[Federal Register Volume 75, Number 160 (Thursday, August 19, 2010)]
[Proposed Rules]
[Pages 51191-51204]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-20544]


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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

46 CFR Part 401

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


Great Lakes Pilotage Rates--2011 Annual Review and Adjustment

AGENCY: Coast Guard, DHS.

ACTION: Notice of proposed rulemaking.

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

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

DATES: Comments and related material must reach the Docket Management 
Facility on or before September 20, 2010.

ADDRESSES: You may submit comments identified by Coast Guard docket 
number USCG-2010-0517 to the Docket Management Facility at the U.S. 
Department of Transportation. To avoid duplication, please use only 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: For questions on this proposed rule, 
call Mr. Paul M. Wasserman, Chief, Great Lakes Pilotage Division, 
Commandant (CG-5522), U.S. Coast Guard, at 202-372-1535, by fax 202-
372-1909, or by e-mail at [email protected]. If you have 
questions on viewing or submitting material to the docket, call Renee 
V. Wright, Program Manager, Docket Operations, telephone 202-366-9826.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Public Participation and Request for Comments
    A. Submitting Comments
    B. Viewing Comments and Documents
    C. Privacy Act
    D. Public Meeting
II. Abbreviations
III. Background
IV. Discussion of the Proposed Rule
    A. Proposed Pilotage Rate Changes--Summarized
    B. Calculating the Rate Adjustment
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-2010-0517), 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 e-mail 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, 
click on the ``submit a comment'' box, which will then become 
highlighted in blue. In the ``Document Type'' drop down menu select 
``Proposed Rule'' and insert ``USCG-2010-0517'' in the ``Keyword'' box. 
Click ``Search'' then click on the balloon shape in the ``Actions'' 
column. If you submit your comments by mail or hand delivery, submit 
them in an unbound format, no larger than 8\1/2\ by 11 inches, suitable 
for copying and electronic filing. If you submit comments by mail and 
would like to know that they reached the Facility, please enclose a 
stamped, self-addressed postcard or envelope.
    We will consider all comments and material received during the 
comment period and may change this proposed rule based on your 
comments.

B. Viewing Comments and Documents

    To view comments, as well as documents mentioned in this preamble 
as being available in the docket, go to http://www.regulations.gov, 
click on the ``read comments'' box, which will then become highlighted 
in blue. In the

[[Page 51192]]

``Keyword'' box insert ``USCG-2010-0517'' and click ``Search.'' Click 
the ``Open Docket Folder'' in the ``Actions'' column. If you do not 
have access to the internet, you may view the docket online by visiting 
the Docket Management Facility in Room W12-140 on the ground floor of 
the Department of Transportation West Building, 1200 New Jersey Avenue 
SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through 
Friday, except Federal holidays. We have an agreement with the 
Department of Transportation to use the Docket Management Facility.

C. Privacy Act

    Anyone can search the electronic form of all 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 system of 
records notice regarding our public dockets in the January 17, 2008 
issue of the Federal Register (73 FR 3316).

D. Public Meeting

    We do not plan to hold a public meeting. But you may submit a 
request for one to the Docket Management Facility at the address under 
ADDRESSES explaining why one would be beneficial. If we determine that 
one would aid this rulemaking, we will hold one at a time and place 
announced by a later notice in the Federal Register.

II. Abbreviations

AMOU American Maritime Officers Union
MISLE Marine Information for Safety and Law Enforcement
NAICS North American Industry Classification System
NEPA National Environmental Policy Act of 1969
NPRM Notice of proposed rulemaking
NVMC National Vessel Movement Center
OMB Office of Management and Budget

III. Background

    This notice of proposed rulemaking (NPRM) is issued pursuant to 
Coast Guard regulations in 46 CFR Parts 401-404. Those regulations 
implement the Great Lakes Pilotage Act of 1960, 46 U.S.C. Chapter 93 
(``the Act''), which requires foreign-flag vessels and U.S.-flag 
vessels engaged in foreign trade to use federally registered Great 
Lakes pilots while transiting the St. Lawrence Seaway and the Great 
Lakes system, and which requires the Secretary of Homeland Security to 
``prescribe by regulation rates and charges for pilotage services, 
giving consideration to the public interest and the costs of providing 
the services.'' 46 U.S.C. 9303(f). There is no minimum tonnage limit or 
exemption for these vessels, but the Coast Guard's interpretation is 
that the Act applies only to commercial vessels and not to recreational 
vessels.
    The U.S. waters of the Great Lakes and the St. Lawrence Seaway are 
divided into three pilotage Districts. Pilotage in each District is 
provided by an association certified by the Coast Guard Director of 
Great Lakes Pilotage to operate a pilotage pool. It is important to 
note that, while the Coast Guard sets rates, it does not control the 
actual compensation that pilots receive. This is determined by each of 
the three District associations, which use different compensation 
practices.
    District One, consisting of Areas 1 and 2, includes all U.S. waters 
of the St. Lawrence River and Lake Ontario. District Two, consisting of 
Areas 4 and 5, includes all U.S. waters of Lake Erie, the Detroit 
River, Lake St. Clair, and the St. Clair River. District Three, 
consisting of Areas 6, 7, and 8, includes all U.S. waters of the St. 
Mary's River, Sault Ste. Marie Locks, and Lakes Michigan, Huron, and 
Superior. Area 3 is the Welland Canal, which is serviced exclusively by 
the Canadian Great Lakes Pilotage Authority and, accordingly, is not 
included in the U.S. rate structure. Areas 1, 5, and 7 have been 
designated by Presidential Proclamation No. 3385, as amended by 
Proclamation No. 3855, pursuant to the Act, to be waters in which 
pilots must at all times be fully engaged in the navigation of vessels 
in their charge. Areas 2, 4, 6, and 8 have not been so designated 
because they are open bodies of water. Under the Act, pilots assigned 
to vessels in these areas are only required to ``be on board and 
available to direct the navigation of the vessel at the discretion of 
and subject to the customary authority of the master.'' 46 U.S.C. 
9302(a)(1)(B).
    The Act requires annual reviews of pilotage rates and the setting 
of new rates at least once every five years, or sooner, if annual 
reviews show a need. 46 U.S.C. 9303(f), 46 CFR 404.1. To assist in 
calculating pilotage rates, the pilotage associations are required to 
submit to the Coast Guard annual financial statements prepared by 
certified public accounting firms. In addition, every fifth year, in 
connection with the mandatory rate adjustment, the Coast Guard obtains 
a full and independent audit of the accounts and records of the 
pilotage associations and prepare and submit financial reports relevant 
to the ratemaking process. In those years when a full ratemaking is 
conducted, the Coast Guard generates the pilotage rates using Appendix 
A to 46 CFR Part 404. Between the five-year full ratemaking intervals, 
the Coast Guard annually reviews the pilotage rates using Appendix C to 
Part 404, and adjusts rates when deemed appropriate. Terms and formulas 
used in Appendix A and Appendix C are defined in Appendix B to Part 
404.
    The last full ratemaking using the Appendix A methodology was 
published on April 3, 2006 (71 FR 16501). Since then, rates have been 
reviewed under Appendix C and adjusted annually: 2007 (72 FR 53158, 
Sep. 18, 2007); 2008 (interim rule 73 FR 15092, Mar. 21, 2008; final 
rule 74 FR 220, Jan. 5, 2009); 2009 (74 FR 35812, Jul. 21, 2009); 2010 
(75 FR 7958, Feb. 23, 2010). The present rulemaking proposes a rate 
adjustment for the 2011 shipping season, based on an Appendix C review. 
At the conclusion of this ratemaking cycle, we anticipate publishing an 
NPRM proposing a rate adjustment based upon an Appendix A 5-year review 
and audit of the pilot association books and records.
    As we stated in the NPRM for our 2010 Appendix C ratemaking, 74 FR 
56153 at 56154 (Oct. 30, 2009), we had anticipated that the next 
Appendix A ratemaking would be completed in 2011. However, the current 
rulemaking is not an Appendix A review because the Coast Guard cannot 
use the audits conducted in 2009 in preparation for the next Appendix A 
review. Those audits were incomplete and inadequate for determining the 
expenses of the regulated associations or for use in ratemaking.
    The Coast Guard has contracted for new audits that will be 
conducted during the 2010 navigation season. These audits will serve as 
the basis for the next Appendix A review, which we will undertake as 
soon as possible.

