[Federal Register Volume 62, Number 27 (Monday, February 10, 1997)]
[Rules and Regulations]
[Pages 5917-5924]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3176]
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DEPARTMENT OF TRANSPORTATION
Saint Lawrence Seaway Development Corporation
33 CFR Parts 404 and 407
RIN 2135-AA08
Seaway Regulations and Rules: Great Lakes Pilotage Rates
AGENCY: Saint Lawrence Seaway Development Corporation, DOT.
ACTION: Final rule.
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SUMMARY: The Saint Lawrence Seaway Development Corporation (SLSDC)
amends the Seaway Regulations and Rules by increasing Great Lakes
Pilotage Rates by: 8% in District 1 (9% in Area 1; 6% in Area 2); 19%
in District 2 (0% in Area 4; 31% in Area 5); 6% in District 3 (7% in
Area 6; 6% in Area 7; 4% in Area 8); and 11% for mutual rates.
The pilotage rate adjustments contained in this final rule are
different from the rates proposed by the SLSDC in the Notice of
Proposed Rulemaking published in the Federal Register (61 FR 50258) on
September 25, 1996, (the NPRM), because adjustments have been made
based on comments received in response to the NPRM. These adjustments
are discussed in the section of this rule entitled ``Discussion of
Comments and Changes.''
The increase in Great Lakes pilotage rates is necessary because,
after review, the SLSDC has determined that, in accordance with 33 CFR
407.1(b), pilot compensation is not meeting pilot compensation targets
established in 33 CFR Part 407, Appendix A, Step 2.
EFFECTIVE DATE: This rule becomes effective on March 1, 1997.
FOR FURTHER INFORMATION CONTACT: Scott A. Poyer, Chief Economist, Saint
[[Page 5918]]
Lawrence Seaway Development Corporation, Office of Great Lakes
Pilotage, United States Department of Transportation, 400 7th Street
SW., Suite 5424, Washington, DC 20590, 1-800-785-2779, or Marc C. Owen,
Chief Counsel, Saint Lawrence Seaway Development Corporation, 400
Seventh Street, S.W., Suite 5424, Washington, D.C. 20590, (202) 366-
6823.
SUPPLEMENTARY INFORMATION:
Regulatory History
On September 25, 1996, the SLSDC published a NPRM in the Federal
Register (61 FR 50258) that proposed new pilotage rates in accordance
with the Great Lakes Pilotage Ratemaking Methodology (33 CFR Part 407).
The NPRM detailed the calculations involved in determining new pilotage
rates and proposed increases in Great Lakes pilotage rates based on the
results of these calculations. The NPRM announced a public hearing,
which was held on October 22, 1996, in Romulus, MI. The original
comment period for the NPRM was scheduled to end on November 12, 1996;
however, four commenters requested an extension. In order to allow the
public more time to prepare their responses to the proposals contained
in the NPRM, the SLSDC published a notice in the Federal Register on
November 15, 1996, (61 FR 58496), which extended the NPRM's comment
period to November 27, 1996.
Background and Purpose
On December 11, 1995, the Secretary of Transportation transferred
responsibility for administration of the Great Lakes Pilotage Act from
the Commandant of the U.S. Coast Guard to the Administrator of the
SLSDC. This transfer was effected by a final rule published by the U.S.
Department of Transportation (DOT) in the Federal Register on December
11, 1995 (60 FR 63444). Among the responsibilities transferred by this
final rule was the responsibility for setting Great Lakes pilotage
rates. On May 9, 1996, the DOT published a final rule in the Federal
Register (61 FR 21081), which was originated and initially drafted when
Great Lakes pilotage functions were administered by the U.S. Coast
Guard. The final rule made the Department's final changes to the
methodology used to set Great Lakes pilotage rates.
The purpose of this rulemaking is to establish pilotage rates under
the new Great Lakes Pilotage ratemaking methodology for the first time.
This rulemaking also finishes the first full rate review since 1987 and
implements the first U.S. rate adjustment since 1992.
Discussion of Comments and Changes
In response to the NPRM a total of 42 written and 13 oral comments
were received. Many commenters did not limit themselves to the subject
of proposals contained in the NPRM. In fact, nearly all the comments
addressed one or more issues that were beyond the scope of this
rulemaking. These comments can be divided into two major categories--
commenters who wanted a comprehensive study of the entire Great Lakes
Pilotage system and commenters who wanted to reopen or redesign the
Great Lakes Pilotage Ratemaking Methodology. Twenty-nine commenters
representing every facet of the Great Lakes maritime community
requested a study or comprehensive review of the pilotage system with
the aim of making the Great Lakes pilotage system more efficient.
