Great Lakes Pilotage Rates-2015 Annual Review and Adjustment, 52602-52624 [2014-21046]

Download as PDF 52602 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules (4) Posting of signs in the local vicinity. * * * * * ■ 7. In § 13.400, remove paragraph (e) and redesignate paragraph (f) as paragraph (e). ■ 8. Revise § 13.470 to read as follows: § 13.470 ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA–R07–OAR–2014–0595; FRL–9916–09– Region 7] Subsistence Fishing. Fish may be taken by local rural residents for subsistence uses in park areas where subsistence uses are allowed in compliance with applicable Federal law and regulation, including the provisions of §§ 2.3 and 13.40 of this chapter. Local rural residents in park areas where subsistence uses are allowed may fish with a net, seine, trap, or spear; or use native species as bait, where permitted by applicable Federal law and regulation. ■ 9. Revise § 13.480 to read as follows: § 13.480 Subsistence Hunting and Trapping. Local rural residents may hunt and trap wildlife for subsistence uses in park areas where subsistence uses are allowed in compliance with this chapter and 50 CFR Part 100. ■ 10. In § 13.490, revise paragraph (a) to read as follows: tkelley on DSK3SPTVN1PROD with PROPOSALS § 13.490 Closures and restrictions to subsistence uses of fish and wildlife. (a) The Superintendent may temporarily restrict a subsistence activity or close all or part of a park area to subsistence uses of a fish or wildlife population in accordance with the provisions of this section. The Superintendent may make a temporary closure or restriction notwithstanding any other provision of this part, and only if the following conditions are met: (1) The restriction or closure must be necessary for reasons of public safety, administration, or to ensure the continued viability of the fish or wildlife population; (2) The Superintendent must provide public notice and hold a public hearing; (3) The restriction or closure may last only so long as reasonably necessary to achieve the purposes of the closure. * * * * * Dated: August 25, 2014. Michael Bean, Principal Deputy Assistant Secretary for Fish and Wildlife and Parks. [FR Doc. 2014–20881 Filed 9–3–14; 8:45 am] BILLING CODE 4310–EJ–P VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 Approval and Promulgation of Implementation Plans; State of Missouri, Control of Gasoline Reid Vapor Pressure Environmental Protection Agency (EPA). ACTION: Proposed rule. AGENCY: The Environmental Protection Agency (EPA) proposes to approve a revision to the State Implementation Plan (SIP) submitted by the State of Missouri and received by EPA on July 18, 2013, related to the Missouri rule that controls Gasoline Reid Vapor Pressure in the Kansas City metropolitan area. This action would amend the SIP by updating no longer existing references to certain sampling procedures and test procedures. DATES: Comments on this proposed action must be received in writing by October 6, 2014. ADDRESSES: Submit your comments, identified by Docket ID No. EPA–R07– OAR–2014–0595, by mail to Amy Bhesania, Environmental Protection Agency, Air Planning and Development Branch, 11201 Renner Boulevard, Lenexa, Kansas 66219. Comments may also be submitted electronically or through hand delivery/courier by following the detailed instructions in the ADDRESSES section of the direct final rule located in the rules section of this Federal Register. FOR FURTHER INFORMATION CONTACT: Amy Bhesania, Environmental Protection Agency, Air Planning and Development Branch, 11201 Renner Boulevard, Lenexa, Kansas 66219 at (913) 551–7147, or by email at bhesania.amy@epa.gov. SUPPLEMENTARY INFORMATION: In the final rules section of the Federal Register, EPA is approving the state’s SIP revision as a direct final rule without prior proposal because the Agency views this as a noncontroversial revision amendment and anticipates no relevant adverse comments to this action. A detailed rationale for the approval is set forth in the direct final rule. If no relevant adverse comments are received in response to this action, no further activity is contemplated in relation to this action. If EPA receives relevant adverse comments, the direct final rule will be withdrawn and all public comments received will be SUMMARY: PO 00000 Frm 00018 Fmt 4702 Sfmt 4702 addressed in a subsequent final rule based on this proposed action. EPA will not institute a second comment period on this action. Any parties interested in commenting on this action should do so at this time. Please note that if EPA receives adverse comment on part of this rule and if that part can be severed from the remainder of the rule, EPA may adopt as final those parts of the rule that are not the subject of an adverse comment. For additional information, see the direct final rule which is located in the rules section of this Federal Register. List of Subjects in 40 CFR Part 52 Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference, Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds. Dated: August 20, 2014. Mark Hague, Acting Regional Administrator, Region 7. [FR Doc. 2014–20912 Filed 9–3–14; 8:45 am] BILLING CODE 6560–50–P DEPARTMENT OF HOMELAND SECURITY Coast Guard 46 CFR Part 401 [USCG–2014–0481] RIN 1625–AC22 Great Lakes Pilotage Rates—2015 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, last amended in March 2014. The proposed adjustments would establish new base rates made in accordance with a full ratemaking procedure. Additionally, the Coast Guard proposes to exercise the discretion provided by Step 7 of the Appendix A methodology. The result is an upward adjustment to match the rate increase of the Canadian Great Lakes Pilotage Authority. We also propose temporary surcharges to accelerate recoupment of necessary and reasonable training costs for the pilot associations. This notice of proposed rulemaking promotes the Coast Guard’s strategic goal of maritime safety. DATES: Comments and related material must either be submitted to our online SUMMARY: E:\FR\FM\04SEP1.SGM 04SEP1 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules docket via http://www.regulations.gov on or before November 3, 2014 or reach the Docket Management Facility by that date. ADDRESSES: You may submit comments identified by docket number USCG– 2014–0481 using any one of the following methods: (1) Federal eRulemaking Portal: http://www.regulations.gov. (2) Fax: 202–493–2251. (3) Mail: Docket Management Facility (M–30), U.S. Department of Transportation, West Building Ground Floor, Room W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590– 0001. (4) Hand delivery: Same as mail address above, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The telephone number is 202–366–9329. 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. If you have questions on this proposed rule, call or email Mr. Todd Haviland, Director, Great Lakes Pilotage, Commandant (CG–WWM–2), Coast Guard; telephone 202–372–2037, email Todd.A.Haviland@uscg.mil, or fax 202– 372–1914. If you have questions on viewing or submitting material to the docket, call Ms. Cheryl Collins, Program Manager, Docket Operations, telephone 202–366–9826. SUPPLEMENTARY INFORMATION: FOR FURTHER INFORMATION CONTACT: tkelley on DSK3SPTVN1PROD with PROPOSALS Table of Contents for Preamble I. Public Participation and Request for Comments 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 A. Summary B. Discussion of Methodology 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 VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 I. Public Participation and Request for Comments We encourage you to participate in this rulemaking by submitting comments and related materials. All comments received will be posted without change to http:// www.regulations.gov and will include any personal information you have provided. A. Submitting Comments If you submit a comment, please include the docket number for this rulemaking (USCG–2014–0481), 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 http://www.regulations.gov and insert ‘‘USCG–2014–0481’’ 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 notice of proposed rulemaking (NPRM) based on your comments. B. Viewing Comments and Documents To view comments, as well as documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov and insert ‘‘USCG–2014–0481’’ in the ‘‘Search’’ box. 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. PO 00000 Frm 00019 Fmt 4702 Sfmt 4702 52603 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 we decide to hold a public meeting, we will announce its time and place in a later notice in the Federal Register. II. Abbreviations AMOU American Maritime Officers Union APA American Pilots Association CFR Code of Federal Regulations CPA Certified public accountant CPI Consumer Price Index E.O. Executive Order FR Federal Register MISLE Marine Information for Safety and Law Enforcement MOA Memorandum of Arrangements MOU Memorandum of Understanding 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 III. Basis and Purpose The basis of this NPRM 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. or Canadian 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 to ‘‘prescribe by regulation rates and charges for pilotage services, giving consideration to the public interest and the costs of providing the services.’’ 46 U.S.C. 9303(f). Rates must be established or reviewed and adjusted each year, not later than March 1. Base rates must be 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. E:\FR\FM\04SEP1.SGM 04SEP1 52604 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules tkelley on DSK3SPTVN1PROD with PROPOSALS 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, if necessary, adjusted. Id. 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 NPRM is to establish new base pilotage rates, using the methodology found in 46 CFR part 404, Appendix A. IV. Background The vessels affected by this NPRM are those engaged in foreign trade upon the U.S. waters of the Great Lakes. United States 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 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 United States 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, 2 A ‘‘laker’’ is a commercial cargo vessel especially designed for and generally limited to use on the Great Lakes. VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 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 NPRM is a full ratemaking to establish new base pilotage rates, using the methodology found in 46 CFR part 404, Appendix A (hereafter ‘‘Appendix A’’). The last full ratemaking established the current base rates in 2014 (79 FR 12084; Mar. 4, 2014). 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 accountants’ 2012 financial reports. The comments by the pilot associations on those reports and the independent accountants’ 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, 2015, and effective August 1, 2015. Our calculations under Steps 1 through 6 of Appendix A would result in an average 12 percent rate decrease. This rate decrease is not the result of increased efficiencies in providing pilotage services but rather is a result of changes to American Maritime Officers Union (AMOU) contracts. Therefore, we will continue to exercise the discretion outlined in Step 7, increasing rates by 2.5 percent, and matching the Canadian Great Lakes Pilotage Authority’s rate adjustment for 2015. We will provide additional discussion when we explain our Step 7 adjustment of pilot rates. Table 1 shows the proposed percent change for the new rates for each area. Secondly, we propose temporary surcharges for the pilot associations to recoup necessary and reasonable training expenses incurred or that are expected to be incurred prior to the required March 1, 2015 publication of the 2015 final rule. Normally, these expenses would not be recognized until the 2016 annual ratemaking or later. By authorizing the temporary surcharges PO 00000 Frm 00020 Fmt 4702 Sfmt 4702 now, we propose to accelerate the reimbursement for necessary and reasonable training expenses. The surcharge would be authorized for the duration of the 2015 shipping season which begins in March 2015. This action would merely accelerate the recoupment of these expenses. At the conclusion of the 2015 shipping season, we would account for the monies generated by the surcharge and make adjustments as necessary to the operating expenses for the following year. In District One we propose a temporary surcharge of 5 percent to compensate pilots for $28,028.91 that the District One pilot association spent on training in 2013 and early 2014, as well as the anticipated $150,000 cost to train a new applicant pilot in the 2014 shipping season to prepare a replacement for a retiring pilot. We believe this training is necessary and reasonable to maintain safe, efficient, and reliable pilotage on the Great Lakes and support the St. Lawrence Seaway Pilots Association’s continued commitment to the training and professional development of their pilots. Additionally, we propose a temporary surcharge of 10 percent in District Two to compensate pilots for $300,000 that the District Two pilot association will spend training two applicant pilots in 2014. This is necessary and reasonable to allow the association to bring on new pilots in the face of upcoming retirements without adjusting the pilotage needs as determined by the ratemaking methodology. This surcharge would also accelerate the repayment of the association’s investment in upgraded technology ($25,829.80) to enhance the situational awareness of pilots on the bridge. We believe this needed technology would assist in the safety, efficiency, and reliability of the system. Next, we propose a temporary surcharge of 1 percent in District Three to compensate pilots for $26,950 that the District Three pilot association plans to spend on training at the conclusion of the 2014 shipping season. We believe this training is necessary and reasonable for the provision of safe pilotage service. All figures in the tables that follow are based on calculations performed either by an independent accountant or by the Director’s 3 staff. In both cases, those calculations were performed using common commercial computer programs. Decimalization and rounding of the audited and calculated data 3 ‘‘Director’’ is the Coast Guard Director, Great Lakes Pilotage, which is used throughout this NPRM. E:\FR\FM\04SEP1.SGM 04SEP1 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules affects the display in these tables but does not affect the calculations. The calculations are based on the actual 52605 figures, which are rounded for presentation in the tables. TABLE 1—SUMMARY OF RATE ADJUSTMENTS BASED ON STEP 7 DISCRETION Then the percent change over the current rate is: If pilotage service is required in: Area Area Area Area Area Area Area 1 2 4 5 6 7 8 (Designated waters) ......................................................................................................................................................... (Undesignated waters) ..................................................................................................................................................... (Undesignated waters) ..................................................................................................................................................... (Designated waters) ......................................................................................................................................................... (Undesignated waters) ..................................................................................................................................................... (Designated waters) ......................................................................................................................................................... (Undesignated waters) ..................................................................................................................................................... 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 2012 financial information supplied by the pilots association. Step 1: Projection of Operating Expenses. In this step, we project the amount of vessel traffic annually. Based on 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 2012 financial information in 2013. 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 2.50 2.50 2.50 2.50 2.50 2.50 2.50 or disallowed for ratemaking purposes. The accountant’s preliminary findings were sent to the pilot associations, they reviewed and commented on those findings, and the accountant then finalized the findings. The Director reviewed and accepted the 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 Operating Expenses: Other Pilotage Costs: Pilot subsistence/Travel ............................................................................................ License insurance ..................................................................................................... Payroll taxes ............................................................................................................. Other ......................................................................................................................... Area 2 St. Lawrence River Reported Expenses for 2012 Lake Ontario Total $137,315 0 48,452 549 $364,514 0 110,490 1,145 Total Other Pilotage Costs ................................................................................ Pilot Boat and Dispatch Costs: Pilot boat expense .................................................................................................... Dispatch expense ..................................................................................................... Payroll taxes ............................................................................................................. tkelley on DSK3SPTVN1PROD with PROPOSALS $227,199 0 62,038 596 289,833 186,316 476,149 108,539 0 13,429 95,405 0 11,804 203,944 0 25,233 Total Pilot and Dispatch Costs .......................................................................... Administrative Expenses: Legal—general counsel ............................................................................................ Legal—lobbying ........................................................................................................ Insurance .................................................................................................................. Employee benefits .................................................................................................... Payroll taxes ............................................................................................................. Other taxes ............................................................................................................... Travel ........................................................................................................................ Depreciation/Auto leasing/Other ............................................................................... Interest ...................................................................................................................... Dues and subscriptions ............................................................................................ Utilities ...................................................................................................................... Salaries ..................................................................................................................... 121,968 107,209 229,177 1,369 3,957 21,907 21,281 0 18,491 473 38,346 15,484 13,740 4,549 48,837 1,281 3,478 18,998 18,509 0 15,801 416 33,705 13,610 10,240 3,897 42,927 2,650 7,435 40,905 39,790 0 34,292 889 72,051 29,094 23,980 8,446 91,764 VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 PO 00000 Frm 00021 Fmt 4702 Sfmt 4702 E:\FR\FM\04SEP1.SGM 04SEP1 52606 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules TABLE 2—RECOGNIZED EXPENSES FOR DISTRICT ONE—Continued Area 1 Area 2 St. Lawrence River Reported Expenses for 2012 Lake Ontario Total Accounting/Professional fees ................................................................................... Pilot Training ............................................................................................................. Other ......................................................................................................................... 4,683 26,353 10,689 4,317 21,961 8,974 9,000 48,314 19,663 Total Administrative Expenses .......................................................................... 230,159 198,114 428,273 Total Operating Expenses ................................................................................. Proposed Adjustments (Independent certified public accountant (CPA)): Pilotage subsistence/Travel ...................................................................................... Payroll taxes ............................................................................................................. Dues and subscriptions ............................................................................................ 641,960 491,639 1,133,599 (887) (13,719) (13,740) (779) (12,058) (10,240) (1,666) (25,777) (23,980) TOTAL CPA ADJUSTMENTS ........................................................................... Proposed Adjustments (Director): APA Dues ................................................................................................................. Pilot Training (surcharge) ......................................................................................... Legal—lobbying ........................................................................................................ (28,346) (23,077) (51,423) 11,679 (26,353) (3,957) 8,704 (21,961) (3,478) 20,383 (48,314) (7,435) TOTAL DIRECTOR ADJUSTMENTS ............................................................... (18,631) (16,735) (35,366) Total Operating Expenses ................................................................................. 594,983 451,827 1,046,810 Note: Numbers may not total due to rounding. TABLE 3—RECOGNIZED EXPENSES FOR DISTRICT TWO Area 4 Area 5 Lake Erie Southeast Shoal to Port Huron, MI Reported Expenses for 2012 Operating Expenses: Other Pilotage Costs: Pilot subsistence/Travel ............................................................................................ License insurance ..................................................................................................... Payroll taxes ............................................................................................................. Other ......................................................................................................................... Total $130,421 9,252 63,328 35,833 $217,368 15,420 105,546 59,721 Total Other Pilotage Costs ................................................................................ Pilot Boat and Dispatch Costs: Pilot boat expense .................................................................................................... Dispatch expense ..................................................................................................... Employee Benefits .................................................................................................... Payroll taxes ............................................................................................................. tkelley on DSK3SPTVN1PROD with PROPOSALS $86,947 6,168 42,218 23,888 159,221 238,834 398,055 131,285 6,600 48,310 7,412 196,930 9,900 72,465 11,119 328,215 16,500 120,775 18,531 Total Pilot and Dispatch Costs .......................................................................... Administrative Expenses: Legal—general counsel ............................................................................................ Legal—lobbying ........................................................................................................ Legal—litigation ........................................................................................................ Office rent ................................................................................................................. Insurance .................................................................................................................. Employee benefits .................................................................................................... Payroll taxes ............................................................................................................. Other taxes ............................................................................................................... Depreciation/Auto leasing/Other ............................................................................... Interest ...................................................................................................................... Utilities ...................................................................................................................... Salaries ..................................................................................................................... Accounting/Professional fees ................................................................................... Pilot Training ............................................................................................................. Other ......................................................................................................................... 193,607 290,414 484,021 2,054 2,704 6,488 26,275 10,682 16,452 4,143 12,546 9,074 2,989 13,917 36,252 11,764 0 9,405 3,082 4,055 9,733 39,413 16,024 24,678 6,216 18,819 13,610 4,483 20,876 54,377 17,646 0 14,108 5,136 6,759 16,221 65,688 26,706 41,130 10,359 31,365 22,684 7,472 34,793 90,629 29,410 0 23,513 Total Administrative Expenses .......................................................................... 164,745 247,120 411,865 Total Operating Expenses ................................................................................. Proposed Adjustments (Independent CPA): Pilot subsistence/Travel ............................................................................................ Employee benefits .................................................................................................... 517,573 776,368 1,293,941 (1,982) (3,585) (2,974) (5,378) (4,956) (8,963) VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 PO 00000 Frm 00022 Fmt 4702 Sfmt 4702 E:\FR\FM\04SEP1.SGM 04SEP1 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules 52607 TABLE 3—RECOGNIZED EXPENSES FOR DISTRICT TWO—Continued Area 4 Area 5 Lake Erie Southeast Shoal to Port Huron, MI Reported Expenses for 2012 Total TOTAL CPA ADJUSTMENTS ........................................................................... Proposed Adjustments (Director): Federal Tax Allowance ............................................................................................. APA Dues ................................................................................................................. Legal—lobbying ........................................................................................................ Legal—litigation ........................................................................................................ (5,567) (8,352) (13,919) (5,200) 7,344 (2,704) (6,488) (7,800) 11,016 (4,055) (9,733) (13,000) 18,360 (6,759) (16,221) TOTAL DIRECTOR ADJUSTMENTS ............................................................... (7,048) (10,572) (17,620) Total Operating Expenses ................................................................................. 504,958 757,444 1,262,402 Note: Numbers may not total due to rounding. TABLE 4—RECOGNIZED EXPENSES FOR DISTRICT THREE Area 6 Area 7 Area 8 Lakes Huron and Michigan St. Mary’s River Lake Superior $180,316 8,859 0 2,875 $77,278 3,797 0 1,232 $110,398 5,424 0 1,760 $367,992 18,080 0 5,867 Total Other Pilotage Costs ................................................ Pilot Boat and Dispatch Costs: Pilot boat expense .................................................................... Dispatch expense ..................................................................... Payroll taxes ............................................................................. 192,050 82,307 117,582 391,939 261,937 81,958 8,203 112,259 35,125 3,515 160,370 50,178 5,022 534,566 167,261 16,740 Total Pilot Boat and Dispatch Costs ................................. Administrative Expenses: Legal—lobbying ........................................................................ Office rent ................................................................................. Insurance .................................................................................. Employee benefits .................................................................... Payroll taxes ............................................................................. Other taxes ............................................................................... Depreciation/Auto leasing ......................................................... Interest ...................................................................................... Utilities ...................................................................................... Salaries ..................................................................................... Accounting/Professional fees ................................................... Pilot Training ............................................................................. Other ......................................................................................... 352,098 150,899 215,570 718,567 4,304 4,851 6,469 77,348 5,404 941 17,462 2,692 20,950 54,003 13,157 0 4,657 1,845 2,079 2,773 33,149 2,316 403 7,484 1,154 8,979 23,144 5,639 0 1,996 2,635 2,970 3,961 47,356 3,309 576 10,691 1,648 12,827 33,063 8,055 0 2,851 8,784 9,900 13,203 157,854 11,029 1,920 35,637 5,494 42,756 110,210 26,851 0 9,504 Total Administrative Expenses .......................................... 212,238 90,961 129,942 433,141 Total Operating Expenses ................................................. Proposed Adjustments (Independent CPA): Pilot subsistence/travel ............................................................. Payroll taxes ............................................................................. Other taxes ............................................................................... Other ......................................................................................... 756,386 324,167 463,094 1,543,647 (5,303) 44,613 (1,761) (637) (2,273) 19,120 (755) (273) (3,247) 27,314 (1,078) (390) (10,823) 91,046 (3,594) (1,300) TOTAL CPA ADJUSTMENTS ........................................... Proposed Adjustments (Director): APA dues .................................................................................. Legal—lobbying ........................................................................ 36,912 15,819 22,599 75,329 11,695 (4,304) 5,012 (1,845) 7,160 (2,635) 23,868 (8,784) TOTAL DIRECTOR ADJUSTMENTS ............................... 7,391 3,167 4,525 15,084 Total Operating Expenses ................................................. 800,689 343,153 490,218 1,634,060 Reported Expenses for 2012 tkelley on DSK3SPTVN1PROD with PROPOSALS Operating Expenses: Other Pilotage Costs: Pilot subsistence/Travel ............................................................ License insurance ..................................................................... Payroll taxes ............................................................................. Other ......................................................................................... Total Note: Numbers may not total due to rounding. VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 PO 00000 Frm 00023 Fmt 4702 Sfmt 4702 E:\FR\FM\04SEP1.SGM 04SEP1 52608 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules 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 2012 financial information, the ‘‘succeeding navigation season’’ for this ratemaking is 2013. We based our The Coast Guard is aware that the current annual adjustment for inflation does not account for the value of money over time. We are working on a solution to allow for a better approximation of actual costs. inflation adjustment of 1.4 percent on the 2013 change in the Consumer Price Index (CPI) for the Midwest Region of the United States, which can be found at http://www.bls.gov/xg_shells/ ro5xg01.htm. This adjustment appears in Tables 5 through 7. TABLE 5—INFLATION ADJUSTMENT, DISTRICT ONE Area 1 Total Operating Expenses: ....................................................................... 