boat and dispatch costs:
Pilot boat expense.......................................... (767) (1,150) (1,917)
-----------------------------------------------
Total pilot boat and dispatch costs..................... (767) (1,150) (1,917)
Administrative Expenses:
Legal....................................................... (209) (314) (523)
Office rent................................................. (809) (1,213) (2,022)
Interest.................................................... (11,268) (16,902) (28,170)
Dues and subscriptions...................................... (6,200) (9,300) (15,500)
-----------------------------------------------
Total Administrative Expenses........................... (18,486) (27,729) (46,215)
-----------------------------------------------
TOTAL CPA ADJUSTMENTS................................... (23,252) (34,878) (58,130)
-----------------------------------------------
Total Operating Expenses................................ 542,369 813,554 1,355,924
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

Table 4--Recognized Expenses for District Three
----------------------------------------------------------------------------------------------------------------
Area 6 Area 7 Area 8
------------------------------------------------
Reported expenses for 2010 Lakes Huron St. Mary's Total
and Michigan River Lake Superior
----------------------------------------------------------------------------------------------------------------
Operating Expenses:
Other Pilot Costs:
Pilot subsistence/Travel.................... $170,162 $81,836 $108,514 $360,512
License insurance........................... 9,204 4,426 5,869 19,499
Payroll taxes............................... 27,774 13,358 17,712 58,844
Other....................................... 630 303 402 1,335
---------------------------------------------------------------
Total other pilotage costs.............. 207,770 99,923 132,497 440,190

[[Page 45543]]

Pilot Boat and Dispatch Expenses:
Pilot boat costs............................ 197,244 94,861 125,785 417,890
Dispatch expense............................ 72,550 34,891 46,266 153,707
Payroll taxes............................... 8,068 3,880 5,145 17,093
---------------------------------------------------------------
Total pilot boat and dispatch costs......... 277,862 133,632 177,196 588,690
Administrative Expenses:
Legal....................................... 28,089 13,509 17,913 59,511
Office Rent................................. 4,673 2,247 2,980 9,900
Insurance................................... 6,581 3,165 4,197 13,943
Employee benefits........................... 57,942 27,866 36,950 122,758
Payroll taxes............................... 5,709 2,746 3,641 12,096
Other taxes................................. 15,381 7,397 9,808 32,586
Depreciation/auto leasing................... 23,495 11,299 14,983 49,777
Interest.................................... 1,537 739 980 3,256
Dues and subscriptions...................... 13,676 6,577 8,721 28,974
Utilities................................... 13,223 6,359 8,432 28,014
Salaries.................................... 49,802 23,951 31,759 105,512
Accounting/professional fees................ 11,894 5,720 7,585 25,199
Other....................................... 5,574 2,681 3,555 11,810
---------------------------------------------------------------
Total administrative expenses........... 237,576 114,256 151,504 503,336
Total Operating Expenses................ 723,208 347,811 461,197 1,532,216
---------------------------------------------------------------
Proposed Adjustments (independent CPA):
Other Pilot Costs:
Payroll taxes............................... 26,213 12,606 16,716 55,535
---------------------------------------------------------------
Total other pilotage costs.............. 26,213 12,606 16,716 55,535
Pilot Boat and Dispatch Expenses:
Dispatch costs.............................. (2,170) (1,044) (1,384) (4,598)
---------------------------------------------------------------
Total pilot boat and dispatch costs..... (2,170) (1,044) (1,384) (4,598)
Administrative Expenses:
Legal....................................... (1,454) (699) (927) (3,080)
Dues and subscriptions...................... (13,676) (6,577) (8,721) (28,974)
Other....................................... (1,255) (603) (800) (2,658)
---------------------------------------------------------------
Total administrative expenses........... (16,385) (7,879) (10,448) (34,712)
---------------------------------------------------------------
Total CPA Adjustments................... 7,658 3,683 4,884 16,225
---------------------------------------------------------------
Total Operating Expenses................ 730,866 351,494 466,081 1,548,441
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

Step 1.C: Adjustment for Inflation or Deflation. In this sub-step
we project rates of inflation or deflation for the succeeding
navigation season. Because we used 2010 financial information, the
``succeeding navigation season'' for this ratemaking is 2011. We based
our inflation adjustment of 3.2 percent on the 2011 change in the
Consumer Price Index (CPI) for the Midwest Region of the United States,
which can be found at: https://www.bls.gov/xg_shells/ro5xg01.htm. This
adjustment appears in Tables 5 through 7.

Table 5--Inflation Adjustment, District One
----------------------------------------------------------------------------------------------------------------
Area 1 Area 2
---------------- ----------------
Reported expenses for 2010 St. Lawrence Total
River Lake Ontario
----------------------------------------------------------------------------------------------------------------
Total Operating Expenses.......... ........ $547,631 ........ $432,207 ........ $979,838
2011 change in the Consumer Price x .032 x .032 x .032
Index (CPI) for the Midwest
Region of the United States.
Inflation Adjustment.............. = $17,524 = $13,831 = $31,355
----------------------------------------------------------------------------------------------------------------

[[Page 45544]]

Table 6--Inflation Adjustment, District Two
----------------------------------------------------------------------------------------------------------------
Area 4 Area 5
---------------- ----------------
Reported expenses for 2010 Southeast Total
Lake Erie Shoal to Port
Huron, MI
----------------------------------------------------------------------------------------------------------------
Total Operating Expenses.......... ........ $542,369 ........ $813,554 ........ $1,355,924
2011 change in the Consumer Price x .032 x .032 x .032
Index (CPI) for the Midwest
Region of the United States.
Inflation Adjustment.............. = $17,356 = $26,034 = $43,390
----------------------------------------------------------------------------------------------------------------

Table 7--Inflation Adjustment, District Three
----------------------------------------------------------------------------------------------------------------
Area 6 Area 7 Area 8
---------------- ---------------- ----------------
Reported expenses for 2010 Lake Huron and St. Mary's Total
Michigan River Lake Superior
----------------------------------------------------------------------------------------------------------------
Total Operating Expenses..... ... $730,866 ... $351,494 ... $466,081 .. $1,548,441
2011 change in the Consumer x .032 x .032 x .032 x .032
Price Index (CPI) for the
Midwest Region of the United
States.
Inflation Adjustment......... = $23,388 = $11,248 = $14,915 = $49,550
----------------------------------------------------------------------------------------------------------------

Step 1.D: Projection of Operating Expenses. The final sub-step of
Step 1 is to project the operating expenses for each pilotage area, on
the basis of the preceding sub-steps and any other foreseeable
circumstances that could affect the accuracy of the projection. Based
on comments and supporting material received for the 2012 Appendix A
NPRM, we determined that foreseeable circumstances exist in District
One.
Eight months of District One's pilot boat mortgage payments and
boat insurance qualify as foreseeable circumstances. For District One,
the projected operating expenses are based on the calculations from
Sub-steps 1.A through 1.C and the aforementioned foreseeable
circumstances. Table 8 shows these projections.

Table 8--Projected Operating Expenses, District One
----------------------------------------------------------------------------------------------------------------
Area 1 Area 2
---------------- ----------------
Reported expenses for 2010 St. Lawrence Total
River Lake Ontario
----------------------------------------------------------------------------------------------------------------
Total operating expenses.......... ........ $547,631 ........ $432,207 ........ $979,838
Inflation adjustment 3.2%......... + 17,524 + 13,831 + 31,355
Director's adjustment &
foreseeable circumstances
Pilot boat mortgage payments.. + 26,429 + 20,815 + 47,244
Pilot boat insurance.......... + 7,221 + 5,687 + 12,908
-----------------------------------------------------------------------------
Total projected expenses = $598,805 = $472,540 = $1,071,344
for 2012 pilotage season.
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

During the audit for the 2013 Appendix A rulemaking, the
independent accountant informed us that District Two applied for and
received a Consolidated Omnibus Budget Reconciliation Act (COBRA)
subsidy for the first and second quarter of 2010. The American Recovery
and Reinvestment Act of 2009 provided for a temporary premium subsidy
for COBRA continuation coverage. The amount of the COBRA insurance
subsidy for the period 2010 was $60,460. Federal taxes of $18,400 are
accounted for in Step 6 (Federal Tax Allowance). For District Two, the
projected operating expenses are based on the calculations from Sub-
steps 1.A through 1.C, the COBRA subsidy, and Federal taxes. Table 9
shows these projections.