Seventeen commenters requested either specific changes to the Great
Lakes Pilotage Ratemaking Methodology or requested a wholesale redesign
of the entire methodology.
The SLSDC believes that the Great Lakes needs to maintain a safe,
reliable, and efficient pilotage system and a sensible and reliable
ratemaking methodology in order to stay competitive in world markets.
This final rule can only address comments directly related to the NPRM
and its implementation of the ratemaking methodology. However, it is
clear that there is a considerable amount of public interest in a
comprehensive review of the Great Lakes pilotage system as a whole. In
order to give all stakeholders an equal opportunity to comment on this
subject, on January 29, 1997, the SLSDC published a notice in the
Federal Register (62 FR 4223) that announced a public meeting on the
issue. The remainder of the comments discussed in this final rule deal
with subjects proposed in the NPRM.
Thirty-four commenters representing agriculture, labor, shipping
and port interests objected to the rate increases proposed in the NPRM
and nine commenters representing pilotage interests supported the rate
increases. Commenters opposed to the rate believed the increases would
be detrimental to agriculture, labor, ports or shipping on the Great
Lakes. Almost all of these commenters requested a comprehensive review
of the Great Lakes pilotage system (as discussed above), before new
rates were set. Some of the commenters opposed to the NPRM also
requested that the proposed increases either be rejected, delayed, or
phased in over as much as a five-year period. The commenters in favor
of the rate increases believed the proposed increases were necessary,
reasonable and only fair to pilots who had not received a rate increase
in many years. The SLSDC has reviewed existing pilotage rates as
required by 33 CFR Sec. 407.1(b), and determined that pilot
compensation is not meeting pilot compensation targets established in
33 CFR Part 407, Appendix A, Step 2. Therefore, pilotage rates have
been adjusted as required by Step 7 of Appendix A to 33 CFR.
Four commenters believe the SLSDC's traffic projections were too
low, and that vessel traffic and pilotage hours would increase more
than the SLSDC predicted in the NPRM. Commenters requested that
projections be reviewed using data updated through at least November
30, 1996. In response to these comments, the SLSDC has reviewed its
traffic projections using pilot hour data updated through November 30,
1996. Based on this data, the SLSDC has revised its projection of pilot
hours in each District.
In District 1, actual pilot hours through November 30, 1996 were
13.98% above 1995 levels, with December levels increasing. Therefore,
the SLSDC has changed its projection to a 16% increase for District 1.
In District 2, actual pilot hours through November 30, 1996 were
11.04% above 1995 levels, with December levels increasing. Therefore,
the SLSDC has changed its projection to a 16% increase for District 2.
In District 3, actual pilot hours through November 30, 1996 were
20.41% above 1995 levels, with December levels decreasing slightly.
Therefore, the SLSDC has changed its projection to a 20% increase for
District 3.
The change in traffic projections has not affected pilotage rates
in Districts 1 or 2 as much as District 3 because the change in traffic
was not as great. District 3, which in the first three months of the
navigation season was approximately 43% below 1995 levels, witnessed a
significant surge in vessel traffic. By November 30, 1996, District 3
was approximately 20% ahead of 1995 traffic levels. Under the
ratemaking methodology this increase in traffic translated into an
increase in the target number of pilots because more pilots are
necessary to handle the increased workload. The increase in traffic
also decreased pilotage rates because operating costs are spread out
over more entities. Virtually all of the change in pilotage rates in
District 3 is a result of the change in traffic projections that were
requested by commenters from District 3 and elsewhere who correctly
[[Page 5919]]
alerted the SLSDC that vessel traffic was increasing in District 3.
Some of these comments are discussed further below.
Three commenters requested the Director allow 18 pilots in District
3, including three pilots in the St. Mary's River, so that there will
be enough pilots to handle the workload and none of the current 18
pilots will be temporarily layed-off or terminated. As detailed above,
the SLSDC has revised its traffic projections upward in District 3.
Based on this revised projection, pilotage rates have been recalculated
based on 23 pilots in District 3 with four of those pilots in the St.
Mary's River.
One commenter from the District 3 pilot association questioned
whether the pilot hours calculated in the NPRM were correct for
District 3 because the SLSDC's data showed pilot hours were down
approximately 43% at the beginning of the year, while the commenter was
working many hours in excess of 1995. As explained above, the SLSDC has
reexamined its projections using data updated through November 1996,
which shows that total pilot hours for District 3 had increased.