2013 change in the CPI for the Midwest Region of the United States .... Inflation Adjustment .................................................................................. Area 2 St. Lawrence River Reported Expenses for 2012 Lake Ontario Total $594,983 .014 8,330 × = $451,827 .014 6,326 × = $1,046,810 .014 14,655 × = TABLE 6—INFLATION ADJUSTMENT, DISTRICT TWO Area 4 Area 5 Lake Erie Southeast Shoal to Port Huron, MI Reported Expenses for 2012 Total Operating Expenses: ....................................................................... 2013 change in the CPI for the Midwest Region of the United States .... Inflation Adjustment .................................................................................. $504,958 .014 7,069 × = $757,444 .014 10,604 × = Total $1,262,402 .014 17,674 × = TABLE 7—INFLATION ADJUSTMENT, DISTRICT THREE Area 6 Total Operating Expenses: ........................................... 2013 change in the CPI for the Midwest Region of the United States ............................................................. Inflation Adjustment ....................................................... Step 1.D: Projection of Operating Expenses. In this final sub-step of Step 1, we project the operating expenses for each pilotage area on the basis of the Area 7 Area 8 Lakes Huron and Michigan Reported Expenses for 2012 St. Mary’s River Lake Superior $800,689 × = .014 11,210 Total $343,153 × = $490,218 × = .014 4,804 preceding sub-steps and any other foreseeable circumstances that could affect the accuracy of the projection. .014 6,863 $1,634,060 × = .014 22,877 For District One, the projected operating expenses are based on the calculations from Steps 1.A through 1.C. Table 8 shows these projections. TABLE 8—PROJECTED OPERATING EXPENSES, DISTRICT ONE Area 1 Total operating expenses ................................................................................... Inflation adjustment 1.4% ................................................................................... Total projected expenses for 2015 pilotage season .......................................... Area 2 St. Lawrence River Reported Expenses for 2012 Lake Ontario Total $594,983 8,330 603,313 + = $451,827 6,326 458,153 + = + = $1,046,810 14,655 1,061,465 Note: Numbers may not total due to rounding. tkelley on DSK3SPTVN1PROD with PROPOSALS In District Two the projected operating expenses are based on the calculations from Steps 1.A through 1.C. Table 9 shows these projections. TABLE 9—PROJECTED OPERATING EXPENSES, DISTRICT TWO Area 4 Area 5 Lake Erie Southeast Shoal to Port Huron, MI Reported Expenses for 2012 Total Operating Expenses ........................................................................ Inflation adjustment 1.4% ......................................................................... VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 PO 00000 Frm 00024 Fmt 4702 + Sfmt 4702 $504,958 7,069 + E:\FR\FM\04SEP1.SGM $757,444 10,604 04SEP1 Total + $1,262,402 17,674 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules 52609 TABLE 9—PROJECTED OPERATING EXPENSES, DISTRICT TWO—Continued Area 4 Area 5 Lake Erie Southeast Shoal to Port Huron, MI Reported Expenses for 2012 Total projected expenses for 2015 pilotage season ................................ In District Three, projected operating expenses are based on the calculations = 512,027 = 768,048 Total = 1,280,076 from 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 2012 St. Mary’s River Lake Superior Total Total Expenses ................................................. Inflation adjustment 1.4% .................................. Total projected expenses for 2015 pilotage season ........................................................... + $800,689 11,210 + $343,153 4,804 + $490,218 6,863 + $1,634,060 22,877 = 811,899 = 347,957 = 497,081 = 1,656,937 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 2015. 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 on designated waters by multiplying the average first mates’ wages by 150 percent and then adding the average first mates’ benefits. We rely upon union contract data provided by the AMOU, which has agreements with three U.S. companies engaged in Great Lakes shipping. We derive the data from two separate AMOU contracts—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 vessels operated by American Steamship Co. and Mittal Steel USA, Inc. Agreements A and B both expire on July 31, 2016. The AMOU has set the daily aggregate rate, including the daily wage rate, vacation pay, pension plan contributions, and medical plan contributions effective August 1, 2015, as follows: 1) In undesignated waters, $632.12 for Agreement A and $624.34 for Agreement B; and 2) In designated waters, $870.05 for Agreement A and $856.42 for Agreement B. Because we are interested in annual compensation, we must convert these daily rates. We use a 270-day multiplier which reflects an average 30-day month, over the 9 months of the average shipping season. Table 11 shows our calculations using the 270-day multiplier. TABLE 11—PROJECTED ANNUAL AGGREGATE RATE COMPONENTS Aggregate Rate—Wages and Vacation, Pension, and Medical Benefits Pilots on undesignated waters Agreement A: $632.12 daily rate × 270 days ............................................................................................................................ Agreement B: $624.34 daily rate × 270 days ............................................................................................................................ $170,672.40 168,571.80 Pilots on designated waters tkelley on DSK3SPTVN1PROD with PROPOSALS Agreement A: $870.05 daily rate × 270 days ............................................................................................................................ Agreement B: $856.42 daily rate × 270 days ............................................................................................................................ We apportion the compensation provided by each agreement according to the percentage of tonnage represented by companies under each agreement. VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 Agreement A applies to vessels operated by Key Lakes, Inc., representing approximately 30 percent of tonnage, and Agreement B applies to vessels PO 00000 Frm 00025 Fmt 4702 Sfmt 4702 234,913.50 231,233.40 operated by American Steamship Co. and Mittal Steel USA, Inc., representing approximately 70 percent of tonnage. Table 12 provides details. E:\FR\FM\04SEP1.SGM 04SEP1 52610 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules TABLE 12—SHIPPING TONNAGE APPORTIONED BY CONTRACT Company Agreement A Agreement B American Steamship Company ................................................................... Mittal Steel USA, Inc. .................................................................................. Key Lakes, Inc. ............................................................................................ Total tonnage, each agreement .................................................................. Percent tonnage, each agreement .............................................................. ...................................................... ...................................................... 361,385 361,385 361,385÷1,215,811=29.7238% 815,600 38,826 ...................................................... 854,426 854,426÷1,215,811=70.2762% We use the percentages from Table 12 to apportion the projected compensation from Table 11. This gives us a single tonnage-weighted set of figures. Table 13 shows our calculations. TABLE 13—TONNAGE-WEIGHTED WAGE AND BENEFIT COMPONENTS Undesignated waters Designated waters Agreement A: Total wages and benefits .......................................................................................................... Percent tonnage ........................................................................................................................ .... × $170,672.40 29.7238% .... × $234,913.50 29.7238% Total ................................................................................................................................... = $50,730 = $69,825 Agreement B: Total wages and benefits .......................................................................................................... Percent tonnage ........................................................................................................................ .... × $168,571.80 70.2762% .... × $231,233.40 70.2762% Total ................................................................................................................................... = $118,466 = $162,502 Projected Target Rate of Compensation: Agreement A total weighted average wages and benefits ....................................................... Agreement B total weighted average wages and benefits ....................................................... .... + $50,730 $118,466 .... + $69,825 $162,502 Total ................................................................................................................................... = $169,196 = $232,327 Step 2.B: Determination of the Number of Pilots Needed. Subject to adjustment by the Director to ensure uninterrupted service or for other reasonable circumstances, we determine the number of pilots needed for ratemaking purposes in each area through dividing projected bridge hours for each area by either the 1,000 (designated waters) or 1,800 (undesignated waters) bridge hours specified in Step 2.B. We round the mathematical results and express our determination as a whole number of pilots. According to 46 CFR part 404, Appendix A, Step 2.B(1), bridge hours are the number of hours a pilot is aboard a vessel providing pilotage service. For that reason, and as we explained most recently in the 2011 ratemaking’s final rule (76 FR 6351 at 6352 col. 3 (Feb. 4, 2011)), we do not include, and never have included, pilot delay, detention, or cancellation in calculating bridge hours. 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 2014 final rule, we determined that 36 pilots would be needed for ratemaking purposes. For 2015, we project 36 pilots is still the proper number to use for ratemaking purposes. The total pilot authorization strength 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 2008 ratemaking final rule (74 FR 220 at 221– 22 (Jan. 5, 2009)), we have determined that this adjustment is essential for ensuring uninterrupted pilotage service in Area 2. Table 14 shows the bridge hours we project will be needed for each area and our calculations to determine the whole number of pilots needed for ratemaking purposes. TABLE 14—NUMBER OF PILOTS NEEDED tkelley on DSK3SPTVN1PROD with PROPOSALS 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) .......................................... VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 Divided by 1,000 (designated waters) or 1,800 (undesignated waters) Projected 2015 bridge hours PO 00000 Frm 00026 5,116 5,429 5,814 5,052 9,611 3,023 7,540 Fmt 4702 ÷ ÷ ÷ ÷ ÷ ÷ ÷ Sfmt 4702 1,000 1,800 1,800 1,000 1,800 1,000 1,800 E:\FR\FM\04SEP1.SGM Calculated value of pilot demand = = = = = = = 5.116 3.016 3.230 5.052 5.339 3.023 4.189 04SEP1 Pilots needed (total = 36) 6 5 4 6 6 4 5 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules Step 2.C: Projection of Target Pilot Compensation. In Table 15, we project total target pilot compensation separately for each area by multiplying the number of pilots needed in each 52611 area, as shown in Table 14, by the target pilot compensation shown in Table 13. TABLE 15—PROJECTION OF TARGET PILOT COMPENSATION BY AREA Area Area Area Area Area Area Area 1 2 4 5 6 7 8 Target rate of pilot compensation Pilots needed (total = 36) Pilotage area (Designated waters) ............................................................................. (Undesignated waters) ......................................................................... (Undesignated waters) ......................................................................... (Designated waters) ............................................................................. (Undesignated waters) ......................................................................... (Designated waters) ............................................................................. (Undesignated waters) ......................................................................... 6 5 4 6 6 4 5 × × × × × × × $232,327 169,196 169,196 232,327 169,196 232,327 169,196 Projected target pilot compensation = = = = = = = $1,393,964 845,981 676,785 1,393,964 1,015,177 929,309 845,981 Note: Numbers may not total due to rounding. Steps 3 and 3.A: Projection of Revenue. In Steps 3 and 3.A., we project the revenue that would be received in 2015 if demand for pilotage services matches the bridge hours we projected in Table 14, and if 2014 pilotage rates are left unchanged. Table 16 shows this calculation. TABLE 16—PROJECTION OF REVENUE BY AREA Projected 2015 bridge hours Pilotage area 2014 Pilotage rates Revenue projection for 2015 (Designated waters) ............................................................................. (Undesignated waters) ......................................................................... (Undesignated waters) ......................................................................... (Designated waters) ............................................................................. (Undesignated waters) ......................................................................... (Designated waters) ............................................................................. (Undesignated waters) ......................................................................... 5,116 5,429 5,814 5,052 9,611 3,023 7,540 × × × × × × × $472.50 291.96 210.40 521.64 204.95 495.01 191.34 = = = = = = = $2,417,285 1,585,032 1,223,262 2,635,314 1,969,800 1,496,427 1,442,677 Total ........................................................................................................... ............................ .... ............................ .... 12,769,797 Area Area Area Area Area Area Area 1 2 4 5 6 7 8 Note: Numbers may not total due to rounding. Step 4: Calculation of Investment Base. In this step, we calculate each association’s investment base, which is the recognized capital investment in the assets employed by the association 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 17 through 19 follow the formula up to that point. TABLE 17—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 $532,237 61,808 23,413 445,044 11,727 0 ¥ + + ¥ + $467,833 54,329 20,579 391,191 10,308 0 Total Recognized Assets ................................................................................................... Non-Recognized Assets: Total Investments and Special Funds ...................................................................................... tkelley on DSK3SPTVN1PROD with PROPOSALS ¥ + + ¥ + = 927,159 = 814,966 + 6,452 + 5,672 Total Non-Recognized Assets ........................................................................................... Total Assets: Total Recognized Assets .......................................................................................................... Total Non-Recognized Assets .................................................................................................. = 6,452 = 5,672 + 927,159 6,452 + 814,966 5,672 = 933,611 = 820,638 + + + 659,141 262,785 23,413 0 + + + 579,380 230,986 20,579 0 Total Assets ....................................................................................................................... Recognized Sources of Funds: Total Stockholder Equity ........................................................................................................... Long-Term Debt ........................................................................................................................ Current Notes Payable .............................................................................................................. Advances from Affiliated Companies ........................................................................................ VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 PO 00000 Frm 00027 Fmt 4702 Sfmt 4702 E:\FR\FM\04SEP1.SGM 04SEP1 52612 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules TABLE 17—TOTAL SOURCES OF FUNDS, DISTRICT ONE—Continued Area 1 Area 2 Long-Term Obligations—Capital Leases .................................................................................. + 0 + 0 Total Recognized Sources ................................................................................................. Non-Recognized Sources of Funds: Pension Liability ........................................................................................................................ Other Non-Current Liabilities .................................................................................................... Deferred Federal Income Taxes ............................................................................................... Other Deferred Credits .............................................................................................................. = 945,339 = 830,945 + + + 0 0 10,675 0 + + + 0 0 9,383 0 Total Non-Recognized Sources ......................................................................................... Total Sources of Funds: Total Recognized Sources ........................................................................................................ Total Non-Recognized Sources ................................................................................................ = 10,675 = 9,383 + 945,339 10,675 + 830,945 9,383 Total Sources of Funds ..................................................................................................... = 956,014 = 840,328 Note: Numbers may not total due to rounding. TABLE 18—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 ¥ + + ¥ + $498,456 494,410 33,962 436,063 0 60,418 ¥ + + ¥ + $747,683 741,614 50,942 654,094 0 90,627 Total Recognized Assets ................................................................................................... Non-Recognized Assets: Total Investments and Special Funds ...................................................................................... = 534,488 = 801,733 + 0 + 0 Total Non-Recognized Assets ........................................................................................... Total Assets: Total Recognized Assets .......................................................................................................... Total Non-Recognized Assets .................................................................................................. = 0 = 0 + 534,488 0 + 801,733 0 Total Assets ....................................................................................................................... Recognized Sources of Funds: Total Stockholder Equity ........................................................................................................... Long-Term Debt ........................................................................................................................ Current Notes Payable .............................................................................................................. Advances from Affiliated Companies ........................................................................................ Long-Term Obligations—Capital Leases .................................................................................. = 534,488 = 801,733 + + + + 85,846 414,681 33,962 0 0 + + + + 128,768 622,022 50,942 0 0 Total Recognized Sources ................................................................................................. Non-Recognized Sources of Funds: Pension Liability ........................................................................................................................ Other Non-Current Liabilities .................................................................................................... Deferred Federal Income Taxes ............................................................................................... Other Deferred Credits .............................................................................................................. = 534,488 = 801,733 + + + 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 + 534,488 0 + 801,733 0 Total Sources of Funds ..................................................................................................... = 534,488 = 801,733 Note: Numbers may not total due to rounding. tkelley on DSK3SPTVN1PROD with PROPOSALS TABLE 19—TOTAL SOURCES OF FUNDS, DISTRICT THREE Area 6 Recognized Assets: Total Current Assets .......................................................................... Total Current Liabilities ...................................................................... Current Notes Payable ...................................................................... Total Property and Equipment (NET) ................................................ Land ................................................................................................... VerDate Mar<15>2010 18:00 Sep 03, 2014 Jkt 232001 PO 00000 Frm 00028 Fmt 4702 ¥ + + ¥ Sfmt 4702 $656,459 82,775 7,730 19,611 0 Area 7 ¥ + + ¥ E:\FR\FM\04SEP1.SGM $281,340 35,475 3,313 8,405 0 04SEP1 Area 8 ¥ + + ¥ $401,914 50,679 4,733 12,007 0 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules 52613 TABLE 19—TOTAL SOURCES OF FUNDS, DISTRICT THREE—Continued Area 6 Area 7 Area 8 Total Other Assets ............................................................................. + 490 + 210 + 300 Total Recognized Assets ........................................................... Non-Recognized Assets: Total Investments and Special Funds ............................................... = 601,515 = 257,793 = 368,275 + 0 + 0 + 0 Total Non-Recognized Assets .................................................... Total Assets: Total Recognized Assets ................................................................... Total Non-Recognized Assets ........................................................... = 0 = 0 = 0 + 601,515 0 + 257,793 0 + 368,275 0 = 601,515 = 257,793 = 368,275 .... + + + + 586,300 7,485 7,730 0 0 .... + + + + 251,271 3,208 3,313 0 0 .... + + + + 358,959 4,583 4,733 0 0 = 601,515 = 257,793 = 368,275 + + + 0 0 0 0 + + + 0 0 0 0 + + + 0 0 0 0 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 ................................................................ Total Non-Recognized Sources ........................................................ = 0 = 0 = 0 + 601,515 0 + 257,792 0 + 368,275 0 Total Sources of Funds .............................................................. = 601,515 = 257,792 = 368,275 Note: Numbers may not total due to rounding. Tables 17 through 19 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 non-recognized sources of funds (sources we do not recognize as required to support pilotage operations) only exist for District One 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) for Districts Two and Three. District One has a multiplier of 0.99. Table 20 applies the multiplier of 0.99 and 1 as necessary and shows the investment base for each association. Table 20 also expresses these results by area, because area results will be needed in subsequent steps. TABLE 20—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 1 2 927,159 814,966 945,339 830,945 956,014 840,328 0.99 0.99 916,806 805,866 Total .................................................. Two 2 ........................................................ ........................ 4 5 ........................ 534,488 801,733 ........................ 534,488 801,733 ........................ 534,488 801,733 ........................ 1 1 1,722,672 534,488 801,733 Total .................................................. Three ........................................................ tkelley on DSK3SPTVN1PROD with PROPOSALS One .......................................................... ........................ 6 7 8 ........................ 601,515 257,793 368,275 ........................ 601,515 257,792 368,275 ........................ 601,515 257,792 368,275 ........................ 1 1 1 1,336,221 601,515 257,793 368,275 Total .................................................. ........................ ........................ ........................ ........................ ........................ 1,227,581 1 ‘‘Investment base’’ = ‘‘Total recognized assets’’ X ‘‘Multiplier (ratio of recognized to total sources)’’. 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. Note: Numbers may not total due to rounding. 2 The VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 PO 00000 Frm 00029 Fmt 4702 Sfmt 4702 E:\FR\FM\04SEP1.SGM 04SEP1 52614 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules 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 preceding year’s average annual rate of return for new issues of high-grade corporate securities. For 2013, the preceding year, the allowed ROI was 4.24 percent, based on the average rate of return for that year on Moody’s AAA corporate bonds, which can be found at: http://research.stlouisfed.org/fred2/ series/AAA/downloaddata?cid=119. Step 6: Adjustment Determination. The first part of 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 21 through 23. TABLE 21—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 $2,417,285 603,313 1,393,964 420,009 15,484 404,525 0 404,525 420,009 916,806 0.46 ¥ ¥ = ¥ = ¥ = ÷ = ¥ ¥ = ¥ = ¥ = ÷ = $1,585,032 458,153 845,981 280,899 13,610 267,289 0 267,289 280,899 805,866 0.35 TABLE 22—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 $1,223,262 512,027 676,785 34,450 2,989 31,461 5,200 26,261 29,250 534,488 0.05 ¥ ¥ = ¥ = ¥ = ÷ = ¥ ¥ = ¥ = ¥ = ÷ = $2,635,314 768,048 1,393,964 473,302 4,483 468,819 7,800 461,019 465,502 801,733 0.58 TABLE 23—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 ............................................................... tkelley on DSK3SPTVN1PROD with PROPOSALS The second part required for Step 6 compares the results of Tables 21 through 23 with the target ROI (4.24 VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 ¥ ¥ = ¥ = ¥ = ÷ = $1,969,800 811,899 1,015,177 142,724 2,692 140,032 0 140,032 142,724 601,515 0.24 percent) we obtained in Step 5 to determine if an adjustment to the base PO 00000 Frm 00030 Fmt 4702 Sfmt 4702 Area 7 ¥ ¥ = ¥ = ¥ = ÷ = $1,496,427 347,957 929,309 219,161 1,154 218,007 0 218,007 219,161 257,793 0.85 Area 8 ¥ ¥ = ¥ = ¥ = ÷ = $1,442,677 497,081 845,981 99,615 1,648 97,967 0 97,967 99,615 368,275 0.27 pilotage rate is necessary. Table 24 shows this comparison for each area. E:\FR\FM\04SEP1.SGM 04SEP1 52615 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules TABLE 24—COMPARISON OF PROJECTED ROI AND TARGET ROI, BY AREA 1 Area 1 Area 2 Area 4 Area 5 Area 6 Area 7 Area 8 St. Lawrence River Lake Ontario Lake Erie Southeast Shoal to Port Huron, MI Lakes Huron and Michigan St. Mary’s River Lake Superior Projected return on investment ................... Target return on investment .......................... Difference in return on investment ................ 0.4581 0.3486 0.0547 0.5806 0.2373 0.8501 0.2705 0.0424 0.0424 0.0424 0.0424 0.0424 0.0424 0.0424 0.4157 0.3062 0.0123 0.5382 0.1949 0.8077 0.2281 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 24 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 25. It adjusts the investment base we used in Step 4, multiplying it by the target ROI from Step 5, and applies the result to the operating expenses and target pilot compensation determined in Steps 1 and 2. TABLE 25—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) × 4.24% (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) .............. $603,313 458,153 512,027 768,048 811,899 347,957 497,081 + + + + + + + $1,393,964 845,981 676,785 1,393,964 1,015,177 929,309 845,981 + + + + + + + $38,873 34,169 22,662 33,993 25,504 10,930 15,615 + + + + + + + $0 0 5,200 7,800 0 0 0 = = = = = = = $2,036,149 1,338,302 1,216,674 2,203,805 1,852,580 1,288,197 1,358,677 Total ............................................... 3,998,479 + 7,101,160 + 181,747 + 13,000 = 11,294,385 The ‘‘Revenue Needed’’ column of Table 25 is less than the revenue we projected in Table 16. Step 7: Adjustment of Pilotage Rates. Finally, we calculate rate adjustments by dividing the Step 6 revenue needed (Table 25) by the Step 3 revenue projection (Table 16), to give us a rate multiplier for each area. These rate adjustments are subject to negotiation with Canada or adjustment for other supportable circumstances. Tables 26 through 28 show these calculations. TABLE 26—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 ÷ = $2,036,149 $2,417,285 0.8423 ÷ = $1,338,302 $1,585,032 0.8443 TABLE 27—RATE MULTIPLIER, AREAS IN DISTRICT TWO Area 4 Area 5 Lake Erie Southeast Shoal to Port Huron, MI tkelley on DSK3SPTVN1PROD with PROPOSALS Ratemaking projections Revenue Needed (from Step 6) ....................................................................................................... Revenue (from Step 3) ..................................................................................................................... Rate Multiplier .................................................................................................................................. VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 PO 00000 Frm 00031 Fmt 4702 Sfmt 4702 ÷ = E:\FR\FM\04SEP1.SGM $1,216,674 $1,223,262 0.9946 04SEP1 ÷ = $2,203,805 $2,635,314 0.8363 52616 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules TABLE 28—RATE MULTIPLIER, AREAS IN DISTRICT THREE Area 6 Revenue Needed (from Step 6) ............................................................... Revenue (from Step 3) ............................................................................. Rate Multiplier ........................................................................................... Area 7 Area 8 Lakes Huron and Michigan Ratemaking projections St. Mary’s River Lake Superior ÷ = $1,825,580 $1,969,800 0.9405 $1,288,197 $1,496,427 0.8608 ÷ = ÷ = $1,358,677 $1,442,677 0.9418 Note: Numbers may not total due to rounding. changes for 2015. The resulting 2015 rates across the Great Lakes, on average, would then be decreased approximately 12 percent from the 2014 rates. This decrease is not due to increased efficiencies in pilotage services but rather a result of adjustments to AMOU contracts. We propose to decline to impose this decrease because it would TABLE 29—RATE MULTIPLIER FOR have an adverse effect on providing safe, BASIC RATES AND CHARGES IN 46 efficient, and reliable pilotage in the pilotage districts. Additionally, we CFR 401.420 AND 401.428 propose to decline to impose this Ratemaking Projections: decrease because we are unable to Total Revenue Needindependently verify the compensation ed (from Step 6) ... $11,294,385 data contained in the AMOU contracts. Total revenue (from Our Memorandum of Arrangements Step 3) ................. ÷ $12,769,797 Rate Multiplier ................. = 0.884 (MOA) with Canada, as well as our recently signed Memorandum of Using this table, we calculate rates for Understanding (MOU),4 which replaces the MOA, calls for comparable pilotage cancellation, delay, or interruption in rendering services (46 CFR 401.420) and rates between the two countries and we have proposed matching our rate basic rates and charges for carrying a increase to the Canadian rate increase, U.S. pilot beyond the normal change which is 2.5 percent this year. Our point, or for boarding at other than the discretionary authority under Step 7 normal boarding point (46 CFR must be ‘‘based on requirements of the 401.428). The result is a decrease by Memorandum of Arrangements between 11.55 percent in all areas. Without further action, the existing the United States and Canada, and other rates we established in our 2014 final supportable circumstances that may be rule would then be multiplied by the appropriate.’’ The MOA calls for rate multipliers from Tables 29 through comparable United States and Canadian 31 to calculate the area by area rate rates, and the rates would not be We calculate a rate multiplier for adjusting the basic rates and charges described in 46 CFR 401.420 and 401.428, and it is applicable in all areas. We divide total revenue needed (Step 6, Table 25) by total projected revenue (Steps 3 and 3.A, Table 16). Table 29 shows this calculation. comparable if United States rates for 2015 decrease by approximately 12 percent, while Canadian rates for 2015 increase by 2.5 percent. Though rates are not equivalent, matching the Canadian rate increase prevents a move further away from established levels of comparability. ‘‘Other supportable circumstances’’ for exercising our discretion include: • Executive Order (E.O.) 13609, ‘‘Promoting International Regulatory Cooperation,’’ which calls on Federal agencies to eliminate ‘‘unnecessary differences’’ between U.S. and foreign regulations (77 FR 26413; May 4, 2012; sec. 1); and • The risk that a significant rate decrease would jeopardize the ability of the three pilotage associations to provide safe, efficient, and reliable pilotage service. Therefore, we propose relying on the discretionary authority we have under Step 7 to further adjust rates so that they match those adopted by the Canadian Great Lakes Pilotage Authority for 2014. Table 30 compares the impact, area by area, that an average decrease of 12 percent would have, relative to the impact each area would experience if United States rates match those of the Canadian GLPA. TABLE 30—IMPACT OF EXERCISING STEP 7 DISCRETION Percent change in rate without exercising Step 7 discretion Area tkelley on DSK3SPTVN1PROD with PROPOSALS Area Area Area Area Area Area Area 1 2 4 5 6 7 8 ¥15.77 ¥15.57 ¥0.54 ¥16.37 ¥5.95 ¥13.92 ¥5.82 (Designated waters) ..................................................................................................... (Undesignated waters) ................................................................................................. (Undesignated waters) ................................................................................................. (Designated waters) ..................................................................................................... (Undesignated waters) ................................................................................................. (Designated waters) ..................................................................................................... (Undesignated waters) ................................................................................................. The following tables reflect our proposed rate adjustments of 2.5 percent across all areas. 4 The Memorandum of Understanding between the GLPA and USCG was signed on September 19, VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 Percent change in rate with exercise of Step 7 discretion 2.50 2.50 2.50 2.50 2.50 2.50 2.50 Tables 31 through 33 show these calculations. 2013 and goes into effect on January 1, 2015. Copies PO 00000 Frm 00032 Fmt 4702 Sfmt 4702 of the MOA and MOU are available on our Web site: http://www.uscg.mil/hq/cg5/cg552/pilotage.asp. E:\FR\FM\04SEP1.SGM 04SEP1 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules 52617 TABLE 31—PROPOSED ADJUSTMENT OF PILOTAGE RATES, AREAS IN DISTRICT ONE 2014 Rate Area 1 St. Lawrence River Basic Pilotage ............................................................................................ Adjusted rate for 2015 Rate multiplier $19.22/km, 34.02/mi 426 1,395 931 4,084 1.025 = × × × × 1.025 1.025 1.025 1.025 = = = = $19.70/km, 34.87/mi 437 1,430 954 4,186 872 832 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 ....................................................................................... × × × 1.025 1.025 = = 894 853 Note: Numbers may not total due to rounding. In addition to the proposed rate charges in Table 31, as we explain in the Summary section of Part V of this preamble, we propose authorizing District One to implement a temporary supplemental 5 percent charge on each source form (the ‘‘bill’’ for pilotage service) for the duration of the 2015 shipping season, which begins in March 2015. District One would be required to provide us with monthly status reports once this surcharge becomes effective for the duration of the 2015 shipping season. We would exclude these expenses from future rates and any surcharge surplus/deficit from the 2014 season would impact the final authorized surcharge for the 2015 season. TABLE 32—PROPOSED ADJUSTMENT OF PILOTAGE RATES, AREAS IN DISTRICT TWO 2014 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 2015 Rate multiplier $849 653 1,667 × × × 1.025 1.025 1.025 = = = $870 669 1,709 1,417 × 1.025 = 1,452 2,397 3,113 × × 1.025 1.025 = = 2,457 3,191 2,397 × 1.025 = 2,457 4,176 × 1.025 = 4,280 4,837 3,137 2,441 1,735 1,417 × × × × × 1.025 1.025 1.025 1.025 1.025 = = = = = 4,958 3,215 2,502 1,778 1,452 4,176 3,137 1,417 2,397 × × × × 1.025 1.025 1.025 1.025 = = = = 4,280 3,215 1,452 2,457 3,113 3,137 1,735 × × × 1.025 1.025 1.025 = = = 3,191 3,215 1,778 2,397 3,137 × × 1.025 1.025 = = 2,457 3,215 tkelley on DSK3SPTVN1PROD with PROPOSALS Note: Numbers may not total due to rounding. In addition to the proposed rate charges in Table 32, and for the reasons we discussed in the Summary section of Part V of this preamble, we propose authorizing District Two to implement a VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 temporary supplemental 10 percent charge on each source form for the duration of the 2015 shipping season, which begins in March 2015. District Two would be required to provide us PO 00000 Frm 00033 Fmt 4702 Sfmt 4702 with monthly status reports once this surcharge becomes effective for the duration of the 2015 shipping season. We would exclude these expenses from future rates. E:\FR\FM\04SEP1.SGM 04SEP1 52618 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules TABLE 33—PROPOSED ADJUSTMENT OF PILOTAGE RATES, AREAS IN DISTRICT THREE 2014 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 ............................................................................................. Docking or undocking ................................................................................ Adjusted rate for 2015 Rate multiplier $708 672 × × 1.025 1.025 = = $726 689 2,648 2,648 997 × × × 1.025 1.025 1.025 = = = 2,714 2,714 1,022 2,219 × 1.025 = 2,274 997 2,219 997 997 × × × × 1.025 1.025 1.025 1.025 = = = = 1,022 2,274 1,022 1,022 601 571 × × 1.025 1.025 = = 616 585 Note: Numbers may not total due to rounding. In addition to the proposed rate charges in Table 33, and for the reasons we discussed in the Summary section of Part V of this preamble, we propose authorizing District Three to implement a temporary supplemental 1 percent charge on each source form for the duration of the 2015 shipping season, which begins in March 2015. District Three would be required to provide us with monthly status reports once this surcharge becomes effective for the duration of the 2015 shipping season. We would exclude these expenses from future rates. VI. Regulatory Analyses We developed this proposed rule after considering numerous statutes and E.O.s related to rulemaking. Below we summarize our analyses based on these statutes or E.O.s. tkelley on DSK3SPTVN1PROD with PROPOSALS 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 proposed rule is not a significant regulatory action under section 3(f) of E.O. 12866 as supplemented by E.O. 13563, and does not require an assessment of potential costs and VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 benefits under section 6(a)(3) of E.O. 12866. The Office of Management and Budget (OMB) has not reviewed it under E.O. 12866. Nonetheless, we developed an analysis of the costs and benefits of the proposed rule to ascertain its probable impacts on industry. We consider all estimates and analysis in this Regulatory Analysis to be subject to change in consideration of public comments. 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 2015 shipping season to generate sufficient revenue to cover allowable expenses, and to target pilot compensation and returns on pilot associations’ investments. The rate adjustments in this proposed rule would, if codified, lead to an increase in the cost per unit of service to shippers in all three districts, and result in an estimated annual cost increase to shippers of approximately $319,245 across all three districts over 2014 rates—an increase of 2.5 percent. In addition to the increase in payments that would be incurred by shippers in all three districts from the previous year as a result of the proposed discretionary rate adjustments, we propose authorizing temporary, supplemental surcharges to traffic across all three districts in order for the pilotage associations to recover training expenses and technology improvements that were incurred throughout the 2013 PO 00000 Frm 00034 Fmt 4702 Sfmt 4702 and 2014 shipping seasons. These temporary surcharges would be authorized for the duration of the 2015 shipping season, which begins in March. We estimate that these temporary surcharges would generate a combined $650,939 in revenue for the pilotage associations across all three districts. In District One, the proposed 5 percent surcharge would generate an additional $205,119 in revenue. In District Two, the proposed 10 percent surcharge is expected to generate $395,504 in additional revenue. In District Three, the proposed 1 percent surcharge would generate an additional $50,316 in revenue. At the end of the 2015 shipping season, we will account for the monies the surcharges generate and make adjustments (debits/credits) to the operating expenses for the following year.5 Therefore, after accounting for the implementation of the temporary surcharges on traffic across all three districts, the annual payments made by shippers are estimated to be approximately $970,184 more than the payments that were made in 2014.6 A regulatory assessment follows. 5 Assuming our estimate is correct, we would credit District One shippers $27,090 at the end of the 2015 season in order to account for the difference between the total surcharges collected ($205,119) and the actual expenses incurred by the District One pilot association ($178,029 for training expenses), District Two shippers $69,674 (calculation: $395,504 (total surcharges collected) minus $300,000 to train two applicant pilots and $25,829.80 for technology improvements), and District Three shippers $23,366 (calculation: $50,316 (total surcharges collected) minus $26,950 (actual training expenses incurred)). 6 Total payments across all three districts are equal to the increase in payments incurred by shippers as a result of the rate changes plus the temporary surcharges applied to traffic in Districts One, Two, and Three. E:\FR\FM\04SEP1.SGM 04SEP1 52619 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules The proposed rule would apply the 46 CFR part 404, Appendix A, full ratemaking methodology, including the exercise of our discretion to increase Great Lakes pilotage rates, on average, approximately 2.5 percent overall from the current rates set in the 2014 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 2012 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 2014 and used financial data from the 2011 base accounting year. The last annual rate review, conducted under 46 CFR part 404, Appendix C, was completed early in 2011. 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 The impact of the rate adjustment to shippers is estimated from the District pilotage revenues. These revenues represent the costs (‘‘economic costs’’) that shippers must pay for pilotage services. The Coast Guard sets rates so that revenues equal the estimated cost of pilotage for these services. We estimate the additional impact (cost increases or cost decreases) of the rate adjustment in this proposed rule to be the difference between the total projected revenue needed to cover costs in 2014, based on the 2014 rate adjustment, and the total projected revenue needed to cover costs in 2015, as set forth in this proposed rule, plus any temporary surcharges authorized by the Coast Guard. Table 34 details projected revenue needed to cover costs in 2015 after making the discretionary adjustment to pilotage rates as discussed in Step 7 of Part VI of this preamble. Table 35 summarizes the derivation for calculating the revenue expected to be generated as a result of the temporary surcharges applied to traffic in all three districts as discussed in Step 7 of Part VI of this preamble. Table 36 details the additional cost increases to shippers by area and district as a result of the rate adjustments and temporary surcharges on traffic in Districts One, Two, and Three. applies only to commercial vessels and not to recreational vessels. Owners and operators of other vessels that are not affected by this proposed rule, such as recreational boats and vessels operating only within the Great Lakes system, may elect to purchase pilotage services. However, this election is voluntary and does not affect our calculation of the rate and is not a part of our estimated national cost to shippers. We used 2011–2013 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. Using that period, we found that approximately 114 vessels journeyed into the Great Lakes system annually. These vessels entered the Great Lakes by transiting 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 114 vessels, there were approximately 353 annual U.S. port arrivals before the vessels left the Great Lakes system, based on 2011–2013 vessel data from MISLE. TABLE 34—RATE ADJUSTMENT BY AREA AND DISTRICT [$U.S.; Non-discounted] 2014 pilotage rates 7 2015 pilotage rates 9 Rate change 8 Projected 2015 bridge hours 10 Projected revenue needed in 2015 11 Area 1 .................................................... Area 2 .................................................... $472.50 291.96 1.0250 1.0250 $484.31 299.26 5,116 5,429 $2,477,717 1,624,658 Total, District One ........................... .............................. .............................. .............................. .............................. 4,102,375 Area 4 .................................................... Area 5 .................................................... 210.40 521.64 1.0250 1.0250 215.66 534.68 5,814 5,052 1,253,843 2,701,197 Total, District Two ........................... .............................. .............................. .............................. .............................. 3,955,040 Area 6 .................................................... Area 7 .................................................... Area 8 .................................................... 204.95 495.01 191.34 1.0250 1.0250 1.0250 210.08 507.39 196.12 9,611 3,023 7,540 2,019,045 1,533,838 1,478,744 Total, District Three ........................ .............................. .............................. .............................. .............................. 5,031,627 TABLE 35—DERIVATION OF TEMPORARY SURCHARGE tkelley on DSK3SPTVN1PROD with PROPOSALS Area 1 Projected Revenue Needed in 2015 ..................... Surcharge Rate ...................................................... Surcharge Raised .................................................. Total Surcharge .............................................. VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 PO 00000 Area 2 Area 4 Area 5 Area 6 Area 7 Area 8 $2,477,717 5% $123,886 $1,624,658 5% $81,233 $1,253,843 10% $125,384 $2,701,197 10% $270,120 $2,019,045 1% $20,190 $1,533,838 1% $15,338 $1,478,744 1% $14,787 $205,119 Frm 00035 Fmt 4702 $395,504 Sfmt 4702 E:\FR\FM\04SEP1.SGM $50,316 04SEP1 52620 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules TABLE 36—IMPACT OF THE PROPOSED RULE BY AREA AND DISTRICT [$U.S.; Non-discounted] Additional costs or savings of this proposed rule Projected revenue needed in 2014 12 Projected revenue needed in 2015 13 Area 1 .............................................................................................. Area 2 .............................................................................................. $2,417,285 1,585,032 $2,477,717 1,624,658 $123,886 81,233 $184,318 120,859 Total, District One ..................................................................... 4,002,318 4,102,375 205,119 305,177 Area 4 .............................................................................................. Area 5 .............................................................................................. 1,223,262 2,635,314 1,253,843 2,701,197 125,384 270,120 155,966 336,003 Total, District Two ..................................................................... 3,858,576 3,955,040 395,504 491,968 Area 6 .............................................................................................. Area 7 .............................................................................................. Area 8 .............................................................................................. 1,969,800 1,496,427 1,442,677 2,019,045 1,533,838 1,478,744 20,190 15,338 14,787 69,435 52,749 50,854 Total, District Three .................................................................. 4,908,904 5,031,627 50,316 173,039 Temporary surcharge tkelley on DSK3SPTVN1PROD with PROPOSALS After applying the discretionary rate change in this NPRM, the resulting difference between the projected revenue in 2014 and the projected revenue in 2015 is the annual change in payments from shippers to pilots after accounting for market conditions (i.e., a decrease in demand for pilotage services) and the change to pilotage rates as a result of this proposed rule. This figure is equivalent to the total additional payments or reduction in payments from the previous year that shippers would incur for pilotage services from this proposed rule. The impact of the discretionary rate adjustment in this proposed rule on shippers varies by area and district. The discretionary rate adjustments would lead to affected shippers operating in District One, District Two, and District Three experiencing an increase in payments of $100,058, $96,464, and $122,723, respectively, from the previous year. In addition to the rate adjustments, temporary surcharges on traffic in District One, District Two, and District Three would be applied for the duration of the 2015 season in order for the pilotage associations to recover training expenses and technology investments incurred during the 2013 and 2014 shipping seasons. We estimate that these surcharges would generate an additional $205,119, $395,504, and $50,316 in revenue for the pilotage associations in District One, District Two, and District Three, respectively. At the end of the 2015 shipping season, we will account for the monies the surcharges generate and make adjustments (debits/credits) to the operating expenses for the following year.14 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 travelled and the number of port arrivals by their vessels. However, the increase in costs reported earlier in this NPRM does capture the adjustment in payments that shippers would experience from the previous year. The overall adjustment in payments, after taking into account the increase in pilotage rates and the addition of temporary surcharges would be an increase in payments by shippers of approximately $970,184 across all three districts. This proposed rule would allow the Coast Guard to meet the requirements in 46 U.S.C. 9303 to review the rates for pilotage services on the Great Lakes, thus ensuring proper pilot compensation. Alternatively, if we imposed the new rates based on the new contract data from AMOU, instead of using the discretionary rate adjustment described in Step 7, there would be an approximately 12 percent decrease in rates across the system. Instead of shippers experiencing an increase in payments of approximately $319,245 from the previous year, as a result of the proposed rate adjustments, shippers would instead experience a reduction in payments of approximately $1,475,412.15 Table 37 details projected revenue needed to cover costs in 2015 if the discretionary adjustment to pilotage rates as discussed in Step 7 of Part VI of this preamble is not made. Table 38 details the additional costs or savings by area and district as a result of this alternative proposal. 7 2014 Pilotage Rates are described in Table 16 of this NPRM. 8 The estimated rate changes are described in Table 30 of this NPRM. 9 2015 Pilotage Rates—2014 Pilotage Rates × Rate Change. 10 Projected 2015 Bridge Hours are described in Table 14 of this NPRM. 11 Projected Revenue Needed in 2015—2015 Pilotage Rates × Projected 2015 Bridge Hours. 12 Projected revenue needed in 2014 is described in Table 16 of this NPRM. 13 Projected revenue needed in 2015 is described in Table 34 of this NPRM. 14 Assuming our estimate is correct, we would credit District One shippers $27,090 at the end of the 2015 season in order to account for the difference between the total surcharges collected ($205,119) and the actual expenses incurred by the District One pilot association ($178,029 for training expenses), District Two shippers $69,674 (calculation: $395,504 (total surcharges collected) minus $300,000 to train two applicant pilots and $25,829.80 for technology improvements)), and District Three shippers $23,366 (calculation: $50,316 (total surcharges collected) minus $26,950 (actual training expenses incurred)). 15 These figures do not include the additional payments incurred by shippers as a result of the temporary surcharges applied to traffic in all three districts. 16 The estimated rate changes are described in Table 30 of this NPRM. VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 PO 00000 Frm 00036 Fmt 4702 Sfmt 4702 E:\FR\FM\04SEP1.SGM 04SEP1 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules 52621 TABLE 37—ALTERNATIVE RATE ADJUSTMENT BY AREA AND DISTRICT [$U.S.; Non-discounted] 2014 pilotage rates Rate change 16 2015 pilotage rates Projected 2015 bridge hours Projected revenue needed in 2015 Area 1 .............................................................. Area 2 .............................................................. $472.50 291.96 0.8423 0.8443 $398.00 246.51 5,116 5,429 $2,036,149 1,338,302 Total, District One ..................................... ............................ ............................ ............................ ............................ 3,374,451 Area 4 .............................................................. Area 5 .............................................................. 210.40 521.64 0.9946 0.8363 209.27 436.22 5,814 5,052 1,216,674 2,203,805 Total, District Two ..................................... ............................ ............................ ............................ ............................ 3,420,480 Area 6 .............................................................. Area 7 .............................................................. Area 8 .............................................................. 204.95 495.01 191.34 0.9405 0.8608 0.9418 192.76 426.13 180.20 9,611 3,023 7,540 1,852,580 1,288,197 1,358,677 Total, District Three .................................. ............................ ............................ ............................ ............................ 4,499,454 * Some values may not total due to rounding. TABLE 38—ALTERNATIVE IMPACT OF THE RULE BY AREA AND DISTRICT [$U.S.; Non-discounted] Projected revenue needed in 2014 Projected revenue needed in 2015 Area 1 .............................................................................................. Area 2 .............................................................................................. $2,417,285 1,585,032 $2,036,149 1,338,302 $101,807 66,915 ($279,329) (179,815) Total, District One ..................................................................... 4,002,318 3,374,451 168,723 (459,144) Area 4 .............................................................................................. Area 5 .............................................................................................. 1,223,262 2,635,314 1,216,674 2,203,805 121,667 220,381 115,080 (211,128) Total, District Two ..................................................................... 3,858,576 3,420,480 342,048 (96,048) Area 6 .............................................................................................. Area 7 .............................................................................................. Area 8 .............................................................................................. 1,969,800 1,496,427 1,442,677 1,852,580 1,288,197 1,358,677 18,526 12,882 13,587 (98,694) (195,348) (70,413) Total, District Three .................................................................. 4,908,904 4,499,454 44,995 (364,455) Temporary surcharge Additional costs or savings of this proposed rule * Some values may not total due to rounding. tkelley on DSK3SPTVN1PROD with PROPOSALS We reject this alternative, however, because a rate decrease would jeopardize the ability of the three pilotage associations to provide safe, efficient, and reliable pilotage service as well as violate the Memorandum of Arrangements, which calls for the United States’s and Canada’s pilotage rates to be comparable. See our discussion of Step 7 in Part VI of this preamble for further explanation. 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 VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 governmental jurisdictions with populations of less than 50,000 people. We expect that 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 for the period 2011 through 2013 in the Coast Guard’s MISLE database, and we reviewed business revenue and PO 00000 Frm 00037 Fmt 4702 Sfmt 4702 size data provided by publicly available sources such as MANTA and Reference USA. We found that large, foreignowned 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 with the same NAICS industry classification and small-entity size standards described above, but they have fewer than 500 employees; combined, they have approximately 65 total employees. We E:\FR\FM\04SEP1.SGM 04SEP1 52622 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules 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 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 tkelley on DSK3SPTVN1PROD with PROPOSALS 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, Director, Great Lakes Pilotage, Commandant (CG– WWM–2), Coast Guard; telephone 202– 372–2037, email Todd.A.Haviland@uscg.mil, or fax 202– 372–1914. 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 proposed rule would not change the burden in the collection currently approved by the OMB under OMB Control Number VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 1625–0086, Great Lakes Pilotage Methodology. E. Federalism A rule has implications for federalism under E.O. 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 is consistent with the fundamental federalism principles and preemption requirements described in E.O. 13132. Our analysis is explained below. Congress directed the Coast Guard to establish ‘‘rates and charges for pilotage services.’’ 46 U.S.C. 9303(f). This regulation is issued pursuant to that statute and is preemptive of state law as specified in 46 U.S.C. 9306. Under 46 U.S.C. 9306, a ‘‘State or political subdivision of a State may not regulate or impose any requirement on pilotage on the Great Lakes.’’ As a result, States or local governments are expressly prohibited from regulating within this category. Therefore, the rule is consistent with the principles of federalism and preemption requirements in E.O. 13132. While it is well settled that States may not regulate in categories in which Congress intended the Coast Guard to be the sole source of a vessel’s obligations, the Coast Guard recognizes the key role that State and local governments may have in making regulatory determinations. Additionally, for rules with implications and preemptive effect, E.O. 13132 specifically directs agencies to consult with State and local governments during the rulemaking process. If you believe this rule has implications for federalism under E.O. 13132, please contact the person listed in the FOR FURTHER INFORMATION section of this preamble. 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 discuss the effects of this proposed rule elsewhere in this preamble. PO 00000 Frm 00038 Fmt 4702 Sfmt 4702 G. Taking of Private Property This proposed rule would not cause a taking of private property or otherwise have taking implications under E.O. 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 E.O. 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. I. Protection of Children We have analyzed this proposed rule under E.O. 13045, Protection of Children from Environmental Health Risks and Safety Risks. This proposed 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 E.O. 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 E.O. 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 E.O. because it is not a ‘‘significant regulatory action’’ under E.O. 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 E.O. 13211. L. Technical Standards The National Technology Transfer and Advancement Act (15 U.S.C. 272, note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the OMB, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are E:\FR\FM\04SEP1.SGM 04SEP1 52623 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules 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 (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 proposed 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 Any point on or in 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: 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. § 401.410 Basic rates and charges on Lakes Huron, Michigan, and Superior; and the St. Mary’s River. tkelley on DSK3SPTVN1PROD with PROPOSALS $1,430.1 1 The minimum basic rate for assignment of a pilot in the St. Lawrence River is $954, and the maximum basic rate for a through trip is $4,186. (b) Area 2 (Undesignated Waters): Lake Ontario Service 6-Hour Period ........................... Docking or Undocking .............. $894 853 3. In § 401.407, revise paragraphs (a) and (b), including the footnote to paragraph (b), to read as follows: ■ § 401.407 Basic rates and charges on Lake Erie and the navigable waters from Southeast Shoal to Port Huron, MI. * * * * * (a) Area 4 (Undesignated Waters): 2. In § 401.405, revise paragraphs (a) and (b), including the footnote to paragraph (a), to read as follows: § 401.405 Basic rates and charges on the St. Lawrence River and Lake Ontario. * * * * * (a) Area 1 (Designated Waters): Service St. Lawrence River Basic Pilotage ........... $19.70 per kilometer or $34.87 per mile.1 $437.1 Each Lock Transited Toledo or any point on Lake Erie west of Southeast Shoal 2,457 1 4,958 1 4,280 N/A 3,191 2,457 2,457 1,778 6-hour Period .... Docking or Undocking ..... Any point on the Niagara River below the Black Rock Lock ............... Buffalo $870 $870 669 669 N/A 1,709 (b) Area 5 (Designated Waters): Detroit River 1,452 1 4,280 Lake Erie (East of Southeast Shoal) Service Detroit Pilot Boat 3,191 3,215 3,215 1,452 N/A St. Clair River 2,457 2,502 3,215 N/A N/A N/A 1,778 1,452 3,215 3,215 pilots are not changed at the Detroit Pilot Boat. 4. In § 401.410, revise paragraphs (a), (b), and (c) to read as follows: * Harbor Movage ......... ■ Southeast Shoal ■ * St. Lawrence River Title 46—Shipping Toledo or any port on Lake Erie west of Southeast Shoal ........................................... Port Huron Change Point ................................ St. Clair River ................................................... Detroit or Windsor or the Detroit River ............ Detroit Pilot Boat .............................................. 1 When Service * * (a) Area 6 (Undesignated Waters): Lakes Huron and Michigan Service 6-hour Period ........................ $726 * Area VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 PO 00000 Docking or Undocking .......... Frm 00039 Fmt 4702 Sfmt 4702 689 (b) Area 7 (Designated Waters): De Tour Gros Cap ......................................................................................................................... Algoma Steel Corporation Wharf at Sault Ste. Marie, Ontario ....................................... Any point in Sault Ste. Marie, Ontario, except the Algoma Steel Corporation Wharf .... Sault Ste. Marie, MI ......................................................................................................... Harbor Movage ................................................................................................................ Lakes Huron and Michigan Service Gros Cap $2,714 2,714 2,274 2,274 N/A E:\FR\FM\04SEP1.SGM N/A $1,022 1,022 1,022 N/A 04SEP1 Any harbor N/A N/A N/A N/A $1,022 52624 Federal Register / Vol. 79, No. 171 / Thursday, September 4, 2014 / Proposed Rules b. In paragraph (b), remove the text ‘‘$129’’ and add, in its place, the text Service Lake Superior ‘‘$132’’; and remove the text ‘‘$2,021’’ and add, in its place, the text ‘‘$2,072’’; 6-hour Period ........................ $616 Docking or Undocking .......... 585 and ■ c. In paragraph (c)(1), remove the text ‘‘$763’’ and add, in its place, the text § 401.420 [Amended] ‘‘$782’’; and in paragraph (c)(3), remove ■ 5. Amend § 401.420 as follows: the text ‘‘$129’’ and add, in its place, the ■ a. In paragraph (a), remove the text text ‘‘$132’’; and remove the text ‘‘$129’’ and add, in its place, the text ‘‘$132’’; and remove the text ‘‘$2,021’’ ‘‘$2,021’’ and add, in its place, the text and add, in its place, the text ‘‘$2,072’’; ‘‘$2,072’’. tkelley on DSK3SPTVN1PROD with PROPOSALS (c) Area 8 (Undesignated Waters): VerDate Mar<15>2010 16:36 Sep 03, 2014 Jkt 232001 ■ PO 00000 Frm 00040 Fmt 4702 Sfmt 9990 § 401.428 [Amended] 6. In § 401.428, remove the text ‘‘$763’’ and add, in its place, the text ‘‘$782’’. ■ Dated: August 28, 2014. Gary C. Rasicot, Director of Marine Transportation Systems, U.S. Coast Guard. [FR Doc. 2014–21046 Filed 9–3–14; 8:45 am] BILLING CODE 9110–04–P E:\FR\FM\04SEP1.SGM 04SEP1

