Great Lakes Pilotage Rates–2015 Annual Review and Adjustment
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Notice of proposed rulemaking.
CFR Part: "46 CFR Part 401"
RIN Number: "RIN 1625-AC22"
Citation: "79 FR 52602"
Document Number: "USCG-2014-0481"
Page Number: "52602"
"Proposed Rules"
SUMMARY: The
   EFFECTIVE DATE: Comments and related material must either be submitted to our online docket via http://www.regulations.gov on or before
   ADDRESSES: You may submit comments identified by docket number USCG-2014-0481 using any one of the following methods:
   (1) Federal eRulemaking Portal: http://www.regulations.gov.
   (2) Fax: 202-493-2251.
   (3) Mail: Docket Management Facility (M-30),
   (4) Hand delivery: Same as mail address above,
   To avoid duplication, please use only one of these four methods. See the "Public Participation and Request for Comments" portion of the SUPPLEMENTARY INFORMATION section below for instructions on submitting comments.
   FOR FURTHER INFORMATION CONTACT: If you have questions on this proposed rule, call or email Mr.
   SUPPLEMENTARY INFORMATION:
Table of Contents for Preamble
I. Public Participation and Request for Comments
   A. Submitting Comments
   B. Viewing Comments and Documents
   C. Privacy Act
   D. Public Meeting
II. Abbreviations
III. Basis and Purpose
IV. Background
V. Discussion of Proposed Rule
   A. Summary
   B. Discussion of Methodology
VI. Regulatory Analyses
   A. Regulatory Planning and Review
   B. Small Entities
   C. Assistance for Small Entities
   D. Collection of Information
   E. Federalism
   F. Unfunded Mandates Reform Act
   G. Taking of Private Property
   H. Civil Justice Reform
   I. Protection of Children
   J. Indian Tribal Governments
   K. Energy Effects
   L. Technical Standards
   M. Environment
I. Public Participation and Request for Comments
   We encourage you to participate in this rulemaking by submitting comments and related materials. All comments received will be posted without change to http://www.regulations.gov and will include any personal information you have provided.
A. Submitting Comments
   If you submit a comment, please include the docket number for this rulemaking (USCG-2014-0481), indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online or by fax, mail, or hand delivery, but please use only one of these means. We recommend that you include your name and a mailing address, an email address, or a phone number in the body of your document so that we can contact you if we have questions regarding your submission.
   To submit your comment online, go to http://www.regulations.gov and insert "USCG-2014-0481" in the "Search" box. Click on "Submit a Comment" in the "Actions" column. If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 81/2 by 11 inches, suitable for copying and electronic filing. If you submit comments by mail and would like to know that they reached the Facility, please enclose a stamped, self-addressed postcard or envelope.
   We will consider all comments and material received during the comment period and may change this notice of proposed rulemaking (NPRM) based on your comments.
B. Viewing Comments and Documents
   To view comments, as well as documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov and insert "USCG-2014-0481" in the "Search" box. Click "Search." Click the "Open Docket Folder" in the "Actions" column. If you do not have access to the Internet, you may view the docket online by visiting the Docket Management Facility in Room W12-140 on the ground floor of the
C. Privacy Act
   Anyone can search the electronic form of comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review a Privacy Act notice regarding our public dockets in the
D. Public Meeting
   We do not now plan to hold a public meeting, but you may submit a request for one to the docket using one of the methods specified under ADDRESSES. In your request, explain why you believe a public meeting would be beneficial. If we decide to hold a public meeting, we will announce its time and place in a later notice in the
II. Abbreviations
CFR Code of Federal Regulations
CPA Certified public accountant
CPI Consumer Price Index
E.O. Executive Order
MISLE Marine Information for Safety and Law Enforcement
MOA Memorandum of Arrangements
MOU Memorandum of Understanding
NAICS North American Industry Classification System
NPRM Notice of proposed rulemaking
ROI Return on investment
SEC Section symbol
U.S.C. United States Code
III. Basis and Purpose
   The basis of this NPRM is the Great Lakes Pilotage Act of 1960 ("the Act") (46
   FOOTNOTE 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
   The purpose of this NPRM is to establish new base pilotage rates, using the methodology found in 46 CFR part 404, Appendix A.