IV. Discussion of the Proposed Rule

    The Act and Coast Guard pilotage regulations require that the Coast 
Guard, as delegated by the Secretary of Homeland Security, review the 
pilotage rates annually. If the annual review shows that pilotage rates 
are within a reasonable range of the base target pilot compensation set 
in the previous ratemaking, no adjustment to the rates will be 
initiated. However, if the annual review indicates that an adjustment 
is necessary, then the Coast Guard will establish new pilotage rates 
pursuant to 46 CFR 404.10.

[[Page 51193]]

A. Proposed Pilotage Rate Changes--Summarized

    The Appendix C to 46 CFR 404 ratemaking methodology is intended for 
use during the years between Appendix A full ratemaking reviews and 
adjustments. This section summarizes the rate changes proposed for 
2011, and then discusses in detail how the proposed changes were 
calculated under Appendix C.
    We are proposing an increase across all Areas over the last 
pilotage rate adjustment. This reflects a projected August 1, 2011, 
increase in benchmark contractual wages and benefits and a deflation 
adjustment. This rate increase would not go into effect until August 1, 
2011, after the current benchmark contracts expire. Actual rate 
increases vary by Area, and are summarized in Table 1.

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

    Rates for cancellation, delay, or interruption in rendering 
services (46 CFR 401.420), and basic rates and charges for carrying a 
U.S. pilot beyond the normal change point, or for boarding at other 
than the normal boarding point (46 CFR 401.428), have been increased by 
6.51 percent in all Areas based upon the calculations appearing at 
Tables 19 through 21, which appear below.

B. Calculating the Rate Adjustment

    The Appendix C ratemaking calculation involves eight steps:
    Step 1: Calculate the total economic costs for the base period 
(i.e., pilot compensation expense plus all other recognized expenses 
plus the return element) and divide by the total bridge hours used in 
setting the base period rates;
    Step 2: Calculate the ``expense multiplier,'' the ratio of other 
expenses and the return element to pilot compensation for the base 
period;
    Step 3: Calculate an annual ``projection of target pilot 
compensation'' using the same procedures found in Step 2 of Appendix A;
    Step 4: Increase the projected pilot compensation in Step 3 by the 
expense multiplier in Step 2;
    Step 5: Adjust the result in Step 4, as required, for inflation or 
deflation;
    Step 6: Divide the result in Step 5 by projected bridge hours to 
determine total unit costs;
    Step 7: Divide prospective unit costs in Step 6 by the base period 
unit costs in Step 1; and
    Step 8: Adjust the base period rates by the percentage changes in 
unit cost in Step 7.
    The base data used to calculate each of the eight steps comes from 
the 2010 Appendix C review. The Coast Guard uses the most recent union 
contracts between the American Maritime Officers Union (AMOU) and 
vessel owners and operators on the Great Lakes to estimate target pilot 
compensation. However, the current AMOU contracts expire in July 2011, 
and the Coast Guard has been informed that contract negotiations will 
not begin until sometime that year, which is well after the pilotage 
statute requires that we establish a rate. Accordingly, we have 
reviewed the terms of both the existing and past AMOU contracts and 
have projected, for purposes of this ratemaking, that the AMOU 
contracts effective in 2011 would provide increases in compensation 
equal to 3 percent, which is the increase called for in the AMOU 
contracts over the last two years. We project all other benefits to 
remain fixed at current levels with the exception of medical plan 
contributions. Medical plan contributions have increased by 10 percent 
per year from 2006 through 2010 in the current AMOU contracts. Thus, we 
forecast an increase of 10 percent over 2010 medical plan contributions 
for the AMOU contracts in 2011. Bridge hour projections for the 2011 
season have been obtained from historical data, pilots, and industry. 
All documents and records used in this rate calculation have been 
placed in the public docket for this rulemaking and are available for 
review at the addresses listed under ADDRESSES.
    Some values may not total exactly due to format rounding for 
presentation in charts and explanations in this section. The rounding 
does not affect the integrity or truncate the real value of all 
calculations in the ratemaking methodology described below.
    Step 1: Calculate the total economic cost for the base period. In 
this step, for each Area, we add the total cost of target pilot 
compensation, all other recognized expenses, and the return element 
(net income plus interest). We divide this sum by the total bridge 
hours for each Area. The result is the cost in each Area of providing 
pilotage service per bridge hour for the base period. Tables 2 through 
4 summarize the Step 1 calculations:

