Great Lakes pilotage regulations: Rates update,
[Federal Register: April 14, 2000 (Volume 65, Number 73)]
[Proposed Rules]
[Page 20110-20120]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14ap00-32]
DEPARTMENT OF TRANSPORTATION
Coast Guard
46 CFR Part 401
[USCG-1999-6098]
RIN 2115-AF91
Great Lakes Pilotage Rates
AGENCY: Coast Guard, DOT.
[[Page 20111]]
ACTION: Notice of proposed rulemaking.
SUMMARY: The Coast Guard proposes to update the rates that pilots receive for their services on the Great Lakes. We are required by regulations to review these rates annually. Based on our review, we propose to minimally change the rates for the 2000 season to prevent a large rate change in future years.
DATES: Comments and related material must reach the Docket Management Facility on or before May 15, 2000.
ADDRESSES: To make sure your comments and related material are not entered more than once in the docket, please submit them by only one of the following means:
(1) By mail to the Docket Management Facility (USCG-1999-6098), U.S. Department of Transportation, room PL-401, 400 Seventh Street SW., Washington, DC 20590-0001.
(2) By delivery to room PL-401 on the Plaza level of the Nassif Building, 400 Seventh Street SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The telephone number is 202-366-9329.
(3) By fax to the Docket Management Facility at 202-493-2251.
(4) Electronically through the Web Site for the Docket Management System at http://dms.dot.gov.
The Docket Management Facility maintains the public docket for this rulemaking. Comments and material received from the public, as well as documents mentioned in this preamble as being available in the docket, will become part of this docket and will be available for inspection or copying at room PL-401 on the Plaza level of the Nassif Building, 400 Seventh Street SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. You may also find this docket on the Internet at http://dms.dot.gov.
FOR FURTHER INFORMATION CONTACT: For questions on this proposed rule, call LCDR Don Darcy, Project Manager, Office of Standards Evaluation and Development Division, Commandant (G-MSR-1), U.S. Coast Guard, at 202-267-1200, by facsimile 202-267-4547, or by email at ddarcy@comdt.uscg.mil. For questions on viewing or submitting material to the docket, call Dorothy Walker, Chief, Dockets, Department of Transportation, telephone 202-366-9329.
SUPPLEMENTARY INFORMATION:
Request for Comments
We encourage you to participate in this rulemaking by submitting comments and related material. If you do so, please include your name and address, identify the docket number for this rulemaking (USCG-1999- 6098), indicate the specific section of this document to which each comment applies, and give the reason for each comment. You may submit your comments and material by mail, hand delivery, fax, or electronic means to the Docket Management Facility at the address under ADDRESSES; but please submit your comments and material by only one means. If you submit them by mail or hand delivery, submit them in an unbound format, no larger than 8\1/2\ by 11 inches, suitable for copying and electronic filing. If you submit them by mail and would like to know they reached the Facility, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period. We may change this proposed rule in view of them.
Public Meeting
We do not plan to hold a public meeting. But you may submit a request for one to the Docket Management Facility at the address under ADDRESSES explaining why one would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register.
Background and Purpose
(a) Regulatory History
On May 9, 1996, the Department of Transportation published a final rule in the Federal Register (61 FR 21081). The rule explained the methodology used to set the rates for pilots working in the Great Lakes.
On December 14, 1998, the Coast Guard published a notice of annual review findings in the Federal Register (63 FR 68697). The Notice announced the results of the 1998 Rate Review and requested comments.
(b) Purpose of This Rulemaking
The Coast Guard is required by 46 CFR 404.1 (b) to conduct an annual review of rates for pilots working in the Great Lakes. We reviewed these rates by using the methodology found in 46 CFR, part 404, Appendix A, Step 2.A. As explained in Step 2.A, the compensation target for pilots providing service on designated waters of the Great Lakes is equal to the approximate average annual compensation for masters on U.S Great Lakes vessels. To calculate the compensation target for pilots, multiply the average annual compensation earned by first mates on U.S. Great Lakes vessels times 150%. The target compensation for pilots providing service on undesignated waters of the Great Lakes is equal to the approximate average annual compensation for first mates on U.S. Great Lakes vessels. We reviewed these pilotage rates and determined that they should be adjusted to meet pilot target compensation. Therefore, in accordance with 46 U.S.C. 9303(f), and based on the 1999 rate review, we are proposing to update the pilotage rates to meet these targets. We would like your comments on these updated rates.