IV. Background
   The vessels affected by this NPRM are those engaged in foreign trade upon the U.S. waters of the Great Lakes.
   FOOTNOTE 2 A "laker" is a commercial cargo vessel especially designed for and generally limited to use on the Great Lakes. END FOOTNOTE
   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 we do not control the actual compensation that pilots receive. The actual compensation is determined by each of the three district associations, which use different compensation practices.
   District One, consisting of Areas 1 and 2, includes all U.S. waters of the
   This NPRM is a full ratemaking to establish new base pilotage rates, using the methodology found in 46 CFR part 404, Appendix A (hereafter "Appendix A"). The last full ratemaking established the current base rates in 2014 (79 FR 12084;
V. Discussion of Proposed Rule
A. Summary
   We propose establishing new base pilotage rates in accordance with the methodology outlined in Appendix A to 46 CFR part 404. The proposed new rates would be established by
   Secondly, we propose temporary surcharges for the pilot associations to recoup necessary and reasonable training expenses incurred or that are expected to be incurred prior to the required
   In District One we propose a temporary surcharge of 5 percent to compensate pilots for
   Additionally, we propose a temporary surcharge of 10 percent in District Two to compensate pilots for
   Next, we propose a temporary surcharge of 1 percent in District Three to compensate pilots for
   All figures in the tables that follow are based on calculations performed either by an independent accountant or by the Director's /3/ 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 figures, which are rounded for presentation in the tables.
   FOOTNOTE 3 "Director" is the Coast Guard Director, Great Lakes Pilotage, which is used throughout this NPRM. END FOOTNOTE GOES
Table 1--Summary of Rate Adjustments Based on Step 7 Discretion If pilotage service is required in: Then the percent change over the current rate is: Area 1 (Designated waters) 2.50 Area 2 (Undesignated waters) 2.50 Area 4 (Undesignated waters) 2.50 Area 5 (Designated waters) 2.50 Area 6 (Undesignated waters) 2.50 Area 7 (Designated waters) 2.50 Area 8 (Undesignated waters) 2.50
B. Discussion of Methodology
   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 2012 financial information supplied by the pilots association.
   Step 1: Projection of Operating Expenses. In this step, we project the amount of vessel traffic annually. Based on 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 pilot association to provide us with detailed financial information in accordance with 46 CFR part 403. The associations complied with this requirement, supplying 2012 financial information in 2013. 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 disallowed for ratemaking purposes. The accountant's preliminary findings were sent to the pilot associations, they reviewed and commented on those findings, and the accountant then finalized the findings. The Director reviewed and accepted the final findings, resulting in the determination of recognizable expenses. The preliminary findings, the associations' comments on those findings, and the final findings are all discussed in the "Summary--Independent Accountant's Report on Pilot Association Expenses, with Pilot Association Comments and Accountant's Responses," which appears in the docket. Tables 2 through 4 show each association's recognized expenses.
Table 2--Recognized Expenses for District One Reported Expenses for 2012 Area 1 Area 2 Total St. Lawrence Lake River Ontario Operating Expenses: Other Pilotage Costs: Pilot subsistence/Travel$227,199 $137,315 $364,514 License insurance 0 0 0 Payroll taxes 62,038 48,452 110,490 Other 596 549 1,145 Total Other Pilotage Costs 289,833 186,316 476,149 Pilot Boat and Dispatch Costs: Pilot boat expense 108,539 95,405 203,944 Dispatch expense 0 0 0 Payroll taxes 13,429 11,804 25,233 Total Pilot and Dispatch Costs 121,968 107,209 229,177 Administrative Expenses: Legal--general counsel 1,369 1,281 2,650 Legal--lobbying 3,957 3,478 7,435 Insurance 21,907 18,998 40,905 Employee benefits 21,281 18,509 39,790 Payroll taxes 0 0 0 Other taxes 18,491 15,801 34,292 Travel 473 416 889 Depreciation/Auto leasing/Other 38,346 33,705 72,051 Interest 15,484 13,610 29,094 Dues and subscriptions 13,740 10,240 23,980 Utilities 4,549 3,897 8,446 Salaries 48,837 42,927 91,764 Accounting/Professional fees 4,683 4,317 9,000 Pilot Training 26,353 21,961 48,314 Other 10,689 8,974 19,663 Total Administrative Expenses 230,159 198,114 428,273 Total Operating Expenses 641,960 491,639 1,133,599 Proposed Adjustments (Independent certified public accountant (CPA)): Pilotage subsistence/Travel (887) (779) (1,666) Payroll taxes (13,719) (12,058) (25,777) Dues and subscriptions (13,740) (10,240) (23,980) TOTAL CPA ADJUSTMENTS (28,346) (23,077) (51,423) Proposed Adjustments (Director): APA Dues 11,679 8,704 20,383 Pilot Training (surcharge) (26,353) (21,961) (48,314) Legal--lobbying (3,957) (3,478) (7,435) TOTAL DIRECTOR ADJUSTMENTS (18,631) (16,735) (35,366) Total Operating Expenses 594,983 451,827 1,046,810 Note: Numbers may not total due to rounding.