However, further analysis of the data showed that the increase in the
pilot hour workload was not spread evenly among all pilots, especially
in District 3. Some disparity in workload between pilots should be
expected in any district since no two pilots work exactly the same jobs
at the same time, and some pilots have administrative responsibilities.
Since some pilots work almost exclusively in designated waters where
the target is 1000 hours per pilot per season, while other pilots work
almost exclusively in undesignated waters where the target is 1800
hours per season, it would be expected that the difference between the
pilot with the most hours and the pilot with the least hours would be
approximately 800 hours. As shown in Tables A, B and C below, for
pilots who worked the entire year in Districts 1 and 2, the disparity
between the pilot with the most hours and the pilot with the least
hours was close to 800 hours (approximately 500 hours in District 1 and
approximately 1000 hours in district 2). As can be seen in the tables,
in both districts the pilot workload is divided fairly evenly. However,
for pilots who worked the entire year in District 3, the disparity was
twice as high (approximately 2,000 hours). Many pilots were
significantly over targeted hours, while other pilots were below.
Table A.--District 1 Pilot Hours
------------------------------------------------------------------------
Pilot
Pilot hours
(Jan-Nov)
------------------------------------------------------------------------
Hickey....................................................... 843
Maclean, J................................................... 989
Menkes....................................................... 845
Metzger...................................................... 1,072
Tetzlaff..................................................... 860
Maclean, M................................................... 1,362
Welch........................................................ 1,357
Dorr......................................................... 1,309
Withington................................................... 1,265
Difference (Hi/Lo)........................................... 519
------------------------------------------------------------------------
Table B.--District 2 Pilot Hours
------------------------------------------------------------------------
Pilot
Pilot hours
(Jan-Nov)
------------------------------------------------------------------------
Greene....................................................... 778
Kanaby....................................................... 1,007
Schnell...................................................... 920
Waldrop...................................................... 1,144
Knetchel..................................................... 1,598
Meyer........................................................ 1,101
Ell.......................................................... 1,298
Singler...................................................... 1,348
Coppola...................................................... 1,924
Loflin....................................................... 1,269
Coulston..................................................... 1,428
Difference (Hi/Lo)........................................... 1,146
------------------------------------------------------------------------
Table C.--District 3 Pilot Hours
------------------------------------------------------------------------
Pilot
Pilot hours
(Jan-Nov)
------------------------------------------------------------------------
Opack........................................................ 1,778
Balanda...................................................... 2,106
Brown........................................................ 1,824
Madjiwita.................................................... 1,884
Sciullo...................................................... 835
Brennan...................................................... 2,156
Halverson.................................................... 963
Ojard........................................................ 1,988
Derf......................................................... 784
Aho.......................................................... 1,882
Skorich...................................................... 1,552
Kolenda...................................................... 2,491
Harris....................................................... 1,504
Hayes........................................................ 2,921
Willecke..................................................... 911
Radtke....................................................... 1,226
Difference (Hi/Lo)........................................... 2,137
------------------------------------------------------------------------
Two commenters believe that pilotage rates should allow for more
than the 13 pilots proposed in the NPRM for District 2. As detailed
above, the SLSDC has revised its traffic projections upward in District
2. Based on this revised projection, pilotage rates have been
recalculated based on 14 pilots in District 2.
The revised traffic projections result in a revision of the target
number of pilots for District 1. Pilotage rates have been recalculated
based on 11 pilots in District 1.
Two commenters, the president and controller of the District 3
pilots association, believe the way the NPRM proposed to allocate
expenses to each area resulted in a 1% overstatement of expenses in
favor of District 3, and an inequitable allocation of revenues to Area
7 (the St. Mary's River). The ratemaking methodology does not specify
how expenses and revenues will be divided among the areas, only that a
separate ratemaking calculation be made for each area (see 33 CFR
Sec. 407.10(b)). The NPRM proposed that revenues and expenses be
divided among the individual areas based on the number of pilots
calculated for each area and that the area totals be added together for
the District totals. However, the commenters are correct that in a
District with three areas (i.e., District 3), if all fractions over .5
are rounded up, as is the general rule, then it is possible to have
total area expenses add up to 101% of the actual expenses for the
district. The SLSDC agrees that this situation could upwardly bias
pilotage rates in District 3, so the SLSDC has remedied the situation
by changing the order of the calculations so that the district totals
are done first and then this total is divided among the areas so that
the area totals must equal 100% of the District total. The commenters
also believe that district totals should not be apportioned to areas
within a district based on the number of pilots calculated for that
area, but instead should be apportioned to each area based on the
actual revenue earned in that area in the previous year. The commenters
believe this would lead to a more accurate projection for each area.
