[Federal Register Volume 78, Number 40 (Thursday, February 28, 2013)]
[Rules and Regulations]
[Pages 13521-13543]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-04321]



[[Page 13521]]

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

DEPARTMENT OF HOMELAND SECURITY

Coast Guard

46 CFR Part 401

[Docket No. USCG-2012-0409]
RIN 1625-AB89


Great Lakes Pilotage Rates--2013 Annual Review and Adjustment

AGENCY: Coast Guard, DHS.

ACTION: Final rule.

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

SUMMARY: The Coast Guard is adjusting the rates for pilotage services 
on the Great Lakes, which were last amended in February 2012. The 
adjustments establish new base rates and are made in accordance with a 
full ratemaking procedure. This rulemaking promotes the Coast Guard's 
maritime safety mission.

DATES: This final rule is effective August 1, 2013.

ADDRESSES: Comments and material received from the public, as well as 
any documents mentioned in this preamble as being available in the 
docket, are part of docket USCG-2012-0409 and are available for 
inspection or copying at the 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, between 9 a.m. and 5 
p.m., Monday through Friday, except Federal holidays. You may also find 
this docket on the Internet by going to http://www.regulations.gov, 
inserting USCG-2012-0409 in the ``Keyword'' box, and then clicking 
``Search.''

FOR FURTHER INFORMATION CONTACT: If you have questions on this rule, 
call or email Mr. Todd Haviland, Director, Great Lakes Pilotage, 
Commandant (CG-WWM-2), Coast Guard; telephone 202-372-2037, email 
[email protected], or fax 202-372-1909. If you have questions on 
viewing or submitting material to the docket, call Ms. Renee V. Wright, 
Program Manager, Docket Operations, telephone 202-366-9826.

SUPPLEMENTARY INFORMATION:

Table of Contents for Preamble

I. Abbreviations
II. Regulatory History
III. Basis and Purpose
IV. Background
V. Discussion of Comments and Changes
VI. Discussion of the Final Rule
    A. Summary
    B. Calculating the Rate Adjustment
VII. 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. Abbreviations

AMOU American Maritime Officers Union
APA American Pilots' Association
CFR Code of Federal Regulations
COBRA Consolidated Omnibus Budget Reconciliation Act
CPA Certified Public Accountant
CPI Consumer Price Index
E.O. Executive Order
FR Federal Register
GLPA Canadian Great Lakes Pilotage Authority
MISLE Marine Information for Safety and Law Enforcement
NAICS North American Industry Classification System
NPRM Notice of proposed rulemaking
OMB Office of Management and Budget
ROI Return on Investment
Sec.  Section symbol
SPI Seaway Pilot, Inc.
U.S.C. United States Code

II. Regulatory History

    On August 1, 2012, we published a notice of proposed rulemaking 
(NPRM) entitled ``Great Lakes Pilotage Rates--2013 Annual Review and 
Adjustment'' in the Federal Register (77 FR 45539). We received six 
comments on the NPRM from four sources, including the three pilots' 
associations and one District Three pilot. No public meeting was 
requested and none was held.

III. Basis and Purpose

    The basis of this rulemaking is the Great Lakes Pilotage Act of 
1960 (``the Act'') (46 U.S.C. Chapter 93), which requires U.S. vessels 
operating ``on register'' \1\ and foreign vessels to use U.S. 
registered pilots while transiting the U.S. waters of the St. Lawrence 
Seaway and the Great Lakes system. 46 U.S.C. 9302(a)(1). The Act 
requires the Secretary of the department in which the Coast Guard is 
operating to ``prescribe by regulation rates and charges for pilotage 
services, giving consideration to the public interest and the costs of 
providing the services.'' 46 U.S.C. 9303(f). Rates must be established 
or reviewed and adjusted each year, not later than March 1. Base rates 
must be established by a full ratemaking at least once every 5 years, 
and in years when base rates are not established they must be reviewed 
and adjusted if necessary. 46 U.S.C. 9303(f). The Secretary's duties 
and authority under the Act have been delegated to the Coast Guard. 
Department of Homeland Security Delegation No. 0170.1, paragraph 
(92)(f). Coast Guard regulations implementing the Act appear in parts 
401 through 404 of Title 46, Code of Federal Regulations (CFR). 
Procedures for use in establishing base rates appear in 46 CFR part 
404, Appendix A, and procedures for annual review and adjustment of 
existing base rates appear in 46 CFR part 404, Appendix C.
---------------------------------------------------------------------------

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

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

IV. Background

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

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

    The U.S. waters of the Great Lakes and the St. Lawrence Seaway are 
divided into three pilotage districts. Pilotage in each district is 
provided by an association certified by the Coast Guard Director of 
Great Lakes Pilotage to operate a pilotage pool. It is important to 
note that, while we set rates, we do not control the actual number of 
pilots an association maintains, so long as the association is able to 
provide safe, efficient, and reliable pilotage service. Also, we do not 
control the actual compensation that pilots receive. The actual 
compensation is determined by each of the three district associations.
    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.

[[Page 13522]]

Areas 1, 5, and 7 have been designated by Presidential Proclamation, 
pursuant to the Act, to be waters in which pilots must at all times be 
fully engaged in the navigation of vessels in their charge. Areas 2, 4, 
6, and 8 have not been so designated because they are open bodies of 
water. While working in those undesignated areas, pilots must only ``be 
on board and available to direct the navigation of the vessel at the 
discretion of and subject to the customary authority of the master.'' 
46 U.S.C. 9302(a)(1)(B).
    This rule is a full ratemaking to establish new base pilotage 
rates, using the 46 CFR part 404, Appendix A, methodology. The last 
full ratemaking established the current base rates in the 2012 final 
rule (77 FR 11752, February 28, 2012). Among other things, the Appendix 
A methodology requires us to review detailed pilot association 
financial information, and we contract with independent accountants to 
assist in that review. This final rule is based on the review of 2010 
financial information. The associations are given time to review and 
comment on the preliminary reports of the independent accountants, 
before the review is finalized. Comments by the pilots' associations on 
those reports and the independent accountant's final findings are 
available in the docket.

V. Discussion of Comments and Changes

    We received six public comments on our NPRM from four sources, the 
three pilotage associations and a District Three pilot. Two of the 
associations filed two comments each. The third association filed a 
single series of comments from the association president and the 
association's certified public accountant.
    Agreement A. Two associations said we made mistakes regarding the 
American Maritime Officers Union (AMOU) contracts, Agreement A and 
Agreement B, which provide data used by the Appendix A methodology.
    First, the associations claimed the Agreement A health benefit 
should be $105.61 per day, not $52.96. Second, the associations claimed 
the Agreement A pension benefit should be $44.61 per day, not zero. 
Third, the associations claimed the Agreement A daily wage rate should 
be $295.94, not $270.61.
    Our NPRM correctly reflected the contract information that was 
available to us when the NPRM was published. However, as a result of 
these comments we reached out to AMOU to inquire if the contract that 
we had used was superseded. AMOU then provided us with more recent 
contract information. However, they now treat each individual component 
of wage, health, and pension benefits as proprietary information and 
did not consent to our request to disclose this information. Instead, 
they provided us with a daily aggregate rate for Agreements A and B for 
first mates on U.S. Great Lakes vessels, and validated our Agreements A 
and B aggregate rate values for designated waters. These aggregate 
rates combine, without separately identifying, the following inputs: 
Daily wage rate, vacation pay, pension plan contributions, and medical 
plan contributions.
    In the past, those inputs were separately identified and we passed 
that information along to the public. For example, our August 2012 NPRM 
included Tables 11 (Projected Wage Components) and 12 (Projected 
Benefits Components). Now, because AMOU treats the separate inputs as 
proprietary information, the NPRM's Tables 11 and 12 must be replaced 
in this final rule by new Table 11 (Projected Annual Rate Components), 
which uses the AMOU's aggregate rates. This change in the degree of 
detail with which our tables display AMOU contract data does not result 
in any change in how those data are factored into our ratemaking 
methodology.
    Weighting factors. Weighting factors are based on the size of a 
ship and are used in determining actual charges for pilotage service. 
All three associations pointed out that Canada now uses different 
weighting factors than the weighting factors used by the U.S. and shown 
in 46 CFR 401.400(b). Canada unilaterally changed its weighting factors 
in 2008 to reflect an industry shift to smaller vessels so that these 
smaller vessels carried a more fair portion of the costs associated 
with pilotage on the Great Lakes. As a result, a Canadian pilot on a 
``1.0 factor'' vessel now charges 15 percent more than a U.S. pilot on 
the same vessel.
    A similar comment was made during our 2010 ratemaking, and in the 
final rule for that ratemaking, 75 FR 7958 at 7959, col. 3 (Feb. 23, 
2010), we declined to take action on the grounds that adjusting the 
weighting factors was beyond the scope of that rulemaking. Having made 
that determination in 2010, we cannot take action in this 2013 final 
rule, the public not having been afforded adequate notice in our August 
1, 2012 NPRM that weighting factors might be under consideration for 
adjustment in the 2013 ratemaking. However, we agree with the 
associations that the U.S. should match the Canadian weighting factors, 
as a matter of parity and to reduce billing confusion between the two 
countries, both of which are important Federal Government concerns, as 
emphasized by recent Executive Order 13609, ``Promoting International 
Regulatory Cooperation'' (77 FR 26413, May 4, 2012). Therefore, 
although we will not address weighting factors in this final rule, we 
will do so either in the 2014 ratemaking or in a separate regulatory 
action.
    American Pilots' Association dues. One association said we should 
factor into our ratemaking the dues that associations pay for 
membership in the American Pilots' Association (APA) because the APA 
``continually collects information of value to its members [and] 
represents the pilotage organizations with international entities.'' We 
disagree. Our position has not changed from the position taken in our 
last two Appendix A ratemakings, completed in 2006 (71 FR 16501 at 
16507, col. 3; April 3, 2006) and 2012 (77 FR 11752 at 11755, col. 2; 
Feb. 28, 2012). Our regulations provide clear guidance concerning this 
issue and state, ``[each] expense item included in the rate base is 
evaluated to determine if it is necessary for the provision of pilotage 
service, and if so, what dollar amount is reasonable for the expense.'' 
46 CFR 404.5(a)(1). Recognizable expenses must be both ``reasonable and 
necessary for the provision of pilotage.'' This topic is analogous to a 
licensure issue. Expenditures associated with obtaining and maintaining 
one's pilot's license represent ``necessary'' expenses that are 
recognized. Membership in a voluntary special interest association, 
like the APA, is not necessary for the provision of pilotage. We 
continue to find that American Pilots' Association membership dues are 
not necessary, and thus are excluded from the rate's operating 
expenses.
    Bridge hour projections. Two associations commented on Coast Guard 
procedures for projecting bridge hours, an important part of the 
Appendix A ratemaking methodology, and the District Three pilot 
commented on the negative impact on pilot revenue of over-projecting 
bridge hours. One association said that, in an unexplained departure 
from past practice, our NPRM multiplied 2011 revenue per bridge hour by 
projected bridge hours to arrive at projected revenue. The other 
association said we consistently over-project bridge hours, resulting 
in over-projection of revenue. We disagree with both comments. There 
has been no ``unexplained departure from past practice''--we have 
consistently followed Step 3.A of the Appendix A methodology which 
states: ``Projected demand for pilotage service is