Table 9--Projected Operating Expenses, District Two
----------------------------------------------------------------------------------------------------------------
Area 4 Area 5
---------------- ----------------
Reported expenses for 2010 Southeast Total
Lake Erie Shoal to Port
Huron, MI
----------------------------------------------------------------------------------------------------------------
Total Operating Expenses.......... ........ $542,369 ........ $813,554 ........ $1,355,924
Inflation Adjustment 3.2%......... + 17,356 + 26,034 + 43,390
Director's adjustment &
foreseeable circumstances
American Recovery and + (24,184) + (36,276) + (60,460)
Reinvestment Act Subsidy.
Federal taxes (accounted for + (7,360) + (11,040) + (18,400)
in Step 6).
-----------------------------------------------------------------------------

[[Page 45545]]

Total projected expenses = $528,182 = $792,272 = $1,320,454
for 2013 pilotage season.
----------------------------------------------------------------------------------------------------------------

Because we are not now aware of any such foreseeable circumstances
for District 3, its projected operating expenses are based exclusively
on the calculations from Sub-steps 1.A through 1.C. Table 10 shows
these projections.

Table 10--Projected Operating Expenses, District Three
----------------------------------------------------------------------------------------------------------------
Area 6 Area 7 Area 8
---------------- ---------------- ----------------
Reported expenses for 2010 Lakes Huron St. Mary's Total
and Michigan River Lake Superior
----------------------------------------------------------------------------------------------------------------
Total Expenses............... ... $730,866 ... $351,494 ... $466,081 .. $1,548,441
Inflation Adjustment 3.2%.... + 23,388 + 11,248 + 14,915 + 49,550
----------------------------------------------------------------------------------
Total projected expenses = $754,254 = $362,742 = $480,996 = $1,597,991
for 2013 pilotage season.
----------------------------------------------------------------------------------------------------------------

Step 2: Projection of Target Pilot Compensation. In Step 2, we
project the annual amount of target pilot compensation that pilotage
rates should provide in each area. These projections are based on our
latest information on the conditions that will prevail in 2013.
Step 2.A: Determination of Target Rate of Compensation. Target
pilot compensation for pilots in undesignated waters approximates the
average annual compensation for first mates on U.S. Great Lakes
vessels. Compensation is determined based on the most current union
contracts and includes wages and benefits received by first mates. We
calculate target pilot compensation for pilots on designated waters by
multiplying the average first mates' wages by 150 percent and then
adding the average first mates' benefits.
The most current union contracts available to us are American
Maritime Officers Union (AMOU) contracts with three U.S. companies
engaged in Great Lakes shipping. There are two separate AMOU contracts
available--we refer to them as Agreements A and B and apportion the
compensation provided by each agreement according to the percentage of
tonnage represented by companies under each agreement. 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 Agreements A and B expire on July 31, 2016. For the 2011
Appendix C and 2012 Appendix A rulemakings we did not have the current
contracts and projected target pilot compensation based on historic
data. We have adjusted our projections and recalculated compensation
based upon the new contracts. Under Agreement A, we project that the
daily wage rate would decrease from $278.73 to $270.61. Under Agreement
B, the daily wage rate would increase from $343.59 to $368.05.
Because we are interested in annual compensation, we must convert
these daily rates. Agreements A and B both use monthly multipliers to
convert daily rates into monthly figures that represent actual working
days and vacation, holiday, weekend, or bonus days. The monthly
multiplier for Agreement A is 54.5 days and the monthly multiplier for
Agreement B is 49.5 days. We multiply the monthly figures by 9, which
represents the average length (in months) of the Great Lakes shipping
season. Table 11 shows our calculations.

Table 11--Projected Wage Components
------------------------------------------------------------------------
Pilots on Pilots on
Monthly component undesignated designated
waters waters
------------------------------------------------------------------------
Agreement A:
$270.61 daily rate x 54.5 days...... $14,748.25 $22,122.38
Monthly total x 9 months = total 132,734 199,101
wages..............................
Agreement B:
$368.05 daily rate x 49.5 days...... 18,218.48 27,327.71
Monthly total x 9 months = total 163,966 245,949
wages..............................
------------------------------------------------------------------------

Based on the contracts of both Agreements A and B, we will adjust
their health benefits and pension contributions and leave 401K-plan
contributions unchanged. Health benefits for Agreement A will decrease
this benefit from $107.40 to $52.96 per day, and Agreement B will
decrease this benefit from $107.40 to $105.61 per day. The multiplier
that both agreements use to calculate monthly benefits from daily rates
is currently 45.5 days, and we project that will remain unchanged.
Agreement A eliminated pension contributions, and Agreement B increased
the pension contribution from $43.55 to $44.61 per day. Agreements A
and B maintained 401K plan contributions at 5 percent of the monthly
wage. We use a 9-month multiplier to calculate the annual value

[[Page 45546]]

of these benefits. Table 12 shows our calculations.

Table 12--Projected Benefits Components
------------------------------------------------------------------------
Pilots on Pilots on
Monthly component undesignated designated
waters waters
------------------------------------------------------------------------
Agreement A:
Employer contribution, 401K plan $737.41 $1,106.12
(Monthly wages x 5%)...............
Pension = $0.00 x 45.5 days......... 0.00 0.00
Health = $52.96 x 45.5 days......... 2,409.68 2,409.68
Monthly total benefits.............. 3,147.09 3,515.80
Monthly total benefits x 9 months... 28,323.81 31,642.20
Agreement B:
Employer contribution, 401K plan 910.92 1,366.38
(Monthly wages x 5%)...............
Pension = $44.61 x 45.5 days........ 2,029.76 2,029.76
Health = $105.61 x 45.5 days........ 4,805.26 4,805.26
Monthly total benefits.............. 7,745.94 8,201.40
Monthly total benefits x 9 months... 69,713.46 73,812.60
------------------------------------------------------------------------

Table 13 combines our projected wage and benefit components of
annual target pilot compensation.

Table 13--Projected Wage and Benefits Components, Combined
------------------------------------------------------------------------
Pilots on Pilots on
undesignated designated
waters waters
------------------------------------------------------------------------
Agreement A:
Wages............................... $132,734 $199,101
Benefits............................ 28,324 31,642
-------------------------------
Total........................... 161,058 230,744
Agreement B:
Wages............................... 163,966 245,949
Benefits............................ 69,713 73,813
-------------------------------
Total........................... 233,680 319,762
------------------------------------------------------------------------

Agreements A and B affect three companies. Of the tonnage operating
under those three companies, approximately 30 percent operates under
Agreement A and approximately 70 percent operates under Agreement B.
Table 14 provides details.

Table 14--Shipping Tonnage Apportioned by Contract
----------------------------------------------------------------------------------------------------------------
Company Agreement A Agreement B
----------------------------------------------------------------------------------------------------------------
American Steamship Company.............. .................................. 815,600
Mittal Steel USA, Inc................... .................................. 38,826
Key Lakes, Inc.......................... 361,385 ..................................
-----------------------------------------------------------------------
Total tonnage, each agreement....... 361,385 854,426
Percent tonnage, each agreement......... 361,385 / 1,215,811 = 29.7238% 854,426 / 1,215,811 = 70.2762%
----------------------------------------------------------------------------------------------------------------

We use the percentages from Table 14 to apportion the projected
wage and benefit components from Table 13. This gives us a single
tonnage-weighted set of figures. Table 15 shows our calculations.