For Districts 2 and 3, the SLSDC agrees with the commenters and has
divided the district by area accordingly. In these districts all
revenues and expenses from all areas are pooled together and then
divided. So it is more accurate to divide district totals based on the
actual division of revenue for each area. However, in District 1 two
pools exist, one for Area 1 and one for Area 2. Revenues are accredited
separately in each pool and expenses are assigned on a per capita
basis. Following this system, in District 1 revenues have been
apportioned to each area on the same basis as in Districts 2 and 3, but
expenses and other calculations are divided based on the number of
pilots in each area. The SLSDC believes this method gives a truer
projection of how revenues and expenses are actually divided in each
area.
[[Page 5920]]
One commenter agrees with the above commenters that district
revenues should not be apportioned based on the number of pilots.
However, the commenter's suggested solution is to divide total district
expenses into fixed and variable portions, adjust the variable portion
by projected pilot numbers, and then adjust both the fixed and variable
portions for inflation. As discussed in the previous comment above, the
SLSDC believes that dividing revenues based on actual revenues earned
is a more accurate method, and the SLSDC intends to retain this method
for dividing revenues.
Two commenters believe expenses that the independent auditor had
recommended be disallowed because these expenses were reimbursed by
other entities should not have been disallowed in ratemaking
calculations because the expenses in question have already been
deducted from association revenues reported as net revenues to the
Director. After reviewing association reported revenues, the SLSDC
agrees and $113,273 has been added back to the expense base of District
2 and $112,812 has been added back to the expense base of District 3.
One commenter believed that $53,971 should be added to the expense
base for District 1 to account for unaudited travel expenses that are
not reported in the pilot association's income statement. The SLSDC
reviewed the District travel figures with the independent auditing firm
that conducted an audit of all three pilot associations. The auditing
firm, which had already added $21,624 to the expense base of District 1
for pilot travel and per diem, did not believe additional funds were
warranted. As a result, the SLSDC is not changing the independent
auditing firm's recommended travel allowance for District 1.
One commenter requested that the District 1 pilots be granted an
immediate surcharge for the purpose of purchasing Electronic Chart
Display Information Systems (ECDIS) units for all pilots in District 1.
The SLSDC believes it is sound policy to evaluate the application of
ECDIS technology to Great Lakes pilotage operations before wholesale
adoption. Therefore, this requested change is not adopted.
One commenter supports the Director's proposed allowance of funds
for the test and evaluation of ECDIS equipment in each pilot
association. However, the commenter suggests that the equipment should
be leased before the decision is made to purchase. The SLSDC agrees
that leasing would be a viable option for test and evaluation of the
equipment, and this option will be allowed.
Two commenters believe the expenses for test and evaluation of
ECDIS should be amortized as a capital expenditure, rather than as an
operational expense. Such a change would have virtually no impact on
pilotage rates proposed in the NPRM because the expense is so small
relative to the total rate (approximately six tenths of one percent).
Therefore the SLSDC does not believe such a change would be worthwhile
for this NPRM. If there are large-scale purchases of ECDIS equipment in
future years, these expenses would be better candidates for
capitalization.
One commenter questioned the use of Internal Revenue Service
guidelines for the recognition of expenses and argued that $49,500 in
disallowed pilot boat lease expenses and $5,400 in disallowed property
lease expenses should be reinstated into the District 2 expense base.
The commenter believes that all disallowed expenses should qualify
because they are reasonable and necessary for the provision of pilotage
service. The SLSDC reviewed these expenses and has decided to accept
the opinion of the independent audit firm hired for the purposes of
this ratemaking. The independent audit firm believed the disallowed
expenses were excessive based on the accepted auditing practice of
comparison to expenditures of similar businesses in the same locality,
and the SLSDC has left those expenses out of the rate base for District
2.
Two commenters believe that the NPRM did not account for increases
in operating expenses (e.g., social security, medicare, etc.) that come
with increases in the number of pilots and/or increases in pilotage
operations. These commenters are incorrect, the NPRM did take these
factors into account and an explanation of how operating expenses were
adjusted for these factors was contained in the NPRM (see 61 FR 50261
Step 1.D.).
Three commenters disagreed that master compensation was 1.5 times
all salary and benefits as proposed in the NPRM. Commenters provided
detailed information, including W-2 tax information, showing that a
more accurate approximation of master wages is 1.5 times mate salary,
plus mate benefits. One commenter also provided a separate calculation
that indicated master compensation should be approximately $106,000.