[[Page 13523]]

multiplied by the existing pilotage rates for that service, to arrive 
at the `projection of revenue.' '' As to over-projecting bridge hours, 
a concern raised by the associations and the District Three pilot, we 
have consistently improved our ability to project demand for pilotage 
services. We rely on historic data, input from pilots and industry, 
periodicals and trade magazines, and information from conferences to 
project demand for pilotage services. Both associations said we should 
use a ``less arbitrary'' and more accurate method to project bridge 
hours. This rule applies the best available information to our current 
methodology. However, we understand the pilots' concern about 
definitions and methodologies relating to bridge hours and therefore 
those definitions and methodologies are currently undergoing an 
independent, comprehensive study and review. We anticipate the study 
will be completed by this summer. The results of the study will inform 
our assessment of whether changes to the regulations are needed, and we 
will publish a proposed rule updating definitions and methodologies if 
revisions are deemed necessary.
    License insurance. The District One pilots' association said we 
should recognize two license insurance premium costs of $26,946 and 
$15,781, not $23,880 and $18,847, respectively. We disagree. The 
association did not raise this issue during the comment period for 
reviewing the independent accountant's preliminary report and the 
commenter has provided no subsequent data in support of its claim that 
the costs are incorrectly allocated.
    Insurance costs. The District One pilots' association said we 
should increase its insurance costs by $4,491 to recognize the 
association's addition in 2011 of a fifth pilot. The association's 
implication is that, under Step 1.D of the Appendix A methodology, we 
should adjust our projections because the fifth pilot is a 
``foreseeable circumstance'' that will affect the association's costs 
going forward. We disagree. The audits are based on a review of the 
2010 financial statements, transactions, and documents. Therefore, the 
addition of a fifth pilot in 2011 would not be included in a review of 
the 2010 financial records. This expense will be captured and evaluated 
in the audit of the 2011 expenses. As we stated in the previous 
Appendix A ratemaking, ``[we] consider significant capital expenditures 
and the fixed costs associated with those capital expenditures as 
`foreseeable circumstances.' The rest of the expenses that fluctuate 
due to market forces and the variance in demand for pilot services will 
be reimbursed when they are recognized in the independent accountant's 
financial reports that we will use in future ratemaking.'' (77 FR 11752 
at 11755, col. 3). Therefore, we will not include this expense in the 
2013 Appendix A ratemaking.
    Travel expenses. The District One pilots' association said our NPRM 
relied on an improper extrapolation in disallowing a $13,861 travel 
expense. We disagree. Our independent accountant determined that the 
expense at issue was not incurred in 2010. Only expenses incurred in 
that calendar year are eligible for consideration in this year's 
ratemaking.
    Fixed assets. The District One pilots' association noted that 
virtually all of the association's fixed assets are owned by its 
``corporate arm,'' Seaway Pilot, Inc. (SPI) and claims that we erred in 
our calculation of the 2012 investment base. According to the pilots, 
we erroneously excluded $548,369 from SPI's investment base. The pilots 
believe we have calculated the investment base correctly in the 2013 
NPRM, but assert we have never made them whole by correcting the 2012 
rate. We disagree that any corrective action is needed with respect to 
our 2012 calculations. As we stated in the 2012 Appendix A final rule, 
``[we] coordinated with the independent accountant and used the 
financial information provided by District One to calculate the 
investment base for this rulemaking,'' and ``the independent 
accountant's financial reports include the investment base calculation 
for future rulemakings.'' (77 FR 11752 at 11755, col. 3). We used the 
information that was provided to us by the association and do not see 
any grounds for making the suggested adjustment. The 2013 rate, as 
promised, includes the investment base calculation.
    Inflation. The District One pilots' association said we should 
adjust the 2013 rate to reflect ``a particularly egregious error'' in 
the 2012 rate, the exclusion of an inflationary component based on the 
Consumer Price Index (CPI) for the years 2007 and 2008. The association 
also said our inflation adjustment should reflect inflation between 
2010 and 2013, and that when Appendix A was created, no one foresaw how 
long it would take to recognize actual past financial data in new 
rates. We disagree. We used the 2009 association's financial 
transactions to determine the allowable operating expenses for the 2012 
Appendix A ratemaking. We have always calculated the inflationary 
portion of operating expenses in accordance with Step 1.C of the 
Appendix A methodology, which states: ``The inflation adjustment will 
be based on the preceding year's change in the Consumer Price Index for 
the North Central Region of the United States.'' We are currently 
engaged in a comprehensive study and review of the Appendix A 
methodology and will reevaluate how we take inflation into account. The 
possible need for changes in how we address inflation is within the 
scope of the previously-mentioned comprehensive study and review of our 
Great Lakes pilotage ratemaking methodology now underway.
    Payroll tax methodology. The District One pilots' association said 
our NPRM's proposed adjustment for payroll taxes would be more 
appropriately based on target compensation than on actual 2010 pilot 
earnings. We disagree. The methodology was established to reimburse a 
given pilot association for its expenses that are necessary, 
reasonable, and directly related to providing pilotage services on the 
Great Lakes during the shipping season. We follow 46 CFR 404.5(a)(1), 
which states: ``Each expense item included in the rate base is 
evaluated to determine if it is necessary for the provision of pilotage 
service, and if so, what dollar amount is reasonable for that expense 
item.'' We recognize that the payroll tax is a necessary expense, but 
we do not agree that we should use the value we calculate for target 
pilot compensation instead of the actual pilot compensation to 
determine the amount for payroll taxes. We consider it unreasonable to 
use a payroll tax amount other than the amount actually paid.
    Health insurance subsidy. The District Two pilots' association said 
a $60,460 ``COBRA subsidy'' (referring to the Federal health subsidy 
under the Consolidated Omnibus Budget Reconciliation Act of 1985, or 
``COBRA'') ``should not be an adjustment to projected operating 
expenses, because pilot health insurance premiums are not included in 
the projected operating expense line item.'' We disagree. The 
methodology was established to reimburse a given pilot association for 
its expenses that are necessary, reasonable, and directly related to 
providing pilotage services on the Great Lakes during the shipping 
season. If an association obtains funding from a separate source to 
reimburse it for an expense, the expense must be proportionately 
discounted for ratemaking purposes. We cannot oblige industry to 
reimburse an association for an expense that has already been 
reimbursed. This practice would be contrary to the public's interest 
and

[[Page 13524]]

inconsistent with prior determinations and rulemakings.
    The District Two pilots' association also said it was given no 
opportunity to comment on a $99,993 COBRA expense reduction made in the 
2012 final rule and that the 2013 rate should be adjusted to restore 
that amount. We disagree. We will not include the amount we excluded in 
the 2012 Appendix A ratemaking in the 2013 Appendix A ratemaking. The 
health insurance expense was accounted for in the 2012 Appendix A 
ratemaking, and thus the offset to that expense obtained by the pilots' 
association also needed to be accounted for. The methodology was 
established to reimburse a given pilots' association for its expenses 
that are necessary, reasonable, and directly related to providing 
pilotage services on the Great Lakes during a given shipping season. If 
an association obtains funding to reimburse it for an expense, the 
expense disappears for ratemaking purposes. We cannot compel industry 
to reimburse an association a second time for an expense that has 
already been reimbursed. This practice would be contrary to the 
public's interest and inconsistent with prior determinations and 
rulemakings.

VI. Discussion of the Final Rule

A. Summary

    We are establishing new base pilotage rates in accordance with the 
methodology outlined in Appendix A to 46 CFR part 404. The new rates 
will be established by March 1, 2013 and will go into effect on August 
1, 2013.
    Based on baseline AMOU contract information that we received after 
publication of our August 2012 NPRM, our arithmetical calculations 
under Steps 1 through 6 of Appendix A would result in an average 15.89 
percent rate decrease. However, as we will discuss when we explain our 
Step 7 adjustment of pilot rates, this year's rate adjustments will be 
what we proposed in the August 2012 NPRM, representing on average an 
approximately 1.87 percent increase over the February 2012 final rule's 
rate adjustments.
    All figures in the tables that follow are based on calculations 
performed either by an independent accountant or by the Director of 
Great Lakes Pilotage's staff. In both cases those calculations were 
performed using common commercial computer programs. Decimalization and 
rounding of the audited and calculated data affects the display in 
these tables but does not affect the calculations. The calculations are 
based on the actual figure that rounds values for presentation in the 
tables.
    Table 1 shows the percent change for the new rates for each area.

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

B. Calculating the Rate Adjustment

    The Appendix A methodology provides seven steps, with sub-steps, 
for calculating rate adjustments. The following discussion describes 
those steps and sub-steps and includes tables showing how we have 
applied them to the 2010 detailed pilot financial information.
    Step 1: Projection of Operating Expenses. In this step, we project 
the amount of vessel traffic annually. Based upon that projection, we 
forecast the amount of necessary and reasonable operating expenses that 
pilotage rates should recover.
    Step 1.A: Submission of Financial Information. This sub-step 
requires each pilots' association to provide us with detailed financial 
information in accordance with 46 CFR part 403. The associations 
complied with this requirement, supplying 2010 financial information in 
2011; this is the most current and complete data set we have available.
    Step 1.B: Determination of Recognizable Expenses. This sub-step 
requires us to determine which reported association expenses will be 
recognized for ratemaking purposes, using the guidelines shown in 46 
CFR 404.5. We contracted with an independent accountant to review the 
reported expenses and submit findings recommending which reported 
expenses should be recognized. The accountant also reviewed which 
reported expenses should be adjusted prior to recognition, or if they 
should not be allowed for ratemaking purposes. The independent 
accountant made preliminary findings, which were sent to the pilots' 
associations. The pilots' associations reviewed and commented on the 
preliminary findings. Then, the independent accountant made final 
findings. The Director reviewed and accepted those final findings, 
resulting in the determination of recognizable expenses. The 
preliminary findings, the associations' comments on those findings, and 
the final findings are all available in the docket. Tables 2 through 4 
show each association's recognized expenses.

