[Federal Register Volume 66, Number 134 (Thursday, July 12, 2001)]
[Rules and Regulations]
[Pages 36484-36490]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-17385]


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DEPARTMENT OF TRANSPORTATION

Coast Guard

46 CFR Part 401

[USCG 1999-6098]
RIN 2115-AF91


Great Lakes Pilotage Rates

AGENCY: Coast Guard, DOT.

ACTION: Final rule.

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SUMMARY: The Coast Guard amends the rates for pilotage on the Great 
Lakes. The new rates rest on an independent audit of expenses, results 
of the 1999 rate review, comments received in response to a Notice and 
a Supplemental Notice of Proposed Rulemaking, and a public meeting held 
in Coast Guard Headquarters on October 12, 2000. On these basis, the 
rates for such services increase an average of 3%, with consequent 
effects on the incomes of pilots.

DATES: This rule is effective August 13, 2001.

ADDRESSES: Comments and material received from the public, as well as 
documents indicated in this preamble as being available in the docket, 
are part of docket USCG 1999-6098 and are available for inspection or 
copying at the Docket Management Facility, U.S. Department of 
Transportation, room PL-401, 400 Seventh Street SW., Washington, DC, 
between 9 a.m. and 5 p.m., Monday through Friday, except Federal 
holidays. You may also find this docket on the Internet at http://dms.dot.gov.

FOR FURTHER INFORMATION CONTACT: If you have questions on this final 
rule, call Tom Lawler, Chief Economist, Office of Great Lakes Pilotage, 
Commandant (G-MW-1), U.S. Coast Guard, at 202-267-1241, by facsimile 
202-267-4700, or by email at [email protected]. If you have 
questions on viewing or submitting material to the docket, call Dorothy 
Beard, Chief, Dockets, Department of Transportation, telephone 202-366-
5149.

[[Page 36485]]


SUPPLEMENTARY INFORMATION:

Background and Purpose

    The Coast Guard is required by 46 CFR 404.1(b) to conduct an annual 
review of rates for pilotage in the Great Lakes. On the basis of this 
review the Director can adjust them or not.

Regulatory History

    On May 9, 1996, the Department of Transportation published in the 
Federal Register [61 FR 21081] a final rule, explaining the methodology 
used to set the rates for pilotage on the Great Lakes.
    On April 14, 2000, the Coast Guard published in the Federal 
Register [65 FR 20110] a Notice of Proposed Rulemaking (NPRM), 
announcing the results of the 1999 rate review and seeking comments. We 
received seven letters commenting on the proposed rule.
    On September 13, 2000, in response to comments on the NPRM, the 
Coast Guard published in the Federal Register [65 FR 55206] a 
Supplemental Notice of Proposed Rulemaking (SNPRM), to allow all 
interested parties another 60 days for comment. On October 12, 2000, 
the Coast Guard conducted a public meeting at Coast Guard Headquarters, 
allowing interested parties an opportunity to directly present their 
views to the Director, Great Lakes Pilotage, and his staff.
    This final rule implements the results of the 1999 rate review. It 
increases the rates for pilotage on the Great Lakes in Area 1 by 4%, in 
Area 2 by 17%, and in Area 4 by 3%; decreases them in Area 5 by 5%; 
increases them in Area 6 by 4% and in Area 7 by 9%; and leaves them 
unchanged in Area 8; and it increases average rates by 3%.