After reviewing the available figures, the SLSDC believes that master
salary is closest in comparison to 1.5 times mate salary, plus mate
benefits. Using this method, the calculations in this final rule are
based on a figure of $92,290 for mate compensation and $131,213 for
master compensation (representing $116,767 for salary and $14,446 for
benefits).
One commenter believed mate compensation included funds for
workmen's compensation, insurance and social security, and these
expenses should be disallowed from pilotage district operating costs.
The SLSDC disagrees because the figure used by the SLSDC for mate
benefits does not include the ascribed items.
One commenter believed that profits from related entities of each
pilot association should be counted towards pilot compensation. In
effect this is how such profits are counted after deduction for
expenses and return on investment.
Five commenters complimented the SLSDC and the Office of Great
Lakes Pilotage on the NPRM, believing the SLSDC did a fair and
equitable job of applying the ratemaking methodology. One commenter,
however, believes the SLSDC applied the ratemaking methodology
inconsistently and did not follow the published methodology. The
commenter argues that the number of pilots were calculated without
regard to federal regulations. The commenter believes the regulations
require the Director to include mandatory rest hours when calculating
the number of pilots. The SLSDC does not believe the NPRM was
inconsistent or contradicted the ratemaking methodology. The federal
regulations were followed as per Step 2.A. of Appendix A to part 407 of
Title 33, Code of Federal Regulations, which states that the number of
pilots will be calculated based on projected bridge hours.
One commenter believes the ratemaking methodology does not require
pilotage rates to be set on an area by area basis. The commenter
suggests that rates be set by district and divided evenly among areas
within each district. The SLSDC believes the method proposed by the
commenter is contradictory to the requirements of the ratemaking
methodology (see 33 CFR Sec. 407.10(b) and Part 407, Appendix A, Step
7). The suggested change is not adopted.
One commenter believes that the proposed increase in rates would
have a substantial impact on a significant number of small entities.
However, the commenter only mentions twelve small entities that might
be affected, with no details on how much these entities could be
effected. Lacking any evidence to the contrary, the SLSDC disagrees
that the proposed increases would have a substantial impact on a
significant number of small entities.
One commenter believes the Director should set pilotage rates
separate from
[[Page 5921]]
the calculations detailed in the Great Lakes pilotage ratemaking
methodology in order to arrive at a more fair and equitable rate. The
SLSDC disagrees that the rate calculations are unfair or unreasonable
and both this final rule and the Great Lakes Pilotage Ratemaking
Methodology have been established by public rulemaking, with ample
opportunity for public input. The ratemaking methodology was the
subject of a separate rulemaking which took several years to develop
and involved extensive public comment. The final changes to the Great
Lakes Pilotage Ratemaking Methodology were published as a final rule in
the Federal Register on May 9, 1996, (61 FR 21081). The time for
commenting on the methodology is long expired. This rulemaking serves
to implement the methodology, not reopen the methodology for comment
and change.
Rate Calculations
Based on the changes discussed above, the step-by-step calculations
for each pilotage area are summarized in the following tables:
Table D
----------------------------------------------------------------------------------------------------------------
Total District Area 1, St. Area 2, Lake
1 Lawrence River Ontario
----------------------------------------------------------------------------------------------------------------
Step 1: Projection of operating expenses........................ $354,561 $226,919 $127,642
Step 2: Projection of target pilot compensation................. $1,287,651 $918,491 $369,160
Step 3: Projection of revenue................................... $1,532,401 $1,057,356 $475,045
Step 4: Calculation of investment base.......................... $232,890 $149,050 $83,840
Step 5: Determination of target rate of return on investment.... 7.72% 7.72% 7.72%
Step 6: Adjustment determination................................ $1,660,191 $1,156,917 $503,274
Step 7: Adjustment of pilotage rates............................ 1.08 1.09 1.06
----------------------------------------------------------------------------------------------------------------
Table E
----------------------------------------------------------------------------------------------------------------
Area 5, South
Total District Area 4 Lake East Shoal to
2 Erie Port Huron, MI
----------------------------------------------------------------------------------------------------------------
Step 1: Projection of operating expenses........................ $1,148,410 $447,880 $700,530
Step 2: Projection of target pilot compensation................. $1,642,367 $461,450 $1,180,917
Step 3: Projection of revenue................................... $2,371,548 $924,904 $1,446,644
Step 4: Calculation of investment base.......................... $265,488 $103,540 $161,948