                                  Table 2--Recognized Expenses for District One
----------------------------------------------------------------------------------------------------------------
                                                                      Area 1          Area 2
                                                                 --------------------------------
                   Reported expenses for 2010                      St. Lawrence                        Total
                                                                       River       Lake Ontario
----------------------------------------------------------------------------------------------------------------
Pilot Costs:
    Other pilotage costs:
        Pilot subsistence/Travel................................        $212,715        $167,880        $380,595
        License insurance.......................................          23,880          18,847          42,727
        Payroll taxes...........................................               0               0               0
        Other...................................................           1,432           1,130           2,562
                                                                 -----------------------------------------------
            Total other pilotage costs..........................         238,027         187,857         425,884
----------------------------------------------------------------------------------------------------------------
Pilot Boat and Dispatch Costs:
    Pilot boat expense..........................................          95,254          75,178         170,432
    Dispatch expense............................................               0               0               0

[[Page 13525]]

 
    Payroll taxes...............................................           7,962           6,283          14,245
                                                                 -----------------------------------------------
        Total pilot and dispatch costs..........................         103,216          81,461         184,677
----------------------------------------------------------------------------------------------------------------
Administrative Expenses:
    Legal.......................................................           7,959           6,282          14,241
    Insurance...................................................          13,971          11,026          24,997
    Employee benefits...........................................          19,454          15,354          34,808
    Payroll taxes...............................................           4,816           3,801           8,617
    Other taxes.................................................           4,504           3,554           8,058
    Travel......................................................             215             169             384
    Depreciation/auto leasing/other.............................          17,440          13,765          31,205
    Interest....................................................          12,576           9,926          22,502
    Dues and subscriptions......................................          13,075          10,319          23,394
    Utilities...................................................           5,130           4,049           9,179
    Salaries....................................................          49,840          39,336          89,176
    Accounting/Professional fees................................           4,997           3,943           8,940
    Other.......................................................           9,408           7,425          16,833
                                                                 -----------------------------------------------
        Total Administrative Expenses...........................         163,385         128,949         292,334
                                                                 -----------------------------------------------
        Total Operating Expenses................................         504,628         398,267         902,895
----------------------------------------------------------------------------------------------------------------
Proposed Adjustments (independent CPA):
    Operating Expenses..........................................  ..............  ..............  ..............
    Other Pilot Costs...........................................  ..............  ..............  ..............
    Pilotage Subsistence/Travel.................................         (7,747)         (6,114)        (13,861)
    Payroll taxes...............................................          64,563          50,955         115,518
                                                                 -----------------------------------------------
        Total other pilotage costs..............................          56,816          44,841         101,657
----------------------------------------------------------------------------------------------------------------
Administrative Expenses:
    Legal.......................................................             799             631           1,430
    Employee benefits...........................................         (1,537)         (1,213)         (2,750)
    Dues and subscriptions......................................        (13,075)        (10,319)        (23,394)
                                                                 -----------------------------------------------
        Total Administrative Expenses...........................        (13,813)        (10,901)        (24,714)
                                                                 -----------------------------------------------
        Total CPA Adjustments...................................          43,003          33,940          76,943
                                                                 -----------------------------------------------
        Total Operating Expenses................................         547,631         432,207         979,838
----------------------------------------------------------------------------------------------------------------


                                  Table 3--Recognized Expenses for District Two
----------------------------------------------------------------------------------------------------------------
                                                                      Area 4          Area 5
                                                                 --------------------------------
                   Reported expenses for 2010                                        Southeast         Total
                                                                     Lake Erie     Shoal to Port
                                                                                     Huron, MI
----------------------------------------------------------------------------------------------------------------
Operating Expenses:
    Other pilotage costs:
        Pilot subsistence/Travel................................         $79,503        $119,254        $198,757
        License insurance.......................................           6,168           9,252          15,420
        Payroll taxes...........................................          53,457          80,186         133,643
        Other...................................................          42,130          63,195         105,325
                                                                 -----------------------------------------------
            Total other pilotage costs..........................         181,258         271,887         453,145
----------------------------------------------------------------------------------------------------------------
Pilot Boat and Dispatch Costs:
    Pilot boat expense..........................................         145,254         217,882         363,136
    Dispatch expense............................................           7,830          11,745          19,575
    Payroll taxes...............................................           4,056           6,084          10,140
                                                                 -----------------------------------------------
        Total pilot and dispatch costs..........................         157,140         235,711         392,851
----------------------------------------------------------------------------------------------------------------
Administrative Expenses:
    Legal.......................................................           8,120          12,180          20,300
    Office rent.................................................          26,275          39,413          65,688
    Insurance...................................................          13,410          20,114          33,524

[[Page 13526]]

 
    Employee benefits...........................................          24,420          36,631          61,051
    Payroll taxes...............................................           2,980           4,471           7,451
    Other taxes.................................................          19,100          28,651          47,751
    Depreciation/Auto leasing/Other.............................          22,954          34,431          57,385
    Interest....................................................          14,790          22,185          36,975
    Dues and subscriptions......................................           6,200           9,300          15,500
    Utilities...................................................          12,138          18,208          30,346
    Salaries....................................................          46,611          69,917         116,528
    Accounting/Professional fees................................          14,067          21,100          35,167
    Other.......................................................          16,157          24,235          40,392
                                                                 -----------------------------------------------
        Total Administrative Expenses...........................         227,223         340,835         568,058
                                                                 -----------------------------------------------
        Total Operating Expenses................................         565,622         848,432       1,414,054
----------------------------------------------------------------------------------------------------------------
Proposed Adjustments (independent CPA):
Operating Expenses:
    Other Pilot Costs:
        Pilotage subsistence/Travel.............................         (3,999)         (5,999)         (9,998)
                                                                 -----------------------------------------------
            Total other pilotage costs..........................         (3,999)         (5,999)         (9,998)
----------------------------------------------------------------------------------------------------------------
Pilot boat and dispatch costs:
    Pilot boat expense..........................................           (767)         (1,150)         (1,917)
                                                                 -----------------------------------------------
        Total pilot boat and dispatch costs.....................           (767)         (1,150)         (1,917)
----------------------------------------------------------------------------------------------------------------
Administrative Expenses:
    Legal.......................................................           (209)           (314)           (523)
    Office rent.................................................           (809)         (1,213)         (2,022)
    Interest....................................................        (11,268)        (16,902)        (28,170)
    Dues and subscriptions......................................         (6,200)         (9,300)        (15,500)
                                                                 -----------------------------------------------
        Total Administrative Expenses...........................        (18,486)        (27,729)        (46,215)
                                                                 -----------------------------------------------
        Total CPA Adjustments...................................        (23,252)        (34,878)        (58,130)
                                                                 -----------------------------------------------
        Total Operating Expenses................................         542,369         813,554       1,355,924
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.


                                 Table 4--Recognized Expenses for District Three
----------------------------------------------------------------------------------------------------------------
                                                                 Area 6       Area 7       Area 8
                                                             ---------------------------------------
                 Reported Expenses for 2010                   Lakes Huron                               Total
                                                                  and       St. Mary's      Lake
                                                                Michigan      River       Superior
----------------------------------------------------------------------------------------------------------------
Operating Expenses:
    Other Pilot Costs:
        Pilot subsistence/Travel............................     $170,162      $81,836     $108,514     $360,512
        License insurance...................................        9,204        4,426        5,869       19,499
        Payroll taxes.......................................       27,774       13,358       17,712       58,844
        Other...............................................          630          303          402        1,335
                                                             ---------------------------------------------------
            Total other pilotage costs......................      207,770       99,923      132,497      440,190
----------------------------------------------------------------------------------------------------------------
Pilot Boat and Dispatch Expenses:
    Pilot boat costs........................................      197,244       94,861      125,785      417,890
    Dispatch expense........................................       72,550       34,891       46,266      153,707
    Payroll taxes...........................................        8,068        3,880        5,145       17,093
                                                             ---------------------------------------------------
        Total pilot boat and dispatch costs.................      277,862      133,632      177,196      588,690
----------------------------------------------------------------------------------------------------------------
Administrative Expenses:
    Legal...................................................       28,089       13,509       17,913       59,511
    Office Rent.............................................        4,673        2,247        2,980        9,900
    Insurance...............................................        6,581        3,165        4,197       13,943
    Employee benefits.......................................       57,942       27,866       36,950      122,758

[[Page 13527]]

 
    Payroll taxes...........................................        5,709        2,746        3,641       12,096
    Other taxes.............................................       15,381        7,397        9,808       32,586
    Depreciation/auto leasing...............................       23,495       11,299       14,983       49,777
    Interest................................................        1,537          739          980        3,256
    Dues and subscriptions..................................       13,676        6,577        8,721       28,974
    Utilities...............................................       13,223        6,359        8,432       28,014
    Salaries................................................       49,802       23,951       31,759      105,512
    Accounting/professional fees............................       11,894        5,720        7,585       25,199
    Other...................................................        5,574        2,681        3,555       11,810
                                                             ---------------------------------------------------
        Total administrative expenses.......................      237,576      114,256      151,504      503,336
                                                             ---------------------------------------------------
        Total Operating Expenses............................      723,208      347,811      461,197    1,532,216
----------------------------------------------------------------------------------------------------------------
Proposed Adjustments (independent CPA):
    Other Pilot Costs:
        Payroll taxes.......................................       26,213       12,606       16,716       55,535
                                                             ---------------------------------------------------
            Total other pilotage costs......................       26,213       12,606       16,716       55,535
----------------------------------------------------------------------------------------------------------------
Pilot Boat and Dispatch Expenses:
    Dispatch costs..........................................      (2,170)      (1,044)      (1,384)      (4,598)
                                                             ---------------------------------------------------
        Total pilot boat and dispatch costs.................      (2,170)      (1,044)      (1,384)      (4,598)
----------------------------------------------------------------------------------------------------------------
Administrative Expenses:
    Legal...................................................      (1,454)        (699)        (927)      (3,080)
    Dues and subscriptions..................................     (13,676)      (6,577)      (8,721)     (28,974)
    Other...................................................      (1,255)        (603)        (800)      (2,658)
                                                             ---------------------------------------------------
        Total administrative expenses.......................     (16,385)      (7,879)     (10,448)     (34,712)
                                                             ---------------------------------------------------
        Total CPA Adjustments...............................        7,658        3,683        4,884       16,225
                                                             ---------------------------------------------------
        Total Operating Expenses............................      730,866      351,494      466,081    1,548,441
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

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

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


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

[[Page 13528]]

 
Inflation Adjustment....................       =         $17,356       =         $26,034       =         $43,390
----------------------------------------------------------------------------------------------------------------


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

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

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

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

                               Table 9--Projected Operating Expenses, District Two
----------------------------------------------------------------------------------------------------------------
                                                      Area 4                  Area 5
                                                 ----------------        ----------------
       Reported Expenses for 2010                                            Southeast                 Total
                                                     Lake Erie             Shoal to Port
                                                                             Huron, MI
----------------------------------------------------------------------------------------------------------------
Total Operating Expenses................                $542,369                $813,554              $1,355,924
Inflation Adjustment 3.2%...............       +          17,356       +          26,034       +          43,390
Director's adjustment & foreseeable
 circumstances
    American Recovery and Reinvestment         +        (24,184)       +        (36,276)       +        (60,460)
     Act Subsidy........................
    Federal taxes (accounted for in Step       +         (7,360)       +        (11,040)       +        (18,400)
     6).................................
                                         -----------------------------------------------------------------------
        Total projected expenses for           =         528,182       =         792,272       =       1,320,454
         2013 pilotage season...........
----------------------------------------------------------------------------------------------------------------


[[Page 13529]]