What Is the Coast Guard Proposing in This Rulemaking?
We propose to change the rates for pilots in 46 CFR 401.405, 401.407, and 401.410 as follows:
If you are a pilot working in . . .
Your rate will . . .
Area 1.................................... increase 3% Area 2.................................... decrease 4% Area 4.................................... decrease 2% Area 5.................................... decrease 6% Area 6.................................... no change Area 7.................................... increase 9% Area 8.................................... decrease 5%
We also propose to decrease the rates in 46 CFR 401.420 and 401.428 by 1% because the average change in rates for all districts is 1%.
The yearly rate update is designed to minimize fluctuations in pilot compensation and avoid large changes in pilotage rates.
This rulemaking follows the methodology detailed in 46 CFR Part 404, including the step-by-step ratemaking calculations contained in Appendix A to Part 404. We summarized these calculations in the following tables and explained them in more detail afterwards.
[[Page 20112]]
Table A.--District 1
Area 1 St. Area 2 Lake
Total Methodology
Lawrence River Ontario District 1
Step 1, Projection of operating expenses........................
$287,152
$244,612
$531,764 Step 2, Projection of target pilot compensation................. $1,088,262
$414,576 $1,502,838 Step 3, Projection of revenue................................... $1,333,991
$687,207 $2,021,198 Step 4, Calculation of investment base..........................
$0
$0
$0 Step 5, Determination of target return on investment............
6.69%
6.69%
6.69% Step 6, Adjustment determination................................ $1,359,198
$645,374 $2,004,572 Step 7, Adjustment of pilotage rates............................
1.03
.96
1.01
Table B.--District 2
Area 5 South Area 4 Lake East Shoal to Total Methodology
Erie
Port Huron District 2 Michigan
Step 1, Projection of operating expenses........................
$609,164
$518,917 $1,128,081 Step 2, Projection of target pilot compensation.................
$518,220 $1,243,728 $1,761,948 Step 3, Projection of revenue................................... $1,156,057 $1,886,198 $3,042,255 Step 4, Calculation of investment base..........................
$45,397
$71,006
$116,403 Step 5, Determination of target return on investment............
6.69%
6.69%
6.69% Step 6, Adjustment determination................................ $1,134,321 $1,773,496 $2,907,817 Step 7, Adjustment of pilotage rates............................
.98
.94
.96
Table C.--District 3
Area 6 Lakes Huron Area 7 St. Area 8 Total Methodology
and
Mary's
Lake District 3 Michigan River Superior
Step 1, Projection of operating expenses.................... $648,500 $128,476 $446,608 $1,223,584 Step 2, Projection of target pilot compensation............. $1,140,084 $621,864 $829,152 $2,591,100 Step 3, Projection of revenue............................... $1,797,967 $688,583 $1,338,912 $3,825,462 Step 4, Calculation of investment base...................... $11,997 $4,595 $8,934 $25,526 Step 5, Determination of target return on investment........
6.69%
6.69%
6.69%
6.69% Step 6, Adjustment determination............................ $1,789,386 $750,648 $1,276,358 $3,816,392 Step 7, Adjustment of pilotage rate.........................
1.001.09
.95
.99
Here is a detailed explanation of our step-by-step calculations.
Step 1.A: Submission of Financial Information
Our first step is to gather financial data from each of the three Great Lakes pilot associations (the Associations). Each of the Associations must obtain an audit by an independent Certified Public Accountant (CPA) and submit these audits to the Director of the Great Lakes Pilotage (the Director), in accordance with 46 CFR 403.300.
Step 1.B: Determination of Recognizable Expenses
Each year, the Director determines which Association expenses will be recognized for ratemaking purposes. The Director may hire an independent CPA firm to review the expenses reported by the Association using the guidelines contained in 46 CFR 404.05. However, for 1999 this was not possible due to the transfer of the Office of the Director, Great Lakes Pilotage from the St. Lawrence Seaway Development Corporation to the United States Coast Guard, and the fact that the position of Economist on the Director's staff was vacant for the last half of 1998. To determine the reasonable and necessary expenses for the purpose of the 1999 Rate Review, we used the Director's 1997 independent audit of the Associations. In the following paragraphs, we discuss some of the details of the audit and afterward, we have provided you with a table containing the expenses that the Director recognized and approved.