 Table 2--Total Economic Cost for Base Period (2010), Areas in District
                                   One
------------------------------------------------------------------------
                                      Area 1 St.          Area 2 Lake
                                    Lawrence  River         Ontario
------------------------------------------------------------------------
Base operating expense (less                $578,569            $590,032
 base return element)...........
Base target pilot compensation..        + $1,677,397        + $1,020,120
Base return element.............           + $11,571           + $17,701
                                 ---------------------------------------

[[Page 51194]]

 
    Subtotal....................        = $2,267,537        = $1,627,853
                                 =======================================
Base bridge hours...............             / 5,203             / 5,650
Base cost per bridge hour.......           = $435.81           = $288.12
------------------------------------------------------------------------


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


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

    Step 2. Calculate the expense multiplier. In this step, for each 
Area, we add the base operating expense and the base return element. 
Then, we divide the sum by the base target pilot compensation to get 
the expense multiplier for each Area. Tables 5 through 7 show the Step 
2 calculations.

           Table 5--Expense Multiplier, Areas in District One
------------------------------------------------------------------------
                                      Area 1 St.          Area 2 Lake
                                    Lawrence River          Ontario
------------------------------------------------------------------------
Base operating expense..........            $578,569            $590,032
Base return element.............           + $11,571           + $17,701
                                 ---------------------------------------
    Subtotal....................          = $590,140          = $607,733
                                 =======================================
Base target pilot compensation..        / $1,677,397        / $1,020,120
Expense multiplier..............             0.35182             0.59575
------------------------------------------------------------------------


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


[[Page 51195]]


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

    Step 3. Calculate annual projection of target pilot compensation. 
In this step, we determine the new target rate of compensation and the 
new number of pilots needed in each pilotage Area, to determine the new 
target pilot compensation for each Area.
    (a) Determine new target rate of compensation. Target pilot 
compensation is based on the average annual compensation of first mates 
and masters on U.S. Great Lakes vessels. For pilots in undesignated 
waters, we approximate the first mates' compensation and, in designated 
waters, we approximate the master's compensation (first mates' wages 
multiplied by 150 percent plus benefits). To determine first mates' and 
masters' average annual compensation, we typically use data from the 
most recent AMOU contracts with the U.S. companies engaged in Great 
Lakes shipping. Where different AMOU agreements apply to different 
companies, we apportion the compensation provided by each agreement 
according to the percentage of tonnage represented by companies under 
each agreement.
    As of July 2010, there are two current AMOU contracts, which we 
designate Agreement A and Agreement B. Agreement A applies to vessels 
operated by Key Lakes, Inc., and Agreement B applies to all vessels 
operated by American Steamship Co. and Mittal Steel USA, Inc.
    Both Agreement A and Agreement B will expire on July 31, 2011. 
Based on discussions with AMOU officials, these contracts are not 
expected to be negotiated until 2011. This does not provide sufficient 
time to incorporate new rates into the ratemaking process for the 2011 
shipping season. The Coast Guard projects that when new AMOU contracts 
are negotiated in 2011, they would provide for a 3 percent wage 
increase effective August 1, 2011. This is in keeping with the recent 
contractual wage raises under the existing union contracts. Both 2009 
and 2010 saw wage raises of 3 percent. Under Agreement A, we project 
that the daily wage rate would increase from $270.61 to $278.73. Under 
Agreement B, the daily wage rate would increase from $333.58 to 
$343.59. All other benefits and calculations for these contracts are 
forecasted to remain identical to the current AMOU contracts. The 
pension plan contribution, which has been a fixed amount, the 401k 
employers matching contribution of 5 percent of wages, which is also a 
set amount, and the monthly contract multipliers are all projected to 
remain fixed at current AMOU contract levels. These benefits have not 
changed their numerical or percentage values over the course of the 
previous AMOU agreements still in effect. We do not project that the 
2011 contracts would have any impact on these fixed benefits.
    To calculate monthly wages, we apply Agreement A and Agreement B 
monthly multipliers of 54.5 and 49.5, respectively, to the daily rate. 
Agreement A's 54.5 multiplier represents 30.5 average working days, 
15.5 vacation days, 4 days for four weekends, 3 bonus days, and 1.5 
holidays. Agreement B's 49.5 multiplier represents 30.5 average working 
days, 16 vacation days, and 3 bonus days.
    To calculate average annual compensation, we multiply monthly 
figures by 9 months, the length of the Great Lakes shipping season.
    Table 8 shows new wage calculations based on projected Agreements A 
and B to be effective as of August 1, 2011.

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

    Both Agreements A and B currently include a health benefits 
contribution rate of $88.76. On average, this benefit contribution has 
increased at a rate of 10 percent per year throughout the lives of the 
existing five-year contracts. Accordingly, for purposes of the 2011 
rate we project that when new AMOU contracts are negotiated in 2011, 
this contribution would increase to $97.64 effective August 1, 2011. We 
project that Agreement A would continue to include a pension plan 
contribution rate of $33.35 per man-day and that Agreement B would 
continue to include a pension plan contribution rate of $43.55 per man-
day. Similarly, we expect both Agreements A and B to continue to 
provide a 5 percent 401K employer matching provision. Accordingly, for 
purposes of the 2011 rate, we will continue to use these values in 
calculating total pilot compensation. Currently, neither Agreement A 
nor Agreement B includes a clerical contribution that appeared in 
earlier contracts, and we project that this

[[Page 51196]]

would not be a feature of any new AMOU contracts negotiated in 2011. We 
project that the multiplier used to calculate monthly benefits would 
remain the same at 45.5 days.
    Table 9 shows new benefit calculations based on projected 
Agreements A and B, effective August 1, 2011.