Table 3--Recognized Expenses for District Two Reported Expenses for 2012 Area 4 Area 5 Total Lake Erie Southeast Shoal to Port Huron, MI Operating Expenses: Other Pilotage Costs: Pilot subsistence/Travel$86,947 $130,421 $217,368 License insurance 6,168 9,252 15,420 Payroll taxes 42,218 63,328 105,546 Other 23,888 35,833 59,721 Total Other Pilotage Costs 159,221 238,834 398,055 Pilot Boat and Dispatch Costs: Pilot boat expense 131,285 196,930 328,215 Dispatch expense 6,600 9,900 16,500 Employee Benefits 48,310 72,465 120,775 Payroll taxes 7,412 11,119 18,531 Total Pilot and Dispatch Costs 193,607 290,414 484,021 Administrative Expenses: Legal--general counsel 2,054 3,082 5,136 Legal--lobbying 2,704 4,055 6,759 Legal--litigation 6,488 9,733 16,221 Office rent 26,275 39,413 65,688 Insurance 10,682 16,024 26,706 Employee benefits 16,452 24,678 41,130 Payroll taxes 4,143 6,216 10,359 Other taxes 12,546 18,819 31,365 Depreciation/Auto leasing/Other 9,074 13,610 22,684 Interest 2,989 4,483 7,472 Utilities 13,917 20,876 34,793 Salaries 36,252 54,377 90,629 Accounting/Professional fees 11,764 17,646 29,410 Pilot Training 0 0 0 Other 9,405 14,108 23,513 Total Administrative Expenses 164,745 247,120 411,865 Total Operating Expenses 517,573 776,368 1,293,941 Proposed Adjustments (Independent CPA): Pilot subsistence/Travel (1,982) (2,974) (4,956) Employee benefits (3,585) (5,378) (8,963) TOTAL CPA ADJUSTMENTS (5,567) (8,352) (13,919) Proposed Adjustments (Director): Federal Tax Allowance (5,200) (7,800) (13,000) APA Dues 7,344 11,016 18,360 Legal--lobbying (2,704) (4,055) (6,759) Legal--litigation (6,488) (9,733) (16,221) TOTAL DIRECTOR ADJUSTMENTS (7,048) (10,572) (17,620) Total Operating Expenses 504,958 757,444 1,262,402 Note: Numbers may not total due to rounding.