We calculate target pilot compensation each year based on the previous year's compensation earned by first mates on U.S. Great Lakes vessels. That figure is added to the total expenses to determine the revenue needed for ratemaking purposes. District 2 reported pilot compensation of $246,649 as training expenses and District 3 reported applicant pilot salaries and benefits of $274,509 as an expense. Because the figures represent pilot compensation, they cannot be considered expenses for ratemaking purposes. The Director subtracted these expenses from the expense bases of Districts 1 and 2.
To support safety and ongoing learning, each Pilot's Association agreed to develop a Continuing Education Plan for registered pilots to keep them aware of safety issues and refresh their skills. Each Association submitted a plan that the Director approved, with minor modifications. The Director will continue to monitor these plans to ensure they have been implemented, are effective and are applied to each District's continuing education account. The Director reserves the right to modify each plan as necessary.
In order to encourage safety and compensate each District for its training
[[Page 20113]]
expenses, the Director has added the following figures to the expense bases of each District:
District 1: $30,000.
District 2: $40,000.
District 3: $50,000.
These figures include $2000 for each District for their ``Train the Trainer'' courses which prepare pilots to more effectively contribute to the training process.
The following table displays the results of the audits and the Director's adjustments.
Recognizable Expenses
District 1
District 2
District 3
Total reported expenses....................................
$343,699
$1,522,063 $1,191,109 Proposed adjustments (independent CPA firm)................
70,939
(225,569)
151,619 Director's adjustments.....................................
(32,894)
(246,649)
(274,509) 45,000
(45,602)
(56,203) 30,000
(21,151)
40,000 40,000
50,000
Total recognized expenses..............................
$456,744
$1,023,092 $1,062,016
In June 1999, we forwarded the Director's 1997 independent CPA firm audit report to the Associations for comment. The following is a summary of the CPA firm's major findings and proposed adjustments, along with the Director's corresponding adjustments.
Summary of Major Findings and Proposed Adjustments
We divided the adjustments we made to the reported expenses into five categories: (1) Equalization Between districts, (2) reimbursed expenses, (3) expenses not necessary for pilotage services, (4) expenses related to lobbying, and (5) expenses not conforming to IRS guidelines. (1) Equalization between Associations
The Coast Guard must ensure that each association's expenses are analyzed fairly and consistently with the other associations because each one is organized differently. The District 1 and 3 Associations are organized as partnerships whereas the District 2 Association is organized as a corporation. Because of this difference, the District 2 Association pays for Social Security taxes, Medicare taxes, insurance and travel expenses out of corporate funds while in the District 1 and 3 Associations these expenses are paid directly by the pilots themselves. Since these taxes, insurance and travel expenses are legitimate business expenses that should be recognized for ratemaking purposes, funds for these expenses have been added to the expense base of Districts 1 and 3.
District 2 spends a great deal more than the other Districts on many categories of expenses. For instance, pilot boat expenses in District 2 average $176 per trip, while expenses in the other two Districts average approximately $97 per trip. Erie Leasing, a wholly owned subsidiary of District 2 pilot's association that leases equipment back to District 2, reported a net income from operations of $70,506 in 1997, while District 3 has no affiliated company and the District 1 affiliated company showed a net income of $4520 for 1997.