Step 5: Determination of target rate of return on investment.... 7.72% 7.72% 7.72%
Step 6: Adjustment determination................................ $2,821,272 $921,223 $1,900,049
Step 7: Adjustment of pilotage rates............................ 1.19 1.00 1.31
----------------------------------------------------------------------------------------------------------------
Table F
----------------------------------------------------------------------------------------------------------------
Area 6, Lakes
Total District Huron and Area 7, St. Area 8, Lake
3 Michigan Mary's River Superior
----------------------------------------------------------------------------------------------------------------
Step 1: Projection of operating expenses........ $1,159,099 $602,731 $266,593 $289,775
Step 2: Projection of target pilot compensation. $2,278,362 $1,199,770 $524,852 $553,740
Step 3: Projection of revenue................... $3,262,301 $1,696,396 $750,329 $815,576
Step 4: Calculation of investment base.......... $119,823 $62,308 $27,559 $29,956
Step 5: Determination of target rate of return
on investment.................................. 7.72% 7.72% 7.72% 7.72%
Step 6: Adjustment determination................ $3,446,711 $1,807,311 $793,572 $845,828
Step 7: Adjustment of pilotage rates............ 1.06 1.07 1.06 1.04
----------------------------------------------------------------------------------------------------------------
As summarized in the tables A, B and C above, the SLSDC amends the
pilotage rates found in 33 CFR Secs. 404.405-410 by increasing pilotage
rates: 9% in Area 1; 6% in Area 2; 0% in Area 4; 31% in Area 5; 7% in
Area 6; 6% in Area 7; and 4% in Area 8. For the pilotage rates in 33
CFR Secs. 404.420, 404.425 and 404.428, which are paid in all pilotage
areas, the SLSDC amends those sections by increasing these rates 11%,
which is the aggregate increase for the pilotage rate increase in all
areas.
Regulatory Evaluation
This proposed regulation involves a foreign affairs function of the
United States and therefore, Executive Order 12866 does not apply. The
Great Lakes Pilotage Act (46 U.S.C. Sec. 9305) provides that the
Secretary may make agreements with the appropriate agency of Canada to
prescribe joint or identical pilotage rates and charges. The Secretary
of Transportation and the Minister of Transport of Canada have signed a
Memorandum of Agreement concerning Great Lakes Pilotage dated January
18, 1977, section 7 of which provides that the Secretary and the
Minister will provide for the establishment of identical rates, charges
and any other conditions or terms. The terms of this rulemaking have
been discussed with the cognizant agency of Canada, the Great Lakes
Pilotage Authority, which has voiced no objections.
This proposed regulation has also been evaluated under the
Department of Transportation's Regulatory Policies and Procedures and
the proposed regulation is considered to be substantive but
nonsignificant under those procedures. All previous pilotage rate
rulemakings have been considered nonsignificant except for the interim
pilotage rate adjustment of June 5, 1992, (57 FR 23955). This interim
adjustment was necessary because a new rate methodology was being
designed and was significant because the interim rate
[[Page 5922]]
adjustment was put in before the methodology was completed. The rate
methodology has now been completed and 33 CFR Sec. 407.1(b) requires
that pilotage rates be reviewed annually.
The economic impact of this rulemaking is expected to be minimal so
that a full economic evaluation is not warranted. Fees for Great Lakes
registered pilotage service are paid almost exclusively by foreign
vessels. Therefore, the effect of the proposed increase in Great Lakes
pilotage rates will be borne almost exclusively by foreign vessels
operators, not U.S. entities.
Regulatory Flexibility Act Determination
The SLSDC certifies that this proposed regulation, if adopted,
would not have a significant economic impact on a substantial number of
small entities. In addition, this rule does not impose unfunded
mandates or requirements that will have any impact on the quality of
the human environment. The number of small entities that the SLSDC
believes will be directly affected by this rule are three U.S. pilot
associations. The pilot associations will be positively affected by
this rulemaking, and as discussed above under ``Regulatory
Evaluation,'' the SLSDC expects the impact of this proposed rule to be
minimal for other small entities. Since the vast majority of pilotage
fees are paid by foreign vessels, any resulting costs will be borne
almost exclusively by foreign vessel operators. The alternative of not
increasing pilotage rates would have a negative impact on the three
small entity U.S. pilot associations.
Environmental Impact
This proposed regulation does not require an environmental impact
statement under the National Environmental Policy Act (49 U.S.C. 4321,
et seq.) because it is not a major federal action significantly
affecting the quality of the human environment.
Collection of Information
This rule contains no collection of information requirements under
the Paperwork Reduction Act (44 U.S.C. 3501 et seq.).
Federalism
The Corporation has analyzed this proposal under the principles and
criteria in Executive Order 12612 and has determined that this proposal
does not have sufficient federalism implications to warrant the
preparation of a Federalism Assessment.