Discussion of Comments and Changes

    We received, in response to the requests for comments contained in 
the SNPRM, 18 written comments. We received one comment from the 
Honorable David E. Bonior of Michigan. We also received one comment 
from American Great Lakes Ports, one from the United States Great Lakes 
Shipping Association, one from each of the three District Pilots' 
Associations, one from the accounting firm of the District 2 Pilots' 
Association, one from the lawyer for that Association, five from pilots 
in District 2, one from the chief dispatcher for District 2, one from 
the President of that Association, one from a pilot in District 1, one 
from the Grand Lodge, International Masters' Association, and one from 
the International Longshoremen's Association. All of the commenters 
address issues that pertained to the 1999 rate review, while some went 
beyond the scope of the solicitation and dealt with such issues as the 
methodology used to determine pilots' compensation, the 2000 rate 
review, and the status of pilots' continuing-education programs. The 
discussion of comments here can only address issues raised in the 1999 
rate review.
    The Honorable Mr. Bonior emphasizes that the rates of pay for all 
pilots providing services on the Great Lakes need to increase at the 
same level. The rates of pay for all those pilots will increase 11% 
under the updated rates contained in this final rule. This is because 
pilots' compensation on the Great Lakes, as stated in the rate-making 
methodology, 46 CFR part 404, Appendix A, results from a calculation 
directly linked to the compensation of certain licensed officers 
serving on U.S.-flag vessels on the Great Lakes. The compensation of 
pilots providing services on the open and deep ``undesignated'' waters 
of the Great Lakes is calculated on the current union contract, to 
include wages and benefits, for first mates serving on such vessels. 
That of pilots providing services on the confined and shallow 
``designated'' waters, perhaps approximating the annual average 
compensation for masters serving on such vessels, is calculated at 150% 
of that of first mates. As their compensation is tied directly to the 
current union contract for first mates, pilots will receive the 
cumulative increases that the mates (and incidentally the masters) will 
receive.
    Four commenters--the District 2 Pilots' Association, the District 3 
Pilots' Association, the accounting firm for District 2, and a pilot in 
District 2--argue that the methodology, especially in regard to the 
projection of operating expenses, was flawed because it used 1997 
audited data for expenses with 1998 revenues and bridge-hours. 46 CFR 
part 404, Appendix A, states in Step 1:
    ``The Director projects the amount of vessel traffic annually. [On 
the basis of] that projection, he forecasts the amount of fair and 
reasonable operating expenses that pilotage rates should recover. This 
consists of the following phases:
    (a) Submission of financial [data] from each Association;
    (b) Determination of recognizable expenses;
    (c) Adjustment for inflation or deflation; and
    (d) Final projection of operating expenses.''
    The use of 1997 audited data for expenses in conjunction with 1998 
data supplied by the Pilots' Associations is consistent with the above 
guidelines. In 1998, the actual bridge-hour data and revenues for 1998 
in each of the pilotage areas became available to the Coast Guard in 
May, through the submission of an unqualified opinion on audited 
financial statements for 1998 by each of the Pilots' Associations as 
required by 46 CFR 403.300. A review of the financial and bridge-hour 
data indicated that, on average, revenues and bridge-hours throughout 
the Great Lakes increased 30% from 1997 to 1998. We combined the actual 
observed increase for each District in 1998 with the projected 5% 
decrease in traffic for 1999 to establish an overall change in traffic 
from 1997 to 1999. For example, District 1 experienced an average 
increase of 36% in bridge-hours from 1997 to 1998. Considering the 
projected reduction of 5% from 1998 to 1999, combined with an overall 
projected increase of 36% from 1997 to 1999, yields a net increase of 
31% for District 1. For the 1999 rulemaking, each District's approved 
1997 expenses were adjusted for inflation [Approved 1997 Expenses x 
(1+Inflation Factor)], then multiplied by the aggregate percentage 
change in traffic projected for each District from 1997 to 1999, and 
then factored for the percentage of the Associations' expenses that 
change with traffic (pilotage hours). Analysis indicates that 57% of 
Associations' expenses are affected by a change in pilotage hours. For 
instance, in District 1 pilotage hours are projected to increase 31% 
from 1997 to 1999, which is multiplied by 57% (.31  x  .57 = .18) to 
project that the District's operating expenses should increase 18%. 
Therefore, in this instance, we used the following formula to project 
1999 expenses [(Approved 1997 Expenses x (1+Inflation Factor) x (1+(.31 
x .57)]. In this instance, to incorporate approved costs of 
transportation and training into the rate, we added $86,000 to the 
District's expense base for the 1999 ratemaking.
    The District 2 Pilots' Association, the accounting firm for 
District 2, and two pilots in District 2 disagree with the method used 
by our independent auditor to determine the cost per pilot-boat trip in 
District 2. They further insist that pilot-boat expenses in District 2 
were not excessive, and disagree with our deduction of $45,602 from the 
District's expense base to offset the high cost of pilot-boat trips. 
Our auditor used the following method to calculate the average cost of 
these trips (two-way). Total pilot-boat expenses were divided by total 
pilot-boat trips to compute the average cost per trip. 46 CFR 404.5 
establishes the guidelines for the Director, Great Lakes Pilotage, in