                            Table 9--Benefits
------------------------------------------------------------------------
                                          Pilots on         Pilots on
          Monthly component             undesignated       designated
                                           waters            waters
------------------------------------------------------------------------
AGREEMENT A: Employer contribution,            $759.53         $1,139.30
 401(K) plan (Monthly Wages x 5%)...
Pension = $33.35 x 45.5 days........         $1,517.43         $1,517.43
Health = $97.64 x 45.5 days.........         $4,442.62         $4,442.62
AGREEMENT B: Employer contribution,            $850.38         $1,275.57
 401(K) plan (Monthly Wages x 5%)...
Pension = $43.55 x 45.5 days........         $1,981.53         $1,981.53
Health = $97.64 x 45.5 days.........         $4,442.62         $4,442.62
AGREEMENT A: Monthly total benefits.       = $6,719.58       = $7,099.35
AGREEMENT A: Monthly total benefits          = $60,476         = $63,894
 x 9 months.........................
AGREEMENT B: Monthly total benefits.       = $7,274.52       = $7,699.71
AGREEMENT B: Monthly total benefits          = $65,471         = $69,297
 x 9 months.........................
------------------------------------------------------------------------


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

    Table 11 shows that approximately one third of U.S. Great Lakes 
shipping deadweight tonnage operates under Agreement A, with the 
remaining two thirds operating under Agreement B.

             Table 11--Deadweight Tonnage by AMOU Agreement
------------------------------------------------------------------------
             Company                  Agreement A         Agreement B
------------------------------------------------------------------------
American Steamship Company......  ..................  815,600.
Mittal Steel USA, Inc...........  ..................  38,826.
Key Lakes, Inc..................  361,385...........
Total tonnage, each agreement...  361,385...........  854,426.
Percent tonnage, each agreement.  361,385 /           854,426 /
                                   1,215,811 =         1,215,811 =
                                   29.7238%.           70.2762%.
------------------------------------------------------------------------

    Table 12 applies the percentage of tonnage represented by each 
agreement to the wages and benefits provided by each agreement, to 
determine the projected target rate of compensation on a tonnage-
weighted basis.

        Table 12--Projected Target Rate of Compensation, Weighted
------------------------------------------------------------------------
                                     Undesignated
                                        waters         Designated waters
------------------------------------------------------------------------
AGREEMENT A: Total wages and      $197,192 x          $268,968 x
 benefits x percent tonnage.       29.7238% =          29.7238% =
                                   $58,613.            $79,948.
AGREEMENT B: Total wages and      $218,539 x          $298,900 x
 benefits x percent tonnage.       70.2762% =          70.2762% =
                                   $153,581.           $210,055.
Total weighted average wages and  $58,613 + $153,581  $79,948 + $210,055
 benefits = projected target       = $212,194.         = $290,003.
 rate of compensation.
------------------------------------------------------------------------

     (b) Determine number of pilots needed. Subject to adjustment by 
the Coast Guard Director of Great Lakes Pilotage to ensure 
uninterrupted service, we determine the number of pilots needed for 
ratemaking purposes in each Area by dividing each Area's projected 
bridge hours, either by 1,000 (designated waters) or by 1,800 
(undesignated waters).
    Bridge hours are the number of hours a pilot is aboard a vessel 
providing pilotage service. Projected bridge hours are based on the 
vessel traffic that pilots are expected to serve. Based on historical 
data and information provided by pilots and industry, we project that 
vessel traffic in the 2011

[[Page 51197]]

navigation season, in Districts 1 and 2, would remain unchanged from 
the 2010 projections noted in Table 13 of the 2010 final rule. In 
District 3, in both Areas 6 and 8, dropping bridge hours require the 
removal of two unused authorizations for pilots, one for each Area. 
There are no pilots currently in either of these slots and no jobs are 
being lost as a result of this action. The removal of these two pilot 
billets merely attempts to mitigate a significant downward trend across 
the undesignated waters of District 3. The bridge hours for the 
designated waters of Area 7, like Districts 1 and 2, would remain 
unchanged from the 2010 projections.
    Table 13, below, shows the projected bridge hours needed for each 
Area, and the total number of pilots needed for ratemaking purposes 
after dividing those figures either by 1,000 or 1,800. As in the 
previous three annual ratemakings, and for the reasons described in 
detail in the 2008 final rule (74 FR 220 at 221-222), we rounded up to 
the next whole pilot except in Area 2 where we rounded up from 3.14 to 
5, and in Area 4 where we rounded down from 4.07 to 4.

                                        Table 13--Number of Pilots Needed
----------------------------------------------------------------------------------------------------------------
                                                                    Divided by 1,000
                                        Projected 2011 bridge    (designated waters) or  Pilots needed  (total =
            Pilotage area                       hours             1,800 (undesignated              38)
                                                                        waters)
----------------------------------------------------------------------------------------------------------------
Area 1...............................                    5,203                    1,000                        6
Area 2...............................                    5,650                    1,800                        5
Area 4...............................                    7,320                    1,800                        4
Area 5...............................                    5,097                    1,000                        6
Area 6...............................                   11,606                    1,800                        7
Area 7...............................                    3,259                    1,000                        4
Area 8...............................                    9,830                    1,800                        6
----------------------------------------------------------------------------------------------------------------

     (c) Determine the projected target pilot compensation for each 
Area. The projection of new total target pilot compensation is 
determined separately for each pilotage Area by multiplying the number 
of pilots needed in each Area (see Table 13) by the projected target 
rate of compensation (see Table 12) for pilots working in that Area. 
Table 14 shows this calculation.

                                  Table 14--Projected Target Pilot Compensation
----------------------------------------------------------------------------------------------------------------
                                       Pilots needed  (total =    Multiplied by target    Projected target pilot
            Pilotage area                        38)              rate of compensation         compensation
----------------------------------------------------------------------------------------------------------------
Area 1...............................                        6               x $290,003               $1,740,018
Area 2...............................                        5                x 212,194                1,060,970
Area 4...............................                        4                x 212,194                  848,776
Area 5...............................                        6                x 290,003                1,740,018
Area 6...............................                        7                x 212,194                1,485,357
Area 7...............................                        4                x 290,003                1,160,012
Area 8...............................                        6                x 212,194                1,273,164
----------------------------------------------------------------------------------------------------------------

    Step 4: Increase the projected pilot compensation in Step 3 by the 
expense multiplier in Step 2. This step yields a projected increase in 
operating costs necessary to support the increased projected pilot 
compensation. Table 15 shows this calculation.