Agencies

[Federal Register Volume 79, Number 171 (Thursday, September 4, 2014)]
[Proposed Rules]
[Pages 52602-52624]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-21046]


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

DEPARTMENT OF HOMELAND SECURITY

Coast Guard

46 CFR Part 401

[USCG-2014-0481]
RIN 1625-AC22


Great Lakes Pilotage Rates--2015 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, last amended in March 2014. The proposed 
adjustments would establish new base rates made in accordance with a 
full ratemaking procedure. Additionally, the Coast Guard proposes to 
exercise the discretion provided by Step 7 of the Appendix A 
methodology. The result is an upward adjustment to match the rate 
increase of the Canadian Great Lakes Pilotage Authority. We also 
propose temporary surcharges to accelerate recoupment of necessary and 
reasonable training costs for the pilot associations. This notice of 
proposed rulemaking promotes the Coast Guard's strategic goal of 
maritime safety.

DATES: Comments and related material must either be submitted to our 
online

[[Page 52603]]

docket via http://www.regulations.gov on or before November 3, 2014 or 
reach the Docket Management Facility by that date.

ADDRESSES: You may submit comments identified by docket number USCG-
2014-0481 using any one of the following methods:
    (1) Federal eRulemaking Portal: http://www.regulations.gov.
    (2) Fax: 202-493-2251.
    (3) Mail: Docket Management Facility (M-30), U.S. Department of 
Transportation, West Building Ground Floor, Room W12-140, 1200 New 
Jersey Avenue SE., Washington, DC 20590-0001.
    (4) Hand delivery: Same as mail address above, between 9 a.m. and 5 
p.m., Monday through Friday, except Federal holidays. The telephone 
number is 202-366-9329.
    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, Director, Great Lakes Pilotage, 
Commandant (CG-WWM-2), Coast Guard; telephone 202-372-2037, email 
Todd.A.Haviland@uscg.mil, or fax 202-372-1914. If you have questions on 
viewing or submitting material to the docket, call Ms. Cheryl Collins, 
Program Manager, Docket Operations, telephone 202-366-9826.