Table 15--Tonnage-Weighted Wage and Benefit Components
------------------------------------------------------------------------
Undesignated Designated
waters waters
------------------------------------------------------------------------
Agreement A:
Total wages and benefits.. ... $161,058 ... $230,744
Percent tonnage........... x 29.7238% x 29.7238%
-----------------------------------------

[[Page 45547]]

Total................. = $47,873 = $68,586
Agreement B:
Total wages and benefits.. ... $233,680 ... $319,762
Percent tonnage........... x 70.2762% x 70.2762%
-----------------------------------------
Total................. = $164,221 = $224,717
Projected Target Rate of
Compensation
Agreement A total weighted ... $47,873 ... $68,586
average wages and
benefits.
Agreement B total weighted + $164,221 + $224,717
average wages and
benefits.
-----------------------------------------
Total................. = $212,094 = $293,302
------------------------------------------------------------------------

Step 2.B: Determination of the Number of Pilots Needed. Subject to
adjustment by the Coast Guard Director of Great Lakes Pilotage to
ensure uninterrupted service or for other reasonable circumstances, we
determine the number of pilots needed for ratemaking purposes in each
area by dividing projected bridge hours for each area, by either 1,000
(designated waters) or 1,800 (undesignated waters) bridge hours. We
round the mathematical results and express our determination as whole
pilots.
``Bridge hours are the number of hours a pilot is aboard a vessel
providing pilotage service,'' 46 CFR part 404, Appendix A, Step 2.B(1).
For that reason and as we explained most recently in the 2011
ratemaking's final rule, we do not include, and never have included,
pilot delay, detention, or cancellation in calculating bridge hours.
See 76 FR 6351 at 6352 col. 3 (February 4, 2011). Projected bridge
hours are based on the vessel traffic that pilots are expected to
serve. We use historical data, input from the pilots and industry,
periodicals and trade magazines, and information from conferences to
project demand for pilotage services for the coming year.
In our 2012 final rule, we determined that 38 pilots would be
needed for ratemaking purposes. We have determined that 38 remains the
proper number to use for ratemaking purposes in 2013. This includes
five pilots in Area 2, where rounding up alone would result in only
four pilots. For the same reasons we explained at length in the final
rule for the 2008 ratemaking, 74 FR 220 at 221-22 (January 5, 2009)
which is available in the docket, we have determined that this
adjustment is essential for ensuring uninterrupted pilotage service in
Area 2. Table 16 shows the bridge hours we project will be needed for
each area and our calculations to determine the number of whole pilots
needed for ratemaking purposes.

Table 16--Number of Pilots Needed
----------------------------------------------------------------------------------------------------------------
Divided by
1,000
(designated Calculated
Pilotage area Projected 2013 waters) or value of pilot Pilots needed
bridge hours 1,800 demand (total = 38)
(undesignated
waters)
----------------------------------------------------------------------------------------------------------------
Area 1 (Designated waters)...... 5,216 / 1,000 = 5.216 6
Area 2 (Undesignated waters).... 5,509 / 1,800 = 3.061 5
Area 4 (Undesignated waters).... 6,814 / 1,800 = 3.785 4
Area 5 (Designated waters)...... 5,102 / 1,000 = 5.102 6
Area 6 (Undesignated waters).... 11,411 / 1,800 = 6.339 7
Area 7 (Designated waters)...... 3,223 / 1,000 = 3.223 4
Area 8 (Undesignated waters).... 9,540 / 1,800 = 5.300 6
----------------------------------------------------------------------------------------------------------------

Step 2.C: Projection of Target Pilot Compensation. In Table 17 we
project total target pilot compensation separately for each area, by
multiplying the number of pilots needed in each area, as shown in Table
16, by the target pilot compensation shown in Table 15.

Table 17--Projection of Target Pilot Compensation by Area
----------------------------------------------------------------------------------------------------------------
Target rate of Projected
Pilotage area Pilots needed pilot target pilot
(total = 38) compensation compensation
----------------------------------------------------------------------------------------------------------------
Area 1 (Designated waters)............ 6 x $293,302 = $1,759,814
Area 2 (Undesignated waters).......... 5 x 212,094 = 1,060,469
Area 4 (Undesignated waters).......... 4 x 212,094 = 848,375
Area 5 (Designated waters)............ 6 x 293,302 = 1,759,814
Area 6 (Undesignated waters).......... 7 x 212,094 = 1,484,657
Area 7 (Designated waters)............ 4 x 293,302 = 1,173,209

[[Page 45548]]

Area 8 (Undesignated waters).......... 6 x 212,094 = 1,272,563
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

Step 3 and 3.A: Projection of Revenue. In this step, we project the
revenue that would be received in 2013 if demand for pilotage services
matches the bridge hours we projected in Table 16, and if 2012 pilotage
rates were left unchanged. Table 18 shows this calculation.

Table 18--Projection of Revenue by Area
----------------------------------------------------------------------------------------------------------------
Revenue
Pilotage area Projected 2013 2012 Pilotage projection for
bridge hours rates 2013
----------------------------------------------------------------------------------------------------------------
Area 1 (Designated waters)........... 5,216 .......... $467.58 = $2,438,897
Area 2 (Undesignated waters)......... 5,509 x 289.72 = 1,596,067
Area 4 (Undesignated waters)......... 6,814 x 188.54 = 1,284,712
Area 5 (Designated waters)........... 5,102 x 504.11 = 2,571,969
Area 6 (Undesignated waters)......... 11,411 x 191.69 = 2,187,375
Area 7 (Designated waters)........... 3,223 x 480.26 = 1,547,878
Area 8 (Undesignated waters)......... 9,540 x 183.87 = 1,754,120
--------------------------------------------------------------------------
Total............................ ............... .......... ............... .......... 13,381,018
----------------------------------------------------------------------------------------------------------------

Step 4: Calculation of Investment Base. This step calculates each
association's investment base, the recognized capital investment in the
assets employed by the association required to support pilotage
operations. This step uses a formula set out in 46 CFR part 404,
Appendix B. The first part of the formula identifies each association's
total sources of funds. Tables 19 through 21 follow the formula up to
that point.

Table 19--Total Sources of Funds, District One
------------------------------------------------------------------------
Area 1 Area 2
------------------------------------------------------------------------
Recognized Assets:
Total Current Assets...... ... $681,485 ... $537,847
Total Current Liabilities. - 78,005 - 61,564
Current Notes Payable..... + 22,168 + 17,496
Total Property and + 374,021 + 295,189
Equipment (NET).
Land...................... - 12,315 - 9,720
Total Other Assets........ + 0 + 0
-----------------------------------------
Total Recognized = 987,354 = 779,248
Assets.
Non-Recognized Assets:
Total Investments and + 6,103 + 4,817
Special Funds.
-----------------------------------------
Total Non-Recognized = 6,103 = 4,817
Assets.
Total Assets:
Total Recognized Assets... ... 987,354 ... 779,248
Total Non-Recognized + 6,103 + 4,817
Assets.
-----------------------------------------
Total Assets.......... = 993,457 = 784,065
Recognized Sources of Funds:
Total Stockholder Equity.. ... 659,702 ... 520,656
Long-Term Debt............ + 323,902 + 255,633
Current Notes Payable..... + 22,168 + 17,496
Advances from Affiliated + 0 + 0
Companies.
Long-Term Obligations-- + 0 + 0
Capital Leases.
-----------------------------------------
Total Recognized = 1,005,772 = 793,785
Sources.
Non-Recognized Sources of
Funds:
Pension Liability......... ... 0 ... 0
Other Non-Current + 0 + 0
Liabilities.
Deferred Federal Income + 0 + 0
Taxes.
Other Deferred Credits.... + 0 + 0
-----------------------------------------
Total Non-Recognized = 0 = 0
Sources.
Total Sources of Funds:
Total Recognized Sources.. ... 1,005,772 ... 793,785

[[Page 45549]]

Total Non-Recognized + 0 + 0
Sources.
-----------------------------------------
Total Sources of Funds = 1,005,772 = 793,785
------------------------------------------------------------------------