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

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

    Step 2: Projection of Target Pilot Compensation. In Step 2, we 
project the annual amount of target pilot compensation that pilotage 
rates should provide in each area. These projections are based on our 
latest information on the conditions that will prevail in 2013.
    Step 2.A: Determination of Target Rate of Compensation. Target 
pilot compensation for pilots in undesignated waters approximates the 
average annual compensation for first mates on U.S. Great Lakes 
vessels. Compensation is determined based on the most current union 
contracts and includes wages and benefits received by first mates. We 
calculate target pilot compensation for pilots on designated waters by 
multiplying the average first mates' wages by 150 percent and then 
adding the average first mates' benefits. In prior rulemakings, the 
AMOU shared the individual compensation components for first mates and 
the scheme for applying these components. We took each component and 
applied the scheme to determine a monthly value. We then multiplied 
this monthly value by 9 months, because the Great Lakes shipping season 
for pilotage lasts from around the end of March to around the end of 
December (approximately 9 months). We then created a table that 
combined all of the components to determine the target pilot 
compensation for a given year.
    As we discussed in part V of this preamble, the AMOU contract 
changed after we published our August 2012 NPRM. The values stipulated 
by AMOU that we now use are aggregates. These aggregates include the 
daily wage rate, vacation pay, pension plan contributions, and medical 
plan contributions; these represent the components we previously 
calculated in separate tables using the scheme outlined in the 
contract. Using these aggregates eliminates the need to calculate each 
component separately and reduces the number of tables we need to 
demonstrate our calculations, but otherwise it does not affect how AMOU 
contract data is factored into our ratemaking methodology.
    According to the information provided by the AMOU, new contracts 
will take effect August 1, 2013 and will expire July 31, 2016, and they 
set the following aggregate daily rates: in undesignated waters, 
$592.92 for Agreement A and $585.57 for Agreement B; in designated 
waters, $816.09 for Agreement A and $803.24 for Agreement B.
    Because we are interested in annual compensation, we must convert 
these daily rates. In past contracts, the AMOU used monthly 
multipliers, and we then applied those monthly multipliers over the 
average 9-month length of the Great Lakes shipping season to determine 
annual compensation. The latest AMOU contracts no longer use monthly 
multipliers, but instead use a 270-day multiplier which reflects an 
average 30-day month, over the 9 months of the average shipping season. 
Table 11 shows our calculations using the 270-day multiplier.

          Table 11--Projected Annual Aggregate Rate Components
------------------------------------------------------------------------
 
------------------------------------------------------------------------
    Aggregate Rate--Wages and Vacation, Pension, and Medical Benefits
------------------------------------------------------------------------
                      Pilots on Undesignated Waters
------------------------------------------------------------------------
Agreement A:
    $592.92 daily rate x 270 days.......................     $160,088.40
Agreement B:
    $585.57 daily rate x 270 days.......................     $158,103.90
------------------------------------------------------------------------
                       Pilots on Designated Waters
------------------------------------------------------------------------
Agreement A:
    $816.09 daily rate x 270 days.......................     $220,334.30
Agreement B:
    1$803.24 daily rate x 270 days......................     $216,874.80
------------------------------------------------------------------------

    We apportion the compensation provided by each agreement according 
to the percentage of tonnage represented by companies under each 
agreement. Agreement A applies to vessels operated by Key Lakes, Inc., 
representing approximately 30 percent of tonnage, and Agreement B 
applies to all vessels operated by American Steamship Co. and Mittal 
Steel USA, Inc., representing approximately 70 percent of tonnage. 
Table 12 provides details.

                               Table 12--Shipping Tonnage Apportioned by Contract
----------------------------------------------------------------------------------------------------------------
             Company                             Agreement A                            Agreement B
----------------------------------------------------------------------------------------------------------------
American Steamship Company.......  ......................................  815,600
Mittal Steel USA, Inc............  ......................................  38,826
Key Lakes, Inc...................  361,385                                 .....................................
----------------------------------------------------------------------------------------------------------------
    Total tonnage, each agreement  361,385                                 854,426
----------------------------------------------------------------------------------------------------------------
Percent tonnage, each agreement..  361,385 / 1,215,811 = 29.7238%          854,426 / 1,215,811 = 70.2762%
----------------------------------------------------------------------------------------------------------------


[[Page 13530]]

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

                                     Table 13--Tonnage-weighted Compensation
----------------------------------------------------------------------------------------------------------------
                                                                           Undesignated             Designated
                                                                              waters                  waters
----------------------------------------------------------------------------------------------------------------
Agreement A:
    Total wages and benefits....................................  ......     $160,088.40             $220,344.30
    Percent tonnage.............................................       x        29.7238%       x        29.7238%
                                                                 -----------------------------------------------
        Total...................................................       =         $47,584       =         $65,495
                                                                 -----------------------------------------------
Agreement B:
    Total wages and benefits....................................  ......        $158,104                $216,875
    Percent tonnage.............................................       x        70.2762%       x        70.2762%
                                                                 -----------------------------------------------
        Total...................................................       =        $111,109       =        $152,411
----------------------------------------------------------------------------------------------------------------
Projected Target Rate of Compensation:
    Agreement A total weighted average wages and benefits.......  ......         $47,584                 $65,495
    Agreement B total weighted average wages and benefits.......       +        $111,109       +        $152,411
                                                                 -----------------------------------------------
        Total...................................................       =        $158,694       =        $217,906
----------------------------------------------------------------------------------------------------------------

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

                                        Table 14--Number of Pilots Needed
----------------------------------------------------------------------------------------------------------------
                                                            Divided by
                                                               1,000
                                                            (designated             Calculated
          Pilotage area           Projected 2013            waters) or            value of pilot   Pilots needed
                                   bridge hours                1,800                  demand       (total = 38)
                                                           (undesignated
                                                              waters)
----------------------------------------------------------------------------------------------------------------
Area 1 (Designated waters)......           5,216       /           1,000       =           5.216               6
Area 2 (Undesignated waters)....           5,509       /           1,800       =           3.061               5
Area 4 (Undesignated waters)....           6,814       /           1,800       =           3.785               4
Area 5 (Designated waters)......           5,102       /           1,000       =           5.102               6
Area 6 (Undesignated waters)....          11,411       /           1,800       =           6.339               7
Area 7 (Designated waters)......           3,223       /           1,000       =           3.223               4
Area 8 (Undesignated waters)....           9,540       /           1,800       =           5.300               6
----------------------------------------------------------------------------------------------------------------

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

[[Page 13531]]



                            Table 15--Projection of Target Pilot Compensation by Area
----------------------------------------------------------------------------------------------------------------
                                                                          Target rate of             Projected
                  Pilotage area                    Pilots needed               pilot               target pilot
                                                   (total = 38)            compensation            compensation
----------------------------------------------------------------------------------------------------------------
Area 1 (Designated waters)......................               6       x        $217,906       =      $1,307,436
Area 2 (Undesignated waters)....................               5       x         158,694       =         793,469
Area 4 (Undesignated waters)....................               4       x         158,694       =         634,775
Area 5 (Designated waters)......................               6       x         217,906       =       1,307,436
Area 6 (Undesignated waters)....................               7       x         158,694       =       1,110,856
Area 7 (Designated waters)......................               4       x         217,906       =         871,624
Area 8 (Undesignated waters)....................               6       x         158,694       =         952,163
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

    Step 3 and 3.A: Projection of Revenue. In this step, we project the 
revenue that would be received in 2013 if demand for pilotage services 
matches the bridge hours we projected in Table 14, and if 2012 pilotage 
rates were left unchanged. Table 16 shows this calculation.

                                     Table 16--Projection of Revenue by Area
----------------------------------------------------------------------------------------------------------------
                                                                                                      Revenue
                  Pilotage area                   Projected 2013           2012 Pilotage            projection
                                                   bridge hours                rates                 for 2013
----------------------------------------------------------------------------------------------------------------
Area 1 (Designated waters)......................           5,216       x         $467.58       =      $2,438,897
Area 2 (Undesignated waters)....................           5,509       x          289.72       =       1,596,067
Area 4 (Undesignated waters)....................           6,814       x          188.54       =       1,284,712
Area 5 (Designated waters)......................           5,102       x          504.11       =       2,571,969
Area 6 (Undesignated waters)....................          11,411       x          191.69       =       2,187,375
Area 7 (Designated waters)......................           3,223       x          480.26       =       1,547,878
Area 8 (Undesignated waters)....................           9,540       x          183.87       =       1,754,120
                                                 ---------------------------------------------------------------
    Total.......................................  ..............          ..............              13,381,018
----------------------------------------------------------------------------------------------------------------

    Step 4: Calculation of Investment Base. This step calculates each 
association's investment base, the recognized capital investment in the 
assets employed by the association required to support pilotage 
operations. This step uses a formula set out in 46 CFR part 404, 
Appendix B. The first part of the formula identifies each association's 
total sources of funds. Tables 17 through 19 follow the formula up to 
that point.

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

[[Page 13532]]

 
    Other Non-Current Liabilities...   +             0   +             0
    Deferred Federal Income Taxes...   +             0   +             0
    Other Deferred Credits..........   +             0   +             0
                                     -----------------------------------
        Total Non-Recognized Sources   =             0   =             0
Total Sources of Funds:
    Total Recognized Sources........  ...    1,005,772  ...      793.785
    Total Non-Recognized Sources....   +             0   +             0
        Total Sources of Funds......   =     1,005,772   =       793,785
------------------------------------------------------------------------


             Table 18--Total Sources of Funds, District Two
------------------------------------------------------------------------
                                              Area 4            Area 5
------------------------------------------------------------------------
Recognized Assets:
    Total Current Assets............  ...     $454,842  ...   $1,026,731
    Total Current Liabilities.......   -       449,157   -     1,013,899
    Current Notes Payable...........   +             0   +             0
    Total Property and Equipment       +       312,858   +       706,224
     (NET)..........................
    Land............................   -             0   -             0
    Total Other Assets..............   +             0   +             0
                                     -----------------------------------
        Total Recognized Assets.....   =       318,543   =       719,056
Non-Recognized Assets:
    Total Investments and Special      +             0   +             0
     Funds..........................
                                     -----------------------------------
        Total Non-Recognized Assets.   =             0   =             0
Total Assets:
    Total Recognized Assets.........  ...      318,543  ...      719,056
    Total Non-Recognized Assets.....   +             0   +             0
                                     -----------------------------------
        Total Assets................   =       318,543   =       719,056
Recognized Sources of Funds:
    Total Stockholder Equity........  ...       60,920  ...      137,517
    Long-Term Debt..................   +       257,622   +       581,540
    Current Notes Payable...........   +             0   +             0
    Advances from Affiliated           +             0   +             0
     Companies......................
    Long-Term Obligations--Capital     +             0   +             0
     Leases.........................
                                     -----------------------------------
        Total Recognized Sources....   =       318,542   =       719,057
Non-Recognized Sources of Funds:
    Pension Liability...............                 0                 0
    Other Non-Current Liabilities...   +             0   +             0
    Deferred Federal Income Taxes...   +             0   +             0
    Other Deferred Credits..........   +             0   +             0
                                     -----------------------------------
        Total Non-Recognized Sources   =             0   =             0
Total Sources of Funds:
    Total Recognized Sources........  ...      318,542  ...      719,057
    Total Non-Recognized Sources....   +             0   +             0
                                     -----------------------------------
        Total Sources of Funds......   =       318,542   =       719,057
------------------------------------------------------------------------