[[Page 36486]]

determining whether to recognize expenses. It specifies that he should 
evaluate each item to determine whether it is necessary for the 
provision of pilotage service and, if so, whether it is reasonable--
that is, comparable or similar to the expense paid by others in the 
maritime industry for the same item. Pilot-boat expenses in District 2 
average $176 per trip, whereas in District 1 they average $110 and in 
District 3 they average $83.
    The treatment of leased goods and services matters greatly here 
because fees for leasing--if allowable--count in ratemaking. Fees are 
allowable if reasonable. District 3 contracts for all pilot-boat 
services while Districts 1 and 2 operate affiliated companies, owned 
wholly or partly by registered pilots, to provide these services. These 
affiliated companies reported net incomes for 1997 of $4,520 in 
District 1 and $70,506 in District 2. The latter figure represents a 
19% return on total equipment and property, less land, at $372,270. In 
1997, District 2 paid Erie Leasing $66,000 in fees for the rental of 
two pilot-boats. The Director considers these fees excessive. 46 CFR 
404.5(a)(3) states:

    Lease costs for both operating and capital leases are recognized 
for ratemaking purposes to the extent that they conform to market 
rates. In the absence of a comparable market, lease costs are 
recognized * * * to the extent that they conform to depreciation 
plus an allowance for return on investment (computed as if the asset 
had been purchased with equity capital). The portion of lease costs 
that exceed these standards is not recognized for ratemaking 
purposes.

    Using this methodology, with the reported cost of the pilot-boats 
at $315,000 and using a market return of 6.9% and a depreciation amount 
of $9,450, results in an allowable lease of $31,185 ($315,000 x 6.9% = 
$21,735 + $9,450 = $31,185). To bring pilot-boat expenses for District 
2 into line with those for Districts 1 and 3, the Director is reducing 
the expense base for District 2 by $34,815 ($66,000 rental fee-$31,185 
allowable fee = $34,815 excessive fees). He is deducting $34,815 
instead of $45,602 from the expense base for District 2.
    A pilot from District 1 asserts that the Coast Guard, in the 1999 
rate review, did not include 892 bridge-hours performed by pilots on 
the St. Lawrence River when it determined the requirement of pilots for 
Lake Ontario. The assertion is accurate. That Review originally 
determined a requirement of four pilots for Lake Ontario. A 
recalculation of the bridge-hours for 1999 runs as follows: Lake pilots 
performed 6,355 bridge-hours in 1998, while river pilots performed 892 
bridge-hours, for a total of 7,247 bridge-hours. We projected bridge-
hours to decline 5% in 1999, so that the corrected projection for 1999 
is 6,885 bridge-hours (7,247 x .95 = 6,885). In accordance with 46 CFR 
part 404, we then divided 6,885 by 1800 (6,885/1800 = 3.82 pilots) and 
determined a requirement of four pilots for Lake Ontario for 1999. In 
view of the significant increase in traffic experienced there during 
2000, the Director is authorizing a total of five pilots for Area 2. 
This total is also consistent with the Memorandum of Arrangements (MOA) 
with Canada, which states that traffic on Lake Ontario will be evenly 
divided between American pilots and Canadian. In 1997, total bridge-
hours for the two countries approximated 17,254 hours. Fifty percent 
comes to 8,627 hours; those are the hours that American pilots should 
expect under the MOA. The 1999 rate review projected a 5% reduction in 
traffic for the following navigational season, down to 8,196 (8,627 x 
.95 = 8,196). Dividing 8,196 by the bridge-hour standard of 1800 (8,196 
/ 1800 = 4.55), gives a figure of 4.55 pilots.
    The District 2 Pilots' Association and its accounting firm disagree 
with the results of the calculation that determined the number of 