Table 20--Total Sources of Funds, District Two
------------------------------------------------------------------------
Area 4 Area 5
------------------------------------------------------------------------
Recognized Assets:
Total Current Assets...... ... $454,842 ... $1,026,731
Total Current Liabilities. - 449,157 - 1,013,899
Current Notes Payable..... + 0 + 0
Total Property and + 312,858 + 706,224
Equipment (NET).
Land...................... - 0 - 0
Total Other Assets........ + 0 + 0
-----------------------------------------
Total Recognized = 318,543 = 719,056
Assets.
Non-Recognized Assets:
Total Investments and + 0 + 0
Special Funds.
-----------------------------------------
Total Non-Recognized = 0 = 0
Assets.
Total Assets:
Total Recognized Assets... ... 318,543 ... 719,056
Total Non-Recognized + 0 + 0
Assets.
-----------------------------------------
Total Assets.......... = 318,543 = 719,056
Recognized Sources of Funds:
Total Stockholder Equity.. ... 60,920 ... 137,517
Long-Term Debt............ + 257,622 + 581,540
Current Notes Payable..... + 0 + 0
Advances from Affiliated + 0 + 0
Companies.
Long-Term Obligations-- + 0 + 0
Capital Leases.
-----------------------------------------
Total Recognized = 318,542 = 719,057
Sources.
Non-Recognized Sources of
Funds:
Pension Liability......... ... 0 ... 0
Other Non-Current + 0 + 0
Liabilities.
Deferred Federal Income + 0 + 0
Taxes.
Other Deferred Credits.... + 0 + 0
-----------------------------------------
Total Non-Recognized = 0 = 0
Sources.
Total Sources of Funds:
Total Recognized Sources.. ... 318,542 ... 719,057
Total Non-Recognized + 0 + 0
Sources.
-----------------------------------------
Total Sources of Funds = 318,542 = 719,057
------------------------------------------------------------------------

Table 21--Total Sources of Funds, District Three
----------------------------------------------------------------------------------------------------------------
Area 6 Area 7 Area 8
----------------------------------------------------------------------------------------------------------------
Recognized Assets:
Total Current Assets.......... ........ $1,009,619 ........ $485,558 ........ $643,846
Total Current Liabilities..... - 123,906 - 59,590 - 79,016
Current Notes Payable......... + 0 + 0 + 0
Total Property and Equipment + 35,709 + 17,174 + 22,772
(NET).
Land.......................... - 0 - 0 - 0
Total Other Assets............ + 354 + 170 + 226
-----------------------------------------------------------------------------
Total Recognized Assets... = 921,776 = 443,312 = 587,828
Non-Recognized Assets:
Total Investments and Special + 0 + 0 + 0
Funds.
-----------------------------------------------------------------------------
Total Non-Recognized = 0 = 0 = 0
Assets.
Total Assets:
Total Recognized Assets....... ........ 921,776 ........ 443,312 ........ 587,828
Total Non-Recognized Assets... + 0 + 0 + 0
-----------------------------------------------------------------------------
Total Assets.............. = 921,776 = 443,312 = 587,828
Recognized Sources of Funds:
Total Stockholder Equity...... ........ 921,776 ........ 443,321 ........ 587,828

[[Page 45550]]

Long-Term Debt................ + 0 + 0 + 0
Current Notes Payable......... + 0 + 0 + 0
Advances from Affiliated...... + 0 + 0 + 0
Companies.....................
Long-Term Obligations--Capital + 0 + 0 + 0
Leases.
-----------------------------------------------------------------------------
Total Recognized Sources.. = 921,776 = 443,321 = 587,828
Non-Recognized Sources of Funds:
Pension Liability............. ........ 0 ........ 0 ........ 0
Other Non-Current Liabilities. + 0 + 0 + 0
Deferred Federal Income Taxes. + 0 + 0 + 0
Other Deferred Credits........ + 0 + 0 + 0
-----------------------------------------------------------------------------
Total Non-Recognized = 0 = 0 = 0
Sources.
Total Sources of Funds:
Total Recognized Sources...... ........ 921,776 ........ 443,321 ........ 587,828
Total Non-Recognized Sources.. + 0 + 0 + 0
-----------------------------------------------------------------------------
Total Sources of Funds.... = 921,776 = 443,321 = 587,828
----------------------------------------------------------------------------------------------------------------

Tables 19 through 21 also relate to the second part of the formula
for calculating the investment base. The second part establishes a
ratio between recognized sources of funds and total sources of funds.
Since no non-recognized sources of funds (sources we do not recognize
as required to support pilotage operations) exist for any of the pilot
associations for this year's rulemaking, the ratio between recognized
sources of funds and total sources of funds is ``1:1'' (or a multiplier
of ``1'') in all cases. Table 22 applies the multiplier of ``1,'' and
shows that the investment base for each association equals its total
recognized assets. Table 22 also expresses these results by area,
because area results will be needed in subsequent steps.

Table 22--Investment Base by Area and District
--------------------------------------------------------------------------------------------------------------------------------------------------------
Multiplier
Total Recognized Total sources (ratio of Investment
District Area recognized sources of of funds ($) recognized to base ($) \1\
assets ($) funds ($) total sources)
--------------------------------------------------------------------------------------------------------------------------------------------------------
One............................................................ 1 987,354 1,005,772 1,005,772 1 987,354
2 779,248 793,785 793,785 1 779,248
----------------------------------------------------------------------------------------
Total...................................................... ....... .............. .............. .............. .............. 1,766,602
Two \2\........................................................ 4 318,543 318,542 318,542 1 318,543
5 719,056 719,057 719,057 1 719,056
----------------------------------------------------------------------------------------
Total...................................................... ....... .............. .............. .............. .............. 1,037,599
Three.......................................................... 6 921,776 921,776 921,776 1 921,776
7 443,312 443,312 443,312 1 443,312
----------------------------------------------------------------------------------------
8 587,828 587,828 587,828 1 587,828
----------------------------------------------------------------------------------------
Total...................................................... ....... .............. .............. .............. .............. 1,952,916
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Note: ``Investment base'' = ``Total recognized assets'' x ``Multiplier (ratio of recognized to total sources)''.
\2\ Note: The pilot associations that provide pilotage services in Districts One and Three operate as partnerships. The pilot association that provides
pilotage service for District Two operates as a corporation.

Step 5: Determination of Target Rate of Return. We determine a
market-equivalent return on investment (ROI) that will be allowed for
the recognized net capital invested in each association by its members.
We do not recognize capital that is unnecessary or unreasonable for
providing pilotage services. There are no non-recognized investments in
this year's calculations. The allowed ROI is based on the preceding
year's average annual rate of return for new issues of high-grade
corporate securities. For 2011, the preceding year, the allowed ROI was
a little more than 4.64 percent, based on the average rate of return
that year on Moody's AAA corporate bonds, which can be found at: https://research.stlouisfed.org/fred2/series/AAA/downloaddata?cid=119.
Step 6: Adjustment Determination. The first Sub-step in the
adjustment determination requires an initial calculation, applying a
formula described in Appendix A. The formula uses the results from
Steps 1, 2, 3, and 4 to project the ROI that can be expected in each
area, if no further adjustments are made. This calculation is shown in
Tables 23 through 25.

[[Page 45551]]

Table 23--Projected ROI, Areas in District One
------------------------------------------------------------------------
Area 1 Area 2
------------------------------------------------------------------------
Revenue (from Step 3)......... + $2,438,897 + $1,596,067
Operating Expenses (from Step - 598,805 - 472,540
1).
Pilot Compensation (from Step - 1,759,814 - 1,060,469
2).
Operating Profit/(Loss)....... = 80,278 = 63,059
Interest Expense (from audits) - 12,576 - 9,926
Earnings Before Tax........... = 67,702 = 53,133
Federal Tax Allowance......... - 0 - 0
Net Income.................... = 67,702 = 53,133
Return Element (Net Income + ... 80,278 ... 63,059
Interest).
Investment Base (from Step 4). / 987,354 / 779,248
Projected Return on Investment = 0.08 = 0.08
------------------------------------------------------------------------

Table 24--Projected ROI, Areas in District Two
------------------------------------------------------------------------
Area 4 Area 5
------------------------------------------------------------------------
Revenue (from Step 3)......... + $1,284,712 + $2,571,969
Operating Expenses (from Step - $528,181 - $792,272
1).
Pilot Compensation (from Step - $848,375 - $1,759,814
2).
Operating Profit/(Loss)....... = ($91,845) = $19,883
Interest Expense (from audits) - $3,522 - $5,283
Earnings Before Tax........... = ($95,367) = $14,600
Federal Tax Allowance......... - $7,360 - $11,040
Net Income.................... = ($102,727) = $3,560
Return Element (Net Income + ... ($99,205) ... $8,843
Interest).
Investment Base (from Step 4). / $318,543 / $719,056
Projected Return on Investment = (0.31) = 0.01
------------------------------------------------------------------------