                                Table 19--Total Sources of Funds, District Three
----------------------------------------------------------------------------------------------------------------
                                                                    Area 6            Area 7            Area 8
----------------------------------------------------------------------------------------------------------------
Recognized Assets:
    Total Current Assets..................................  ...   $1,009,619  ...     $485,558  ...     $643,846
    Total Current Liabilities.............................   -       123,906   -        59,590   -        79,016
    Current Notes Payable.................................   +             0   +             0   +             0
    Total Property and Equipment (NET)....................   +        35,709   +        17,174   +        22,772
    Land..................................................   -             0   -             0   -             0
    Total Other Assets....................................   +           354   +           170   +           226
                                                           -----------------------------------------------------
        Total Recognized Assets...........................   =       921,776   =       443,312   =       587,828
 
Non-Recognized Assets:
    Total Investments and Special Funds...................   +             0   +             0   +             0
                                                           -----------------------------------------------------
        Total Non-Recognized Assets.......................   =             0   =             0   =             0
 

[[Page 13533]]

 
Total Assets:
    Total Recognized Assets...............................  ...      921,776  ...      443,312  ...      587,828
    Total Non-Recognized Assets...........................   +             0   +             0   +             0
                                                           -----------------------------------------------------
        Total Assets......................................   =       921,776   =       443,312   =       587,828
 
Recognized Sources of Funds:
    Total Stockholder Equity..............................  ...      921,776  ...      443,312  ...      587,828
    Long-Term Debt........................................   +             0   +             0   +             0
    Current Notes Payable.................................   +             0   +             0   +             0
    Advances from Affiliated Companies....................   +             0   +             0   +             0
    Long-Term Obligations--Capital Leases.................   +             0   +             0   +             0
                                                           -----------------------------------------------------
        Total Recognized Sources..........................   =       921,776   =       443,321   =       587,828
 
Non-Recognized Sources of Funds:
    Pension Liability.....................................  ...            0  ...            0  ...            0
    Other Non-Current Liabilities.........................   +             0   +             0   +             0
    Deferred Federal Income Taxes.........................   +             0   +             0   +             0
    Other Deferred Credits................................   +             0   +             0   +             0
                                                           -----------------------------------------------------
        Total Non-Recognized Sources......................   =             0   =             0   =             0
Total Sources of Funds:
    Total Recognized Sources..............................  ...      921,776  ...      443,321  ...      587,828
    Total Non-Recognized Sources..........................   +             0   +             0   +             0
                                                           -----------------------------------------------------
 
        Total Sources of Funds............................   =       921,776   =       443,321   =       587,828
----------------------------------------------------------------------------------------------------------------

    Tables 17 through 19 also relate to the second part of the formula 
for calculating the investment base. The second part establishes a 
ratio between recognized sources of funds and total sources of funds. 
Since no non-recognized sources of funds (sources we do not recognize 
as required to support pilotage operations) exist for any of the 
pilots' associations for this year's rulemaking, the ratio between 
recognized sources of funds and total sources of funds is ``1:1'' (or a 
multiplier of ``1'') in all cases. Table 20 applies the multiplier of 
``1,'' and shows that the investment base for each association equals 
its total recognized assets. Table 20 also expresses these results by 
area, because area results will be needed in subsequent steps.

                                                     Table 20--Investment Base by Area and District
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Recognized                        Multiplier (ratio
               District                        Area         Total recognized   sources of funds   Total sources of   of recognized to   Investment base
                                                              assets  ($)            ($)             funds  ($)       total sources)        ($) \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
One...................................                  1            987,354          1,005,772          1,005,772                  1            987,354
                                                        2            779,248            793,785            793,785                  1            779,248
                                                                                                                   -------------------------------------
                                                                                                                                TOTAL          1,766,602
                                                                                                                   -------------------------------------
Two \2\...............................                  4            318,543            318,542            318,542                  1            318,543
                                                        5            719,056            719,057            719,057                  1            719,056
                                                                                                                   -------------------------------------
                                                                                                                                TOTAL          1,037,599
                                                                                                                   -------------------------------------
Three.................................                  6            921,776            921,776            921,776                  1            921,776
                                                        7            443,312            443,312            443,312                  1            443,312
                                                        8            587,828            587,828            587,828                  1            587,828
                                                                                                                   -------------------------------------
                                                                                                                                TOTAL          1,952,916
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Note: ``Investment base'' = ``Total recognized assets'' x ``Multiplier (ratio of recognized to total sources)''.
\2\ Note: The pilots' associations that provide pilotage services in Districts One and Three operate as partnerships. The pilots' association that
  provides pilotage service for District Two operates as a corporation.

    Step 5: Determination of Target Rate of Return. We determine a 
market-equivalent return on investment (ROI) that will be allowed for 
the recognized net capital invested in each association by its members. 
We do not recognize capital that is unnecessary or unreasonable for 
providing pilotage services. There are no non-recognized investments in 
this year's calculations. The allowed ROI is based on the preceding 
year's average annual rate of return for new issues of high-grade 
corporate securities. For 2011, the preceding year, the allowed ROI was 
a little more than 4.64 percent, based on the average rate of return 
that year on Moody's AAA corporate bonds, which can be found at: http://research.stlouisfed.org/fred2/series/AAA/downloaddata?cid=119.

[[Page 13534]]

    Step 6: Adjustment Determination. The first sub-step in the 
adjustment determination requires an initial calculation, applying a 
formula described in Appendix A. The formula uses the results from 
Steps 1, 2, 3, and 4 to project the ROI that can be expected in each 
area, if no further adjustments are made. This calculation is shown in 
Tables 21 through 23.

             Table 21--Projected ROI, Areas in District One
------------------------------------------------------------------------
                                              Area 1            Area 2
------------------------------------------------------------------------
Revenue (from Step 3)...............   +    $2,438,897   +    $1,596,067
Operating Expenses (from Step 1)....   -       598,805   -       472,540
Pilot Compensation (from Step 2)....   -     1,307,436   -       793,469
Operating Profit/(Loss).............   =       532,656   =       330,059
Interest Expense (from audits)......   -        12,576   -         9,926
Earnings Before Tax.................   =       520,080   =       320,133
Federal Tax Allowance...............   -             0   -             0
Net Income..........................   =       520,080   =       320,133
Return Element (Net Income +          ...      532,656  ...      330,059
 Interest)..........................
Investment Base (from Step 4).......   /       987,354   /       779,248
Projected Return on Investment......   =          0.54   =          0.42
------------------------------------------------------------------------
Note: Numbers may not total due to rounding.


             Table 22--Projected ROI, Areas in District Two
------------------------------------------------------------------------
                                              Area 4            Area 5
------------------------------------------------------------------------
Revenue (from Step 3)...............   +    $1,284,712   +    $2,571,969
Operating Expenses (from Step 1)....   -       528,181   -       792,272
Pilot Compensation (from Step 2)....   -       634,775   -     1,307,436
Operating Profit/(Loss).............   =       121,756   =       472,261
Interest Expense (from audits)......   -         3,522   -         5,283
Earnings Before Tax.................   =       118,234   =       466,978
Federal Tax Allowance...............   -             0   -             0
Net Income..........................   =       118,234   =       466,978
Return Element (Net Income +          ...      121,756  ...      472,261
 Interest)..........................
Investment Base (from Step 4).......   /       318,543   /       719,056
Projected Return on Investment......   =          0.38   =          0.66
------------------------------------------------------------------------
Note: Numbers may not total due to rounding.


                                Table 23--Projected ROI, Areas in District Three
----------------------------------------------------------------------------------------------------------------
                                                                    Area 6            Area 7            Area 8
----------------------------------------------------------------------------------------------------------------
Revenue (from Step 3).....................................   +    $2,187,375   +    $1,547,878   +    $1,754,120
Operating Expenses (from Step 1)..........................   -       754,254   -       362,742   -       480,996
Pilot Compensation (from Step 2)..........................   -     1,110,856   -       871,624   -       952,163
Operating Profit/(Loss)...................................   =       322,264   =       313,512   =       320,962
Interest Expense (from audits)............................   -         1,537   -           739   -           980
Earnings Before Tax.......................................   =       320,727   =       312,773   =       319,982
Federal Tax Allowance.....................................   -             0   -             0   -             0
Net Income................................................   =       320,727   =       312,773   =       319,982
Return Element (Net Income + Interest)....................  ...      322,264  ...      313,512  ...      320,962
Investment Base (from Step 4).............................   /       921,776   /       443,312   /       587,828
Projected Return on Investment............................   =          0.35   =          0.71   =          0.55
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

    The second sub-step required for Step 6 compares the results of 
Tables 21 through 23 with the target ROI (approximately 4.64 percent) 
we obtained in Step 5 to determine if an adjustment to the base 
pilotage rate is necessary. Table 24 shows this comparison for each 
area.

                                            Table 24--Comparison of Projected ROI and Target ROI, by Area \1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Area 1          Area 2          Area 4          Area 5          Area 6          Area 7          Area 8
                                         ---------------------------------------------------------------------------------------------------------------
                                                                                             Southeast
                                           St. Lawrence    Lake Ontario      Lake Erie     Shoal to Port    Lakes Huron     St. Mary's     Lake Superior
                                               River                                         Huron, MI     and Michigan        River
--------------------------------------------------------------------------------------------------------------------------------------------------------
Projected return on investment..........           0.539           0.424           0.382           0.657           0.350           0.707           0.546

[[Page 13535]]

 
Target return on investment.............           0.046           0.046           0.046           0.046           0.046           0.046           0.046
Difference in return on investment......           0.493           0.377           0.336           0.610           0.303           0.661           0.500
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Note: Decimalization and rounding of the target ROI affects the display in this table but does not affect our calculations, which are based on the
  actual figure.

    Because Table 24 shows a significant difference between the 
projected and target ROIs, an adjustment to the base pilotage rates is 
necessary. Step 6 now requires us to determine the pilotage revenues 
that are needed to make the target return on investment equal to the 
projected return on investment. This calculation is shown in Table 25. 
It adjusts the investment base we used in Step 4, multiplying it by the 
target ROI from Step 5, and applies the result to the operating 
expenses and target pilot compensation determined in Steps 1 and 2.