In the 1998 rate review, the Director stated that 1998 was the last year in which District 2 would be allowed to incur unreasonably high expenses. To bring pilot boat charges in line with Districts 1 and 3, the Director is reducing District 2's expense base by an additional $45,602. This deduction is intended to offset Erie Leasing's net income of $70,506 from operations. This, in effect, reduces Erie Leasing's net income to $24,904, which represents a 6.69% return on Erie Leasing's property and equipment of $372,270. (2) Reimbursed Expenses
The independent CPA firm found that multiple parties reimburse some expenses for each association and recommended that these expenses should not be included in the expense base for each district. Examples of these expenses include reimbursement from one pilot association to another for shared pilot boats and dispatch, reimbursement from ships for tugboat use, and reimbursement from Canadian pilotage operations for shared administrative expenses. Although these are legitimate business expenses, they are paid by other districts or parties, not by basic pilotage rates, and should not be included in the calculation of pilotage rates for the district being reimbursed. The Director agrees with the independent CPA firm's recommendation to deduct reimbursed expenses from the expense bases of District's 2 and 3. These expenses include those for Canadian pilotage operations and shared administrative expenses. (3) Expenses Not Necessary for Pilotage Services
Expenses that are not necessary for the provision of pilotage services are disallowed for ratemaking purposes. This is explained in 46 CFR 404.5 (a)(1), which contains some of the Great Lakes Pilotage Ratemaking regulations. This section states: ``Each expense included in the rate base is evaluated to determine if it is necessary for the provision of pilotage service'' and ``expense items that the Director determines are not reasonable and necessary for the provision of pilotage service will not be recognized for ratemaking purposes.'' The independent CPA firm determined that the largest portion of expenses that fits in this category came from the legal challenge by two Associations. They challenged the transfer of Great Lakes Pilotage oversight functions from the Commandant of the Coast Guard to the Administrator of the Saint Lawrence Seaway Development Corporation (SLSDC). This transfer did not affect the substantive rules regarding pilotage services. These litigation costs are distinguishable from expenses that are directly related to the provision of those services, such as the cost of transportation to and from vessels or the pilot's labor, from which the rate-paying public derives a direct benefit. The latter are costs that affect service to the public, while the former are not. We allowed some legal expenses directly related to the provision of pilotage service, such as the expense of defending a law suit by an applicant pilot discharged from the training program for cause, which directly affects the quality of service provided the public. While it is reasonable to expect the public to share the burden of the direct costs of services provided, it is not reasonable to pass on the costs of litigation over an issue that has no
[[Page 20114]]
discernable effect on the actual provision of pilotage services. Therefore, we are disallowing these legal costs for the purposes of this ratemaking ($19,900 in District 1, $36,869 in District 3).
Furthermore, the Director believes that a major portion of the remaining legal costs, even after disallowance for the above, are still excessive. In 1997, District 1 reported $34,138 in legal expenses, District 2: $21,151, and District 3: $56,203. The Director intends to recognize only those legal expenses that are reasonable, necessary and directly related to the provision of pilotage services (i.e., they directly result from a legal action). In 1997, District 1 incurred $34,138 in legal expenses; $1,244 of which was directly related to litigation. Therefore, in the absence of any documentation to justify these legal expenses, the Director, for ratemaking purposes, is disallowing $32,894 in legal expenses for District 1. Furthermore, because there were no legal expenses related to litigation in Districts 2 and 3, the Director is disallowing $21,151 for District 2 and $56,203 for District 3.
In addition to the costs associated with legal expenses, the independent CPA firm also recommended additional deductions from District 2's expenses in the amount of $4800 for overpayment of rent, $947 for business promotion, $400 in donations, and $1,988 for uniforms. None of these charges are necessary for the provision of pilotage services. The Director agrees with the independent CPA firm's findings and these expenses have been deducted from the rate base. (4) Expenses Related to Lobbying
The independent CPA firm recommended that we deduct $1,392 from District 1, $3,428 from District 2, and $12,495 from District 3 for lobbying expenses including dues, legal charges, employee payrolls, and travel. (5) Expenses Not Conforming to IRS Guidelines
The independent CPA firm recommended that we deduct $2,484 from District 2's expense base for overpayment of a subsistence allowance that does not conform to IRS guidelines. The Director agrees with these findings and we deducted these expenses from the rate base.
During the 1999 navigational season, the Director initiated a change to District 1's Working Rules, in order to reduce pilot fatigue. This change increased the pilot's minimum time between assignments from eleven hours to thirteen hours and approved the use of a car service between home and pilot change points. During 1999, the cost of the car service was applied as a surcharge on the pilot's uniform source form. To incorporate this expense in District 1's expense base, the Director has approved an additional $45,000.