Table 25--Projected ROI, Areas in District Three
----------------------------------------------------------------------------------------------------------------
Area 6 Area 7 Area 8
----------------------------------------------------------------------------------------------------------------
Revenue (from Step 3)............. + $2,187,375 + $1,547,878 + $1,754,120
Operating Expenses (from Step 1).. - $754,254 - $362,742 - $480,996
Pilot Compensation (from Step 2).. - $1,484,657 - $1,173,209 - $1,272,563
Operating Profit/(Loss)........... = ($51,536) = $11,927 = 561
Interest Expense (from audits).... - $1,537 - $739 - $980
Earnings Before Tax............... = ($53,073) = $11,188 = ($419)
Federal Tax Allowance............. - $0 - $0 - $0
Net Income........................ = ($53,073) = $11,188 = ($419)
Return Element (Net Income + ........ ($51,536) ........ $11,927 ........ $561
Interest).
Investment Base (from Step 4)..... / $921,776 / $443,312 / $587,828
Projected Return on Investment.... = (0.06) = 0.03 = 0.00
----------------------------------------------------------------------------------------------------------------

The second sub-step required for Step 6 compares the results of
Tables 23 through 25 with the target ROI (approximately 4.64 percent)
we obtained in Step 5 to determine if an adjustment to the base
pilotage rate is necessary. Table 26 shows this comparison for each
area.

Table 26--Comparison of Projected ROI and Target ROI, by Area \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Area 1 Area 2 Area 4 Area 5 Area 6 Area 7 Area 8
-----------------------------------------------------------------------------------------------
Southeast
St. Lake Shoal to Lakes Huron St. Mary's Lake
Lawrence Ontario Lake Erie Port Huron, and Michigan River Superior
River MI
--------------------------------------------------------------------------------------------------------------------------------------------------------
Projected return on investment.......................... 0.081 0.081 (0.288) 0.028 (0.056) 0.027 0.001
Target return on investment............................. 0.046 0.046 0.046 0.046 0.046 0.046 0.046
Difference in return on investment...................... 0.035 0.035 (0.335) (0.019) (0.102) (0.019) (0.045)
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Note: Decimalization and rounding of the target ROI affects the display in this table but does not affect our calculations, which are based on the
actual figure.

Because Table 26 shows a significant difference between the
projected and target ROIs, an adjustment to the base pilotage rates is
necessary. Step 6 now requires us to determine the pilotage revenues
that are needed to make the target return on investment equal to the
projected return on investment. This calculation is shown in Table 27.
It adjusts the investment base we used in Step 4, multiplying it by the
target ROI from Step 5, and applies the result to

[[Page 45552]]

the operating expenses and target pilot compensation determined in
Steps 1 and 2.

Table 27--Revenue Needed To Recover Target ROI, by Area
--------------------------------------------------------------------------------------------------------------------------------------------------------
Investment
Operating Target pilot base (step 4)
Pilotage area expenses compensation x 4.64% Federal tax Revenue needed
(Step 1) (Step 2) (target ROI allowance
Step 5)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Area 1 (Designated waters)........ $598,805 + $1,759,814 + $45,805 + $0 = $2,404,424
Area 2 (Undesignated waters)...... 472,540 + 1,060,469 + 36,151 + 0 = 1,569,160
Area 4 (Undesignated waters)...... 528,181 + 848,375 + 14,778 + 7,360 = 1,398,694
Area 5 (Designated waters)........ 792,272 + 1,759,814 + 33,358 + 11,040 = 2,596,484
Area 6 (Undesignated waters)...... 754,254 + 1,484,657 + 42,763 + 0 = 2,281,673
Area 7 (Designated waters)........ 362,742 + 1,173,209 + 20,566 + 0 = 1,556,517
Area 8 (Undesignated waters)...... 480,996 + 1,272,563 + 27,270 + 0 = 1,780,829
---------------------------------------------------------------------------------------------------------------------
Total......................... 3,989,788 + 9,358,902 + 220,691 + 18,400 = 13,587,781
--------------------------------------------------------------------------------------------------------------------------------------------------------

The ``Revenue Needed'' column of Table 27 is more than the revenue
we projected in Table 18. For purposes of transparency, we verify Table
27's calculations by rerunning the first part of Step 6, using the
revenue needed from Table 27 instead of the Table 18 revenue
projections we used in Tables 23 through 25. Tables 28 through 30 show
that attaining the Table 27 revenue needed is sufficient to recover
target ROI.

Table 28--Balancing Revenue Needed and Target ROI, District One
------------------------------------------------------------------------
Area 1 Area 2
------------------------------------------------------------------------
Revenue Needed................ + $2,404,424 + $1,569,160
Operating Expenses (from Step - $598,805 - $472,540
1).
Pilot Compensation (from Step - $1,759,814 - $1,060,469
2).
Operating Profit/(Loss)....... = $45,805 = $36,151
Interest Expense (from audits) - $12,576 - $9,926
Earnings Before Tax........... = $33,229 = $26,225
Federal Tax Allowance......... - $0 - $0
Net Income.................... = $33,229 = $26,225
Return Element (Net Income + ... $45,805 ... $36,151
Interest).
Investment Base (from Step 4). / $987,354 / $779,248
Return on Investment.......... = 0.0464 = 0.0464
------------------------------------------------------------------------

Table 29--Balancing Revenue Needed and Target ROI, District Two
------------------------------------------------------------------------
Area 4 Area 5
------------------------------------------------------------------------
Revenue Needed................ + $1,398,694 + $2,596,484
Operating Expenses (from Step - $528,181 - $792,272
1).
Pilot Compensation (from Step - $848,375 - $1,759,814
2).
Operating Profit/(Loss)....... = $22,138 = $44,398
Interest Expense (from audits) - $3,522 - $5,283
Earnings Before Tax........... = $18,616 = $39,115
Federal Tax Allowance......... - $7,360 - $11,040
Net Income.................... = $11,256 = $28,075
Return Element (Net Income + ... $14,778 ... $33,358
Interest).
Investment Base (from Step 4). / $318,543 / $719,056
Return on Investment.......... = 0.0464 = 0.0464
------------------------------------------------------------------------

Table 30--Balancing Revenue Needed and Target ROI, District Three
----------------------------------------------------------------------------------------------------------------
Area 6 Area 7 Area 8
----------------------------------------------------------------------------------------------------------------
Revenue Needed.................... + $2,281,673 + $1,556,517 + $1,780,829
Operating Expenses (from Step 1).. - $754,254 - $362,742 - $480,996
Pilot Compensation (from Step 2).. - $1,484,657 - $1,173,209 - $1,272,563
Operating Profit/(Loss)........... = $42,763 = $20,566 = $27,270
Interest Expense (from audits).... - $1,537 - $739 - $980
Earnings Before Tax............... = $41,226 = $19,827 = $26,290
Federal Tax Allowance............. - $0 - $0 - $0
Net Income........................ = $41,226 = $19,827 = $26,290
Return Element (Net Income + ........ $42,763 ........ $20,566 ........ $27,270
Interest).
Investment Base (from Step 4)..... / $921,776 / $443,312 / $587,828

[[Page 45553]]

Return on Investment.............. = 0.0464 = 0.0464 = 0.0464
----------------------------------------------------------------------------------------------------------------

Step 7: Adjustment of Pilotage Rates. Finally, and subject to
negotiation with Canada or adjustment for other supportable
circumstances, we calculate rate adjustments by dividing the Step 6
revenue needed (Table 27) by the Step 3 revenue projection (Table 18),
to give us a rate multiplier for each area. Tables 31 through 33 show
these calculations.