                                                 Table 25--Revenue Needed To Recover Target ROI, by Area
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Investment
                                             Operating             Target Pilot            Base (Step 4)            Federal Tax
              Pilotage area                  Expenses              Compensation           x 4.64 (Target             Allowance            Revenue Needed
                                             (Step 1)                (Step 2)               ROI Step 5)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Area 1 (Designated waters)..............        $598,805       +      $1,307,436       +         $45,813       +              $0       =      $1,952,054
Area 2 (Undesignated waters)............         472,540       +         793,469       +          36,157       +               0       =       1,302,166
Area 4 (Undesignated waters)............         528,181       +         634,775       +          14,780       +           7,360       =       1,185,096
Area 5 (Designated waters)..............         792,272       +       1,307,436       +          33,364       +          11,040       =       2,144,112
Area 6 (Undesignated waters)............         754,254       +       1,110,856       +          42,770       +               0       =       1,907,881
Area 7 (Designated waters)..............         362,742       +         871,624       +          20,570       +               0       =       1,254,936
Area 8 (Undesignated waters)............         480,996       +         952,163       +          27,275       +               0       =       1,460,433
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................       3,989,788       +       6,977,760       +         220,730       +          18,400       =      11,206,678
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The ``Revenue Needed'' column of Table 25 is less than the revenue 
we projected in Table 16. For purposes of transparency, we verify Table 
25's calculations by rerunning the first part of Step 6, using the 
revenue needed from Table 25 instead of the Table 16 revenue 
projections we used in Tables 21 through 23. Tables 26 through 28 show 
that attaining the Table 25 revenue needed is sufficient to recover 
target ROI.

     Table 26--Balancing Revenue Needed and Target ROI, District One
------------------------------------------------------------------------
                                              Area 1            Area 2
------------------------------------------------------------------------
Revenue Needed......................   +    $1,952,054   +    $1,302,166
Operating Expenses (from Step 1)....   -       598,805   -       472,540
Pilot Compensation (from Step 2)....   -     1,307,436   -       793,469
Operating Profit/(Loss).............   =        45,813   =        36,157
Interest Expense (from audits)......   -        12,576   -         9,926
Earnings Before Tax.................   =        33,237   =        26,231
Federal Tax Allowance...............   -             0   -             0
Net Income..........................   =        33,237   =        26,231
Return Element (Net Income +          ...       45,813  ...       36,157
 Interest)..........................
Investment Base (from Step 4).......   /       987,354   /       779,248
Return on Investment................   =        0.0464   =        0.0464
------------------------------------------------------------------------


     Table 27--Balancing Revenue Needed and Target ROI, District Two
------------------------------------------------------------------------
                                              Area 4            Area 5
------------------------------------------------------------------------
Revenue Needed......................   +    $1,185,096   +    $2,144,112
Operating Expenses (from Step 1)....   -       528,181   -       792,272
Pilot Compensation (from Step 2)....   -       634,775   -     1,307,436
Operating Profit/(Loss).............   =        22,140   =        44,404
Interest Expense (from audits)......   -         3,522   -         5,283
Earnings Before Tax.................   =        18,616   =        39,115
Federal Tax Allowance...............   -         7,360   -        11,040
Net Income..........................   =        11,258   =        28,081
Return Element (Net Income +          ...       14,780  ...       33,364
 Interest)..........................
Investment Base (from Step 4).......   /       318,543   /       719,056

[[Page 13536]]

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


                        Table 28--Balancing Revenue Needed and Target ROI, District Three
----------------------------------------------------------------------------------------------------------------
                                                                    Area 6            Area 7            Area 8
----------------------------------------------------------------------------------------------------------------
Revenue Needed............................................   +    $1,907,881   +    $1,254,936   +    $1,460,433
Operating Expenses (from Step 1)..........................   -       754,254   -       362,742   -       480,996
Pilot Compensation (from Step 2)..........................   -     1,110,856   -       871,624   -       952,163
Operating Profit/(Loss)...................................   =        42,770   =        20,570   =        27,275
Interest Expense (from audits)............................   -         1,537   -           739   -           980
Earnings Before Tax.......................................   =        41,233   =        19,831   =        26,295
Federal Tax Allowance.....................................   -             0   -             0   -             0
Net Income................................................   =        41,233   =        19,831   =        26,295
Return Element (Net Income + Interest)....................            42,770            20,570            27,275
Investment Base (from Step 4).............................   /       921,776   /       443,312   /       587,828
Return on Investment......................................   =        0.0464   =        0.0464   =        0.0464
----------------------------------------------------------------------------------------------------------------

    Step 7: Adjustment of Pilotage Rates. This step calls for us to 
divide the Step 6 revenue needed (Table 25) by the Step 3 revenue 
projection (Table 16), to give us a rate multiplier for each area. 
Tables 29 through 31 show these calculations.

                                Table 29--Rate Multiplier, Areas in District One
----------------------------------------------------------------------------------------------------------------
                                                                            Area 1  St.             Area 2 Lake
                     Ratemaking projections                               Lawrence River              Ontario
----------------------------------------------------------------------------------------------------------------
Revenue Needed (from Step 6)....................................              $1,952,046              $1,302,159
Revenue (from Step 3)...........................................       /       2,438,897       /       1,596,067
Rate Multiplier.................................................       =          0.8004       =          0.8159
----------------------------------------------------------------------------------------------------------------


                                Table 30--Rate Multiplier, Areas in District Two
----------------------------------------------------------------------------------------------------------------
                                                                                                      Area 5
                                                                            Area 4 Lake              Southeast
                     Ratemaking projections                                    Erie                Shoal to Port
                                                                                                     Huron, MI
----------------------------------------------------------------------------------------------------------------
Revenue Needed (from Step 6)....................................              $1,185,094              $2,144,106
Revenue (from Step 3)...........................................       /       1,284,712       /       2,571,969
Rate Multiplier.................................................       =          0.9225       =          0.8336
----------------------------------------------------------------------------------------------------------------


                               Table 31--Rate Multiplier, Areas in District Three
----------------------------------------------------------------------------------------------------------------
                                                   Area 6 Lakes
         Ratemaking projections                      Huron and              Area 7 St.              Area 8 Lake
                                                     Michigan              Mary's River              Superior
----------------------------------------------------------------------------------------------------------------
Revenue Needed (from Step 6)............              $1,907,873              $1,254,932              $1,460,429
Revenue (from Step 3)...................       /       2,187,375       /       1,547,878       /       1,754,120
Rate Multiplier.........................       =          0.8722       =          0.8107       =          0.8326
----------------------------------------------------------------------------------------------------------------

    Rates for cancellation, delay, or interruption in rendering 
services (46 CFR 401.420) and basic rates and charges for carrying a 
U.S. pilot beyond the normal change point, or for boarding at other 
than the normal boarding point (46 CFR 401.428), would decrease by 
16.25 percent in all areas.
    We then calculate a rate multiplier for adjusting the basic rates 
and charges described in 46 CFR 401.420 and 401.428 and applicable in 
all areas. We divide total revenue needed (Step 6, Table 25) by total 
projected revenue (Step 3 & 3A, Table 16). Table 32 shows this 
calculation.

 Table 32--Rate Multiplier for Basic Rates and Charges in 46 CFR 401.420
                               and 401.428
------------------------------------------------------------------------
         Ratemaking projections
------------------------------------------------------------------------
Total Revenue Needed (from Step 6).....                   $11,206,638.64
Total revenue (from Step 3)............       /           $13,381,017.91

[[Page 13537]]

 
Rate Multiplier........................       =                    0.838
------------------------------------------------------------------------

    Without further action, the existing rates we established in our 
2012 final rule would then be multiplied by the rate multipliers from 
Tables 29 through 31 to calculate the area by area rate changes for 
2013. The resulting 2013 rates, on average, would then be decreased 
almost 16 percent from the 2012 rates, instead of increasing almost 2 
percent as we proposed in our August 2012 NPRM. We decline to impose 
that decrease; but instead, we are relying on the discretionary 
authority we have under Step 7 to further adjust rates. Table 33 
compares the impact, area by area, that an average decrease of almost 
16 percent would have, relative to the impact each area will actually 
experience as a result of this final rule.

            Table 33--Impact of Exercising Step 7 Discretion
------------------------------------------------------------------------
                                          Percent change
                                              without     Percent change
                  Area                      exercising     with exercise
                                              Step 7         of Step 7
                                            discretion      discretion
------------------------------------------------------------------------
Area 1 (Designated waters)..............          -19.96           -1.41
Area 2 (Undesignated waters)............          -18.41           -1.69
Area 4 (Undesignated waters)............           -7.75            8.87
Area 5 (Designated waters)..............          -16.64            0.95
Area 6 (Undesignated waters)............          -12.78            4.31
Area 7 (Designated waters)..............          -18.93            0.56
Area 8 (Undesignated waters)............          -16.74            1.52
------------------------------------------------------------------------

    Our discretionary authority under Step 7 must be ``based on 
requirements of the Memorandum of Arrangements between the United 
States and Canada, and other supportable circumstances that may be 
appropriate.'' The Memorandum of Arrangements calls for comparable U.S. 
and Canadian rates, and the rates would not be comparable if U.S. rates 
decrease by 16 percent, while Canadian rates for 2013 increase by 2.5 
percent.\3\ ``Other supportable circumstances'' we have for exercising 
our discretion include recent Executive Order 13609, which calls on 
Federal agencies to eliminate ``unnecessary differences'' between U.S. 
and foreign regulations (77 FR 26413, sec. 1), and the possibility that 
a 16 percent rate decrease would jeopardize the ability of the three 
pilotage associations to provide safe, dependable service. (In the case 
of one association, our examination of that association's financial 
data suggests it could not survive such a rate decrease.)
---------------------------------------------------------------------------

    \3\ The Canadian Great Lakes Pilotage Authority (GLPA) 
originally recommended a 2013 rate increase of 4 percent based on 
GLPA's analysis of the revenue needed to cover the costs of 
providing pilotage service for GLPA clients, but reduced that figure 
to 2.5 percent based in large part on our NPRM's proposed average 
1.87 percent increase.
---------------------------------------------------------------------------

    The following tables reflect the rate adjustments we proposed in 
our August 2012 NPRM. We are finalizing the values from the NPRM in 
this rulemaking.
    Tables 34 through 36 show these calculations.

                          Table 34--Adjustment of Pilotage Rates, Areas in District One
----------------------------------------------------------------------------------------------------------------
                                                                               Rate
                                                                            multiplier             Adjusted rate
                                                     2012 Rate              (2013 APP A              for 2013
                                                                               NPRM)
----------------------------------------------------------------------------------------------------------------
Area 1
St. Lawrence River:
    Basic Pilotage..............................      $19.02/km,       x           0.986       =      $18.75/km,
                                                       $33.67/mi                                       $33.19/mi
    Each lock transited.........................            $422       x           0.986       =            $416
    Harbor movage...............................          $1,381       x           0.986       =          $1,361
    Minimum basic rate, St. Lawrence River......            $921       x           0.986       =            $908
    Maximum rate, through trip..................          $4,041       x           0.986       =          $3,984
Area 2
Lake Ontario:
    6-Hour period...............................            $865       x           0.983       =            $851
    Docking or Undocking........................            $826       x           0.983       =            $812
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.