                                      Table 15--Projected Operating Expense
----------------------------------------------------------------------------------------------------------------
                                        Projected target pilot   Multiplied by expense     Projected operating
            Pilotage area                    compensation              multiplier                expense
----------------------------------------------------------------------------------------------------------------
Area 1...............................               $1,740,018                x 0.35182               = $612,171
Area 2...............................                1,060,970                x 0.59575                = 632,069
Area 4...............................                  848,776                x 0.69619                = 590,909
Area 5...............................                1,740,018                x 0.52606                = 915,350
Area 6...............................                1,485,357                x 0.55921                = 830,633
Area 7...............................                1,160,012                x 0.39457                = 457,708
Area 8...............................                1,273,164                x 0.49867                = 634,883
----------------------------------------------------------------------------------------------------------------

    Step 5: Adjust the result in Step 4, as required, for inflation or 
deflation, and calculate projected total economic cost. Based on data 
from the U.S. Department of Labor's Bureau of Labor Statistics 
available at http://www.bls.gov/xg_shells/ro5xg01.htm, we have 
multiplied the results in Step 4 by a 0.994 deflation factor, 
reflecting an average deflation rate of 0.6 percent between 2008 and 
2009, the latest years for which data are available. Table 16 shows 
this calculation and the projected total economic cost.

[[Page 51198]]



                                                         Table 16--Projected Total Economic Cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               B. Increase, multiplied                              D. Projected total
                    Pilotage area                      A. Projected operating  by deflation factor  (=    C. Projected target     economic cost  (= B +
                                                              expense                 A x 0.994)           pilot compensation               C)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Area 1..............................................                 $612,171                 $608,498               $1,740,018               $2,348,516
Area 2..............................................                  632,069                  628,277                1,060,970                1,689,246
Area 4..............................................                  590,909                  587,364                  848,776                1,436,140
Area 5..............................................                  915,350                  909,858                1,740,018                2,649,876
Area 6..............................................                  830,633                  825,649                1,485,357                2,311,006
Area 7..............................................                  457,708                  454,962                1,160,012                1,614,974
Area 8..............................................                  634,883                  631,074                1,273,164                1,904,237
--------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

    Step 7: Divide prospective unit costs (total unit costs) in Step 6 
by the base period unit costs in Step 1. Table 18 shows this 
calculation, which expresses the percentage change between the total 
unit costs and the base unit costs. The results, for each Area, are 
identical with the percentage increases listed in Table 1.

                                    Table 18--Percentage Change in Unit Costs
----------------------------------------------------------------------------------------------------------------
                                                                                           C. Percentage change
                                         A. Prospective unit      B. Base period unit     from base  (A divided
            Pilotage area                       costs                    costs           by B;  result expressed
                                                                                             as  percentage)
----------------------------------------------------------------------------------------------------------------
Area 1...............................                  $451.38                  $435.81                     3.57
Area 2...............................                   298.98                   288.12                     3.77
Area 4...............................                   196.19                   189.11                     3.75
Area 5...............................                   519.89                   502.22                     3.52
Area 6...............................                   199.12                   189.84                     4.89
Area 7...............................                   495.54                   478.52                     3.56
Area 8...............................                   193.72                   184.04                     5.26
----------------------------------------------------------------------------------------------------------------

    We use the percentage change between the prospective overall unit 
cost and the base overall unit cost to increase rates for cancellation, 
delay, or interruption in rendering services (46 CFR 401.420), and 
basic rates and charges for carrying a U.S. pilot beyond the normal 
change point, or for boarding at other than the normal boarding point 
(46 CFR 401.428). This calculation is derived from the Appendix C 
ratemaking methodology found at 46 CFR 404.10, and differs from the 
area rate calculation by using total costs and total bridge hours for 
all areas. Tables 19 through 21 show this calculation.

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


[[Page 51199]]


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


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

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

                     Table 22--Base Period Rates Adjusted by Percentage Change in Unit Costs
----------------------------------------------------------------------------------------------------------------
                                                         B. Percentage                         D. Adjusted rate
                                  A. Base period rate   change in unit   C. Increase in base  (A + C, rounded to
                                                             costs          rate (A x B%)       nearest dollar)
----------------------------------------------------------------------------------------------------------------
*Pilotage area                    ...................    (Multiplying
                                                            Factor)
----------------------------------------------------------------------------------------------------------------
Area 1:                                                   3.57 (1.0357)
    --Basic pilotage............  $17.73/km, $31.38/   ................  $0.63/km, $1.12/mi.  $18.36/km, $32.50/
                                   mi.                                                         mi.
    --Each lock transited.......  $393...............  ................  $14.03.............  $407.
    --Harbor movage.............  $1,287.............  ................  $45.95.............  $1,333.
    --Minimum basic rate, St.     $858...............  ................  $30.63.............  $889.
     Lawrence River.
    --Maximum rate, through trip  $3,767.............  ................  $134.48............  $3,901.
Area 2:                                                   3.77 (1.0377)
    --6-hr. period..............  $861...............  ................  $32.46.............  $893.
    --Docking or undocking......  $821...............  ................  $30.95.............  $852.
Area 4:                                                   3.75 (1.0375)
    --6-hr. period..............  $762...............  ................  $28.58.............  $791.
    --Docking or undocking......  $587...............  ................  $22.01.............  $609.
    --Any point on Niagara River  $1,498.............  ................  $56.18.............  $1,554.
     below Black Rock Lock.
Area 5 between any point on or    ...................     3.52 (1.0352)
 in:
    --Toledo or any point on      $1,364.............  ................  $48.01.............  $1,412.
     Lake Erie W. of Southeast
     Shoal.
    --Toledo or any point on      $2,308.............  ................  $81.24.............  $2,389.
     Lake Erie W. of Southeast
     Shoal & Southeast Shoal.
    --Toledo or any point on      $2,997.............  ................  $105.49............  $3,102.
     Lake Erie W. of Southeast
     Shoal & Detroit River.
    --Toledo or any point on      $2,308.............  ................  $81.24.............  $2,389.
     Lake Erie W. of Southeast
     Shoal & Detroit Pilot Boat.
    --Port Huron Change Point &   $4,020.............  ................  $141.50............  $4,162.
     Southeast Shoal (when
     pilots are not changed at
     the Detroit Pilot Boat).
    --Port Huron Change Point &   $4,657.............  ................  $163.93............  $4,821.
     Toledo or any point on Lake
     Erie W. of Southeast Shoal
     (when pilots are not
     changed at the Detroit
     Pilot Boat).
    --Port Huron Change Point &   $3,020.............  ................  $106.30............  $3,126.
     Detroit River.
    --Port Huron Change Point &   $2,349.............  ................  $82.68.............  $2,432.
     Detroit Pilot Boat.
    --Port Huron Change Point &   $1,670.............  ................  $58.78.............  $1,729.
     St. Clair River.
    --St. Clair River...........  $1,364.............  ................  $48.01.............  $1,412.
    --St. Clair River &           $4,020.............  ................  $141.50............  $4,162.
     Southeast Shoal (when
     pilots are not changed at
     the Detroit Pilot Boat).
    --St. Clair River & Detroit   $3,020.............  ................  $106.30............  $3,126.
     River/Detroit Pilot Boat.
    --Detroit, Windsor, or        $1,364.............  ................  $48.01.............  $1,412.
     Detroit River.
    --Detroit, Windsor, or        $2,308.............  ................  $81.24.............  $2,389.
     Detroit River & Southeast
     Shoal.
    --Detroit, Windsor, or        $2,997.............  ................  $105.49............  $3,102.
     Detroit River & Toledo or
     any point on Lake Erie W.
     of Southeast Shoal.
    --Detroit, Windsor, or        $3,020.............  ................  $106.30............  $3,126.
     Detroit River & St. Clair
     River.
    --Detroit Pilot Boat &        $1,670.............  ................  $58.78.............  $1,729.
     Southeast Shoal.
    --Detroit Pilot Boat &        $2,308.............  ................  $81.24.............  $2,389.
     Toledo or any point on Lake
     Erie W. of Southeast Shoal.
    --Detroit Pilot Boat & St.    $3,020.............  ................  $106.30............  $3,126.
     Clair River.
Area 6:                                                   4.89 (1.0489)
    --6-hr. period..............  $656...............  ................  $32.08.............  $688.
    --Docking or undocking......  $623...............  ................  $30.46.............  $653.