SUPPLEMENTARY INFORMATION:

Table of Contents for Preamble

I. Public Participation and Request for Comments
    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
    A. Summary
    B. Discussion of Methodology
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 http://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-2014-0481), 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 http://www.regulations.gov and 
insert ``USCG-2014-0481'' 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 notice of proposed rulemaking (NPRM) 
based on your comments.

B. Viewing Comments and Documents

    To view comments, as well as documents mentioned in this preamble 
as being available in the docket, go to http://www.regulations.gov and 
insert ``USCG-2014-0481'' in the ``Search'' box. 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 we decide to hold a public meeting, we will 
announce its time and place in a later notice in the Federal Register.

II. Abbreviations

AMOU American Maritime Officers Union
APA American Pilots Association
CFR Code of Federal Regulations
CPA Certified public accountant
CPI Consumer Price Index
E.O. Executive Order
FR Federal Register
MISLE Marine Information for Safety and Law Enforcement
MOA Memorandum of Arrangements
MOU Memorandum of Understanding
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 NPRM 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. or 
Canadian 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 to ``prescribe by regulation rates and 
charges for pilotage services, giving consideration to the public 
interest and the costs of providing the services.'' 46 U.S.C. 9303(f). 
Rates must be established or reviewed and adjusted each year, not later 
than March 1. Base rates must be

[[Page 52604]]

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, 
if necessary, adjusted. Id. 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 NPRM is to establish new base pilotage rates, 
using the methodology found in 46 CFR part 404, Appendix A.

IV. Background

    The vessels affected by this NPRM are those engaged in foreign 
trade upon the U.S. waters of the Great Lakes. United States 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 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 United States 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 NPRM is a full ratemaking to establish new base pilotage 
rates, using the methodology found in 46 CFR part 404, Appendix A 
(hereafter ``Appendix A''). The last full ratemaking established the 
current base rates in 2014 (79 FR 12084; Mar. 4, 2014). 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 accountants' 2012 financial reports. The comments by 
the pilot associations on those reports and the independent 
accountants' 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, 2015, and effective August 
1, 2015. Our calculations under Steps 1 through 6 of Appendix A would 
result in an average 12 percent rate decrease. This rate decrease is 
not the result of increased efficiencies in providing pilotage services 
but rather is a result of changes to American Maritime Officers Union 
(AMOU) contracts. Therefore, we will continue to exercise the 
discretion outlined in Step 7, increasing rates by 2.5 percent, and 
matching the Canadian Great Lakes Pilotage Authority's rate adjustment 
for 2015. We will provide additional discussion when we explain our 
Step 7 adjustment of pilot rates. Table 1 shows the proposed percent 
change for the new rates for each area.
    Secondly, we propose temporary surcharges for the pilot 
associations to recoup necessary and reasonable training expenses 
incurred or that are expected to be incurred prior to the required 
March 1, 2015 publication of the 2015 final rule. Normally, these 
expenses would not be recognized until the 2016 annual ratemaking or 
later. By authorizing the temporary surcharges now, we propose to 
accelerate the reimbursement for necessary and reasonable training 
expenses. The surcharge would be authorized for the duration of the 
2015 shipping season which begins in March 2015. This action would 
merely accelerate the recoupment of these expenses. At the conclusion 
of the 2015 shipping season, we would account for the monies generated 
by the surcharge and make adjustments as necessary to the operating 
expenses for the following year.
    In District One we propose a temporary surcharge of 5 percent to 
compensate pilots for $28,028.91 that the District One pilot 
association spent on training in 2013 and early 2014, as well as the 
anticipated $150,000 cost to train a new applicant pilot in the 2014 
shipping season to prepare a replacement for a retiring pilot. We 
believe this training is necessary and reasonable to maintain safe, 
efficient, and reliable pilotage on the Great Lakes and support the St. 
Lawrence Seaway Pilots Association's continued commitment to the 
training and professional development of their pilots.
    Additionally, we propose a temporary surcharge of 10 percent in 
District Two to compensate pilots for $300,000 that the District Two 
pilot association will spend training two applicant pilots in 2014. 
This is necessary and reasonable to allow the association to bring on 
new pilots in the face of upcoming retirements without adjusting the 
pilotage needs as determined by the ratemaking methodology. This 
surcharge would also accelerate the repayment of the association's 
investment in upgraded technology ($25,829.80) to enhance the 
situational awareness of pilots on the bridge. We believe this needed 
technology would assist in the safety, efficiency, and reliability of 
the system.
    Next, we propose a temporary surcharge of 1 percent in District 
Three to compensate pilots for $26,950 that the District Three pilot 
association plans to spend on training at the conclusion of the 2014 
shipping season. We believe this training is necessary and reasonable 
for the provision of safe pilotage service.
    All figures in the tables that follow are based on calculations 
performed either by an independent accountant or by the Director's \3\ 
staff. In both cases, those calculations were performed using common 
commercial computer programs. Decimalization and rounding of the 
audited and calculated data

[[Page 52605]]

affects the display in these tables but does not affect the 
calculations. The calculations are based on the actual figures, which 
are rounded for presentation in the tables.
---------------------------------------------------------------------------

    \3\ ``Director'' is the Coast Guard Director, Great Lakes 
Pilotage, which is used throughout this NPRM.

     Table 1--Summary of Rate Adjustments Based on Step 7 Discretion
------------------------------------------------------------------------
                                                       Then the percent
        If pilotage service is required in:            change over the
                                                       current rate is:
------------------------------------------------------------------------
Area 1 (Designated waters).........................                2.50
Area 2 (Undesignated waters).......................                2.50
Area 4 (Undesignated waters).......................                2.50
Area 5 (Designated waters).........................                2.50
Area 6 (Undesignated waters).......................                2.50
Area 7 (Designated waters).........................                2.50
Area 8 (Undesignated waters).......................                2.50
------------------------------------------------------------------------

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 2012 financial information supplied by the pilots 
association.
    Step 1: Projection of Operating Expenses. In this step, we project 
the amount of vessel traffic annually. Based on 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 2012 financial information in 
2013. 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 disallowed 
for ratemaking purposes. The accountant's preliminary findings were 
sent to the pilot associations, they reviewed and commented on those 
findings, and the accountant then finalized the findings. The Director 
reviewed and accepted the 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 2012                    St. Lawrence                            Total
                                                                  River         Lake Ontario
----------------------------------------------------------------------------------------------------------------
Operating Expenses:
Other Pilotage Costs:
    Pilot subsistence/Travel..............................          $227,199          $137,315          $364,514
    License insurance.....................................                 0                 0                 0
    Payroll taxes.........................................            62,038            48,452           110,490
    Other.................................................               596               549             1,145
                                                           -----------------------------------------------------
        Total Other Pilotage Costs........................           289,833           186,316           476,149
Pilot Boat and Dispatch Costs:
    Pilot boat expense....................................           108,539            95,405           203,944
    Dispatch expense......................................                 0                 0                 0
    Payroll taxes.........................................            13,429            11,804            25,233
                                                           -----------------------------------------------------
        Total Pilot and Dispatch Costs....................           121,968           107,209           229,177
Administrative Expenses:
    Legal--general counsel................................             1,369             1,281             2,650
    Legal--lobbying.......................................             3,957             3,478             7,435
    Insurance.............................................            21,907            18,998            40,905
    Employee benefits.....................................            21,281            18,509            39,790
    Payroll taxes.........................................                 0                 0                 0
    Other taxes...........................................            18,491            15,801            34,292
    Travel................................................               473               416               889
    Depreciation/Auto leasing/Other.......................            38,346            33,705            72,051
    Interest..............................................            15,484            13,610            29,094
    Dues and subscriptions................................            13,740            10,240            23,980
    Utilities.............................................             4,549             3,897             8,446
    Salaries..............................................            48,837            42,927            91,764

[[Page 52606]]

 
    Accounting/Professional fees..........................             4,683             4,317             9,000
    Pilot Training........................................            26,353            21,961            48,314
    Other.................................................            10,689             8,974            19,663
                                                           -----------------------------------------------------
        Total Administrative Expenses.....................           230,159           198,114           428,273
                                                           -----------------------------------------------------
        Total Operating Expenses..........................           641,960           491,639         1,133,599
Proposed Adjustments (Independent certified public
 accountant (CPA)):
    Pilotage subsistence/Travel...........................             (887)             (779)           (1,666)
    Payroll taxes.........................................          (13,719)          (12,058)          (25,777)
    Dues and subscriptions................................          (13,740)          (10,240)          (23,980)
                                                           -----------------------------------------------------
        TOTAL CPA ADJUSTMENTS.............................          (28,346)          (23,077)          (51,423)
Proposed Adjustments (Director):
    APA Dues..............................................            11,679             8,704            20,383
    Pilot Training (surcharge)............................          (26,353)          (21,961)          (48,314)
    Legal--lobbying.......................................           (3,957)           (3,478)           (7,435)
                                                           -----------------------------------------------------
        TOTAL DIRECTOR ADJUSTMENTS........................          (18,631)          (16,735)          (35,366)
                                                           -----------------------------------------------------
        Total Operating Expenses..........................           594,983           451,827         1,046,810
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.


                                  Table 3--Recognized Expenses for District Two
----------------------------------------------------------------------------------------------------------------
                                                                 Area 4            Area 5
                                                           ------------------------------------
                Reported Expenses for 2012                                     Southeast Shoal        Total
                                                                Lake Erie      to Port Huron,
                                                                                     MI
----------------------------------------------------------------------------------------------------------------
Operating Expenses:
Other Pilotage Costs:
    Pilot subsistence/Travel..............................           $86,947          $130,421          $217,368
    License insurance.....................................             6,168             9,252            15,420
    Payroll taxes.........................................            42,218            63,328           105,546
    Other.................................................            23,888            35,833            59,721
                                                           -----------------------------------------------------
        Total Other Pilotage Costs........................           159,221           238,834           398,055
Pilot Boat and Dispatch Costs:
    Pilot boat expense....................................           131,285           196,930           328,215
    Dispatch expense......................................             6,600             9,900            16,500
    Employee Benefits.....................................            48,310            72,465           120,775
    Payroll taxes.........................................             7,412            11,119            18,531
                                                           -----------------------------------------------------
        Total Pilot and Dispatch Costs....................           193,607           290,414           484,021
Administrative Expenses:
    Legal--general counsel................................             2,054             3,082             5,136
    Legal--lobbying.......................................             2,704             4,055             6,759
    Legal--litigation.....................................             6,488             9,733            16,221
    Office rent...........................................            26,275            39,413            65,688
    Insurance.............................................            10,682            16,024            26,706
    Employee benefits.....................................            16,452            24,678            41,130
    Payroll taxes.........................................             4,143             6,216            10,359
    Other taxes...........................................            12,546            18,819            31,365
    Depreciation/Auto leasing/Other.......................             9,074            13,610            22,684
    Interest..............................................             2,989             4,483             7,472
    Utilities.............................................            13,917            20,876            34,793
    Salaries..............................................            36,252            54,377            90,629
    Accounting/Professional fees..........................            11,764            17,646            29,410
    Pilot Training........................................                 0                 0                 0
    Other.................................................             9,405            14,108            23,513
                                                           -----------------------------------------------------
        Total Administrative Expenses.....................           164,745           247,120           411,865
                                                           -----------------------------------------------------
        Total Operating Expenses..........................           517,573           776,368         1,293,941
Proposed Adjustments (Independent CPA):
    Pilot subsistence/Travel..............................           (1,982)           (2,974)           (4,956)
    Employee benefits.....................................           (3,585)           (5,378)           (8,963)
                                                           -----------------------------------------------------

[[Page 52607]]

 
        TOTAL CPA ADJUSTMENTS.............................           (5,567)           (8,352)          (13,919)
Proposed Adjustments (Director):
    Federal Tax Allowance.................................           (5,200)           (7,800)          (13,000)
    APA Dues..............................................             7,344            11,016            18,360
    Legal--lobbying.......................................           (2,704)           (4,055)           (6,759)
    Legal--litigation.....................................           (6,488)           (9,733)          (16,221)
                                                           -----------------------------------------------------
        TOTAL DIRECTOR ADJUSTMENTS........................           (7,048)          (10,572)          (17,620)
                                                           -----------------------------------------------------
        Total Operating Expenses..........................           504,958           757,444         1,262,402
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.


                                 Table 4--Recognized Expenses for District Three
----------------------------------------------------------------------------------------------------------------
                                               Area 6            Area 7            Area 8
                                         ------------------------------------------------------
       Reported Expenses for 2012          Lakes Huron and                                            Total
                                              Michigan      St. Mary's River    Lake Superior
----------------------------------------------------------------------------------------------------------------
Operating Expenses:
Other Pilotage Costs:
    Pilot subsistence/Travel............          $180,316           $77,278          $110,398          $367,992
    License insurance...................             8,859             3,797             5,424            18,080
    Payroll taxes.......................                 0                 0                 0                 0
    Other...............................             2,875             1,232             1,760             5,867
                                         -----------------------------------------------------------------------
        Total Other Pilotage Costs......           192,050            82,307           117,582           391,939
Pilot Boat and Dispatch Costs:
    Pilot boat expense..................           261,937           112,259           160,370           534,566
    Dispatch expense....................            81,958            35,125            50,178           167,261
    Payroll taxes.......................             8,203             3,515             5,022            16,740
                                         -----------------------------------------------------------------------
        Total Pilot Boat and Dispatch              352,098           150,899           215,570           718,567
         Costs..........................
Administrative Expenses:
    Legal--lobbying.....................             4,304             1,845             2,635             8,784
    Office rent.........................             4,851             2,079             2,970             9,900
    Insurance...........................             6,469             2,773             3,961            13,203
    Employee benefits...................            77,348            33,149            47,356           157,854
    Payroll taxes.......................             5,404             2,316             3,309            11,029
    Other taxes.........................               941               403               576             1,920
    Depreciation/Auto leasing...........            17,462             7,484            10,691            35,637
    Interest............................             2,692             1,154             1,648             5,494
    Utilities...........................            20,950             8,979            12,827            42,756
    Salaries............................            54,003            23,144            33,063           110,210
    Accounting/Professional fees........            13,157             5,639             8,055            26,851
    Pilot Training......................                 0                 0                 0                 0
    Other...............................             4,657             1,996             2,851             9,504
                                         -----------------------------------------------------------------------
        Total Administrative Expenses...           212,238            90,961           129,942           433,141
                                         -----------------------------------------------------------------------
        Total Operating Expenses........           756,386           324,167           463,094         1,543,647
Proposed Adjustments (Independent CPA):
    Pilot subsistence/travel............           (5,303)           (2,273)           (3,247)          (10,823)
    Payroll taxes.......................            44,613            19,120            27,314            91,046
    Other taxes.........................           (1,761)             (755)           (1,078)           (3,594)
    Other...............................             (637)             (273)             (390)           (1,300)
                                         -----------------------------------------------------------------------
        TOTAL CPA ADJUSTMENTS...........            36,912            15,819            22,599            75,329
Proposed Adjustments (Director):
    APA dues............................            11,695             5,012             7,160            23,868
    Legal--lobbying.....................           (4,304)           (1,845)           (2,635)           (8,784)
                                         -----------------------------------------------------------------------
        TOTAL DIRECTOR ADJUSTMENTS......             7,391             3,167             4,525            15,084
                                         -----------------------------------------------------------------------
        Total Operating Expenses........           800,689           343,153           490,218         1,634,060
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.


[[Page 52608]]

    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 2012 financial information, the 
``succeeding navigation season'' for this ratemaking is 2013. We based 
our inflation adjustment of 1.4 percent on the 2013 change in the 
Consumer Price Index (CPI) for the Midwest Region of the United States, 
which can be found at http://www.bls.gov/xgshells/ro5xg01.htm. 
This adjustment appears in Tables 5 through 7.
    The Coast Guard is aware that the current annual adjustment for 
inflation does not account for the value of money over time. We are 
working on a solution to allow for a better approximation of actual 
costs.

                                   Table 5--Inflation Adjustment, District One
----------------------------------------------------------------------------------------------------------------
                                                        Area 1                 Area 2
                                                 ------------------     ------------------
         Reported Expenses for 2012                  St. Lawrence                                     Total
                                                        River               Lake Ontario
----------------------------------------------------------------------------------------------------------------
Total Operating Expenses:..................  ...          $594,983  ...          $451,827  ...        $1,046,810
2013 change in the CPI for the Midwest        x               .014   x               .014   x               .014
 Region of the United States...............
Inflation Adjustment.......................   =              8,330   =              6,326   =             14,655
----------------------------------------------------------------------------------------------------------------


                                   Table 6--Inflation Adjustment, District Two
----------------------------------------------------------------------------------------------------------------
                                                       Area 4                 Area 5
                                                 ------------------     ------------------
         Reported Expenses for 2012                                       Southeast Shoal             Total
                                                      Lake Erie           to Port Huron,
                                                                                MI
----------------------------------------------------------------------------------------------------------------
Total Operating Expenses:..................  ...          $504,958  ...          $757,444  ...        $1,262,402
2013 change in the CPI for the Midwest        x               .014   x               .014   x               .014
 Region of the United States...............
Inflation Adjustment.......................   =              7,069   =             10,604   =             17,674
----------------------------------------------------------------------------------------------------------------


                                                      Table 7--Inflation Adjustment, District Three
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            Area 6                 Area 7                 Area 8
                                                                       ----------------       ----------------       ----------------
                   Reported Expenses for 2012                             Lakes Huron            St. Mary's                                     Total
                                                                         and Michigan               River              Lake Superior
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses:......................................  .....        $800,689  .....        $343,153  .....        $490,218  .....   $1,634,060
2013 change in the CPI for the Midwest Region of the United         x             .014     x             .014     x             .014     x          .014
 States........................................................
Inflation Adjustment...........................................     =           11,210     =            4,804     =            6,863     =        22,877
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Step 1.D: Projection of Operating Expenses. In this final sub-step 
of Step 1, we 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.
    For District One, the projected operating expenses are based on the 
calculations from Steps 1.A through 1.C. Table 8 shows these 
projections.

                               Table 8--Projected Operating Expenses, District One
----------------------------------------------------------------------------------------------------------------
                                                           Area 1                 Area 2
                                                      ----------------       ----------------
          Reported Expenses for 2012                    St. Lawrence                                    Total
                                                            River              Lake Ontario
----------------------------------------------------------------------------------------------------------------
Total operating expenses......................  .....        $594,983  .....        $451,827  .....   $1,046,810
Inflation adjustment 1.4%.....................     +            8,330     +            6,326     +        14,655
Total projected expenses for 2015 pilotage         =          603,313     =          458,153     =     1,061,465
 season.......................................
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

    In District Two the projected operating expenses are based on the 
calculations from Steps 1.A through 1.C. Table 9 shows these 
projections.