[[Page 13538]]


                          Table 35--Adjustment of Pilotage Rates, Areas in District Two
----------------------------------------------------------------------------------------------------------------
                                                                               Rate
                                                                            multiplier             Adjusted rate
                                                     2012 Rate              (2013 APP A              for 2013
                                                                               NPRM)
----------------------------------------------------------------------------------------------------------------
Area 4
Lake Erie:
    6-Hour period...............................            $760       x           1.089       =            $828
    Docking or undocking........................            $585       x           1.089       =            $637
    Any point on Niagara River below Black Rock           $1,493       x           1.089       =          $1,626
     Lock.......................................
Area 5
Southeast Shoal to Port Huron, MI between any
 point on or in:
    Toledo or any point on Lake Erie W. of                $1,369       x           1.010       =          $1,382
     Southeast Shoal............................
    Toledo or any point on Lake Erie W. of                $2,317       x           1.010       =          $2,339
     Southeast Shoal & Southeast Shoal..........
    Toledo or any point on Lake Erie W. of                $3,008       x           1.010       =          $3,037
     Southeast Shoal & Detroit River............
    Toledo or any point on Lake Erie W. of                $2,317       x           1.010       =          $2,339
     Southeast Shoal & Detroit Pilot Boat.......
    Port Huron Change Point & Southeast Shoal             $4,036       x           1.010       =          $4,074
     (when pilots are not changed at the Detroit
     Pilot Boat)................................
    Port Huron Change Point & Toledo or any               $4,675       x           1.010       =          $4,719
     point on Lake Erie W. of Southeast Shoal
     (when pilots are not changed at the Detroit
     Pilot Boat)................................
    Port Huron Change Point & Detroit River.....          $3,031       x           1.010       =          $3,060
    Port Huron Change Point & Detroit Pilot Boat          $2,358       x           1.010       =          $2,381
    Port Huron Change Point & St. Clair River...          $1,677       x           1.010       =          $1,693
    St. Clair River.............................          $1,369       x           1.010       =          $1,382
    St. Clair River & Southeast Shoal (when               $4,036       x           1.010       =          $4,074
     pilots are not changed at the Detroit Pilot
     Boat)......................................
    St. Clair River & Detroit River/Detroit               $3,031       x           1.010       =          $3,060
     Pilot Boat.................................
    Detroit, Windsor, or Detroit River..........          $1,369       x           1.010       =          $1,382
    Detroit, Windsor, or Detroit River &                  $2,317       x           1.010       =          $2,339
     Southeast Shoal............................
    Detroit, Windsor, or Detroit River & Toledo           $3,008       x           1.010       =          $3,037
     or any point on Lake Erie W. of Southeast
     Shoal......................................
    Detroit, Windsor, or Detroit River & St.              $3,031       x           1.010       =          $3,060
     Clair River................................
    Detroit Pilot Boat & Southeast Shoal........          $1,677       x           1.010       =          $1,693
    Detroit Pilot Boat & Toledo or any point on           $2,317       x           1.010       =          $2,339
     Lake Erie W. of Southeast Shoal............
    Detroit Pilot Boat & St. Clair River........          $3,031       x           1.010       =          $3,060
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.


                         Table 36--Adjustment of Pilotage Rates, Areas in District Three
----------------------------------------------------------------------------------------------------------------
                                                                               Rate
                                                                            multiplier             Adjusted rate
                                                     2012 Rate              (2013 APP A              for 2013
                                                                               NPRM)
----------------------------------------------------------------------------------------------------------------
Area 6 Lakes Huron and Michigan:
    6-Hour Period...............................            $662       x           1.043       =            $691
    Docking or undocking........................            $629       x           1.043       =            $656
Area 7 St. Mary's River between any point on or
 in:
    Gros Cap & De Tour..........................          $2,568       x           1.006       =          $2,583
    Algoma Steel Corp. Wharf, Sault Ste. Marie,           $2,568       x           1.006       =          $2,583
     Ont. & De Tour.............................
    Algoma Steel Corp. Wharf, Sault Ste. Marie,             $967       x           1.006       =            $973
     Ont. & Gros Cap............................
    Any point in Sault St. Marie, Ont., except            $2,153       x           1.006       =          $2,165
     the Algoma Steel Corp. Wharf & De Tour.....
    Any point in Sault St. Marie, Ont., except              $967       x           1.006       =            $973
     the Algoma Steel Corp. Wharf & Gros Cap....
    Sault Ste. Marie, MI & De Tour..............          $2,153       x           1.006       =          $2,165
    Sault Ste. Marie, MI & Gros Cap.............            $967       x           1.006       =            $973
    Harbor movage...............................            $967       x           1.006       =            $973
Area 8 Lake Superior:
    6-Hour period...............................            $577       x           1.015       =            $586
    Docking or undocking........................            $549       x           1.015       =            $557
----------------------------------------------------------------------------------------------------------------
Note: Numbers may not total due to rounding.

VII. Regulatory Analyses

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

A. Regulatory Planning and Review

    Executive Orders (E.O.) 12866 (``Regulatory Planning and Review'') 
and 13563 (``Improving Regulation and Regulatory Review'') direct 
agencies to assess the costs and benefits of available regulatory 
alternatives and, if regulation is necessary, to select regulatory

[[Page 13539]]

approaches that maximize net benefits (including potential economic, 
environmental, public health and safety effects, distributive impacts, 
and equity). Executive Order 13563 emphasizes the importance of 
quantifying both costs and benefits, of reducing costs, of harmonizing 
rules, and of promoting flexibility. This rule is not a ``significant 
regulatory action'' under section 3(f) of E.O. 12866. Accordingly, the 
final rule has not been reviewed by the Office of Management and Budget 
(OMB). Step 7 allows for discretion when making the rate. The 
Memorandum of Arrangements between the United States and Canada calls 
for comparable rates. As such, we maintain the rate increase presented 
in the NPRM, resulting in an estimated cost to shippers of $148,000.
    A regulatory assessment follows.
    The Coast Guard is required to review and adjust pilotage rates on 
the Great Lakes annually. See sections III and IV of this preamble for 
detailed discussions of the Coast Guard's legal basis and purpose for 
this rulemaking and for background information on Great Lakes pilotage 
ratemaking. Based on our annual review of this rule, we are adjusting 
the pilotage rates for the 2013 shipping season to generate sufficient 
revenue to cover allowable expenses, and target pilot compensation and 
returns on investment. The rate adjustments in this final rule will 
lead to a cost in all three districts with an estimated cost to 
shippers of approximately $148,000 across all three districts.
    This rule increases Great Lakes pilotage rates, on average, 
approximately 1.87 percent overall from the current rates set in the 
2012 final rule. This represents the same increase as proposed in the 
NPRM. The Appendix A methodology is discussed and applied in detail in 
section V of this preamble. Among other factors described in section V, 
it reflects audited 2010 financial data from the pilots' associations 
(the most recent year available for auditing), projected association 
expenses, and regional inflation or deflation. The last full Appendix A 
ratemaking was concluded in 2011 and used financial data from the 2009 
base accounting year. The last annual rate review, conducted under 46 
CFR part 404, Appendix C, was completed early in 2011.
    In general, we expect an increase in pilotage rates for a certain 
area to result in additional costs for shippers using pilotage services 
in that area, while a decrease will result in a cost reduction or 
savings for shippers in that area. The shippers affected by these rate 
adjustments are those owners and operators of domestic vessels 
operating on register (employed in foreign trade) and owners and 
operators of foreign vessels on a route within the Great Lakes system. 
These owners and operators must have pilots or pilotage service as 
required by 46 U.S.C. 9302. There is no minimum tonnage limit or 
exemption for these vessels. The Coast Guard's interpretation is that 
the statute applies only to commercial vessels and not to recreational 
vessels.
    Owners and operators of other vessels that are not affected by this 
rule, such as recreational boats and vessels only operating within the 
Great Lakes system may elect to purchase pilotage services. However, 
this election is voluntary and does not affect the Coast Guard's 
calculation of the rate and is not a part of our estimated national 
cost to shippers. Coast Guard sampling of pilot data suggests there are 
very few U.S. domestic vessels, without registry and operating only in 
the Great Lakes that voluntarily purchase pilotage services.
    We used 2008-2010 vessel arrival data from the Coast Guard's Marine 
Information for Safety and Law Enforcement (MISLE) system to estimate 
the average annual number of vessels affected by the rate adjustment to 
be 204 vessels that journey into the Great Lakes system. These vessels 
entered the Great Lakes by transiting through or in part of at least 
one of the three pilotage districts before leaving the Great Lakes 
system. These vessels often make more than one distinct stop, docking, 
loading, and unloading at facilities in Great Lakes ports. Of the total 
trips for the 204 vessels, there were approximately 319 annual U.S. 
port arrivals before the vessels left the Great Lakes system, based on 
2008-2010 vessel data from MISLE.
    Historically, the impact of the rate adjustment to shippers is 
estimated from the District pilotage revenues. These revenues represent 
the direct and indirect costs that shippers must pay for pilotage 
services. The Coast Guard sets rates so that revenues equal the 
estimated cost of pilotage. For this rule, we base our rate on pilotage 
revenues as reported for the NPRM, as discussed in step 7, despite new 
data provided by AMOU.
    We estimate the additional impact (costs or savings) of the rate 
adjustment in this rule to be the difference between the total 
projected revenue needed to cover costs in 2013 based on the 2012 rate 
adjustment and the total projected revenue needed to cover costs in 
2013 as set forth in the NPRM. Table 37 details additional costs or 
savings by area and district.

    Table 37--Rate Adjustment and Additional Impact of the Rule by Area and District ($U.S.; Non-Discounted)
----------------------------------------------------------------------------------------------------------------
                                                                                                    Additional
                                                                     Projected       Projected       costs or
                                                                  revenue needed  revenue needed    savings of
                                                                     in 2012 *      in 2013 **       this rule
----------------------------------------------------------------------------------------------------------------
Area 1..........................................................      $2,308,357      $2,404,424         $96,067
Area 2..........................................................       1,614,791       1,569,160        (45,631)
    Total, District One.........................................       3,923,148       3,973,583          50,435
Area 4..........................................................       1,310,549       1,398,694          88,145
Area 5..........................................................       2,600,490       2,596,484         (4,006)
    Total, District Two.........................................       3,911,039       3,995,178          84,139
Area 6..........................................................       2,227,555       2,281,673          54,118
Area 7..........................................................       1,565,906       1,556,517         (9,389)
Area 8..........................................................       1,811,863       1,780,829        (31,034)
    Total, District Three.......................................       5,605,324       5,619,020          13,696
----------------------------------------------------------------------------------------------------------------
* These 2012 estimates are detailed in Table 18 of the 2012 final rule (76 FR 6351).
** These 2013 estimates are detailed in Table 27 of the NPRM for this rulemaking.
Some values may not total due to rounding.
``Additional Revenue or Cost of this Rulemaking'' = ``Revenue needed in 2012'' minus ``Revenue needed in 2011.''