[[Page 51200]]

 
Area 7 between any point on or                            3.56 (1.0356)
 in:
    --Gros Cap & De Tour........  $2,559.............  ................  $91.10.............  $2,650.
    --Algoma Steel Corp. Wharf,   $2,559.............  ................  $91.10.............  $2,650.
     Sault Ste. Marie, Ont. & De
     Tour.
    --Algoma Steel Corp. Wharf,   $964...............  ................  $34.32.............  $998.
     Sault Ste. Marie, Ont. &
     Gros Cap.
    --Any point in Sault Ste.     $2,145.............  ................  $76.36.............  $2,221.
     Marie, Ont., except the
     Algoma Steel Corp. Wharf &
     De Tour.
    --Any point in Sault Ste.     $964...............  ................  $34.32.............  $998.
     Marie, Ont., except the
     Algoma Steel Corp. Wharf &
     Gros Cap.
    --Sault Ste. Marie, MI & De   $2,145.............  ................  $76.36.............  $2,221.
     Tour.
    --Sault Ste. Marie, MI &      $964...............  ................  $34.32.............  $998.
     Gros Cap.
    --Harbor movage.............  $964...............  ................  $34.32.............  $998.
Area 8:                                                   5.26 (1.0526)
    --6-hr. period..............  $578...............  ................  $30.40.............  $608.
    --Docking or undocking......  $549...............  ................  $28.88.............  $578.
----------------------------------------------------------------------------------------------------------------
* Rates for ``Cancellation, delay or interruption in rendering services (Sec.   401.420)'' and ``Basic Rates and
  charges for carrying a U.S. pilot beyond the normal change point, or for boarding at other than the normal
  boarding point (Sec.   401.428)'' are not reflected in this table but have been increased by 6.51% across all
  areas (see Table 21).

VI. Regulatory Analyses

    We developed this proposed rule after considering numerous statutes 
and executive orders related to rulemaking. Below, we summarize our 
analyses based on 13 of these statutes or executive orders.

A. Regulatory Planning and Review

    This proposed 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. A draft Regulatory 
Assessment follows:
    The Coast Guard is required to conduct an annual review of pilotage 
rates on the Great Lakes and, if necessary, adjust these rates to align 
compensation levels between Great Lakes pilots and industry. See the 
``Background'' section for a detailed explanation of the legal 
authority and requirements for the Coast Guard to conduct an annual 
review and provide possible adjustments of pilotage rates on the Great 
Lakes. Based on our annual review for this proposed rulemaking, we are 
adjusting the pilotage rates for the 2011 shipping season to generate 
sufficient revenue to cover allowable expenses, target pilot 
compensation, and returns on investment.
    This proposed rule would implement rate adjustments for the Great 
Lakes system over the current rates adjusted in the 2010 final rule. 
These adjustments to Great Lakes pilotage rates meet the requirements 
set forth in 46 CFR Part 404 for similar compensation levels between 
Great Lakes pilots and industry. They also include adjustments for 
deflation and projected changes in association expenses to maintain 
these compensation levels.
    In general, we expect an increase in pilotage rates for a certain 
area to result in additional costs for shippers using pilotage services 
in that area, while a decrease would result in a cost reduction or 
savings for shippers in that area. The shippers affected by these rate 
adjustments are those owners and operators of domestic vessels 
operating on register (employed in the foreign trade) and owners and 
operators of foreign vessels on a route within the Great Lakes system. 
These owners and operators must have pilots or pilotage service as 
required by 46 U.S.C. 9302. There is no minimum tonnage limit or 
exemption for these vessels. The Coast Guard's interpretation is that 
the statute applies only to commercial vessels and not to recreational 
vessels.
    Owners and operators of other vessels that are not affected by this 
rule, such as recreational boats and vessels only operating within the 
Great Lakes system, may elect to purchase pilotage services. However, 
this election is voluntary and does not affect the Coast Guard's 
calculation of the rate increase and is not a part of our estimated 
national cost to shippers. Coast Guard sampling of pilot data suggests 
there are very few U.S. domestic vessels, without registry and 
operating only in the Great Lakes, that voluntarily purchase pilotage 
services.
    We used 2006-2008 vessel arrival data from the Coast Guard's Marine 
Information for Safety and Law Enforcement (MISLE) system to estimate 
the average annual number of vessels affected by the rate adjustment to 
be 208 vessels that journey into the Great Lakes system. These vessels 
entered the Great Lakes by transiting through or in part of at least 
one of the pilotage areas before leaving the Great Lakes system. These 
vessels often make more than one distinct stop, docking, loading, and 
unloading at facilities in Great Lakes ports. Of the total trips for 
the 208 vessels, there were approximately 923 annual U.S. port arrivals 
before the vessels left the Great Lakes system, based on 2006-2008 
vessel data from MISLE.
    The impact of the rate adjustment to shippers is estimated from 
pilotage revenues. These revenues represent the direct and indirect 
costs (``economic costs'') that shippers must pay for pilotage 
services. The Coast Guard sets rates so that revenues equal the 
estimated cost of pilotage.
    We estimate the additional impact (costs or savings) of the rate 
adjustment in this proposed rule to be the difference between the total 
projected revenue needed to cover costs based on the 2010 rate 
adjustment and the total projected revenue needed to cover costs in 
this proposed rule for 2011. Table 23 details additional costs or 
savings by area.