                               Table 9--Projected Operating Expenses, District Two
----------------------------------------------------------------------------------------------------------------
                                                       Area 4                 Area 5
                                                 ------------------     ------------------
         Reported Expenses for 2012                                       Southeast Shoal             Total
                                                      Lake Erie           to Port Huron,
                                                                                MI
----------------------------------------------------------------------------------------------------------------
Total Operating Expenses...................  ...          $504,958  ...          $757,444  ...        $1,262,402
Inflation adjustment 1.4%..................   +              7,069   +             10,604   +             17,674

[[Page 52609]]

 
Total projected expenses for 2015 pilotage    =            512,027   =            768,048   =          1,280,076
 season....................................
----------------------------------------------------------------------------------------------------------------

    In District Three, projected operating expenses are based on the 
calculations from 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 2012                         Lakes Huron and                                                           Total
                                                                       Michigan           St. Mary's River         Lake Superior
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Expenses..............................................  ...          $800,689  ...          $343,153  ...          $490,218  ...        $1,634,060
Inflation adjustment 1.4%...................................   +             11,210   +              4,804   +              6,863   +             22,877
Total projected expenses for 2015 pilotage season...........   =            811,899   =            347,957   =            497,081   =          1,656,937
--------------------------------------------------------------------------------------------------------------------------------------------------------

    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 2015.
    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 on designated waters by multiplying 
the average first mates' wages by 150 percent and then adding the 
average first mates' benefits.
    We rely upon union contract data provided by the AMOU, which has 
agreements with three U.S. companies engaged in Great Lakes shipping. 
We derive the data from two separate AMOU contracts--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 vessels operated by 
American Steamship Co. and Mittal Steel USA, Inc.
    Agreements A and B both expire on July 31, 2016. The AMOU has set 
the daily aggregate rate, including the daily wage rate, vacation pay, 
pension plan contributions, and medical plan contributions effective 
August 1, 2015, as follows: 1) In undesignated waters, $632.12 for 
Agreement A and $624.34 for Agreement B; and 2) In designated waters, 
$870.05 for Agreement A and $856.42 for Agreement B.
    Because we are interested in annual compensation, we must convert 
these daily rates. We use a 270-day multiplier which reflects an 
average 30-day month, over the 9 months of the average shipping season. 
Table 11 shows our calculations using the 270-day multiplier.

          Table 11--Projected Annual Aggregate Rate Components
------------------------------------------------------------------------
 
------------------------------------------------------------------------
    Aggregate Rate--Wages and Vacation,
       Pension, and Medical Benefits
------------------------------------------------------------------------
       Pilots on undesignated waters
------------------------------------------------------------------------
Agreement A:
    $632.12 daily rate x 270 days.........                   $170,672.40
Agreement B:
    $624.34 daily rate x 270 days.........                    168,571.80
------------------------------------------------------------------------
        Pilots on designated waters
------------------------------------------------------------------------
Agreement A:
    $870.05 daily rate x 270 days.........                    234,913.50
Agreement B:
    $856.42 daily rate x 270 days.........                    231,233.40
------------------------------------------------------------------------

    We 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., 
representing approximately 30 percent of tonnage, and Agreement B 
applies to vessels operated by American Steamship Co. and Mittal Steel 
USA, Inc., representing approximately 70 percent of tonnage. Table 12 
provides details.

[[Page 52610]]



                               Table 12--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 12 to apportion the projected 
compensation from Table 11. This gives us a single tonnage-weighted set 
of figures. Table 13 shows our calculations.

                             Table 13--Tonnage-Weighted Wage and Benefit Components
----------------------------------------------------------------------------------------------------------------
                                                                           Undesignated            Designated
                                                                              waters                 waters
----------------------------------------------------------------------------------------------------------------
Agreement A:
    Total wages and benefits......................................  ...       $170,672.40  ...       $234,913.50
    Percent tonnage...............................................   x           29.7238%   x           29.7238%
                                                                   ---------------------------------------------
        Total.....................................................   =            $50,730   =            $69,825
----------------------------------------------------------------------------------------------------------------
Agreement B:
    Total wages and benefits......................................  ...       $168,571.80  ...       $231,233.40
    Percent tonnage...............................................   x           70.2762%   x           70.2762%
                                                                   ---------------------------------------------
        Total.....................................................   =           $118,466   =           $162,502
----------------------------------------------------------------------------------------------------------------
Projected Target Rate of Compensation:
    Agreement A total weighted average wages and benefits.........  ...           $50,730  ...           $69,825
    Agreement B total weighted average wages and benefits.........   +           $118,466   +           $162,502
                                                                   ---------------------------------------------
        Total.....................................................   =           $169,196   =           $232,327
----------------------------------------------------------------------------------------------------------------

    Step 2.B: Determination of the Number of Pilots Needed. Subject to 
adjustment by the Director to ensure uninterrupted service or for other 
reasonable circumstances, we determine the number of pilots needed for 
ratemaking purposes in each area through dividing projected bridge 
hours for each area by either the 1,000 (designated waters) or 1,800 
(undesignated waters) bridge hours specified in Step 2.B. We round the 
mathematical results and express our determination as a whole number of 
pilots.
    According to 46 CFR part 404, Appendix A, Step 2.B(1), bridge hours 
are the number of hours a pilot is aboard a vessel providing pilotage 
service. For that reason, and as we explained most recently in the 2011 
ratemaking's final rule (76 FR 6351 at 6352 col. 3 (Feb. 4, 2011)), we 
do not include, and never have included, pilot delay, detention, or 
cancellation in calculating bridge hours. 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 2014 final rule, we determined that 36 pilots would be 
needed for ratemaking purposes. For 2015, we project 36 pilots is still 
the proper number to use for ratemaking purposes. The total pilot 
authorization strength 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 2008 ratemaking final rule (74 FR 220 at 
221-22 (Jan. 5, 2009)), we have determined that this adjustment is 
essential for ensuring uninterrupted pilotage service in Area 2. Table 
14 shows the bridge hours we project will be needed for each area and 
our calculations to determine the whole number of pilots needed for 
ratemaking purposes.

                                        Table 14--Number of Pilots Needed
----------------------------------------------------------------------------------------------------------------
                                                       Divided by 1,000
                                                          (designated
         Pilotage area           Projected 2015        waters) or 1,800       Calculated value    Pilots needed
                                  bridge hours           (undesignated         of pilot demand    (total = 36)
                                                            waters)
----------------------------------------------------------------------------------------------------------------
Area 1 (Designated waters)....             5,116   /              1,000   =              5.116                 6
Area 2 (Undesignated waters)..             5,429   /              1,800   =              3.016                 5
Area 4 (Undesignated waters)..             5,814   /              1,800   =              3.230                 4
Area 5 (Designated waters)....             5,052   /              1,000   =              5.052                 6
Area 6 (Undesignated waters)..             9,611   /              1,800   =              5.339                 6
Area 7 (Designated waters)....             3,023   /              1,000   =              3.023                 4
Area 8 (Undesignated waters)..             7,540   /              1,800   =              4.189                 5
----------------------------------------------------------------------------------------------------------------


[[Page 52611]]

    Step 2.C: Projection of Target Pilot Compensation. In Table 15, we 
project total target pilot compensation separately for each area by 
multiplying the number of pilots needed in each area, as shown in Table 
14, by the target pilot compensation shown in Table 13.

                            Table 15--Projection of Target Pilot Compensation by Area
----------------------------------------------------------------------------------------------------------------
                                                                          Target rate of        Projected target
                  Pilotage area                     Pilots needed              pilot                  pilot
                                                    (total = 36)           compensation           compensation
----------------------------------------------------------------------------------------------------------------
Area 1 (Designated waters)......................                 6   x           $232,327   =         $1,393,964
Area 2 (Undesignated waters)....................                 5   x            169,196   =            845,981
Area 4 (Undesignated waters)....................                 4   x            169,196   =            676,785
Area 5 (Designated waters)......................                 6   x            232,327   =          1,393,964
Area 6 (Undesignated waters)....................                 6   x            169,196   =          1,015,177
Area 7 (Designated waters)......................                 4   x            232,327   =            929,309
Area 8 (Undesignated waters)....................                 5   x            169,196   =           845,981
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

    Steps 3 and 3.A: Projection of Revenue. In Steps 3 and 3.A., we 
project the revenue that would be received in 2015 if demand for 
pilotage services matches the bridge hours we projected in Table 14, 
and if 2014 pilotage rates are left unchanged. Table 16 shows this 
calculation.

                                     Table 16--Projection of Revenue By Area
----------------------------------------------------------------------------------------------------------------
                                                                                                     Revenue
                  Pilotage area                    Projected 2015          2014 Pilotage         projection for
                                                    bridge hours               rates                  2015
----------------------------------------------------------------------------------------------------------------
Area 1 (Designated waters)......................             5,116   x            $472.50   =         $2,417,285
Area 2 (Undesignated waters)....................             5,429   x             291.96   =          1,585,032
Area 4 (Undesignated waters)....................             5,814   x             210.40   =          1,223,262
Area 5 (Designated waters)......................             5,052   x             521.64   =          2,635,314
Area 6 (Undesignated waters)....................             9,611   x             204.95   =          1,969,800
Area 7 (Designated waters)......................             3,023   x             495.01   =          1,496,427
Area 8 (Undesignated waters)....................             7,540   x             191.34   =          1,442,677
                                                 ---------------------------------------------------------------
    Total.......................................  ................  ...  ................  ...        12,769,797
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

    Step 4: Calculation of Investment Base. In this step, we calculate 
each association's investment base, which is the recognized capital 
investment in the assets employed by the association 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 17 through 19 follow the 
formula up to that point.

                                 Table 17--Total Sources of Funds, District One
----------------------------------------------------------------------------------------------------------------
                                                                              Area 1                 Area 2
----------------------------------------------------------------------------------------------------------------
Recognized Assets:
    Total Current Assets..........................................               $532,237               $467,833
    Total Current Liabilities.....................................   -             61,808   -             54,329
    Current Notes Payable.........................................   +             23,413   +             20,579
    Total Property and Equipment (NET)............................   +            445,044   +            391,191
    Land..........................................................   -             11,727   -             10,308
    Total Other Assets............................................   +                  0   +                  0
                                                                   ---------------------------------------------
        Total Recognized Assets...................................   =            927,159   =            814,966
Non-Recognized Assets:
    Total Investments and Special Funds...........................   +              6,452   +              5,672
                                                                   ---------------------------------------------
        Total Non-Recognized Assets...............................   =              6,452   =              5,672
Total Assets:
    Total Recognized Assets.......................................                927,159                814,966
    Total Non-Recognized Assets...................................   +              6,452   +              5,672
                                                                   ---------------------------------------------
        Total Assets..............................................   =            933,611   =            820,638
Recognized Sources of Funds:
    Total Stockholder Equity......................................                659,141                579,380
    Long-Term Debt................................................   +            262,785   +            230,986
    Current Notes Payable.........................................   +             23,413   +             20,579
    Advances from Affiliated Companies............................   +                  0   +                  0

[[Page 52612]]

 
    Long-Term Obligations--Capital Leases.........................   +                  0   +                  0
                                                                   ---------------------------------------------
        Total Recognized Sources..................................   =            945,339   =            830,945
Non-Recognized Sources of Funds:
    Pension Liability.............................................                      0                      0
    Other Non-Current Liabilities.................................   +                  0   +                  0
    Deferred Federal Income Taxes.................................   +             10,675   +              9,383
    Other Deferred Credits........................................   +                  0   +                  0
                                                                   ---------------------------------------------
        Total Non-Recognized Sources..............................   =             10,675   =              9,383
Total Sources of Funds:
    Total Recognized Sources......................................                945,339                830,945
    Total Non-Recognized Sources..................................   +             10,675   +              9,383
                                                                   ---------------------------------------------
        Total Sources of Funds....................................   =            956,014   =            840,328
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.


                                 Table 18--Total Sources of Funds, District Two
----------------------------------------------------------------------------------------------------------------
                                                                              Area 4                 Area 5
----------------------------------------------------------------------------------------------------------------
Recognized Assets:
Total Current Assets..............................................  ...          $498,456  ...          $747,683
    Total Current Liabilities.....................................   -            494,410   -            741,614
    Current Notes Payable.........................................   +             33,962   +             50,942
    Total Property and Equipment (NET)............................   +            436,063   +            654,094
    Land..........................................................   -                  0   -                  0
    Total Other Assets............................................   +             60,418   +             90,627
                                                                   ---------------------------------------------
        Total Recognized Assets...................................   =            534,488   =            801,733
Non-Recognized Assets:
    Total Investments and Special Funds...........................   +                  0   +                  0
                                                                   ---------------------------------------------
        Total Non-Recognized Assets...............................   =                  0   =                  0
Total Assets:
    Total Recognized Assets.......................................  ...           534,488  ...           801,733
    Total Non-Recognized Assets...................................   +                  0   +                  0
                                                                   ---------------------------------------------
        Total Assets..............................................   =            534,488   =            801,733
Recognized Sources of Funds:
    Total Stockholder Equity......................................  ...            85,846  ...           128,768
    Long-Term Debt................................................   +            414,681   +            622,022
    Current Notes Payable.........................................   +             33,962   +             50,942
    Advances from Affiliated Companies............................   +                  0   +                  0
    Long-Term Obligations--Capital Leases.........................   +                  0   +                  0
                                                                   ---------------------------------------------
        Total Recognized Sources..................................   =            534,488   =            801,733
Non-Recognized Sources of Funds:
    Pension Liability.............................................  ...                 0  ...                 0
    Other Non-Current Liabilities.................................   +                  0   +                  0
    Deferred Federal Income Taxes.................................   +                  0   +                  0
    Other Deferred Credits........................................   +                  0   +                  0
                                                                   ---------------------------------------------
        Total Non-Recognized Sources..............................   =                  0   =                  0
Total Sources of Funds:
    Total Recognized Sources......................................  ...           534,488  ...           801,733
    Total Non-Recognized Sources..................................   +                  0   +                  0
                                                                   ---------------------------------------------
        Total Sources of Funds....................................   =            534,488   =            801,733
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.


                                Table 19--Total Sources of Funds, District Three
----------------------------------------------------------------------------------------------------------------
                                                       Area 6                 Area 7                 Area 8
----------------------------------------------------------------------------------------------------------------
Recognized Assets:
    Total Current Assets...................               $656,459               $281,340               $401,914
    Total Current Liabilities..............   -             82,775   -             35,475   -             50,679
    Current Notes Payable..................   +              7,730   +              3,313   +              4,733
    Total Property and Equipment (NET).....   +             19,611   +              8,405   +             12,007
    Land...................................   -                  0   -                  0   -                  0

[[Page 52613]]

 
    Total Other Assets.....................   +                490   +                210   +                300
                                            --------------------------------------------------------------------
        Total Recognized Assets............   =            601,515   =            257,793   =            368,275
Non-Recognized Assets:
    Total Investments and Special Funds....   +                  0   +                  0   +                  0
                                            --------------------------------------------------------------------
        Total Non-Recognized Assets........   =                  0   =                  0   =                  0
Total Assets:
    Total Recognized Assets................                601,515                257,793                368,275
    Total Non-Recognized Assets............   +                  0   +                  0   +                  0
                                            --------------------------------------------------------------------
        Total Assets.......................   =            601,515   =            257,793   =            368,275
Recognized Sources of Funds:
    Total Stockholder Equity...............  ...           586,300  ...           251,271  ...           358,959
    Long-Term Debt.........................   +              7,485   +              3,208   +              4,583
    Current Notes Payable..................   +              7,730   +              3,313   +              4,733
    Advances from Affiliated Companies.....   +                  0   +                  0   +                  0
    Long-Term Obligations--Capital Leases..   +                  0   +                  0   +                  0
                                            --------------------------------------------------------------------
        Total Recognized Sources...........   =            601,515   =            257,793   =            368,275
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 Sources.......   =                  0   =                  0   =                  0
Total Sources of Funds:
    Total Recognized Sources...............                601,515                257,792                368,275
    Total Non-Recognized Sources...........   +                  0   +                  0   +                  0
                                            --------------------------------------------------------------------
        Total Sources of Funds.............   =            601,515   =            257,792   =            368,275
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

    Tables 17 through 19 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 non-recognized sources of funds (sources we do not recognize as 
required to support pilotage operations) only exist for District One 
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) for 
Districts Two and Three. District One has a multiplier of 0.99. Table 
20 applies the multiplier of 0.99 and 1 as necessary and shows the 
investment base for each association. Table 20 also expresses these 
results by area, because area results will be needed in subsequent 
steps.

                                                     Table 20--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         927,159         945,339         956,014            0.99         916,806
                                                                       2         814,966         830,945         840,328            0.99         805,866
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................  ..............  ..............  ..............  ..............  ..............       1,722,672
Two \2\.................................................               4         534,488         534,488         534,488               1         534,488
                                                                       5         801,733         801,733         801,733               1         801,733
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................  ..............  ..............  ..............  ..............  ..............       1,336,221
Three...................................................               6         601,515         601,515         601,515               1         601,515
                                                                       7         257,793         257,792         257,792               1         257,793
                                                                       8         368,275         368,275         368,275               1         368,275
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................  ..............  ..............  ..............  ..............  ..............       1,227,581
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ ``Investment base'' = ``Total recognized assets'' X ``Multiplier (ratio of recognized to total sources)''.
\2\ 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.
Note: Numbers may not total due to rounding.


[[Page 52614]]

    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 2013, the preceding year, the allowed ROI was 
4.24 percent, based on the average rate of return for that year on 
Moody's AAA corporate bonds, which can be found at: http://research.stlouisfed.org/fred2/series/AAA/downloaddata?cid=119.
    Step 6: Adjustment Determination. The first part of 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 21 
through 23.

                                 Table 21--Projected ROI, Areas in District One
----------------------------------------------------------------------------------------------------------------
                                                                               Area 1                 Area 2
----------------------------------------------------------------------------------------------------------------
Revenue (from Step 3).............................................             $2,417,285             $1,585,032
Operating Expenses (from Step 1)..................................     -          603,313     -          458,153
Pilot Compensation (from Step 2)..................................     -        1,393,964     -          845,981
Operating Profit/(Loss)...........................................     =          420,009     =          280,899
Interest Expense (from audits)....................................     -           15,484     -           13,610
Earnings Before Tax...............................................     =          404,525     =          267,289
Federal Tax Allowance.............................................     -                0     -                0
Net Income........................................................     =          404,525     =          267,289
Return Element (Net Income + Interest)............................                420,009                280,899
Investment Base (from Step 4).....................................     /          916,806     /          805,866
Projected Return on Investment....................................     =             0.46     =             0.35
----------------------------------------------------------------------------------------------------------------


                                 Table 22--Projected ROI, Areas in District Two
----------------------------------------------------------------------------------------------------------------
                                                                               Area 4                 Area 5
----------------------------------------------------------------------------------------------------------------
Revenue (from Step 3).............................................             $1,223,262             $2,635,314
Operating Expenses (from Step 1)..................................     -          512,027     -          768,048
Pilot Compensation (from Step 2)..................................     -          676,785     -        1,393,964
Operating Profit/(Loss)...........................................     =           34,450     =          473,302
Interest Expense (from audits)....................................     -            2,989     -            4,483
Earnings Before Tax...............................................     =           31,461     =          468,819
Federal Tax Allowance.............................................     -            5,200     -            7,800
Net Income........................................................     =           26,261     =          461,019
Return Element (Net Income + Interest)............................                 29,250                465,502
Investment Base (from Step 4).....................................     /          534,488     /          801,733
Projected Return on Investment....................................     =             0.05     =             0.58
----------------------------------------------------------------------------------------------------------------


                                Table 23--Projected ROI, Areas in District Three
----------------------------------------------------------------------------------------------------------------
                                                       Area 6                 Area 7                 Area 8
----------------------------------------------------------------------------------------------------------------
Revenue (from Step 3)......................             $1,969,800             $1,496,427             $1,442,677
Operating Expenses (from Step 1)...........   -            811,899   -            347,957   -            497,081
Pilot Compensation (from Step 2)...........   -          1,015,177   -            929,309   -            845,981
Operating Profit/(Loss)....................   =            142,724   =            219,161   =             99,615
Interest Expense (from audits).............   -              2,692   -              1,154   -              1,648
Earnings Before Tax........................   =            140,032   =            218,007   =             97,967
Federal Tax Allowance......................   -                  0   -                  0   -                  0
Net Income.................................   =            140,032   =            218,007   =             97,967
Return Element (Net Income + Interest).....                142,724                219,161                 99,615
Investment Base (from Step 4)..............   /            601,515   /            257,793   /            368,275
Projected Return on Investment.............   =               0.24   =               0.85   =               0.27
----------------------------------------------------------------------------------------------------------------

    The second part required for Step 6 compares the results of Tables 
21 through 23 with the target ROI (4.24 percent) we obtained in Step 5 
to determine if an adjustment to the base pilotage rate is necessary. 
Table 24 shows this comparison for each area.