pilots required for their District. 46 CFR part 404 establishes the 
methodology in determining the number of pilots required for each area: 
``The basis for the number of pilots needed in each area of 
undesignated water is established by dividing the projected bridge-
hours by 1800.'' The accounting firm disagreed with the standard of 
1800 hours used to determine the number of pilots in undesignated 
waters; it combined delay, detention, and travel hours with bridge-
hours to calculate the number of pilots required in District 2. Yet 
part 404 establishes 1800 bridge-hours (taking no account of detention, 
delay, and travel hours) as the standard, and it is the law.
    The District 2 Pilots' Association and its accounting firm also 
disagree with the Director's reduction of $4,800 a year in total rental 
expenses for a six-bedroom house, rented to the Association by Erie 
Leasing, an affiliated company. The house serves as temporary 
accommodations in Port Colburn. The auditor recommended an adjustment, 
in that similar accommodations in the area rent on average for $400 a 
month less than the Association pays. However, District 2 pilots do 
save $52 a night by using this facility instead of a hotel. In 1999, 
this yielded a saving of about $15,000. In view of the above, the 
Director has put the $4,800 back into the expense base for District 2.
    The District 2 Pilots' Association and its accounting firm also 
disagree with the Director's decision to disallow legal expenses not 
directly related to the provision of pilotage services. In September 
1999, the Director requested each of the Pilots' Associations to 
justify its legal expenses under this standard. District 1 justified 
its, to the extent of $1,244. Districts 2 and 3 did not justify theirs, 
to any extent. The Director recognized that legal expenses are 
necessary in today's business environment. Therefore, he used the 
guidelines in 46 CFR 404.5(a)(2)(i), ``Comparable or similar expenses 
paid by others in the maritime industry,'' and in 46 CFR 
404.5(a)(2)(ii), ``Comparable or similar expenses paid by other 
industries,'' to determine a fair and equitable allowance for legal 
expenses in each District. He compared the Association's legal expenses 
as a percentage of revenues with those of two firms that operate in 
relatively high-risk environments, an elevator company and an 
underwater-welding company. The elevator company had revenues between 
$12 and $18 million a year and legal expenses of $12,000 to $18,000 a 
year; the welding company had revenues in excess of $15 million a year 
with legal expenses of less than $10,000 a year. An analysis of the 
Association's legal expenses as a percentage of revenue since 1995 
indicated that those expenses averaged $23,326 or .9% of revenue. In 
view of today's complex legal climate, the Director views those 
expenses over the past five years as fair for a Pilots' Association, 
which also operates in a relatively high-risk environment. Using the 
.9% of revenue for 1997 as a guideline, he has approved $22,815 in 
legal expenses for District 2, and $13,258 and $29,552 in legal 
expenses for Districts 1 and 3, respectively. He is returning these 
amounts to the Districts' expense bases for present purposes.
    The District 2 Pilots' Association, its accounting firm, and one 
pilot in the District disagree on the disallowance of pilots' training 
expenses in the District. In summary, they indicate that, because the 
Director recognized these expenses in the past, he should recognize 
them now. They argue that until a temporarily registered pilot is 
permanently registered that person is, in fact, being trained and that 
during this time the Association has to compensate him. The approval of 
these expenses in the 1998 rate review was a mistake on the part of the 
Director. This is so because these expenses were not for instructional 
courses or material, which he should