[[Page 51201]]



                  Table 23--Rate Adjustment and Additional Impact of the Proposed Rule by Area
                                             [$U.S.; non-discounted]
----------------------------------------------------------------------------------------------------------------
                                                               Change in                        Additional cost
                                          Total projected      projected      Total projected    or savings of
                                         expenses in 2010      expenses      expenses in 2011   this rulemaking
----------------------------------------------------------------------------------------------------------------
Area 1.................................        $2,267,537            1.0357        $2,348,516           $80,979
Area 2.................................         1,627,853            1.0377         1,689,246            61,393
Area 4.................................         1,384,253            1.0375         1,436,140            51,887
Area 5.................................         2,559,805            1.0352         2,649,876            90,071
Area 6.................................         2,544,935            0.9081         2,311,006          (233,929)
Area 7.................................         1,559,501            1.0356         1,614,974            55,473
Area 8.................................         2,140,345            0.8897         1,904,237          (236,108)
----------------------------------------------------------------------------------------------------------------
NOTES to Table 23:
Some values may not total due to rounding.
See ``B. Calculating the Rate Adjustment'' for further details on the rate adjustment methodology.
``Additional Cost or Savings of this Rulemaking'' = ``Total Projected Expenses in 2011'' minus ``Total Projected
  Expenses in 2010.''

    After applying the rate change in this proposed rule, the resulting 
difference between the projected revenue in 2010 and the projected 
revenue in 2011 is the annual impact to shippers from this rule. This 
figure would be equivalent to the total additional payments or savings 
that shippers would incur for pilotage services from this proposed 
rule. As discussed earlier, we consider a reduction in payments to be a 
cost savings.
    The impact of the rate adjustment in this proposed rule to shippers 
varies by area. The annual costs of the rate adjustments range from 
$51,887 to $90,071 for most affected Areas. However, Areas 6 and 8 
would experience annual cost savings of approximately $234,000 and 
$236,000, respectively. The annual savings is due to a projected 
decrease in the number of billeted pilots in Areas 6 and 8 from 2010 to 
2011. This decrease in the number of pilots would reduce the projected 
revenue needed to cover costs of pilotage services in Areas 6 and 8.
    To calculate an exact cost or savings per vessel is difficult 
because of the variation in vessel types, routes, port arrivals, 
commodity carriage, time of season, conditions during navigation, and 
preferences for the extent of pilotage services on designated and 
undesignated portions of the Great Lakes system. Some owners and 
operators would pay more and some would pay less depending on the 
distance and port arrivals of their vessels' trips. However, the annual 
cost or savings reported above does capture all of the additional cost 
the shippers face as a result of the rate adjustment in this rule.
    This proposed rate adjustment would result in a savings for Areas 6 
and 8 that would outweigh the combined costs of the other areas. We 
measure the impact of this rulemaking by examining the changes in costs 
to shippers for pilotage services. With savings in Areas 6 and 8 
exceeding the combined costs in other Areas, the net impact of this 
rulemaking would be a cost savings for pilotage services in the Great 
Lakes system. The overall impact of the proposed rule would be a cost 
savings to shippers of about $130,000 if we sum across all affected 
areas.

B. Small Entities

    Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have 
considered whether this proposed rule would have a significant economic 
impact on a substantial number of small entities. The term ``small 
entities'' comprises small businesses, not-for-profit organizations 
that are independently owned and operated and are not dominant in their 
fields, and governmental jurisdictions with populations of less than 
50,000 people.
    We expect entities affected by the proposed rule would be 
classified under the North American Industry Classification System 
(NAICS) code subsector 483-Water Transportation, which includes one or 
all of the following 6-digit NAICS codes for freight transportation: 
483111-Deep Sea Freight Transportation, 483113-Coastal and Great Lakes 
Freight Transportation, and 483211-Inland Water Freight Transportation. 
According to the Small Business Administration's definition, a U.S. 
company with these NAICS codes and employing less than 500 employees is 
considered a small entity.
    For the proposed rule, we reviewed recent company size and 
ownership data from 2006-2008 Coast Guard MISLE data and business 
revenue and size data provided by Reference USA and Dunn and 
Bradstreet. We were able to gather revenue and size data or link the 
entities to large shipping conglomerates for 22 of the 24 affected 
entities in the United States. We found that large, mostly foreign-
owned, shipping conglomerates or their subsidiaries owned or operated 
all vessels engaged in foreign trade on the Great Lakes. We assume that 
new industry entrants would be comparable in ownership and size to 
these shippers.
    There are three U.S. entities affected by the proposed rule that 
receive revenue from pilotage services. These are the three pilot 
associations that provide and manage pilotage services within the Great 
Lakes system. Two of the associations operate as partnerships and one 
operates as a corporation. These associations are classified with the 
same NAICS industry classification and small entity size standards 
described above, but they have far fewer than 500 employees: 
approximately 65 total employees combined. We expect no adverse impact 
to these entities from this 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 has determined that this proposed rule 
would not have a significant economic impact on a substantial number of 
small entities under 5 U.S.C. Sec.  605(b). 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 and 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 offer to assist small 
entities in understanding the proposed rule so that they could better 
evaluate its effects on

[[Page 51202]]

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 call Mr. Paul M. Wasserman, Chief, Great Lakes 
Pilotage Division, Commandant (CG-5522), U.S. Coast Guard, at 202-372-
1535, by fax 202-372-1909, or by e-mail at [email protected]. 
The Coast Guard will not retaliate against small entities that question 
or complain about this rule or any policy or action of the Coast Guard.
    Small businesses may send comments on the actions of Federal 
employees who enforce, or otherwise determine compliance with, Federal 
regulations to the Small Business and Agriculture Regulatory 
Enforcement Ombudsman and the Regional Small Business Regulatory 
Fairness Boards. The Ombudsman evaluates these actions annually and 
rates each agency's responsiveness to small business. If you wish to 
comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR 
(1-888-734-3247).