[[Page 52615]]



                                            Table 24--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. Lawrence    Lake Ontario      Lake Erie     Shoal to Port    Lakes Huron     St. Mary's     Lake Superior
                                               River                                         Huron, MI     and Michigan        River
--------------------------------------------------------------------------------------------------------------------------------------------------------
Projected return on investment..........          0.4581          0.3486          0.0547          0.5806          0.2373          0.8501          0.2705
Target return on investment.............          0.0424          0.0424          0.0424          0.0424          0.0424          0.0424          0.0424
Difference in return on investment......          0.4157          0.3062          0.0123          0.5382          0.1949          0.8077          0.2281
--------------------------------------------------------------------------------------------------------------------------------------------------------
\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 24 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 25. 
It adjusts the investment base we used in Step 4, multiplying it by the 
target ROI from Step 5, and applies the result to the operating 
expenses and target pilot compensation determined in Steps 1 and 2.

                                                 Table 25--Revenue Needed To Recover Target ROI, by Area
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Investment
                                                         Operating          Target pilot         base (Step 4)
                    Pilotage area                        expenses           compensation            x 4.24%            Federal tax        Revenue needed
                                                         (Step 1)             (Step 2)            (Target ROI           allowance
                                                                                                    Step 5)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Area 1 (Designated waters)..........................        $603,313   +       $1,393,964   +          $38,873   +               $0   =       $2,036,149
Area 2 (Undesignated waters)........................         458,153   +          845,981   +           34,169   +                0   =        1,338,302
Area 4 (Undesignated waters)........................         512,027   +          676,785   +           22,662   +            5,200   =        1,216,674
Area 5 (Designated waters)..........................         768,048   +        1,393,964   +           33,993   +            7,800   =        2,203,805
Area 6 (Undesignated waters)........................         811,899   +        1,015,177   +           25,504   +                0   =        1,852,580
Area 7 (Designated waters)..........................         347,957   +          929,309   +           10,930   +                0   =        1,288,197
Area 8 (Undesignated waters)........................         497,081   +          845,981   +           15,615   +                0   =        1,358,677
                                                     ---------------------------------------------------------------------------------------------------
    Total...........................................       3,998,479   +        7,101,160   +          181,747   +           13,000   =       11,294,385
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The ``Revenue Needed'' column of Table 25 is less than the revenue 
we projected in Table 16.
    Step 7: Adjustment of Pilotage Rates. Finally, we calculate rate 
adjustments by dividing the Step 6 revenue needed (Table 25) by the 
Step 3 revenue projection (Table 16), to give us a rate multiplier for 
each area. These rate adjustments are subject to negotiation with 
Canada or adjustment for other supportable circumstances. Tables 26 
through 28 show these calculations.

                                Table 26--Rate Multiplier, Areas in District One
----------------------------------------------------------------------------------------------------------------
                                                                              Area 1                 Area 2
                                                                        ------------------     -----------------
                      Ratemaking projections                               St. Lawrence
                                                                               River              Lake Ontario
----------------------------------------------------------------------------------------------------------------
Revenue Needed (from Step 6)......................................  ...        $2,036,149  ...        $1,338,302
Revenue (from Step 3).............................................   /         $2,417,285   /         $1,585,032
Rate Multiplier...................................................   =             0.8423   =             0.8443
----------------------------------------------------------------------------------------------------------------


                                Table 27--Rate Multiplier, Areas in District Two
----------------------------------------------------------------------------------------------------------------
                                                                              Area 4                 Area 5
                                                                        ------------------     -----------------
                      Ratemaking projections                                                     Southeast Shoal
                                                                             Lake Erie           to Port Huron,
                                                                                                       MI
----------------------------------------------------------------------------------------------------------------
Revenue Needed (from Step 6)......................................  ...        $1,216,674  ...        $2,203,805
Revenue (from Step 3).............................................   /         $1,223,262   /         $2,635,314
Rate Multiplier...................................................   =             0.9946   =             0.8363
----------------------------------------------------------------------------------------------------------------


[[Page 52616]]


                               Table 28--Rate Multiplier, Areas in District Three
----------------------------------------------------------------------------------------------------------------
                                                       Area 6                 Area 7                 Area 8
                                                 ------------------     ------------------     -----------------
           Ratemaking projections                  Lakes Huron and
                                                      Michigan           St. Mary's River         Lake Superior
----------------------------------------------------------------------------------------------------------------
Revenue Needed (from Step 6)...............  ...        $1,825,580  ...        $1,288,197  ...        $1,358,677
Revenue (from Step 3)......................   /         $1,969,800   /         $1,496,427   /         $1,442,677
Rate Multiplier............................   =             0.9405   =             0.8608   =             0.9418
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

    We calculate a rate multiplier for adjusting the basic rates and 
charges described in 46 CFR 401.420 and 401.428, and it is applicable 
in all areas. We divide total revenue needed (Step 6, Table 25) by 
total projected revenue (Steps 3 and 3.A, Table 16). Table 29 shows 
this calculation.

 Table 29--Rate Multiplier for Basic Rates and Charges in 46 CFR 401.420
                               and 401.428
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Ratemaking Projections:
    Total Revenue Needed (from Step 6)...............  ...   $11,294,385
    Total revenue (from Step 3)......................   /    $12,769,797
Rate Multiplier......................................   =          0.884
------------------------------------------------------------------------

    Using this table, we calculate 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). 
The result is a decrease by 11.55 percent in all areas.
    Without further action, the existing rates we established in our 
2014 final rule would then be multiplied by the rate multipliers from 
Tables 29 through 31 to calculate the area by area rate changes for 
2015. The resulting 2015 rates across the Great Lakes, on average, 
would then be decreased approximately 12 percent from the 2014 rates. 
This decrease is not due to increased efficiencies in pilotage services 
but rather a result of adjustments to AMOU contracts. We propose to 
decline to impose this decrease because it would have an adverse effect 
on providing safe, efficient, and reliable pilotage in the pilotage 
districts. Additionally, we propose to decline to impose this decrease 
because we are unable to independently verify the compensation data 
contained in the AMOU contracts. Our Memorandum of Arrangements (MOA) 
with Canada, as well as our recently signed Memorandum of Understanding 
(MOU),\4\ which replaces the MOA, calls for comparable pilotage rates 
between the two countries and we have proposed matching our rate 
increase to the Canadian rate increase, which is 2.5 percent this year. 
Our discretionary authority under Step 7 must be ``based on 
requirements of the Memorandum of Arrangements between the United 
States and Canada, and other supportable circumstances that may be 
appropriate.'' The MOA calls for comparable United States and Canadian 
rates, and the rates would not be comparable if United States rates for 
2015 decrease by approximately 12 percent, while Canadian rates for 
2015 increase by 2.5 percent. Though rates are not equivalent, matching 
the Canadian rate increase prevents a move further away from 
established levels of comparability. ``Other supportable 
circumstances'' for exercising our discretion include:
---------------------------------------------------------------------------

    \4\ The Memorandum of Understanding between the GLPA and USCG 
was signed on September 19, 2013 and goes into effect on January 1, 
2015. Copies of the MOA and MOU are available on our Web site: 
http://www.uscg.mil/hq/cg5/cg552/pilotage.asp.
---------------------------------------------------------------------------

     Executive Order (E.O.) 13609, ``Promoting International 
Regulatory Cooperation,'' which calls on Federal agencies to eliminate 
``unnecessary differences'' between U.S. and foreign regulations (77 FR 
26413; May 4, 2012; sec. 1); and
     The risk that a significant rate decrease would jeopardize 
the ability of the three pilotage associations to provide safe, 
efficient, and reliable pilotage service.
    Therefore, we propose relying on the discretionary authority we 
have under Step 7 to further adjust rates so that they match those 
adopted by the Canadian Great Lakes Pilotage Authority for 2014. Table 
30 compares the impact, area by area, that an average decrease of 12 
percent would have, relative to the impact each area would experience 
if United States rates match those of the Canadian GLPA.

                                Table 30--Impact of Exercising Step 7 Discretion
----------------------------------------------------------------------------------------------------------------
                                                                 Percent change in rate   Percent change in rate
                             Area                               without exercising Step  with exercise of Step 7
                                                                      7 discretion              discretion
----------------------------------------------------------------------------------------------------------------
Area 1 (Designated waters)....................................                   -15.77                     2.50
Area 2 (Undesignated waters)..................................                   -15.57                     2.50
Area 4 (Undesignated waters)..................................                    -0.54                     2.50
Area 5 (Designated waters)....................................                   -16.37                     2.50
Area 6 (Undesignated waters)..................................                    -5.95                     2.50
Area 7 (Designated waters)....................................                   -13.92                     2.50
Area 8 (Undesignated waters)..................................                    -5.82                     2.50
----------------------------------------------------------------------------------------------------------------

    The following tables reflect our proposed rate adjustments of 2.5 
percent across all areas.
    Tables 31 through 33 show these calculations.

[[Page 52617]]



                     Table 31--Proposed Adjustment of Pilotage Rates, Areas in District One
----------------------------------------------------------------------------------------------------------------
                                                                                                  Adjusted rate
                                                      2014 Rate           Rate multiplier           for 2015
----------------------------------------------------------------------------------------------------------------
Area 1 St. Lawrence River
    Basic Pilotage..............................        $19.22/km,   x              1.025   =         $19.70/km,
                                                          34.02/mi                                      34.87/mi
    Each lock transited.........................               426   x              1.025   =                437
    Harbor movage...............................             1,395   x              1.025   =              1,430
    Minimum basic rate, St. Lawrence River......               931   x              1.025   =                954
Maximum rate, through trip......................             4,084   x              1.025   =              4,186
Area 2 Lake Ontario
    6-hour period...............................               872   x              1.025   =                894
Docking or undocking............................               832   x              1.025   =                853
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

    In addition to the proposed rate charges in Table 31, as we explain 
in the Summary section of Part V of this preamble, we propose 
authorizing District One to implement a temporary supplemental 5 
percent charge on each source form (the ``bill'' for pilotage service) 
for the duration of the 2015 shipping season, which begins in March 
2015. District One would be required to provide us with monthly status 
reports once this surcharge becomes effective for the duration of the 
2015 shipping season. We would exclude these expenses from future rates 
and any surcharge surplus/deficit from the 2014 season would impact the 
final authorized surcharge for the 2015 season.

                     Table 32--Proposed Adjustment of Pilotage Rates, Areas in District Two
----------------------------------------------------------------------------------------------------------------
                                                                                                  Adjusted rate
                                                      2014 Rate           Rate multiplier           for 2015
----------------------------------------------------------------------------------------------------------------
Area 4 Lake Erie
    6-hour period...............................              $849   x              1.025   =               $870
    Docking or undocking........................               653   x              1.025   =                669
    Any point on Niagara River below Black Rock              1,667   x              1.025   =              1,709
     Lock.......................................
Area 5 Southeast Shoal to Port Huron, MI between
 any point on or in
    Toledo or any point on Lake Erie W. of                   1,417   x              1.025   =              1,452
     Southeast Shoal............................
    Toledo or any point on Lake Erie W. of                   2,397   x              1.025   =              2,457
     Southeast Shoal & Southeast Shoal..........
    Toledo or any point on Lake Erie W. of                   3,113   x              1.025   =              3,191
     Southeast Shoal & Detroit River............
    Toledo or any point on Lake Erie W. of                   2,397   x              1.025   =              2,457
     Southeast Shoal & Detroit Pilot Boat.......
    Port Huron Change Point & Southeast Shoal                4,176   x              1.025   =              4,280
     (when pilots are not changed at the Detroit
     Pilot Boat)................................
    Port Huron Change Point & Toledo or any                  4,837   x              1.025   =              4,958
     point on Lake Erie W. of Southeast Shoal
     (when pilots are not changed at the Detroit
     Pilot Boat)................................
    Port Huron Change Point & Detroit River.....             3,137   x              1.025   =              3,215
    Port Huron Change Point & Detroit Pilot Boat             2,441   x              1.025   =              2,502
    Port Huron Change Point & St. Clair River...             1,735   x              1.025   =              1,778
    St. Clair River.............................             1,417   x              1.025   =              1,452
    St. Clair River & Southeast Shoal (when                  4,176   x              1.025   =              4,280
     pilots are not changed at the Detroit Pilot
     Boat)......................................
    St. Clair River & Detroit River/Detroit                  3,137   x              1.025   =              3,215
     Pilot Boat.................................
    Detroit, Windsor, or Detroit River..........             1,417   x              1.025   =              1,452
    Detroit, Windsor, or Detroit River &                     2,397   x              1.025   =              2,457
     Southeast Shoal............................
    Detroit, Windsor, or Detroit River & Toledo              3,113   x              1.025   =              3,191
     or any point on Lake Erie W. of Southeast
     Shoal......................................
    Detroit, Windsor, or Detroit River & St.                 3,137   x              1.025   =              3,215
     Clair River................................
    Detroit Pilot Boat & Southeast Shoal........             1,735   x              1.025   =              1,778
    Detroit Pilot Boat & Toledo or any point on              2,397   x              1.025   =              2,457
     Lake Erie W. of Southeast Shoal............
    Detroit Pilot Boat & St. Clair River........             3,137   x              1.025   =              3,215
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

    In addition to the proposed rate charges in Table 32, and for the 
reasons we discussed in the Summary section of Part V of this preamble, 
we propose authorizing District Two to implement a temporary 
supplemental 10 percent charge on each source form for the duration of 
the 2015 shipping season, which begins in March 2015. District Two 
would be required to provide us with monthly status reports once this 
surcharge becomes effective for the duration of the 2015 shipping 
season. We would exclude these expenses from future rates.

[[Page 52618]]



                    Table 33--Proposed Adjustment of Pilotage Rates, Areas in District Three
----------------------------------------------------------------------------------------------------------------
                                                                                                  Adjusted rate
                                                      2014 Rate           Rate multiplier           for 2015
----------------------------------------------------------------------------------------------------------------
Area 6 Lakes Huron and Michigan
    6-hour Period...............................              $708   x              1.025   =               $726
    Docking or undocking........................               672   x              1.025   =                689
Area 7 St. Mary's River between any point on or
 in
    Gros Cap & De Tour..........................             2,648   x              1.025   =              2,714
    Algoma Steel Corp. Wharf, Sault Ste. Marie,              2,648   x              1.025   =              2,714
     Ont. & De Tour.............................
    Algoma Steel Corp. Wharf, Sault. Ste. Marie,               997   x              1.025   =              1,022
     Ont. & Gros Cap............................
    Any point in Sault St. Marie, Ont., except               2,219   x              1.025   =              2,274
     the Algoma Steel Corp. Wharf & De Tour.....
    Any point in Sault St. Marie, Ont., except                 997   x              1.025   =              1,022
     the Algoma Steel Corp. Wharf & Gros Cap....
    Sault Ste. Marie, MI & De Tour..............             2,219   x              1.025   =              2,274
    Sault Ste. Marie, MI & Gros Cap.............               997   x              1.025   =              1,022
    Harbor movage...............................               997   x              1.025   =              1,022
Area 8 Lake Superior
    6-hour period...............................               601   x              1.025   =                616
    Docking or undocking........................               571   x              1.025   =                585
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

    In addition to the proposed rate charges in Table 33, and for the 
reasons we discussed in the Summary section of Part V of this preamble, 
we propose authorizing District Three to implement a temporary 
supplemental 1 percent charge on each source form for the duration of 
the 2015 shipping season, which begins in March 2015. District Three 
would be required to provide us with monthly status reports once this 
surcharge becomes effective for the duration of the 2015 shipping 
season. We would exclude these expenses from future rates.

VI. Regulatory Analyses

    We developed this proposed rule after considering numerous statutes 
and E.O.s related to rulemaking. Below we summarize our analyses based 
on these statutes or E.O.s.

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 proposed rule is not a significant regulatory action under 
section 3(f) of E.O. 12866 as supplemented by E.O. 13563, and does not 
require an assessment of potential costs and benefits under section 
6(a)(3) of E.O. 12866. The Office of Management and Budget (OMB) has 
not reviewed it under E.O. 12866. Nonetheless, we developed an analysis 
of the costs and benefits of the proposed rule to ascertain its 
probable impacts on industry. We consider all estimates and analysis in 
this Regulatory Analysis to be subject to change in consideration of 
public comments.
    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 2015 shipping season to 
generate sufficient revenue to cover allowable expenses, and to target 
pilot compensation and returns on pilot associations' investments. The 
rate adjustments in this proposed rule would, if codified, lead to an 
increase in the cost per unit of service to shippers in all three 
districts, and result in an estimated annual cost increase to shippers 
of approximately $319,245 across all three districts over 2014 rates--
an increase of 2.5 percent.
    In addition to the increase in payments that would be incurred by 
shippers in all three districts from the previous year as a result of 
the proposed discretionary rate adjustments, we propose authorizing 
temporary, supplemental surcharges to traffic across all three 
districts in order for the pilotage associations to recover training 
expenses and technology improvements that were incurred throughout the 
2013 and 2014 shipping seasons. These temporary surcharges would be 
authorized for the duration of the 2015 shipping season, which begins 
in March. We estimate that these temporary surcharges would generate a 
combined $650,939 in revenue for the pilotage associations across all 
three districts. In District One, the proposed 5 percent surcharge 
would generate an additional $205,119 in revenue. In District Two, the 
proposed 10 percent surcharge is expected to generate $395,504 in 
additional revenue. In District Three, the proposed 1 percent surcharge 
would generate an additional $50,316 in revenue. At the end of the 2015 
shipping season, we will account for the monies the surcharges generate 
and make adjustments (debits/credits) to the operating expenses for the 
following year.\5\
---------------------------------------------------------------------------

    \5\ Assuming our estimate is correct, we would credit District 
One shippers $27,090 at the end of the 2015 season in order to 
account for the difference between the total surcharges collected 
($205,119) and the actual expenses incurred by the District One 
pilot association ($178,029 for training expenses), District Two 
shippers $69,674 (calculation: $395,504 (total surcharges collected) 
minus $300,000 to train two applicant pilots and $25,829.80 for 
technology improvements), and District Three shippers $23,366 
(calculation: $50,316 (total surcharges collected) minus $26,950 
(actual training expenses incurred)).
---------------------------------------------------------------------------

    Therefore, after accounting for the implementation of the temporary 
surcharges on traffic across all three districts, the annual payments 
made by shippers are estimated to be approximately $970,184 more than 
the payments that were made in 2014.\6\
---------------------------------------------------------------------------

    \6\ Total payments across all three districts are equal to the 
increase in payments incurred by shippers as a result of the rate 
changes plus the temporary surcharges applied to traffic in 
Districts One, Two, and Three.
---------------------------------------------------------------------------

    A regulatory assessment follows.