[[Page 36487]]

have approved, but actually represented compensation or salary paid 
directly to temporarily registered pilots. Compensation for such pilots 
is fully accounted for in the ratemaking methodology, as explained in 
46 CFR Part 404, Appendix A. Accounting for such pilots' compensation 
as a training expense inflates the District's expense base by double-
counting: The base already accounts for it otherwise.
    The District 2 Pilots' Association and its accounting firm also 
disagree with the independent auditor's deductions from the expense 
base of $947 for business promotion, $400 in contributions, and $1,988 
as uniform expense. The deductions for the first two are justified in 
that those two are not directly related to the provision of pilotage, 
as they must be under 46 CFR 404.5. However the Director considers the 
$1,988 in uniform expense a necessary investment in equipment that 
actually enhances service and safety. Accordingly he has returned 
$1,988 to the District's expense base.
    The District 2 and District 3 Pilots' Associations disagree with 
the Director's computation of investment base for calculating return on 
investment, urging that the Director take into account all assets 
employed in support of pilotage. 46 CFR part 404, Appendix A, Step 
5(3), states that ``Assets subject to return on investment *  *  * must 
be reasonable in purpose and amount. If an asset or other investment is 
not necessary for the provision of pilotage services, that portion of 
the return element is not allowed for ratemaking purposes.'' In 
calculating rate of return the Director considers property and 
equipment because cash assets held on deposit earn interest. A 
significant portion of the large cash balances that pilots' 
associations accumulate at the end of the calendar year they 
immediately distribute the next year as pilots' compensation during the 
months that the St. Lawrence Seaway is closed. The Director's including 
cash assets would encourage these associations to unnecessarily inflate 
their investment bases and provide a source of return available to few 
if any other private businesses. As we explained in the SNPRM, analysis 
of pilots' associations' investment bases indicates that, ever since 
the concept of return on investment was introduced into the ratemaking 
methodology, Districts 2 and 3 have greatly increased their bases. In 
District 2 the base went from $265,488 in 1995 to $413,998 in 1996, of 
which only $116,041 represented property and equipment. In District 3 
it went from $119,823 in 1995 to $994,896 in 1996, of which only 
$25,583 represented property and equipment.
    The President of the District 2 Pilots' Association observes that 
pilots' compensation for designated waters of the Great Lakes, under 
the NPRM, would have come to exactly 1.5 times that of their 
compensation for undesignated waters of the Lakes. The President 
indicates that this was not the case in past rulemakings. But target 
pilots' compensation for designated waters should at least approximate 
1.5 times that for undesignated waters. This is so because the former 
should be 1.5 times first mates' salary plus first mates' benefits, as 
explained in a final rule published in the Federal Register on February 
10, 1997 [62 FR 5217].
    The daily contractual rate of wages for first mates is multiplied 
by 54 to determine the monthly rate for undesignated waters. This 
monthly rate is then multiplied by 1.5 to determine the monthly rate 
for designated waters (monthly rate for undesignated waters x 1.5 = 
monthly rate for designated waters). Only then is the cost of benefits 
(pensions, medical care, and clerical support) added to the monthly 
rates for both undesignated and designated waters. These figures are 
then multiplied by 9 to yield total yearly target pilots' compensation. 
A recalculation of this compensation for designated waters revealed 
that the figure of $155,466, used in the SNRPM for those waters was in 
error. The corrected figure is $147,540. The calculation goes as 
follows: The daily rate of wages specified in the first mates' union 
contract, effective August 1, 1999, was $179.42. As also specified 
there, the daily rate is then multiplied by 54 days (30.5 work days, 15 
vacation days, 4 weekend days, 1.5 holidays, and 3 bonus days.) to 
determine the monthly rate, $9,689. Added to this figure are the 
monthly costs of first mates' pensions, of $1,246; their medical care, 
of $426, and their clerical support, of $126. The monthly total of 
wages and benefits comes to $11,487. This figure is then multiplied by 
9 to yield total target pilots' compensation for undesignated waters, 
of $103,383.
    For designated waters the monthly rate of wages, calculated above, 
is multiplied by 1.5, totaling $14,534. To this figure we add the 
monthly cost of a mates' pension benefits, $1,246; the monthly cost of 
health benefits, $426; and the monthly cost of clerical support, $188. 
The monthly total of wages and benefits now comes to $16,395. This 
figure is then multiplied by 9, to yield total target pilots' 
compensation for designated waters of $147,540.
    Because this final rule may be effective for a portion of the 2001 
navigational season on the Great Lakes, we have updated the rates in it 
to reflect the daily rate of wages in the current first mates' union 
contract, of $188.39, that became effective August 1, 2000. For those 
reasons the revised target pilots' compensation for undesignated waters 
and designated waters are $107,735, and $154,079, respectively.
    One commenter, the District 1 Pilots' Association, states that the 
District's expense base should be adjusted for inflation to reflect the 
average change in the Consumer Price Index (CPI) until mid-year 2000, 
not December 1999. The Director agrees and has adjusted the base of 
each District to reflect the average change in the CPI from the close 
of the 1997 season to mid-year 2000. This equates to an inflation 
factor of 4.8%.
    The District 2 Pilots' Association and its accounting firm disagree 
with the deduction of amounts for daily subsistence that did not 
conform to guidelines of the Internal Revenue Service. 46 CFR Part 
404.5 establishes those guidelines as one of the tests used to 
determine the reasonableness of an expense. For 1997 those guidelines 
fix $36 a day as the maximum allowable amount of daily subsistence. 
Pilots in District 2 were paid $40, as stated in the Pilot 
Association's accounting handbook and confirmed by the District's chief 
dispatcher during the independent auditor's 1999 audit of the District. 
The amount in excess of $36, $2,484, we have deducted from the expense 
base of the District.
    The District 2 Pilots' Association and its accounting firm indicate 
that they do not understand how pilots in District 2 exceeded their 
target pilots' compensation by 16% in 1998, as the SNPRM stated they 
did. The 16% is an error; the corrected figure is 5%. In 1998, District 
2 was authorized 5 pilots in Area 4 and 9 pilots in Area 5. Target 
pilots' compensation in the undesignated waters of Area 4 was $97,524 
for a subtotal of $487,620 (5 x $97,524), while in designated waters of 
Area 5 it was $138,762 for a subtotal of $1,248,858 (9 x $138,762). 
Target pilots' compensation for District 2, then, was a total of 
$1,736,478 ($487,620 + $1,248,858). The independent audit by the 
certified public accountant showed that the actual total compensation 
paid to pilots in District 2 during 1998 was $1,826,905. This means 
those pilots' compensation exceeded the total target pilots' 
compensation by 5%.