[[Page 13540]]

    After applying the rate change in this rule, the resulting 
difference between the projected revenue in 2012 and the projected 
revenue in 2013 is the annual impact to shippers from this rule. This 
figure would be equivalent to the total additional payments or savings 
that shippers would incur for pilotage services from this rule. As 
discussed earlier, we consider a reduction in payments to be a cost 
savings.
    The impact of the rate adjustment in this rule to shippers varies 
by area and district. The rate adjustments lead to a cost in all three 
districts, with affected shippers operating in District One, District 
Two, and District Three experiencing costs of $50,435, $84,139, and 
$13,696, respectively. To calculate an exact cost or savings per vessel 
is difficult because of the variation in vessel types, routes, port 
arrivals, commodity carriage, time of season, conditions during 
navigation, and preferences for the extent of pilotage services on 
designated and undesignated portions of the Great Lakes system. Some 
owners and operators would pay more and some would pay less depending 
on the distance and port arrivals of their vessels' trips. As Table 37 
indicates, shippers operating in all Districts would experience an 
increased annual cost due to this rule. The overall impact of the rule 
would be a cost to shippers of approximately $148,000 across all three 
districts.
    This rule allows the U.S. Coast Guard to meet the statutory 
requirements to review the rates for pilotage services on the Great 
Lakes--ensuring proper pilot compensation.
    Alternatively, if we were to impose the new rates based on the new 
contract data from AMOU, there would be a nearly 16 percent decrease in 
rates across the system. This would have a dramatically different 
effect on industry, moving from a proposed cost to shippers of 
approximately $148,000 to a cost savings of approximately $1.7 million. 
Table 38 shows the difference in projected 2012 expenses as compared to 
projected 2013 expenses based on the new AMOU contract information.

    Table 38--Alternative Rate Adjustment and Additional Impact of the Rule by Area and District ($U.S.; Non-
                                                   Discounted)
----------------------------------------------------------------------------------------------------------------
                                                       Total                           Total        Additional
                                                     projected     Proposed rate     projected      revenue or
                                                    expenses in       change        expenses in    cost of this
                                                       2012                            2013         rulemaking
----------------------------------------------------------------------------------------------------------------
Area 1..........................................      $2,308,357          0.9465      $2,438,897        $130,540
Area 2..........................................       1,614,791          1.0117       1,596,067        (18,724)
    Total, District One.........................       3,923,148          1.6086       2,438,897     (1,484,251)
Area 4..........................................       1,310,549          1.0201       1,284,712        (25,837)
Area 5..........................................       2,600,490          1.0111       2,571,969        (28,521)
    Total, District Two.........................       3,911,039          1.0141       3,856,681        (54,358)
Area 6..........................................       2,227,555          1.0184       2,187,375        (40,180)
Area 7..........................................       1,565,906          1.0116       1,547,878        (18,028)
Area 8..........................................       1,811,863          1.0329       1,754,120        (57,743)
    Total, District Three.......................       5,605,324          1.0211       5,489,373       (115,951)
All Three Districts.............................      13,439,511          1.1404      11,784,951     (1,654,560)
----------------------------------------------------------------------------------------------------------------

    We reject this alternative for the reasons laid out in our 
discussion of Step 7 in part VI of this preamble.

B. Small Entities

    Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have 
considered whether this 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 this rule will be classified under 
the North American Industry Classification System (NAICS) code 
subsector 483--Water Transportation, which includes the following 6-
digit NAICS codes for freight transportation: 483111--Deep Sea Freight 
Transportation, 483113--Coastal and Great Lakes Freight Transportation, 
and 483211--Inland Water Freight Transportation. According to the Small 
Business Administration's definition, a U.S. company with these NAICS 
codes and employing less than 500 employees is considered a small 
entity.
    For the rule, we reviewed recent company size and ownership data 
from 2008-2010 Coast Guard MISLE data and business revenue and size 
data provided by publicly available sources such as MANTA and Reference 
USA. We found that large, mostly foreign-owned, shipping conglomerates 
or their subsidiaries owned or operated all vessels engaged in foreign 
trade on the Great Lakes. We assume that new industry entrants would be 
comparable in ownership and size to these shippers.
    There are three U.S. entities affected by this rule that receive 
revenue from pilotage services. These are the three pilots' 
associations that provide and manage pilotage services within the Great 
Lakes districts. Two of the associations operate as partnerships and 
one operates as a corporation. These associations are designated the 
same NAICS industry classification and small entity size standards 
described above, but they have far fewer than 500 employees; they have 
approximately 65 total employees combined. We expect no adverse impact 
to these entities from this rule because all associations receive 
enough revenue to balance the projected expenses associated with the 
projected number of bridge hours and pilots. Additionally, while we are 
not required to conduct a full Regulatory Flexibility Analysis for this 
action, we have indicated some potential adverse impacts from 
alternative action in our discussion of the analysis performed under 
Step 7.
    Therefore, the Coast Guard certifies under 5 U.S.C. 605(b) that 
this final rule will not have a significant economic impact on a 
substantial number of small entities.

C. Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement 
Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small 
entities in understanding this rule so that they could better evaluate 
its effects on them and participate in the rulemaking. If the rule will 
affect your small business,

[[Page 13541]]

organization, or governmental jurisdiction and you have questions 
concerning its provisions or options for compliance, please consult Mr. 
Todd Haviland, Director, Great Lake Pilotage, Office of Great Lakes 
Pilotage, Commandant (CG-WWM-2), Coast Guard; telephone 202-372-2037, 
email [email protected], or fax 202-372-1909. The Coast Guard 
will not retaliate against small entities that question or complain 
about this rule or any policy or action of the Coast Guard.
    Small businesses may send comments on the actions of Federal 
employees who enforce, or otherwise determine compliance with, Federal 
regulations to the Small Business and Agriculture Regulatory 
Enforcement Ombudsman and the Regional Small Business Regulatory 
Fairness Boards. The Ombudsman evaluates these actions annually and 
rates each agency's responsiveness to small business. If you wish to 
comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR 
(1-888-734-3247).

D. Collection of Information

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

E. Federalism

    A rule has implications for federalism under Executive Order 13132, 
Federalism, if it has a substantial direct effect on State or local 
governments and would either preempt State law or impose a substantial 
direct cost of compliance on them. Congress directed the Coast Guard to 
establish ``rates and charges for pilotage services.'' 46 U.S.C. 
9303(f). This regulation is issued pursuant to that statute and is 
preemptive of state law as outlined in 46 U.S.C. 9306. Under 46 U.S.C. 
9306, a ``State or political subdivision of a State may not regulate or 
impose any requirement on pilotage on the Great Lakes.'' Because States 
may not promulgate rules within this category, preemption is not an 
issue under Executive Order 13132.
    Additionally, President Barack Obama's memorandum of May 20, 2009, 
titled ``Preemption,'' states that ``preemption of State law by 
executive departments and agencies should be undertaken only with full 
consideration of the legitimate prerogatives of the States and with a 
sufficient legal basis for preemption.'' To that end, when a department 
or agency intends to preempt State law, it should do so only if 
justified under legal principles governing preemption, including those 
outlined in Executive Order 13132, and it should also include 
preemption provisions in the codified regulation. As currently stated 
in 46 CFR 401.120, states, municipalities, and other local authorities 
are prohibited from requiring ``the use of pilots or [regulating] any 
aspect of pilotage in any of the waters specified in the Act.'' 
Therefore, this regulation complies with the requirements of the 
memorandum.

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

G. Taking of Private Property

    This rule will not cause a taking of private property or otherwise 
have taking implications under E.O. 12630, Governmental Actions and 
Interference with Constitutionally Protected Property Rights.

H. Civil Justice Reform

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

I. Protection of Children

    We have analyzed this rule under E.O. 13045, Protection of Children 
From Environmental Health Risks and Safety Risks. This rule is not an 
economically significant rule and would not create an environmental 
risk to health or risk to safety that may disproportionately affect 
children.

J. Indian Tribal Governments

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

K. Energy Effects

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

L. Technical Standards

    The National Technology Transfer and Advancement Act (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 rule does not use technical standards. 
Therefore, we did not consider the use of voluntary consensus 
standards.

M. Environment

    We have analyzed this 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. 4321-4370h), and have concluded 
that this action is one of a category of actions that do not 
individually or cumulatively have a significant effect on the human 
environment. This rule adjusts rates in accordance with applicable 
statutory and regulatory mandates and is categorically excluded under 
section 2.B.2, figure 2-1, paragraph (34)(a) of the Instruction, which 
includes regulations that are editorial or procedural. An environmental 
analysis checklist and a categorical exclusion determination are 
available in the docket where indicated under the ADDRESSES section of 
this preamble.

[[Page 13542]]

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 amends 
46 CFR part 401 as follows:

PART 401--GREAT LAKES PILOTAGE REGULATIONS

0
1. The authority citation for part 401 continues to read as follows:

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


0
2. In Sec.  401.405, revise paragraphs (a) and (b), including the 
footnote to Table (a), to read as follows:


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

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

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

     (b) Area 2 (Undesignated Waters):

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



0
3. In Sec.  401.407 revise paragraphs (a) and (b), including the 
footnote to Table (b), to read as follows:


Sec.  401.407  Basic rates and charges on Lake Erie and the navigable 
waters from Southeast Shoal to Port Huron, MI.

* * * * *
    (a) Area 4 (Undesignated Waters):

------------------------------------------------------------------------
                                             Lake Erie
                                             (East of
                 Service                     Southeast        Buffalo
                                              Shoal)
------------------------------------------------------------------------
6-Hour Period...........................            $828            $828
Docking or Undocking....................             637             637
Any point on the Niagara River below the             N/A           1,626
 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           $2,339          $1,382          $3,037          $2,339             N/A
 west of Southeast Shoal........
Port Huron Change Point.........       \1\ 4,074       \1\ 4,719           3,060           2,381           1,693
St. Clair River.................       \1\ 4,074             N/A           3,060           3,060           1,382
Detroit or Windsor or the                  2,339           3,037           1,382             N/A           3,060
 Detroit River..................
Detroit Pilot Boat..............           1,693           2,339             N/A             N/A           3,060
----------------------------------------------------------------------------------------------------------------
\1\ When pilots are not changed at the Detroit Pilot Boat.



0
4. In Sec.  401.410, revise paragraphs (a), (b), and (c) to read as 
follows:


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

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

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

     (b) Area 7 (Designated Waters):

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


[[Page 13543]]

    (c) Area 8 (Undesignated Waters):

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

Sec.  401.420  [Amended]


0
5. Amend Sec.  401.420 as follows:
0
a. In paragraph (a), remove the text ``$124'' and add, in its place, 
the text ``$126''; and remove the text ``$1,942'' and add, in its 
place, the text ``$1,972'';
0
b. In paragraph (b), remove the text ``$124'' and add, in its place, 
the text ``$126''; and remove the text ``$1,942'' and add, in its 
place, the text ``$1,972''; and
0
c. In paragraph (c)(1), remove the text ``$733'' and add, in its place, 
the text ``$744''; and in paragraph (c)(3), remove the text ``$124'' 
and add, in its place, the text ``$126'', and remove the text 
``$1,942'' and add, in its place, the text ``$1,972''.

Sec.  401.428  [Amended]

0
6. In Sec.  401.428, remove the text ``$748'' and add, in its place, 
the text ``$744''.

    Dated: February 20, 2013.
Dana A. Goward,
Director, Marine Transportation Systems Management, U.S. Coast Guard.
[FR Doc. 2013-04321 Filed 2-27-13; 8:45 am]
BILLING CODE 9110-04-P