Step 1.C: Adjustment for Inflation or Deflation
To adjust expenses for inflation, we increased the total recognized expenses for each association by 2.1%. The 2.1% inflation figure is based on the change in the Consumer Price Index (CPI) from January 1998 to April 1999.
Step 1.D: Projection of Operating Expenses
Once all adjustments are made to the recognized operating expenses, the Director projects these expenses for each pilotage area. The Director considers foreseeable circumstances that could affect the accuracy of the projection and, as best as possible, determines the ``projection of operating expenses.''
For this rulemaking, we adjusted association expenses by multiplying the pilotage hour projection for each district (described in step 2.B., below) by the aggregate percentage of Association expenses that change in relation to a change in pilotage hours. Analysis indicates about 57% of Association expenses are affected by a change in pilotage hours. For instance, in District 1, pilotage hours are projected to decrease 5% (see step 2.B. below) which is multiplied by 57% to project that District 1's operating expenses should decrease 2.8% in response to the projected decrease in pilotage hours. Then, District-wide expenses were apportioned to each area according to the number of pilots in that area, as determined in step 2.B., below. For instance, District 1 is calculated to need seven pilots in Area 1 and four pilots in Area 2, therefore, Area 1 was assigned 64% of the expenses for the District and Area 2 was assigned 36% of the expenses for the District. The results of Step 1 for each district are displayed below.
District 1
Area 1 St. Area 2 Lake Total District Methodology
Lawrence River Ontario
1
Projection of operating expenses................................
$287,152
$244,612
$531,764
District 2
Area 5 South Methodology
Area 4 Lake East Shoal to Total District Erie
Port Huron MI
2
Projection of operating expenses................................
$609,164
$518,917 1,128,081
District 3
Area 6 Lakes Huron Area 7 St. Area 8 Lake Total Methodology
and
Mary's Superior District 3 Michigan River
Projection of operating expenses............................ $648,500 $128,476 $446,608 $1,223,584
[[Page 20115]]
Step 2.A: Determination of Target Rate of Compensation
For pilots providing service in undesignated waters, the target rate of compensation is equal to the average yearly compensation earned by first mates on U.S. Great Lakes vessels. Effective August 1, 1999, the rate is $103,644, according to information from the American Maritime Officers Union and Great Lakes Ship Operating Companies. This rate covers wages and compensation which include work days, vacation pay, weekend pay, holiday pay, bonuses, clerical pay, medical benefits and pension contributions.
For pilots providing services in designated waters the target rate of compensation is 1.5 times the yearly rate of first mate compensation, which is calculated at $155,466. These figures represent a 12% increase in pilot's target compensation since pilotage rates were last set in 1997.
Step 2.B: Determination of Number of Pilots Needed
The number of pilots needed is determined by dividing the projected bridge hours for each area by the work hour targets for each area i.e., 1000 hours in designated waters and 1800 hours in undesignated waters. Pilot bridge hours are projected based on the vessel traffic that these pilots are expected to serve. The Coast Guard used three sources to project vessel traffic and bridge hours. These sources included industry surveys, projections by the St. Lawrence Seaway Corporation and current bridge hour levels. The projection for 1999 is for a 5% reduction in Districts 1, 2, and 3. The following bullets list the projected equivalent pilot needs for 1999, by area:
Area 1: 7 pilots.
Area 2: 4 pilots.
Area 4: 5 pilots.
Area 5: 8 pilots.
Area 6: 11 pilots.
Area 7: 4 pilots.
Area 8: 8 pilots.
(We use the term ``equivalent'' because the actual assignment of pilots to each area varies according to the needs of vessel traffic). Applying this methodology to the undesignated waters of District 3 results in a total of 19.2 pilots required for both Areas 6 and 8. Because District 3 utilizes contract pilots, a total of 19 pilots was utilized instead of 20 pilots to determine total pilot target compensation for the District. This certainly is not intended to penalize District 3 in any manner. Contract pilots enhance profitability while providing District 3 an added flexibility to comfortably handle sudden surges in traffic, while protecting pilot compensation targets in the event that projected traffic projections fall short of estimates.
Step 2.C. Projection of Target Pilot Compensation
Target pilot compensation is determined by multiplying the target compensation for each area by the number of pilots in each area. The results of Step 2 are summarized below.