List of Subjects in 33 CFR Parts 404 and 407
Administrative practice and procedure, Great Lakes, Navigation
(water), Penalties, Reporting and recordkeeping requirements, Seamen.
For reasons set out in the preamble, the SLSDC amends Part 404 and
407 of Title 33 of the Code of Federal Regulations as follows:
PART 404--[AMENDED]
1. The authority citation for part 404 continues to read as
follows:
Authority: 46 U.S.C. 6101, 7701, 8105, 9303, 9304; 49 CFR 1.45,
1.52. 33 CFR 404.105 also is issued under the authority of 44 U.S.C.
3507.
2. Section 404.400 (a) and (c) are revised to read as follows:
Sec. 404.400 Calculation of pilotage units and determination of
weighting factor.
* * * * *
(a) Pilotage unit computation:
Pilot Unit=(Length x Breadth x Depth)/283.17 (measured in meters)
Pilot Unit=(Length x Breadth x Depth)/10,000 (measured in feet)
* * * * *
(c) The charge for pilotage service is obtained by multiplying the
weighting factor, obtained from paragraph (b) of this section by the
appropriate basic rate specified in Secs. 404.405, 404.407, 404.410,
404.420 and 404.425.
3. Section 404.405 is revised to read as follows:
Sec. 404.405 Basic rates and charges on the St. Lawrence River and
Lake Ontario.
Except as provided in Sec. 404.420, the following basic rates are
payable for all services and assignments performed by U.S. registered
pilots in the St. Lawrence River and Lake Ontario.
(a) Area 1 (Designated Waters):
------------------------------------------------------------------------
Service St. Lawrence River
------------------------------------------------------------------------
Basic Pilotage............................ $8 per Kilometer or $13 per
Mile.\1\
Each Lock Transited....................... $171.\1\
Harbor Movage............................. $562.\1\
------------------------------------------------------------------------
\1\ The minimum basic rate for assignment of a pilot in the St. Lawrence
River is $374 and the maximum basic rate for a through trip is $1,643.
(b) Area 2 (Undesignated Waters):
------------------------------------------------------------------------
Lake
Service Ontario
------------------------------------------------------------------------
Six Hour Period............................................... $294
Docking/Undocking............................................. $280
------------------------------------------------------------------------
4. Section 404.407 is added to read as follows:
Sec. 404.407 Basic rates and charges on Lake Erie and the navigable
waters from Southeast Shoal to Port Huron, MI.
Except as provided in Sec. 404.420, the following basic rates are
payable for all services and assignments performed by U.S. registered
pilots 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)
------------------------------------------------------------------------
Six Hour Period.................................... $322 $322
Docking/Undocking.................................. 248 248
Any Point on the Niagara River below the Black Rock
Lock.............................................. N/A 633
------------------------------------------------------------------------
(b) Area 5 (Designated Waters):
----------------------------------------------------------------------------------------------------------------
Toledo or
any port on
Southeast Lake Erie Detroit Detroit St. Clair
Any point on/in Shoal west of river pilot boat river
Southeast
Shoal
----------------------------------------------------------------------------------------------------------------
Toledo or any port on Lake Erie west of South-
east Shoal.................................... $988 $583 $1,282 $988 N/A
Port Huron Change Point........................ \1\1,720 \1\1,993 1,293 1,005 $715
St. Clair River................................ \1\1,7201 N/A 1,293 1,293 583
Detroit or Windsor or the Detroit River........ 988 1,282 583 N/A 1,293
Detroit pilot boat............................. 715 988 N/A N/A 1,293
----------------------------------------------------------------------------------------------------------------
\1\ When pilots are not changed at the Detroit Pilot Boat.
[[Page 5923]]
5. Section 404.410 is revised to read as follows:
Sec. 404.410 Basic rates and charges on Lakes Huron, Michigan and
Superior and the St. Mary's River.
Except as provided in Sec. 404.420, the following basic rates are
payable for all services and assignments performed by U.S. registered
pilots on Lakes Huron, Michigan, and Superior and the St. Mary's River.