Table 4--Recognized Expenses for District Three Reported Expenses for 2012 Area 6 Area 7 Area 8 Total Lakes Huron St. Mary's Lake and River Superior Michigan Operating Expenses: Other Pilotage Costs: Pilot subsistence/Travel$180,316 $77,278 $110,398 $367,992 License insurance 8,859 3,797 5,424 18,080 Payroll taxes 0 0 0 0 Other 2,875 1,232 1,760 5,867 Total Other Pilotage Costs 192,050 82,307 117,582 391,939 Pilot Boat and Dispatch Costs: Pilot boat expense 261,937 112,259 160,370 534,566 Dispatch expense 81,958 35,125 50,178 167,261 Payroll taxes 8,203 3,515 5,022 16,740 Total Pilot Boat and Dispatch 352,098 150,899 215,570 718,567 Costs Administrative Expenses: Legal--lobbying 4,304 1,845 2,635 8,784 Office rent 4,851 2,079 2,970 9,900 Insurance 6,469 2,773 3,961 13,203 Employee benefits 77,348 33,149 47,356 157,854 Payroll taxes 5,404 2,316 3,309 11,029 Other taxes 941 403 576 1,920 Depreciation/Auto leasing 17,462 7,484 10,691 35,637 Interest 2,692 1,154 1,648 5,494 Utilities 20,950 8,979 12,827 42,756 Salaries 54,003 23,144 33,063 110,210 Accounting/Professional fees 13,157 5,639 8,055 26,851 Pilot Training 0 0 0 0 Other 4,657 1,996 2,851 9,504 Total Administrative Expenses 212,238 90,961 129,942 433,141 Total Operating Expenses 756,386 324,167 463,094 1,543,647 Proposed Adjustments (Independent CPA): Pilot subsistence/travel (5,303) (2,273) (3,247) (10,823) Payroll taxes 44,613 19,120 27,314 91,046 Other taxes (1,761) (755) (1,078) (3,594) Other (637) (273) (390) (1,300) TOTAL CPA ADJUSTMENTS 36,912 15,819 22,599 75,329 Proposed Adjustments (Director): APA dues 11,695 5,012 7,160 23,868 Legal--lobbying (4,304) (1,845) (2,635) (8,784) TOTAL DIRECTOR ADJUSTMENTS 7,391 3,167 4,525 15,084 Total Operating Expenses 800,689 343,153 490,218 1,634,060 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 2012 financial information, the "succeeding navigation season" for this ratemaking is 2013. We based our inflation adjustment of 1.4 percent on the 2013 change in the Consumer Price Index (CPI) for the
   The Coast Guard is aware that the current annual adjustment for inflation does not account for the value of money over time. We are working on a solution to allow for a better approximation of actual costs.
Table 5--Inflation Adjustment, District One Reported Area 1 Area 2 Total Expenses for 2012 St. Lake Lawrence Ontario River Total Operating$594,983 $451,827 $1,046,810 Expenses: 2013 change in x .014 x .014 x .014 the CPI for the Midwest Region of the United States Inflation = 8,330 = 6,326 = 14,655 Adjustment
Table 6--Inflation Adjustment, District Two Reported Expenses Area 4 Area 5 Total for 2012 Lake Erie Southeast Shoal to Port Huron, MI Total Operating$504,958 $757,444 $1,262,402 Expenses: 2013 change in x .014 x .014 x .014 the CPI for the Midwest Region of the United States Inflation = 7,069 = 10,604 = 17,674 Adjustment
Table 7--Inflation Adjustment, District Three Reported Area 6 Area 7 Area 8 Total Expenses for Lakes St. Mary's Lake 2012 Huron and River Superior Michigan Total$800,689 $343,153 $490,218 $1,634,060 Operating Expenses: 2013 change x .014 x .014 x .014 x .014 in the CPI for the Midwest Region of the United States Inflation = 11,210 = 4,804 = 6,863 = 22,877 Adjustment
   Step 1.D: Projection of Operating Expenses. In this final sub-step of Step 1, we 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.
   For District One, the projected operating expenses are based on the calculations from Steps 1.A through 1.C. Table 8 shows these projections.
Table 8--Projected Operating Expenses, District One Reported Area 1 Area 2 Total Expenses for St. Lake 2012 Lawrence Ontario River Total operating$594,983 $451,827 $1,046,810 expenses Inflation + 8,330 + 6,326 + 14,655 adjustment 1.4% Total projected = 603,313 = 458,153 = 1,061,465 expenses for 2015 pilotage season Note: Numbers may not total due to rounding.
   In District Two the projected operating expenses are based on the calculations from Steps 1.A through 1.C. Table 9 shows these projections.
Table 9--Projected Operating Expenses, District Two Reported Expenses Area 4 Area 5 Total for 2012 Lake Erie Southeast Shoal to Port Huron, MI Total Operating$504,958 $757,444 $1,262,402 Expenses Inflation + 7,069 + 10,604 + 17,674 adjustment 1.4% Total projected = 512,027 = 768,048 = 1,280,076 expenses for 2015 pilotage season
   In District Three, projected operating expenses are based on the calculations from Steps 1.A through 1.C. Table 10 shows these projections.