Table 31--Rate Multiplier, Areas in District One
------------------------------------------------------------------------
Area 1 Area 2
---------------- ---------------
Ratemaking projections St. Lawrence
River Lake Ontario
------------------------------------------------------------------------
Revenue Needed (from Step 6).. ... $2,404,424 ... $1,569,160
Revenue (from Step 3)......... / $2,438,897 / $1,596,067
Rate Multiplier............... = 0.9859 = 0.9831
------------------------------------------------------------------------

Table 32--Rate Multiplier, Areas in District Two
------------------------------------------------------------------------
Area 4 Area 5
---------------- ---------------
Ratemaking projections Southeast
Lake Erie Shoal to Port
Huron, MI
------------------------------------------------------------------------
Revenue Needed (from Step 6).. ... $1,398,694 ... $2,596,484
Revenue (from Step 3)......... / $1,284,712 / $2,571,969
Rate Multiplier............... = 1.0887 = 1.0095
------------------------------------------------------------------------

Table 33--Rate Multiplier, Areas in District Three
----------------------------------------------------------------------------------------------------------------
Area 6 Lakes
Ratemaking projections Huron and Area 7 St. Area 8 Lake
Michigan Mary's River Superior
----------------------------------------------------------------------------------------------------------------
Revenue Needed (from Step 6)...... ........ $2,281,673 ........ $1,556,517 ........ $1,780,829
Revenue (from Step 3)............. / $2,187,375 / $1,547,878 / $1,754,120
Rate Multiplier................... = 1.0431 = 1.0056 = 1.0152
----------------------------------------------------------------------------------------------------------------

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), would increase by 1.55
percent in all areas.
We calculate a rate multiplier for adjusting the basic rates and
charges described in 46 CFR 401.420 and 401.428 and applicable in all
areas. We divide total revenue needed (Step 6, Table 27) by total
projected revenue (Step 3 & 3A, Table 18). Our proposed rate changes
for 46 CFR 401.420 and 401.428 reflect the multiplication of the rates
we established for those sections in our 2012 final rule, by the rate
multiplier shown as the result of our calculation in Table 34.

Table 34--Rate Multiplier for Basic Rates and Charges in 46 CFR 401.420
and 401.428
------------------------------------------------------------------------
Ratemaking Projections
------------------------------------------------------------------------
Total Revenue Needed (from Step 6)...... .............. $13,587,781
Total revenue (from Step 3)............. / $13,381,018
Rate Multiplier......................... = 1.0155
------------------------------------------------------------------------

We multiply the existing rates we established in our 2012 final
rule by the rate multipliers from Tables 31 through 33 to calculate the
area by area rate changes we propose for 2013. Tables 35 through 37
show these calculations.

[[Page 45554]]

Table 35--Proposed Adjustment of Pilotage Rates, Areas in District One
----------------------------------------------------------------------------------------------------------------
Rate Adjusted rate
2012 Rate multiplier for 2013
----------------------------------------------------------------------------------------------------------------
Area 1 St. Lawrence River:
Basic Pilotage................. $19.02/km, $33.67/mi x 0.986 = $18.75/km,
$33.19/mi
Each lock Transited............ $422 x 0.986 = $416
Harbor movage.................. $1,381 x 0.986 = $1,361
Minimum basic rate, St. $921 x 0.986 = $908
Lawrence River.
Maximum rate, through trip..... $4,041 x 0.986 = $3,984
Area 2 Lake Ontario:
6-Hour period.................. $865 x 0.983 = $851
Docking or Undocking........... $826 x 0.983 = $812
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

Table 36--Proposed Adjustment of Pilotage Rates, Areas in District Two
----------------------------------------------------------------------------------------------------------------
Rate Adjusted rate
2012 Rate multiplier for 2013
----------------------------------------------------------------------------------------------------------------
Area 4 Lake Erie:
6-Hour period..................... $760 x 1.089 = $828
Docking or undocking.............. 585 x 1.089 = 637
Any point on Niagara River below 1,493 x 1.089 = 1,626
Black Rock Lock.
Area 5 Southeast Shoal to Port Huron,
MI between any point on or in:
Toledo or any point on Lake Erie 1,369 x 1.010 = 1,382
W. of Southeast Shoal.
Toledo or any point on Lake Erie 2,317 x 1.010 = 2,339
W. of Southeast Shoal & Southeast
Shoal.
Toledo or any point on Lake Erie 3,008 x 1.010 = 3,037
W. of Southeast Shoal & Detroit
River.
Toledo or any point on Lake Erie 2,317 x 1.010 = 2,339
W. of Southeast Shoal & Detroit
Pilot Boat.
Port Huron Change Point & 4,036 x 1.010 = 4,074
Southeast Shoal (when pilots are
not changed at the Detroit Pilot
Boat).
Port Huron Change Point & Toledo 4,675 x 1.010 = 4,719
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 3,031 x 1.010 = 3,060
River.
Port Huron Change Point & Detroit 2,358 x 1.010 = 2,381
Pilot Boat.
Port Huron Change Point & St. 1,677 x 1.010 = 1,693
Clair River.
St. Clair River................... 1,369 x 1.010 = 1,382
St. Clair River & Southeast Shoal 4,036 x 1.010 = 4,074
(when pilots are not changed at
the Detroit Pilot Boat).
St. Clair River & Detroit River/ 3,031 x 1.010 = 3,060
Detroit Pilot Boat.
Detroit, Windsor, or Detroit River 1,369 x 1.010 = 1,382
Detroit, Windsor, or Detroit River 2,317 x 1.010 = 2,339
& Southeast Shoal.
Detroit, Windsor, or Detroit River 3,008 x 1.010 = 3,037
& Toledo or any point on Lake
Erie W. of Southeast Shoal.
Detroit, Windsor, or Detroit River 3,031 x 1.010 = 3,060
& St. Clair River.
Detroit Pilot Boat & Southeast 1,677 x 1.010 = 1,693
Shoal.
Detroit Pilot Boat & Toledo or any 2,317 x 1.010 = 2,339
point on Lake Erie W. of
Southeast Shoal.
Detroit Pilot Boat & St. Clair 3,031 x 1.010 = 3,060
River.
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

Table 37--Proposed Adjustment of Pilotage Rates, Areas in District Three
----------------------------------------------------------------------------------------------------------------
Rate Adjusted rate
2011 Rate multiplier for 2012
----------------------------------------------------------------------------------------------------------------
Area 6 Lakes Huron and Michigan:
6-Hour Period..................... $662 x 1.043 = $691
Docking or undocking.............. 629 x 1.043 = 656
Area 7 St. Mary's River between any
point on or in:
Gros Cap & De Tour................ 2,568 x 1.006 = 2,583
Algoma Steel Corp. Wharf, Sault 2,568 x 1.006 = 2,583
Ste. Marie, Ont. & De Tour.
Algoma Steel Corp. Wharf, Sault. 967 x 1.006 = 973
Ste. Marie, Ont. & Gros Cap.
Any point in Sault St. Marie, 2,153 x 1.006 = 2,165
Ont., except the Algoma Steel
Corp. Wharf & De Tour.
Any point in Sault St. Marie, 967 x 1.006 = 973
Ont., except the Algoma Steel
Corp. Wharf & Gros Cap.
Sault Ste. Marie, MI & De Tour.... 2,153 x 1.006 = 2,165
Sault Ste. Marie, MI & Gros Cap... 967 x 1.006 = 973
Harbor movage..................... 967 x 1.006 = 973
Area 8 Lake Superior:
6-Hour period..................... 577 x 1.015 = 586

[[Page 45555]]

Docking or undocking.............. 549 x 1.015 = 557
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

VI. Regulatory Analyses

We developed this proposed rule after considering numerous statutes
and executive orders related to rulemaking. Below we summarize our
analyses based on 14 of these statutes or executive orders.