District 1
Area 1 St. Area 2 Lake
Total Lawrence River Ontario District 1
Projection of target pilot compensation......................... $1,088,262
$414,576 $1,502,838
District 2
Area 5 South Area 4 Lake East Shoal to Total Erie Port Huron, MI District 2
Projection of target pilot compensation.........................
$518,220 $1,243,728 $1,761,948
District 3
Area 6 Lakes Huron and Area 7 St. Area 8 Lake
Total Michigan Mary's River Superior District 3
Projection of target pilot compensation......... $1,140,084
$621,864
$829,152 $2,591,100
Step 3.A. Projection of Revenue
We projected Pilotage Revenue by multiplying the revenue by each Association in 1998 by the change in traffic projected for each Association. The result for each was divided among the pilotage areas based on the number of pilots in each area. The results of Step 3 for each district are summarized below.
District 1
Area 1 St. Area 2 Lake
Total Lawrence River Ontario District 1
Projection of revenue........................................... $1,333,991
$687,207 $2,021,198
[[Page 20116]]
District 2
Area 5 South Area 4 Lake East Shoal to Total Erie Port Huron, MI District 2
Projection of revenue........................................... $1,156,057 $1,886,198 $3,042,255
District 3
Area 6 Lakes Huron and Area 7 St. Area 8 Lake
Total Michigan Mary's River Superior District 3
Projection of revenue........................... $1,797,967
$688,583 $3,825,462 $1,338,912
Step 4. Calculation of Investment Base
The independent CPA firm hired by the Director calculated the Investment Base for each Association during the analysis. The results of those calculations are contained in the reports of the CPA firm, which have been forwarded to each of the Districts for comment. The Step 4 Investment Base as calculated for each district is displayed below.
District 1
Area 1 St. Area 2 Lake
Total Lawrence River Ontario District 1
Calculation of investment base..................................
$0
$0
$0
District 2
Area 5 South Area 4 Lake East Shoal to Total Erie Port Huron, MI District 2
Calculation of investment base..................................
$45,397
$71,006
$116,403
District 3
Area 6 Lakes Huron and Area 7 St. Area 8 Lake
Total Michigan Mary's River Superior District 3
Calculation of investment base..................
$11,997
$4,595
$8,934
$25,526
Step 5. Determination of Target Rate of Return
The rate of return on investment (ROI) for 1999 was set at 6.69%. This is based on the preceding year's average annual rate of return of new issues of high-grade corporate securities (Moody's AAA rating, average return). The Step 5 determination of target return on investment is displayed below.
District 1
Area 1 St. Area 2 Lake
Total Lawrence River Ontario District 1 (percent) (percent) (percent)
Determination of target return on investment....................
6.69
6.69
6.69
[[Page 20117]]
District 2
Area 5 South Area 4 Lake East Shoal to Total Erie Port Huron, MI District 2 (percent) (percent) (percent)
Determination of target return on investment....................
6.69
6.69
6.69
District 3
Area 6 Lakes Huron and Area 7 St.
Total Michigan Mary's River District 3 (percent) (percent) (percent)
Determination of target return on investment....................
6.69
6.69
6.69
Step 6. Adjustment Determination
We made the adjustment determination using the numbers listed above and following the formula found in Step 6 of Appendix A to 46 CFR Part 404. The Step 6 results for each district are displayed below.
District 1
Area 1 St. Area 2 Lake Total District Lawrence River Ontario 1 (percent)
Adjustment determination........................................ $1,375,414
$659,187 $2,034,602
District 2
Area 5 South Area 4 Lake East Shoal to Total Erie
Port Huron MI District 2
Adjustment determination........................................ $1,134,321 $1,773,496 $2,907,81
District 3
Area 6 Lakes Huron and Area 7 St. Area 8 Lake Total District Michigan Mary's, River Superior
3
Adjustment determination........................ $1,789,386
$750,648 $1,276,358 $3,816,392
Step 7. Adjustment of Pilotage Rates
To determine the adjustments to pilotage rates in each area we multiplied the current pilotage rates in those areas by the rate multiplier. The rate multiplier is calculated by dividing the revenue needed (from step 6) by the revenue needed (from step 3) for each area. The Coast Guard proposes to amend the pilotage rates in 46-404.05-410 with the rates obtained by multiplying the current pilotage rates times the rate multiplier calculated for each pilotage area. The Step 7 Adjustments of Pilotage Rates for each district are displayed below.