D. Collection of Information

    This proposed rule would call for no new collection of information 
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). This 
rule does not change the burden in the collection currently approved by 
the Office of Management and Budget (OMB) under OMB Control Number 
1625-0086, Great Lakes Pilotage Methodology.

E. Federalism

    A rule has implications for federalism under Executive Order 13132, 
Federalism, if it has a substantial direct effect on State or local 
governments and would either preempt State law or impose a substantial 
direct cost of compliance on them. We have analyzed this proposed rule 
under that Order and have determined that it does not have implications 
for federalism because States are expressly prohibited by 46 U.S.C. 
9306 from regulating pilotage on the Great Lakes.

F. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) 
requires Federal agencies to assess the effects of their discretionary 
regulatory actions. In particular, the Act addresses actions that may 
result in the expenditure by a State, local, or tribal government, in 
the aggregate, or by the private sector of $100,000,000 (adjusted for 
inflation) or more in any one year. Though this proposed rule would not 
result in such expenditure, we do discuss the effects of this rule 
elsewhere in this preamble.

G. Taking of Private Property

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

H. Civil Justice Reform

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

I. Protection of Children

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

J. Indian Tribal Governments

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

K. Energy Effects

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

L. Technical Standards

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

M. Environment

    We have analyzed this proposed rule under Department of Homeland 
Security Management Directive 023-01 and Commandant Instruction 
M16475.lD, which guide the Coast Guard in complying with the National 
Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and 
have made a preliminary determination that this action is one of a 
category of actions which do not individually or cumulatively have a 
significant effect on the human environment. A preliminary 
environmental analysis checklist supporting this determination is 
available in the docket where indicated under the ``Public 
Participation and Request for Comments'' section of this preamble. This 
rule is categorically excluded under section 2.B.2, figure 2-1, 
paragraph (34)(a) of the Instruction. Paragraph 34(a) pertains to minor 
regulatory changes that are editorial or procedural in nature. This 
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:

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.


[[Page 51203]]


    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...........................  $18.36 per kilometer or $32.50 per mile*.
Each Lock Transited......................  407*.
Harbor Movage............................  1,333*.
----------------------------------------------------------------------------------------------------------------
* The minimum basic rate for assignment of a pilot in the St. Lawrence River is $889, and the maximum basic rate
  for a through trip is $3,901.

     (b) Area 2 (Undesignated Waters):

------------------------------------------------------------------------
                         Service                           Lake Ontario
------------------------------------------------------------------------
Six-Hour Period.........................................            $893
Docking or Undocking....................................             852
------------------------------------------------------------------------

    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):

------------------------------------------------------------------------
                                      Lake Erie  (East
               Service                  of  Southeast        Buffalo
                                           Shoal)
------------------------------------------------------------------------
Six-Hour Period.....................              $791              $791
Docking or Undocking................               609               609
Any Point on the Niagara River below               N/A             1,554
 the Black Rock Lock................
------------------------------------------------------------------------

     (b) Area 5 (Designated Waters):

----------------------------------------------------------------------------------------------------------------
                                                   Toledo or any
                                                   point on Lake
       Any point on or in            Southeast     Erie west of    Detroit River   Detroit Pilot     St. Clair
                                       Shoal         Southeast                         Boat            River
                                                       Shoal
----------------------------------------------------------------------------------------------------------------
Toledo or any port on Lake Erie           $2,389          $1,412          $3,102          $2,389             N/A
 west of Southeast Shoal........
Port Huron Change Point.........          *4,162          *4,821           3,126           2,432           1,729
St. Clair River.................          *4,162             N/A           3,126           3,126           1,412
Detroit or Windsor or the                  2,389           3,102           1,412             N/A           3,126
 Detroit River..................
Detroit Pilot Boat..............           1,729           2,389             N/A             N/A           3,126
----------------------------------------------------------------------------------------------------------------
* When pilots are not changed at the Detroit Pilot Boat.

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


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

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

------------------------------------------------------------------------
                                                            Lakes Huron
                         Service                           and  Michigan
------------------------------------------------------------------------
Six-Hour Period.........................................            $688
Docking or Undocking....................................             653
------------------------------------------------------------------------

     (b) Area 7 (Designated Waters):

----------------------------------------------------------------------------------------------------------------
                           Area                                  De Tour          Gros Cap         Any harbor
----------------------------------------------------------------------------------------------------------------
Gros Cap..................................................             2,650               N/A               N/A
Algoma Steel Corporation Wharf at Sault Ste. Marie,                    2,650               998               N/A
 Ontario..................................................
Any point in Sault Ste. Marie, Ontario, except the Algoma              2,221               998               N/A
 Steel Corporation Wharf..................................
Sault Ste. Marie, MI......................................             2,221               998               N/A

[[Page 51204]]

 
Harbor Movage.............................................               N/A               N/A               998
----------------------------------------------------------------------------------------------------------------

     (c) Area 8 (Undesignated Waters):

------------------------------------------------------------------------
                         Service                           Lake Superior
------------------------------------------------------------------------
Six-Hour Period.........................................            $608
Docking or Undocking....................................             578
------------------------------------------------------------------------

Sec.  401.420  [Amended]

    5. In Sec.  401.420--
    a. In paragraph (a), remove the text ``$119'' and add, in its 
place, the text ``$127''; and remove the text ``$1,867'' and add, in 
its place, the text ``$1,989'';
    b. In paragraph (b), remove the text ``$119'' and add, in its 
place, the text ``$127''; and remove the text ``$1,867'' and add, in 
its place, the text ``$1,989''; and
    c. In paragraph (c)(1), remove the text ``$705'' and add, in its 
place, the text ``$751''; and in paragraph (c)(3), remove the text 
``$119'' and add, in its place, the text ``$127'', and remove the text 
``$1,867'' and add, in its place, the text ``$1,989''.


Sec.  401.428  [Amended]

    6. In Sec.  401.428, remove the text ``$719'' and add, in its 
place, the text ``$766''.

    Dated: August 11, 2010.
Dana A. Goward,
Acting Director, Marine Transportation Systems Management, U. S. Coast 
Guard.
[FR Doc. 2010-20544 Filed 8-16-10; 4:15 pm]
BILLING CODE 9110-04-P