A. Regulatory Planning and Review

Executive Orders 12866 (``Regulatory Planning and Review'') and
13563 (``Improving Regulation and Regulatory Review'') direct agencies
to assess the costs and benefits of available regulatory alternatives
and, if regulation is necessary, to select regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety effects, distributive impacts, and equity).
Executive Order 13563 emphasizes the importance of quantifying both
costs and benefits, of reducing costs, of harmonizing rules, and of
promoting flexibility. This rule is not a ``significant regulatory
action'' under section 3(f) of Executive Order 12866. Accordingly, the
NPRM has not been reviewed by the Office of Management and Budget.
A draft regulatory assessment follows.
The Coast Guard is required to review and adjust pilotage rates on
the Great Lakes annually. See Parts III and IV of this preamble for
detailed discussions of the Coast Guard's legal basis and purpose for
this rulemaking and for background information on Great Lakes pilotage
ratemaking. Based on our annual review for this proposed rulemaking, we
are adjusting the pilotage rates for the 2013 shipping season to
generate sufficient revenue to cover allowable expenses, target pilot
compensation, and returns on investment. The rate adjustments in this
proposed rule would, if codified, lead to a cost in all three districts
with an estimated cost to shippers of approximately $148,000 across all
three districts.
The proposed rule would apply the 46 CFR part 404, Appendix A, full
ratemaking methodology and increase Great Lakes pilotage rates, on
average, approximately 1.87 percent overall from the current rates set
in the 2012 final rule. The Appendix A methodology is discussed and
applied in detail in Part V of this preamble. Among other factors
described in Part V, it reflects audited 2010 financial data from the
pilotage associations (the most recent year available for auditing),
projected association expenses, and regional inflation or deflation.
The last full Appendix A ratemaking was concluded in 2011 and used
financial data from the 2009 base accounting year. The last annual rate
review, conducted under 46 CFR part 404, Appendix C, was completed
early in 2011.
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 foreign trade) and owners and
operators of foreign vessels on a route within the Great Lakes system.
These owners and operators must have pilots or pilotage service as
required by 46 U.S.C. 9302. There is no minimum tonnage limit or
exemption for these vessels. The Coast Guard's interpretation is that
the statute applies only to commercial vessels and not to recreational
vessels.
Owners and operators of other vessels that are not affected by this
rule, such as recreational boats and vessels only operating within the
Great Lakes system may elect to purchase pilotage services. However,
this election is voluntary and does not affect the Coast Guard's
calculation of the rate and is not a part of our estimated national
cost to shippers. Coast Guard sampling of pilot data suggests there are
very few U.S. domestic vessels, without registry and operating only in
the Great Lakes that voluntarily purchase pilotage services.
We used 2008-2010 vessel arrival data from the Coast Guard's Marine
Information for Safety and Law Enforcement (MISLE) system to estimate
the average annual number of vessels affected by the rate adjustment to
be 204 vessels that journey into the Great Lakes system. These vessels
entered the Great Lakes by transiting through or in part of at least
one of the three pilotage districts before leaving the Great Lakes
system. These vessels often make more than one distinct stop, docking,
loading, and unloading at facilities in Great Lakes ports. Of the total
trips for the 204 vessels, there were approximately 319 annual U.S.
port arrivals before the vessels left the Great Lakes system, based on
2008-2010 vessel data from MISLE.
The impact of the rate adjustment to shippers is estimated from the
District pilotage revenues. These revenues represent the direct and
indirect costs (``economic costs'') that shippers must pay for pilotage
services. The Coast Guard sets rates so that revenues equal the
estimated cost of pilotage.
We estimate the additional impact (costs or savings) of the rate
adjustment in this proposed rule to be the difference between the total
projected revenue needed to cover costs in 2013 based on the 2012 rate
adjustment and the total projected revenue needed to cover costs in
2013 as set forth in this proposed rule. Table 38 details additional
costs or savings by area and district.

Table 38--Rate Adjustment and Additional Impact of the Proposed Rule by Area and District
[$U.S.; Non-discounted]
----------------------------------------------------------------------------------------------------------------
Additional
Projected Projected costs or
revenue needed revenue needed savings of
in 2012 * in 2013 ** this proposed
rule
----------------------------------------------------------------------------------------------------------------
Area 1.......................................................... $2,308,357 $2,404,424 $96,067

[[Page 45556]]

Area 2.......................................................... 1,614,791 1,569,160 (45,631)
-----------------------------------------------
Total, District One......................................... 3,923,148 3,973,583 50,435
----------------------------------------------------------------------------------------------------------------
Area 4.......................................................... 1,310,549 1,398,694 88,145
Area 5.......................................................... 2,600,490 2,596,484 (4,006)
-----------------------------------------------
Total, District Two......................................... 3,911,039 3,995,178 84,139
----------------------------------------------------------------------------------------------------------------
Area 6.......................................................... 2,227,555 2,281,673 54,118
Area 7.......................................................... 1,565,906 1,556,517 (9,389)
Area 8.......................................................... 1,811,863 1,780,829 (31,034)
-----------------------------------------------
Total, District Three....................................... 5,605,324 5,619,020 13,696
----------------------------------------------------------------------------------------------------------------
* These 2012 estimates are detailed in Table 18 of the 2012 final rule (76 FR 6351).
** These 2013 estimates are detailed in Table 27 of this rulemaking.
Some values may not total due to rounding.
``Additional Revenue or Cost of this Rulemaking'' = ``Revenue needed in 2012'' minus ``Revenue needed in 2011.''

After applying the rate change in this proposed rule, the resulting
difference between the projected revenue in 2012 and the projected
revenue in 2013 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 proposed
rule. As discussed earlier, we consider a reduction in payments to be a
cost savings.
The impact of the rate adjustment in this proposed rule to shippers
varies by area and district. The rate adjustments would lead to a cost
in all three districts, with affected shippers operating in District
One, District Two, and District Three experiencing costs of $50,435,
$84,139, and $13,696, respectively. To calculate an exact cost or
savings per vessel is difficult because of the variation in vessel
types, routes, port arrivals, commodity carriage, time of season,
conditions during navigation, and preferences for the extent of
pilotage services on designated and undesignated portions of the Great
Lakes system. Some owners and operators would pay more and some would
pay less depending on the distance and port arrivals of their vessels'
trips. However, the additional savings reported earlier in this NPRM
does capture the adjustment the shippers would experience as a result
of the proposed rate adjustment. As Table 38 indicates, shippers
operating in all areas would experience an annual cost due to this
rulemaking. The overall impact of the proposed rule would be a cost to
shippers of approximately $148,270 across all three districts.
This proposed rulemaking would allow the U.S. Coast Guard to meet
the statutory requirements to review the rates for pilotage services on
the Great Lakes--ensuring proper pilot compensation.

B. Small Entities

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have
considered whether this proposed rule would have a significant economic
impact on a substantial number of small entities. The term ``small
entities'' comprises small businesses, not-for-profit organizations
that are independently owned and operated and are not dominant in their
fields, and governmental jurisdictions with populations of less than
50,000 people.
We expect entities affected by the proposed rule would be
classified under the North American Industry Classification System
(NAICS) code subsector 483--Water Transportation, which includes the
following 6-digit NAICS codes for freight transportation: 483111--Deep
Sea Freight Transportation, 483113--Coastal and Great Lakes Freight
Transportation, and 483211--Inland Water Freight Transportation.
According to the Small Business Administration's definition, a U.S.
company with these NAICS codes and employing less than 500 employees is
considered a small entity.
For the proposed rule, we reviewed recent company size and
ownership data from 2008-2010 Coast Guard MISLE data and business
revenue and size data provided by publicly available sources such as
MANTA and Reference USA. 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 would be comparable in ownership and size to these
shippers.
There are three U.S. entities affected by the proposed rule that
receive revenue from pilotage services. These are the three pilot
associations that provide and manage pilotage services within the Great
Lakes districts. Two of the associations operate as partnerships and
one operates as a corporation. These associations are designated the
same NAICS industry classification and small entity size standards
described above, but they have far fewer than 500 employees; they have
approximately 65 total employees combined. We expect no adverse impact
to these entities from this proposed rule because all associations
receive enough revenue to balance the 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 proposed rule would not have a significant economic impact on a
substantial number of small entities. If you think that your business,
organization, or governmental jurisdiction qualifies as a small entity
and that this proposed rule would have a significant economic impact on
it, please submit a comment to the Docket Management Facility at the
address under ADDRESSES. In your

[[Page 45557]]

comment, explain why you think it qualifies, as well as how and to what
degree this proposed rule would economically affect it.

C. Assistance for Small Entities

Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104-121), we want to assist small
entities in understanding this proposed rule so that they can better
evaluate its effects on them and participate in the rulemaking. If the
proposed rule would affect your small business, organization, or
governmental jurisdiction and you have questions concerning its
provisions or options for compliance, please consult Mr. Todd Haviland,
Management & Program Analyst, Office of Great Lakes Pilotage,
Commandant (CG-WWM-2), Coast Guard; telephone 202-372-2037, email
Todd.A.Haviland@uscg.mil, or fax 202-372-1909. 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 proposed rule would call for no new collection of information
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). This
rule does not change the burden in the collection currently approved by
the Office of Management and Budget Under OMB Control Number 1625-0086,
Great Lakes Pilotage Methodology.