District 1
Area 1 St. Area 2 Lake
Total Lawrence River Ontario District 1
Adjustment of pilotage rates....................................
1.03
.96
1.01
[[Page 20118]]
District 2
Area 5 South Area 4 Lake East Shoal to Total Erie Port Huron MI. District 2
Adjustment of pilotage rates....................................
.98
.94
.96
District 3
Area 6 Lakes Huron and Area 7 St. Area 8 Lake
Total Michigan Mary's River Superior District 3
Adjustment of pilotage rate.....................
1.001.09
.95
.99
Regulatory Evaluation
This proposed rule is not a ``significant regulatory action'' under section 3(f) of Executive Order 12866 and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. It is not ``significant'' under the regulatory policies and procedures of the Department of Transportation (DOT)(44 FR 11040, February 26, 1979).
We expect the economic impact of this proposed rule to be so minimal that a full Regulatory Evaluation under paragraph 10e of the regulatory policies and procedures of DOT is unnecessary. This proposed rule would make minimal adjustments to the pilotage rates for the Great Lakes 2000 shipping season. The Coast Guard used the ratemaking methodology found in 46 CFR part 404, Appendix A to identify adjustments necessary to achieve target pilot compensation by establishing these new rates for pilotage. This ratemaking methodology is designed to annually review pilotage rates in order to avoid fluctuations in pilot compensation thus avoiding large changes in pilotage rates. This notice of proposed rulemaking provides a step-by- step economic guide to show how the pilotage rates would be changed. The results of this rulemaking are in keeping with the Coast Guard's desire for a fair and efficient pilotage system.
Small Entities
Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we considered whether this proposed rule would have a significant economic impact on a substantial number of small entities. The term ``small entities'' comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.
For the Great Lakes region, small entities potentially impacted by this proposed rulemaking include shippers, Great Lakes ports, carriers, and shipping agents. The proposed decreases in Great Lakes pilotage rates are not expected to significantly impact small businesses because this rulemaking actually reduces the financial burden on small entities and on the general public.
Therefore, the Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities. If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment to the Docket Management Facility at the address under ADDRESSES. In your comment, explain why you think it qualifies and how and to what degree this rule would economically affect it.
Assistance for Small Entities
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule so that they can better evaluate its effects on them and participate in the rulemaking. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please consult Tom Lawler, Chief Economist, Great Lakes Pilotage (G-MW-1), U.S. Coast Guard, at 202-267-6447, by facsimile 202-267-4700, or by email at tlawler@comdt.uscg.mil.
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).
Collection of Information
This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
Federalism
The Coast Guard has analyzed this proposal under the principles and criteria in Executive Order 12612 and has determined that this proposal does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.
Unfunded Mandates Reform Act
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their regulatory actions not specifically required by law. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 or more in any one year. Though this proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
Taking of Private Property
This proposed rule would not effect a taking of private property or otherwise have taking implications under E.O. 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.
Civil Justice Reform
This proposed rule meets applicable standards in sections 3(a) and 3(b)(2) of E.O. 12988, Civil Justice Reform, to
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minimize litigation, eliminate ambiguity, and reduce burden.
Protection of Children
We have analyzed this proposed rule under E.O. 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not concern an environmental risk to health or risk to safety that may disproportionately affect children.
Environment
We considered the environmental impact of this proposed rule and concluded that under figure 2-1, paragraph 34(a), of the Commandants Instruction M16475.1C, this rule is categorically excluded from further environmental documentation. The proposed rule is procedural in nature because it deals exclusively with adjusting pilotage rates for the Great Lakes. A ``Categorical Exclusion Determination'' is available in the docket where indicated under ADDRESSES.
List of Subjects in 46 CFR Part 401
Administrative practice and procedure, Great Lakes, Navigation (water), Penalties, Reporting and recordkeeping requirements, Seamen.