[[Page 52619]]

    The proposed rule would apply the 46 CFR part 404, Appendix A, full 
ratemaking methodology, including the exercise of our discretion to 
increase Great Lakes pilotage rates, on average, approximately 2.5 
percent overall from the current rates set in the 2014 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 2012 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 2014 and used financial data from the 2011 
base accounting year. The last annual rate review, conducted under 46 
CFR part 404, Appendix C, was completed early in 2011.
    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 
proposed rule, such as recreational boats and vessels operating only 
within the Great Lakes system, may elect to purchase pilotage services. 
However, this election is voluntary and does not affect our calculation 
of the rate and is not a part of our estimated national cost to 
shippers.
    We used 2011-2013 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. 
Using that period, we found that approximately 114 vessels journeyed 
into the Great Lakes system annually. These vessels entered the Great 
Lakes by transiting 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 114 vessels, there were 
approximately 353 annual U.S. port arrivals before the vessels left the 
Great Lakes system, based on 2011-2013 vessel data from MISLE.
    The impact of the rate adjustment to shippers is estimated from the 
District pilotage revenues. These revenues represent the costs 
(``economic costs'') that shippers must pay for pilotage services. The 
Coast Guard sets rates so that revenues equal the estimated cost of 
pilotage for these services.
    We estimate the additional impact (cost increases or cost 
decreases) of the rate adjustment in this proposed rule to be the 
difference between the total projected revenue needed to cover costs in 
2014, based on the 2014 rate adjustment, and the total projected 
revenue needed to cover costs in 2015, as set forth in this proposed 
rule, plus any temporary surcharges authorized by the Coast Guard. 
Table 34 details projected revenue needed to cover costs in 2015 after 
making the discretionary adjustment to pilotage rates as discussed in 
Step 7 of Part VI of this preamble. Table 35 summarizes the derivation 
for calculating the revenue expected to be generated as a result of the 
temporary surcharges applied to traffic in all three districts as 
discussed in Step 7 of Part VI of this preamble. Table 36 details the 
additional cost increases to shippers by area and district as a result 
of the rate adjustments and temporary surcharges on traffic in 
Districts One, Two, and Three.

                                                     Table 34--Rate Adjustment by Area and District
                                                                 [$U.S.; Non-discounted]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                            Projected
                                                              2014 pilotage     Rate change \8\     2015 pilotage     Projected 2015   revenue needed in
                                                               rates \7\                             rates \9\      bridge hours \10\      2015 \11\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Area 1...................................................            $472.50             1.0250            $484.31              5,116         $2,477,717
Area 2...................................................             291.96             1.0250             299.26              5,429          1,624,658
                                                          ----------------------------------------------------------------------------------------------
    Total, District One..................................  .................  .................  .................  .................          4,102,375
                                                          ==============================================================================================
Area 4...................................................             210.40             1.0250             215.66              5,814          1,253,843
Area 5...................................................             521.64             1.0250             534.68              5,052          2,701,197
                                                          ----------------------------------------------------------------------------------------------
    Total, District Two..................................  .................  .................  .................  .................          3,955,040
                                                          ==============================================================================================
Area 6...................................................             204.95             1.0250             210.08              9,611          2,019,045
Area 7...................................................             495.01             1.0250             507.39              3,023          1,533,838
Area 8...................................................             191.34             1.0250             196.12              7,540          1,478,744
                                                          ----------------------------------------------------------------------------------------------
    Total, District Three................................  .................  .................  .................  .................          5,031,627
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                   Table 35--Derivation of Temporary Surcharge
----------------------------------------------------------------------------------------------------------------
                                Area 1      Area 2      Area 4      Area 5      Area 6      Area 7      Area 8
----------------------------------------------------------------------------------------------------------------
Projected Revenue Needed in   $2,477,717  $1,624,658  $1,253,843  $2,701,197  $2,019,045  $1,533,838  $1,478,744
 2015.......................
Surcharge Rate..............          5%          5%         10%         10%          1%          1%          1%
Surcharge Raised............    $123,886     $81,233    $125,384    $270,120     $20,190     $15,338     $14,787
                             -----------------------------------------------------------------------------------
    Total Surcharge.........         $205,119
                                     $395,504
                                            $50,316
----------------------------------------------------------------------------------------------------------------


[[Page 52620]]


                           Table 36--Impact of the Proposed Rule by Area and District
                                             [$U.S.; Non-discounted]
----------------------------------------------------------------------------------------------------------------
                                                                                                    Additional
                                              Projected         Projected         Temporary     costs or savings
                                           revenue needed    revenue needed       surcharge     of this proposed
                                            in 2014 \12\      in 2015 \13\                            rule
----------------------------------------------------------------------------------------------------------------
Area 1..................................        $2,417,285        $2,477,717          $123,886          $184,318
Area 2..................................         1,585,032         1,624,658            81,233           120,859
                                         -----------------------------------------------------------------------
    Total, District One.................         4,002,318         4,102,375           205,119           305,177
                                         =======================================================================
Area 4..................................         1,223,262         1,253,843           125,384           155,966
Area 5..................................         2,635,314         2,701,197           270,120           336,003
                                         -----------------------------------------------------------------------
    Total, District Two.................         3,858,576         3,955,040           395,504           491,968
                                         =======================================================================
Area 6..................................         1,969,800         2,019,045            20,190            69,435
Area 7..................................         1,496,427         1,533,838            15,338            52,749
Area 8..................................         1,442,677         1,478,744            14,787            50,854
                                         -----------------------------------------------------------------------
    Total, District Three...............         4,908,904         5,031,627            50,316           173,039
----------------------------------------------------------------------------------------------------------------

    After applying the discretionary rate change in this NPRM, the 
resulting difference between the projected revenue in 2014 and the 
projected revenue in 2015 is the annual change in payments from 
shippers to pilots after accounting for market conditions (i.e., a 
decrease in demand for pilotage services) and the change to pilotage 
rates as a result of this proposed rule. This figure is equivalent to 
the total additional payments or reduction in payments from the 
previous year that shippers would incur for pilotage services from this 
proposed rule.
---------------------------------------------------------------------------

    \7\ 2014 Pilotage Rates are described in Table 16 of this NPRM.
    \8\ The estimated rate changes are described in Table 30 of this 
NPRM.
    \9\ 2015 Pilotage Rates--2014 Pilotage Rates x Rate Change.
    \10\ Projected 2015 Bridge Hours are described in Table 14 of 
this NPRM.
    \11\ Projected Revenue Needed in 2015--2015 Pilotage Rates x 
Projected 2015 Bridge Hours.
    \12\ Projected revenue needed in 2014 is described in Table 16 
of this NPRM.
    \13\ Projected revenue needed in 2015 is described in Table 34 
of this NPRM.
---------------------------------------------------------------------------

    The impact of the discretionary rate adjustment in this proposed 
rule on shippers varies by area and district. The discretionary rate 
adjustments would lead to affected shippers operating in District One, 
District Two, and District Three experiencing an increase in payments 
of $100,058, $96,464, and $122,723, respectively, from the previous 
year.
    In addition to the rate adjustments, temporary surcharges on 
traffic in District One, District Two, and District Three would be 
applied for the duration of the 2015 season in order for the pilotage 
associations to recover training expenses and technology investments 
incurred during the 2013 and 2014 shipping seasons. We estimate that 
these surcharges would generate an additional $205,119, $395,504, and 
$50,316 in revenue for the pilotage associations in District One, 
District Two, and District Three, respectively. At the end of the 2015 
shipping season, we will account for the monies the surcharges generate 
and make adjustments (debits/credits) to the operating expenses for the 
following year.\14\
---------------------------------------------------------------------------

    \14\ Assuming our estimate is correct, we would credit District 
One shippers $27,090 at the end of the 2015 season in order to 
account for the difference between the total surcharges collected 
($205,119) and the actual expenses incurred by the District One 
pilot association ($178,029 for training expenses), District Two 
shippers $69,674 (calculation: $395,504 (total surcharges collected) 
minus $300,000 to train two applicant pilots and $25,829.80 for 
technology improvements)), and District Three shippers $23,366 
(calculation: $50,316 (total surcharges collected) minus $26,950 
(actual training expenses incurred)).
---------------------------------------------------------------------------

    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 travelled and the number of port arrivals by their vessels. 
However, the increase in costs reported earlier in this NPRM does 
capture the adjustment in payments that shippers would experience from 
the previous year. The overall adjustment in payments, after taking 
into account the increase in pilotage rates and the addition of 
temporary surcharges would be an increase in payments by shippers of 
approximately $970,184 across all three districts.
    This proposed rule would allow the Coast Guard to meet the 
requirements in 46 U.S.C. 9303 to review the rates for pilotage 
services on the Great Lakes, thus ensuring proper pilot compensation.
    Alternatively, if we imposed the new rates based on the new 
contract data from AMOU, instead of using the discretionary rate 
adjustment described in Step 7, there would be an approximately 12 
percent decrease in rates across the system. Instead of shippers 
experiencing an increase in payments of approximately $319,245 from the 
previous year, as a result of the proposed rate adjustments, shippers 
would instead experience a reduction in payments of approximately 
$1,475,412.\15\ Table 37 details projected revenue needed to cover 
costs in 2015 if the discretionary adjustment to pilotage rates as 
discussed in Step 7 of Part VI of this preamble is not made. Table 38 
details the additional costs or savings by area and district as a 
result of this alternative proposal.
---------------------------------------------------------------------------

    \15\ These figures do not include the additional payments 
incurred by shippers as a result of the temporary surcharges applied 
to traffic in all three districts.
    \16\ The estimated rate changes are described in Table 30 of 
this NPRM.

[[Page 52621]]



                                               Table 37--Alternative Rate Adjustment by Area and District
                                                                 [$U.S.; Non-discounted]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                            Projected
                                                                  2014 pilotage   Rate change \16\    2015 pilotage    Projected 2015    revenue needed
                                                                      rates                               rates         bridge hours         in 2015
--------------------------------------------------------------------------------------------------------------------------------------------------------
Area 1........................................................           $472.50            0.8423           $398.00             5,116        $2,036,149
Area 2........................................................            291.96            0.8443            246.51             5,429         1,338,302
                                                               -----------------------------------------------------------------------------------------
    Total, District One.......................................  ................  ................  ................  ................         3,374,451
                                                               =========================================================================================
Area 4........................................................            210.40            0.9946            209.27             5,814         1,216,674
Area 5........................................................            521.64            0.8363            436.22             5,052         2,203,805
                                                               -----------------------------------------------------------------------------------------
    Total, District Two.......................................  ................  ................  ................  ................         3,420,480
                                                               =========================================================================================
Area 6........................................................            204.95            0.9405            192.76             9,611         1,852,580
Area 7........................................................            495.01            0.8608            426.13             3,023         1,288,197
Area 8........................................................            191.34            0.9418            180.20             7,540         1,358,677
                                                               -----------------------------------------------------------------------------------------
    Total, District Three.....................................  ................  ................  ................  ................         4,499,454
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Some values may not total due to rounding.


                          Table 38--Alternative Impact of the Rule by Area and District
                                             [$U.S.; Non-discounted]
----------------------------------------------------------------------------------------------------------------
                                                                                                Additional costs
                                              Projected         Projected         Temporary       or savings of
                                           revenue needed    revenue needed       surcharge       this proposed
                                               in 2014           in 2015                              rule
----------------------------------------------------------------------------------------------------------------
Area 1..................................        $2,417,285        $2,036,149          $101,807        ($279,329)
Area 2..................................         1,585,032         1,338,302            66,915         (179,815)
                                         -----------------------------------------------------------------------
    Total, District One.................         4,002,318         3,374,451           168,723         (459,144)
                                         =======================================================================
Area 4..................................         1,223,262         1,216,674           121,667           115,080
Area 5..................................         2,635,314         2,203,805           220,381         (211,128)
                                         -----------------------------------------------------------------------
    Total, District Two.................         3,858,576         3,420,480           342,048          (96,048)
                                         =======================================================================
Area 6..................................         1,969,800         1,852,580            18,526          (98,694)
Area 7..................................         1,496,427         1,288,197            12,882         (195,348)
Area 8..................................         1,442,677         1,358,677            13,587          (70,413)
                                         -----------------------------------------------------------------------
    Total, District Three...............         4,908,904         4,499,454            44,995         (364,455)
----------------------------------------------------------------------------------------------------------------
* Some values may not total due to rounding.

    We reject this alternative, however, because a rate decrease would 
jeopardize the ability of the three pilotage associations to provide 
safe, efficient, and reliable pilotage service as well as violate the 
Memorandum of Arrangements, which calls for the United States's and 
Canada's pilotage rates to be comparable. See our discussion of Step 7 
in Part VI of this preamble for further explanation.

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 that 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 for the period 2011 through 2013 in the Coast Guard's 
MISLE database, and we reviewed business revenue and size data provided 
by publicly available sources such as MANTA and Reference USA. We found 
that large, 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 with 
the same NAICS industry classification and small-entity size standards 
described above, but they have fewer than 500 employees; combined, they 
have approximately 65 total employees. We

[[Page 52622]]

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 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, 
Director, Great Lakes Pilotage, Commandant (CG-WWM-2), Coast Guard; 
telephone 202-372-2037, email Todd.A.Haviland@uscg.mil, or fax 202-372-
1914. 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 
proposed rule would not change the burden in the collection currently 
approved by the OMB under OMB Control Number 1625-0086, Great Lakes 
Pilotage Methodology.

E. Federalism

    A rule has implications for federalism under E.O. 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 is consistent with the fundamental federalism 
principles and preemption requirements described in E.O. 13132. Our 
analysis is explained below.
    Congress directed the Coast Guard to establish ``rates and charges 
for pilotage services.'' 46 U.S.C. 9303(f). This regulation is issued 
pursuant to that statute and is preemptive of state law as specified in 
46 U.S.C. 9306. Under 46 U.S.C. 9306, a ``State or political 
subdivision of a State may not regulate or impose any requirement on 
pilotage on the Great Lakes.'' As a result, States or local governments 
are expressly prohibited from regulating within this category. 
Therefore, the rule is consistent with the principles of federalism and 
preemption requirements in E.O. 13132.
    While it is well settled that States may not regulate in categories 
in which Congress intended the Coast Guard to be the sole source of a 
vessel's obligations, the Coast Guard recognizes the key role that 
State and local governments may have in making regulatory 
determinations. Additionally, for rules with implications and 
preemptive effect, E.O. 13132 specifically directs agencies to consult 
with State and local governments during the rulemaking process. If you 
believe this rule has implications for federalism under E.O. 13132, 
please contact the person listed in the FOR FURTHER INFORMATION section 
of this preamble.

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 discuss the effects of this proposed 
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 E.O. 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 E.O. 12988, Civil Justice Reform, to minimize litigation, 
eliminate ambiguity, and reduce burden.

I. Protection of Children

    We have analyzed this proposed rule under E.O. 13045, Protection of 
Children from Environmental Health Risks and Safety Risks. This 
proposed 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 E.O. 
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 E.O. 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 E.O. because it is not a ``significant 
regulatory action'' under E.O. 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 E.O. 
13211.

L. Technical Standards

    The National Technology Transfer and Advancement Act (15 U.S.C. 
272, note) directs agencies to use voluntary consensus standards in 
their regulatory activities unless the agency provides Congress, 
through the OMB, with an explanation of why using these standards would 
be inconsistent with applicable law or otherwise impractical. Voluntary 
consensus standards are

[[Page 52623]]

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 (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 proposed 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:

Title 46--Shipping

PART 401--GREAT LAKES PILOTAGE REGULATIONS

0
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.

0
2. In Sec.  401.405, revise paragraphs (a) and (b), including the 
footnote to paragraph (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......................  $19.70 per kilometer or $34.87 per
                                       mile.\1\
Each Lock Transited.................  $437.\1\
Harbor Movage.......................  $1,430.\1\
------------------------------------------------------------------------
\1\ The minimum basic rate for assignment of a pilot in the St. Lawrence
  River is $954, and the maximum basic rate for a through trip is
  $4,186.

    (b) Area 2 (Undesignated Waters):

------------------------------------------------------------------------
                                                                 Lake
                          Service                              Ontario
------------------------------------------------------------------------
6-Hour Period..............................................         $894
Docking or Undocking.......................................          853
------------------------------------------------------------------------

0
3. In Sec.  401.407, revise paragraphs (a) and (b), including the 
footnote to paragraph (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.................................         $870         $870
Docking or Undocking..........................          669          669
Any point on the Niagara River below the Black          N/A        1,709
 Rock Lock....................................
------------------------------------------------------------------------

    (b) Area 5 (Designated Waters):

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Toledo or any
                                                                                    point on Lake                       Detroit Pilot
                      Any point on or in                         Southeast Shoal    Erie west of      Detroit River         Boat         St. Clair River
                                                                                   Southeast Shoal
--------------------------------------------------------------------------------------------------------------------------------------------------------
Toledo or any port on Lake Erie west of Southeast Shoal.......             2,457             1,452             3,191             2,457               N/A
Port Huron Change Point.......................................         \1\ 4,280         \1\ 4,958             3,215             2,502             1,778
St. Clair River...............................................         \1\ 4,280               N/A             3,215             3,215             1,452
Detroit or Windsor or the Detroit River.......................             2,457             3,191             1,452               N/A             3,215
Detroit Pilot Boat............................................             1,778             2,457               N/A               N/A             3,215
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ When pilots are not changed at the Detroit Pilot Boat.

0
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...........................................            $726
Docking or Undocking....................................             689
------------------------------------------------------------------------

    (b) Area 7 (Designated Waters):

----------------------------------------------------------------------------------------------------------------
                           Area                                  De Tour          Gros Cap         Any harbor
----------------------------------------------------------------------------------------------------------------
Gros Cap..................................................            $2,714               N/A               N/A
Algoma Steel Corporation Wharf at Sault Ste. Marie,                    2,714            $1,022               N/A
 Ontario..................................................
Any point in Sault Ste. Marie, Ontario, except the Algoma              2,274             1,022               N/A
 Steel Corporation Wharf..................................
Sault Ste. Marie, MI......................................             2,274             1,022               N/A
Harbor Movage.............................................               N/A               N/A            $1,022
----------------------------------------------------------------------------------------------------------------


[[Page 52624]]

    (c) Area 8 (Undesignated Waters):

------------------------------------------------------------------------
                         Service                           Lake Superior
------------------------------------------------------------------------
6-hour Period...........................................            $616
Docking or Undocking....................................             585
------------------------------------------------------------------------

Sec.  401.420  [Amended]

0
5. Amend Sec.  401.420 as follows:
0
a. In paragraph (a), remove the text ``$129'' and add, in its place, 
the text ``$132''; and remove the text ``$2,021'' and add, in its 
place, the text ``$2,072'';
0
b. In paragraph (b), remove the text ``$129'' and add, in its place, 
the text ``$132''; and remove the text ``$2,021'' and add, in its 
place, the text ``$2,072''; and
0
c. In paragraph (c)(1), remove the text ``$763'' and add, in its place, 
the text ``$782''; and in paragraph (c)(3), remove the text ``$129'' 
and add, in its place, the text ``$132''; and remove the text 
``$2,021'' and add, in its place, the text ``$2,072''.


Sec.  401.428  [Amended]

0
6. In Sec.  401.428, remove the text ``$763'' and add, in its place, 
the text ``$782''.

    Dated: August 28, 2014.
Gary C. Rasicot,
Director of Marine Transportation Systems, U.S. Coast Guard.
[FR Doc. 2014-21046 Filed 9-3-14; 8:45 am]
BILLING CODE 9110-04-P