E. Federalism

A rule has implications for federalism under Executive Order 13132,
Federalism, if it has a substantial direct effect on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government. We have analyzed this proposed rule under that Order and
have determined that it does not have implications for federalism
because States are expressly prohibited by 46 U.S.C. 9306 from
regulating pilotage on the Great Lakes.

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 proposed rule would not
result in such expenditure, we do discuss the effects of this rule
elsewhere in this preamble.

G. Taking of Private Property

This proposed rule would 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 proposed rule meets applicable standards in sections 3(a) and
3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden.

I. Protection of Children

We have analyzed this proposed rule under Executive Order 13045,
Protection of Children from Environmental Health Risks and Safety
Risks. This rule is not an economically significant rule and would not
create an environmental risk to health or risk to safety that might
disproportionately affect children.

J. Indian Tribal Governments

This proposed rule does not have tribal implications under
Executive Order 13175, Consultation and Coordination with Indian Tribal
Governments, because it would 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 proposed rule under Executive Order 13211,
Actions Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use. We have determined that it is not a ``significant
energy action'' under that order because it is not a ``significant
regulatory action'' under Executive Order 12866 and is not likely to
have a significant adverse effect on the supply, distribution, or use
of energy. The Administrator of the Office of Information and
Regulatory Affairs has not designated it as a significant energy
action. Therefore, it does not require a Statement of Energy Effects
under Executive Order 13211.

L. Technical Standards

The National Technology Transfer and Advancement Act (NTTAA) (15
U.S.C. 272 note) directs agencies to use voluntary consensus standards
in their regulatory activities unless the agency provides Congress,
through the Office of Management and Budget, with an explanation of why
using these standards would be inconsistent with applicable law or
otherwise impractical. Voluntary consensus standards are technical
standards (e.g., specifications of materials, performance, design, or
operation; test methods; sampling procedures; and related management
systems practices) that are developed or adopted by voluntary consensus
standards bodies. This proposed rule does not use technical standards.
Therefore, we did not consider the use of voluntary consensus
standards.

M. Environment

We have analyzed this proposed rule under Department of Homeland
Security Management Directive 023-01 and Commandant Instruction
M16475.lD, which guide the Coast Guard in complying with the National
Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and
have made a preliminary determination that this action is one of a
category of actions that do not individually or cumulatively have a
significant effect on the human environment. A preliminary
environmental analysis checklist supporting this determination is
available in the docket where indicated under the ``Public
Participation and Request for Comments'' section of this preamble. 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
proposed rule adjusts rates in accordance with applicable statutory and
regulatory mandates. We seek any comments or information that may lead
to the discovery of a significant environmental impact from this
proposed rule.

List of Subjects in 46 CFR Part 401

Administrative practice and procedure, Great Lakes, Navigation
(water), Penalties, Reporting and recordkeeping requirements, Seamen.

For the reasons discussed in the preamble, the Coast Guard proposes
to amend 46 CFR part 401 as follows:

[[Page 45558]]

PART 401--GREAT LAKES PILOTAGE REGULATIONS

1. The authority citation for part 401 continues to read as
follows:

Authority: 46 U.S.C. 2104(a), 6101, 7701, 8105, 9303, 9304;
Department of Homeland Security Delegation No. 0170.1; 46 CFR
401.105 also issued under the authority of 44 U.S.C. 3507.

2. In Sec. 401.405, revise paragraphs (a) and (b), including the
footnote to table (a), to read as follows:

Sec. 401.405 Basic rates and charges on the St. Lawrence River and
Lake Ontario.

* * * * *
(a) Area 1 (Designated Waters):

------------------------------------------------------------------------
Service St. Lawrence river
------------------------------------------------------------------------
Basic Pilotage............................ \1\ $18.75 per kilometer or
$33.19 per mile.
Each Lock Transited....................... \1\ $416.
Harbor Movage............................. \1\ $1,361.
------------------------------------------------------------------------
\1\ The minimum basic rate for assignment of a pilot in the St. Lawrence
River is $908, and the maximum basic rate for a through trip is
$3,984.

(b) Area 2 (Undesignated Waters):

------------------------------------------------------------------------
Service Lake Ontario
------------------------------------------------------------------------
6-Hour Period............................. $851
Docking or Undocking...................... 812
------------------------------------------------------------------------

3. In Sec. 401.407 revise paragraphs (a) and (b), including the
footnote to Table (b), to read as follows:

Sec. 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
Service Southeast Buffalo
Shoal)
------------------------------------------------------------------------
6-Hour Period................................. $828 $828
Docking or Undocking.......................... 637 637
Any point on the Niagara River below the Black N/A 1,626
Rock Lock....................................
------------------------------------------------------------------------

(b) Area 5 (Designated Waters):

----------------------------------------------------------------------------------------------------------------
Toledo or
any point
on Lake
Any point on or in Southeast Erie west Detroit Detroit St. Clair
Shoal of River Pilot Boat River
Southeast
Shoal
----------------------------------------------------------------------------------------------------------------
Toledo or any port on Lake Erie west of $2,339 $1,382 $3,037 $2,339 N/A
Southeast Shoal...............................
Port Huron Change Point........................ \1\ 4,074 \1\ 4,719 3,060 2,339 1,693
St. Clair River................................ \1\ 4,074 N/A 3,060 3,060 1,382
Detroit or Windsor or the Detroit River........ 2,339 3,037 1,382 N/A 3,060
Detroit Pilot Boat............................. 1,693 2,339 N/A N/A 3,060
----------------------------------------------------------------------------------------------------------------
\1\ When pilots are not changed at the Detroit Pilot Boat.

4. In Sec. 401.410, revise paragraphs (a), (b), and (c) to read as
follows:

Sec. 401.410 Basic rates and charges on Lakes Huron, Michigan, and
Superior; and the St. Mary's River.

* * * * *
(a) Area 6 (Undesignated Waters):

------------------------------------------------------------------------
Lakes Huron
Service and
Michigan
------------------------------------------------------------------------
6-Hour Period.............................................. $691
Docking or Undocking....................................... 656
------------------------------------------------------------------------

(b) Area 7 (Designated Waters):

------------------------------------------------------------------------
Area De Tour Gros Cap Any harbor
------------------------------------------------------------------------
Gros Cap......................... $2,583 N/A N/A
Algoma Steel Corporation Wharf at 2,583 973 N/A
Sault Ste. Marie, Ontario.......
Any point in Sault Ste. Marie, 2,165 973 N/A
Ontario, except the Algoma Steel
Corporation Wharf...............
Sault Ste. Marie, MI............. 2,165 973 N/A
Harbor Movage.................... N/A N/A $973
------------------------------------------------------------------------

------------------------------------------------------------------------
Lake
Service Superior
------------------------------------------------------------------------
6-Hour Period.............................................. $586
Docking or Undocking....................................... 557
------------------------------------------------------------------------

Sec. 401.420 [Amended]

5. Amend Sec. 401.420 as follows:
a. In paragraph (a), remove the text ``$124'' and add, in its
place, the text ``$126''; and remove the text ``$1,942'' and add, in
its place, the text ``$1,972'';
b. In paragraph (b), remove the text ``$124'' and add, in its
place, the text ``$126''; and remove the text ``$1,942'' and add, in
its place, the text ``$1,972''; and
c. In paragraph (c)(1), remove the text ``$733'' and add, in its
place, the text ``$744''; and in paragraph (c)(3), remove the text
``$124'' and add, in its place, the text ``$126'', and remove the text
``$1,942'' and add, in its place, the text ``$1,972''.

Sec. 401.428 [Amended]

6. In Sec. 401.428, remove the text ``$748'' and add, in its
place, the text ``$744''.

Dated: July 9, 2012.
Dana A. Goward,
Director, Marine Transportation Systems Management, U.S. Coast Guard.
[FR Doc. 2012-18714 Filed 7-31-12; 8:45 am]
BILLING CODE 9110-04-P

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