For the reasons discussed in the preamble, the Coast Guard proposes to amend 46 CFR part 401 as follows:
PART 401--GREAT LAKES PILOTAGE REGULATIONS
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The authority citation for part 401 continues to read as follows:
Authority: 46 U.S.C. 2104(a), 6101, 7701, 8105, 9303, 9304; 49 CFR 1.45, 1.46 (mmm), 46 CFR 401.105 also issued the authority of 44 U.S.C. 3507.
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In Sec. 401.405, revise tables (a) and (b) to read as follows:
Sec. 401.405 Basic rates and charges on the St. Lawrence River and Lake Ontario.
* * * * *
(a) Area 1 (Designated Waters):
Service
St. Lawrence River
Basic Pilotage............................ $8 Kilometer or $13 per mile. \1\ Each Lock Transited....................... $176 \1\ Harbor Movage............................. $579 \1\
\1\ The minimum basic rate for assignment of a pilot in the St. Lawrence River is $381 and the maximum basic rate for a through trip is $1,676.
(b) Area 2 (Undesignated Waters):
Service
Lake Ontario
Six Hour Period.........................................
$282 Docking/Undocking.......................................
269
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In Sec. 401.407, revise tables (a) and (b) to read as follows:
Sec. 401.407 Basic rates and charges on Lake Erie and the navigable waters from Southeast Shoal to Port Huron, MI.
* * * * *
(a) Area 4 (Undesignated Waters):
Lake Erie (East of Service
Southeast
Buffalo Shoal)
Six Hour Period.........................
$316
$316 Docking/Undocking.......................
243
243 Any Point on the Niagara River below the
N/A
620 Black Rock Lock........................
(b) Area 5 (Designated Waters):
Toledo or any point on Lake Any point on/in
Southeast Erie west of Detroit River Detroit pilot St. Clair Shoal
Southeast
boat
River Shoal
Toledo or any port on Lake Erie
$929
$548
$1,205
$929
N/A west of South-East Shoal....... Port Huron Change Point......... \1\ 1,617 \1\ 1,873
1,215
945
$672 St. Clair River................. \1\ 1,617
N/A
1,215
1,215
548 Detroit or Windsor or the
929
1,205
548
N/A
1,215 Detroit River.................. Detroit Pilot Boat..............
672
929
N/A
N/A
1,215
\1\ When pilots are not changed at the Detroit Pilot Boat.
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In Sec. 401.410, revise tables (b) and (c) to read as follows:
Sec. 401.410 Basic rates and charges on Lake Huron, Michigan and Superior and the St Mary's River.
* * * * * * *
(b) Area 7 (Designated Waters):
Area
Detour
Gros Cap Any Harbor
Gros Cap........................................................
$1,436
N/A
N/A Algoma Steel Corporation Wharf at Sault Ste. Marie Ontario......
1,436
541
N/A Any point in Sault Ste. Marie, Ontario except the Algoma Steel
1,204
541
N/A Corporation Wharf.............................................. Sault Ste. Marie, Michigan......................................
1,204
541
N/A Harbor Movage...................................................
N/A
N/A
541
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(c) Area 8 (Undesignated Waters):
Service
Lake Superior
Six Hour Period.........................................
$248 Docking/Undocking.......................................
237
Sec. 401.420 [Amended]
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In Sec. 401.420--
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In paragraph (a), remove the number ``$51'' and add, in its place, the number ``$50''; and remove the number ``$807'' and add, in its place, the number ``$799''.
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In paragraph (b), remove the number ``$51'' and add, in its place, the number ``$50''; and remove the number ``$807'' and add, in its place, the number ``$799''.
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In paragraph (c) (1), remove the number ``$305'' and add, in its place, the number ``$302''; in paragraph (c) (3), remove the number ``$51'' and add, in its place, the number ``$50'' and also in paragraph (c) (3), remove the number ``$807'', and add, in its place, the number ``$799''.
Sec. 401.428 [Amended]
-
-
In Sec. 401.428, remove the number ``$312'' and add, in its place, the number ``$309''.
Dated: April 5, 2000. R.C. North, Rear Admiral, U.S. Coast GuardAssistant Commandant for Marine Safety and Environmental Protection.
[FR Doc. 00-9251Filed4-13-00; 8:45 am]
BILLING CODE 4910-15-P