[[Page 36488]]

Summary of Changes

    The changes just discussed are summarized in Tables A, B, and C, 
which follow:

                                              Table A.--District 1
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                                                                    Area 1--St.    Area 2--Lake   Total District
                                                                  Lawrence River      Ontario            1
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Step 1, Projection of operating expenses........................        $309,479        $263,630        $573,109
Step 2, Projection of target pilot compensation.................      $1,078,553        $538,675      $1,617,228
Step 3, Projection of revenue...................................      $1,333,991        $687,207      $2,021,198
Step 4, Calculation of investment base..........................              $0              $0              $0
Step 5, Determination of target return on investment............           7.04%           7.04%           7.04%
Step 6, Adjustment determination................................      $1,388,032        $802,305      $2,190,337
Step 7, Adjustment of pilotage rates............................            1.04            1.17            1.08
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                                              Table B.--District 2
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                                                                                   Area 5--South
                                                                   Area 4--Lake    East Shoal to  Total District
                           Methodology                                 Erie         Port Huron           2
                                                                                     Michigan
----------------------------------------------------------------------------------------------------------------
Step 1, Projection of operating expenses........................        $647,029        $551,174      $1,198,203
Step 2, Projection of target pilot compensation.................        $538,675      $1,232,632      $1,771,307
Step 3, Projection of revenue...................................      $1,156,057      $1,886,198      $3,042,255
Step 4, Calculation of investment base..........................         $45,397         $71,006        $116,403
Step 5, Determination of target return on investment............           7.04%           7.04%           7.04%
Step 6, Adjustment determination................................      $1,188.901      $1,788,804      $2,975,455
Step 7, Adjustment of pilotage rates............................            1.03             .95             .98
----------------------------------------------------------------------------------------------------------------


                                              Table C.--District 3
----------------------------------------------------------------------------------------------------------------
                                                   Area 6--Lakes
                   Methodology                       Huron and      Area 7--St.    Area 8--Lake   Total District
                                                     Michigan      Mary's River      Superior            3
----------------------------------------------------------------------------------------------------------------
Step 1, Projection of operating expenses........        $692,430        $131,178        $476,862      $1,306,471
Step 2, Projection of target pilot compensation.      $1,185,085        $616,316        $861,880      $2,591,100
Step 3, Projection of revenue...................      $1,797,967        $688,583      $1,338,912      $3,825,462
Step 4, Calculation of investment base..........         $11,997          $4,595          $8,934         $25,526
Step 5, Determination of target return on                  7.04%           7.04%           7.04%           7.04%
 investment.....................................
Step 6, Adjustment determination................      $1,878,359        $753,819      $1,339,371      $3,971,549
Step 7, Adjustment of pilotage rate.............            1.04            1.09            1.00            1.04
----------------------------------------------------------------------------------------------------------------

    As summarized in Tables A, B, and C, the Coast Guard amends the 
pilotage rates dictated by 46 CFR, Secs. 401.405, 401.407, and 401.410, 
by increasing the rates for pilotage on the Great Lakes in Area 1 by 
4%, in Area 2 by 17%, and in Area 4 by 3%; decreasing them in Area 5 by 
5%; increasing them in Area 6 by 4% and in Area 7 by 9%; and leaving 
them unchanged in Area 8; and by increasing average rates by 3%.

Regulatory Evaluation

    This final rule is not a ``significant regulatory action'' under 
section 3(f) of Executive Order 12866, Regulatory Planning and Review, 
and does not require an assessment of potential costs and benefits 
under section 6(a)(3) of that Order. The Office of Management and 
Budget has not reviewed it under that Order. It is not ``significant'' 
under the regulatory policies and procedures of the Department of 
Transportation (DOT) [44 FR 11040, (February 26, 1979)].
    We expect the economic impact of this rule to be so minimal that a 
full Regulatory Evaluation under paragraph 10e of the regulatory 
policies and procedures of DOT is unnecessary. This rule makes minimal 
adjustments to the pilotage rates for the Great Lakes' 2001 shipping 
season. The Coast Guard has used the ratemaking methodology found in 46 
CFR Part 404, Appendix A, to identify adjustments necessary to achieve 
target pilots' compensation by establishing these new rates for 
pilotage. This methodology is designed to review pilotage rates every 
year so as to avoid large changes in them and ultimately avoid large 
fluctuations in pilots' compensation. This rule provides a step-by-step 
economic guide to show how the methodology works. This rulemaking will 
help accomplish the Coast Guard's desire for a safe, reliable, and 
efficient pilotage system.