(a) Area 6 (Undesignated Waters):
------------------------------------------------------------------------
Lakes Huron
Service and
Michigan
------------------------------------------------------------------------
Six Hour Period............................................ $269
Docking/Undocking.......................................... 256
------------------------------------------------------------------------
(b) Area 7 (Designated Waters):
------------------------------------------------------------------------
Area Detour Gros Cap Any Harbor
------------------------------------------------------------------------
Gros Cap......................... $1,317 N/A N/A
Algoma Steel Corporation Wharf at
Sault Ste. Marie, Ontario....... 1,317 $496 N/A
Any point in Sault Ste. Marie,
Ontario except the Algoma Steel
Corporation Wharf............... 1,105 496 N/A
Sault Ste. Marie, Michigan....... 1,105 496 N/A
Harbor Movage.................... N/A N/A $496
------------------------------------------------------------------------
(c) Area 8 (Undesignated Waters):
------------------------------------------------------------------------
Lakes
Service Superior
------------------------------------------------------------------------
Six Hour Period............................................ $261
Docking/Undocking.......................................... 249
------------------------------------------------------------------------
6. Section 404.420 is revised to read as follows:
Sec. 404.420 Cancellation, delay or interruption in rendition of
services.
(a) Except as provided in this section, whenever the passage of a
ship is interrupted and the services of a U.S. pilot are retained
during the period of the interruption or when a U.S. pilot is detained
on board a ship after the end of an assignment for the convenience of
the ship, the ship shall pay an additional charge calculated on a basic
rate of $51 for each hour or part of an hour during which each
interruption or detention lasts with a maximum basic rate of $807 for
each continuous 24-hour period during which the interruption or
detention continues. There is no charge for an interruption or
detention caused by ice, weather or traffic, except during the period
beginning the 1st of December and ending on the 8th of the following
April. No charge may be made for an interruption or detention if the
total interruption or detention ends during the 6-hour period for which
a charge has been made under Secs. 404.405 through 404.410.
(b) When the departure or movage of a ship for which a U.S. pilot
has been ordered is delayed for the convenience of the ship for more
than one hour after the U.S. pilot reports for duty at the designated
boarding point or after the time for which the pilot is ordered,
whichever is later, the ship shall pay an additional charge calculated
on a basic rate of $51 for each hour or part of an hour including the
first hour of the delay, with a maximum basic rate of $807 for each
continuous 24-hour period of the delay.
(c) When a U.S. pilot reports for duty as ordered and the order is
cancelled, the ship shall pay:
(1) A cancellation charge calculated on a basic rate of $305;
(2) A charge for reasonable travel expenses if the cancellation
occurs after the pilot has commenced travel; and
(3) If the cancellation is more than one hour after the pilot
reports for duty at the designated boarding point or after the time for
which the pilot is ordered, whichever is later, a charge calculated on
a basic rate of $51 for each hour or part of an hour including the
first hour, with a maximum basic rate of $807 for each 24-hour period.
Sec. 404.425 [Amended]
7. Section 404.425 is amended by revising the term ''Secs. 404.405,
404.410, and 404.420'' to read ``Secs. 404.405, 404.407, 404.410 and
404.420''.
8. Section 404.428 is revised to read as follows:
Sec. 404.428 Basic rates and charges for carrying a U.S. pilot beyond
normal change point or for boarding at other than the normal boarding
point.
If a U.S. pilot is carried beyond the normal change point or is
unable to board at the normal boarding point, the ship shall pay at the
rate of $312 per day or part thereof, plus reasonable travel expenses
to or from the pilot's base. These charges are not applicable if the
ship utilizes the services of the pilot beyond the normal change point
and the ship is billed for these services. The change points to which
this section applies are designated in Sec. 404.450.
PART 407--[AMENDED]
9. The authority citation for Part 407 continues to read as
follows:
Authority: 46 U.S.C. 8105, 9303, 9304; 49 CFR 1.52.
10. Appendix A to Part 407, Step 1.C. and Step 5(2) are revised to
read as follows:
Appendix A to Part 407--Ratemaking Analyses and Methodology
* * * * *
[[Page 5924]]
Step 1.C.--Adjustment for Inflation or Deflation
(1) In making projections of future expenses, expenses that are
subject to inflationary or deflationary pressures are adjusted. Costs
not subject to inflation or deflation are not adjusted. Annual cost
inflation or deflation rates will be projected to the succeeding
navigation season, reflecting the gradual increase or decrease in costs
throughout the year. The inflation adjustment will be based on the
preceding year's change in the Consumer Price Index for the North
Central Region of the United States.
* * * * *
Step 5: Determination of Target Rate of Return on Investment
* * * * *
(2) The allowed Return on Investment (ROI) is based on the
preceding year's average annual rate of return for new issues of high
grade corporate securities.
* * * * *
Issued at Washington, D.C. on February 4, 1997.
Saint Lawrence Seaway Development Corporation
Gail C. McDonald,
Administrator.
[FR Doc. 97-3176 Filed 2-7-97; 8:45 am]
BILLING CODE 4910-61-P