Small Entities

    Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have 
considered whether this final rule will 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.
    For the Great Lakes, small entities potentially affected by this 
rule include shippers, Great Lakes ports, carriers, and shipping 
agents. The overall

[[Page 36489]]

increase in pilotage rates on the lakes should not significantly affect 
small businesses. This is true because the overall average increase in 
rates, of 3%, is less than the approximate increase in the CPI, of 5%, 
since the rates were last changed, in 1997. Therefore, the Coast Guard 
certifies under 5 U.S.C. 605(b) that this rule will not have a 
significant economic impact on a substantial number of small entities.

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 final rule so that they can better 
evaluate its effects on them and participate in the rulemaking. If the 
rule will affect your small business, organization, or governmental 
jurisdiction and you have questions concerning its provisions or 
options for compliance, please consult Tom Lawler, Chief Economist, 
Great Lakes Pilotage (G-MW-1), U.S. Coast Guard, at 202-267-1241, by 
facsimile 202-267-4700, or by email at [email protected].
    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).

Collection of Information

    This final rule calls for no new collection of information under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

Federalism

    The Coast Guard has analyzed this final rule under the principles 
and criteria in Executive Order 13132 and has determined that this rule 
does not have sufficient federalism implications to warrant the 
preparation of a Federalism Assessment.
    It is well settled that States are precluded from regulation in 
categories reserved for regulation by the Coast Guard. It is also well 
settled, now, that all of the categories covered in 46 U.S.C. 3306, 
3703(a), 7101, and 8101 (design, construction, alteration, repair, 
maintenance, operation, equipping, personnel qualification, and manning 
of vessels) are within the field foreclosed from regulation by States. 
[See the decision of the Supreme Court in the consolidated cases of 
United States v. Locke and Intertanko v. Locke, 120 S. Ct. 1135, 2000 
U.S. LEXIS 1895 (March 6, 2000).] Since this rule involves the numbers 
and compensation for pilots on vessels transiting the Great Lakes, it 
is a matter of manning, and so precludes States from regulation. 
Because States may not promulgate rules within this category, 
preemption is not an issue under Executive Order 13132.

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 regulatory 
actions not specifically required by law. In particular, the Act 
addresses actions that may result in the expenditure by a State, local, 
or tribal government, in the aggregate, or by the private sector of 
$100,000,000 or more in any one year. Though this final rule both is 
required by law and will not result in such expenditure, we do discuss 
the effects of this rule elsewhere in this preamble.

Taking of Private Property

    This final rule will not effect a taking of private property or 
otherwise have taking implications under Executive Order 12630, 
Governmental Actions and Interference with Constitutionally Protected 
Property Rights.

Civil Justice Reform

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

Protection of Children

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

Indian Tribal Governments

    This final rule does not have tribal implications under Executive 
Order 13175, Consultation and Coordination with Indian Tribal 
Governments, because it does not have a substantial direct effect on 
one or more Indian tribes, on the relationship between the Federal 
Government and Indian tribes, or on the distribution of power and 
responsibilities between the Federal Government and Indian tribes.

Environment

    We have considered the environmental impact of this final rule and 
concluded that under figure 2-1, paragraph 34(a), of Commandant 
Instruction M16475.1C, this rule is categorically excluded from further 
environmental documentation. This rule is procedural in nature because 
it deals exclusively with adjusting pilotage rates for the Great Lakes. 
A ``Categorical Exclusion Determination'' is available in the docket 
where indicated under ADDRESSES.

List of Subjects in 46 CFR Part 401

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 amends 
46 CFR Part 401 as follows:

PART 401--GREAT LAKES PILOTAGE REGULATIONS

    1. Revise the citation of authority for part 401 to read as 
follows:

    Authority: 46 U.S.C. 2104(a), 6101, 7701, 8105, 9303, 9304; 49 
CFR 1.45, 1.46 (mmm); 46 CFR 401.105 also issued under the authority 
of 44 U.S.C. 3507

    2. In Sec. 401.405, revise paragraphs (a) and (b) 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............................  $8 per kilometer or $14 per
                                             mile.\1\
Each Lock Transited.......................  $178.\1\
Harbor Movage.............................  $584.\1\
------------------------------------------------------------------------
\1\ The minimum basic rate for assignment of a pilot in the St. Lawrence
  River is $389, and the maximum basic rate for a through trip is $1709.

    (b) Area 2 (Undesignated Waters):

------------------------------------------------------------------------
                                                                   Lake
                            Service                              Ontario
------------------------------------------------------------------------
Six-Hour Period................................................     $344
Docking or Undocking...........................................      328
------------------------------------------------------------------------


    3. In Sec. 401.407, revise paragraphs (a) and (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):

[[Page 36490]]



------------------------------------------------------------------------
                                             Lake Erie
                                             (east of
                 Service                     Southeast        Buffalo
                                              Shoal)
------------------------------------------------------------------------
Six-Hour Period.........................            $335            $335
Docking or Undocking....................             258             258
Any Point on the Niagara River below the             N/A             658
 Black Rock Lock........................
------------------------------------------------------------------------

    (b) Area 5 (Designated Waters):

----------------------------------------------------------------------------------------------------------------
                                                               Toledo or
                                                               any point
                                                                on Lake
               Any point on or in                 Southeast    Erie west     Detroit      Detroit     St. Clair
                                                    Shoal          of         River      Pilot Boat     River
                                                               Southeast
                                                                 Shoal
----------------------------------------------------------------------------------------------------------------
Toledo or any port on Lake Erie west of South-          $939         $554       $1,218         $939          N/A
 East Shoal....................................
Port Huron Change Point........................    \1\ 1,634    \1\ 1,893        1,228          955         $679
St. Clair River................................    \1\ 1,634          N/A        1,228        1,228          554
Detroit or Windsor or the Detroit River........          939        1,218          554          N/A        1,228
Detroit Pilot Boat.............................          679          939          N/A          N/A       1,228
----------------------------------------------------------------------------------------------------------------
\1\ When pilots are not changed at the Detroit Pilot Boat.


    4. In Sec. 401.410, revise paragraphs (a) and (b) 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):

------------------------------------------------------------------------
                         Service                           Lake Superior
------------------------------------------------------------------------
Six-Hour Period.........................................            $280
Docking or Undocking....................................             266
------------------------------------------------------------------------

    (b) Area 7 (Designated Waters):

----------------------------------------------------------------------------------------------------------------
                              Area                                    Detour         Gros cap       Any harbor
----------------------------------------------------------------------------------------------------------------
Gros Cap........................................................          $1,436             N/A             N/A
Wharf of Algoma Steel Corporation at Sault Ste. Marie, Ontario..           1,436            $541             N/A
Any point in Sault Ste. Marie, Ontario, except the Wharf of                1,204             541             N/A
 Algoma Steel Corporation.......................................
Sault Ste. Marie, Michigan......................................           1,204             541             N/A
Harbor Movage...................................................             N/A             N/A            $541
----------------------------------------------------------------------------------------------------------------

* * * * *


Sec. 401.420  [Amended]

    5. Amend Sec. 401.420 as follows: a. In paragraph (a), remove the 
number ``$51'' and add, in its place, the number ``$53''; and remove 
the number ``$807'' and add, in its place, the number ``$831''.
    b. In paragraph (b), remove the number ``$51'' and add, in its 
place, the number ``$53''; and remove the number ``$807'' and add, in 
its place, the number ``$831''.
    c. In paragraph (c)(1), remove the number ``$305'' and add, in its 
place, the number ``$314''; and, in paragraph (c)(3), remove the number 
``$51'' and add, in its place, the number ``$53'' and, also in 
paragraph (c)(3), remove the number ``$807'', and add, in its place, 
the number ``$831''.


Sec. 401.428  [Amended]

    6. In Sec. 401.428, remove the number ``$312'' and add, in its 
place, the number ``$321''.

    Dated: May 25, 2001.
Paul J. Pluta,
Rear Admiral, U.S. Coast Guard, Assistant Commandant for Marine Safety 
and Environmental Safety and Environmental Protection.
[FR Doc. 01-17385 Filed 7-11-01; 8:45 am]
BILLING CODE 4910-15-U