Table 10--Projected Operating Expenses, District Three Reported Area 6 Area 7 Area 8 Total Expenses for Lakes St. Mary's Lake 2012 Huron and River Superior Michigan Total$800,689 $343,153 $490,218 $1,634,060 Expenses Inflation + 11,210 + 4,804 + 6,863 + 22,877 adjustment 1.4% Total = 811,899 = 347,957 = 497,081 = 1,656,937 projected expenses for 2015 pilotage season
   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 2015.
   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
   We rely upon union contract data provided by the AMOU, which has agreements with three U.S. companies engaged in
   Agreements A and B both expire on
   Because we are interested in annual compensation, we must convert these daily rates. We 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. GOES
Table 11--Projected Annual Aggregate Rate Components Aggregate Rate--Wages and Vacation, Pension, and Medical Benefits Pilots on undesignated waters Agreement A:$632.12 daily rate x 270 days$170,672.40 Agreement B:$624.34 daily rate x 270 days 168,571.80 Pilots on designated waters Agreement A:$870.05 daily rate x 270 days 234,913.50 Agreement B:$856.42 daily rate x 270 days 231,233.40
   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
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 / 854,426 / 1,215,811=29.7238% 1,215,811=70.2762%
   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. GOES
Table 13--Tonnage-Weighted Wage and Benefit Components Undesignated Designated waters waters Agreement A: Total wages$170,672.40 $234,913.50 and benefits Percent x 29.7238% x 29.7238% tonnage Total =$50,730 =$69,825 Agreement B: Total wages$168,571.80 $231,233.40 and benefits Percent x 70.2762% x 70.2762% tonnage Total =$118,466 =$162,502 Projected Target Rate of Compensation: Agreement A$50,730 $69,825 total weighted average wages and benefits Agreement B +$118,466 +$162,502 total weighted average wages and benefits Total =$169,196 =$232,327
   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 through dividing projected bridge hours for each area by either the 1,000 (designated waters) or 1,800 (undesignated waters) bridge hours specified in Step 2.B. We round the mathematical results and express our determination as a whole number of pilots.
   According to 46 CFR part 404, Appendix A, Step 2.B(1), bridge hours are the number of hours a pilot is aboard a vessel providing pilotage service. For that reason, and as we explained most recently in the 2011 ratemaking's final rule (76 FR 6351 at 6352 col. 3 (
   In our 2014 final rule, we determined that 36 pilots would be needed for ratemaking purposes. For 2015, we project 36 pilots is still the proper number to use for ratemaking purposes. The total pilot authorization strength 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 2008 ratemaking final rule (74 FR 220 at 221-22 (
Table 14--Number of Pilots Needed Pilotage area Projected Divided by Calculated Pilots 2015 1,000 value of needed bridge (designated pilot (total = hours waters) or demand 36) 1,800 (undesignated waters) Area 1 5,116 / 1,000 = 5.116 6 (Designated waters) Area 2 5,429 / 1,800 = 3.016 5 (Undesignated waters) Area 4 5,814 / 1,800 = 3.230 4 (Undesignated waters) Area 5 5,052 / 1,000 = 5.052 6 (Designated waters) Area 6 9,611 / 1,800 = 5.339 6 (Undesignated waters) Area 7 3,023 / 1,000 = 3.023 4 (Designated waters) Area 8 7,540 / 1,800 = 4.189 5 (Undesignated waters)
   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.
Table 15--Projection of Target Pilot Compensation by Area Pilotage area Pilots Target rate Projected needed of pilot target pilot (total = 36) compensation compensation Area 1 (Designated 6 x$232,327 =$1,393,964 waters) Area 2 5 x 169,196 = 845,981 (Undesignated waters) Area 4 4 x 169,196 = 676,785 (Undesignated waters) Area 5 (Designated 6 x 232,327 = 1,393,964 waters) Area 6 6 x 169,196 = 1,015,177 (Undesignated waters) Area 7 (Designated 4 x 232,327 = 929,309 waters) Area 8 5 x 169,196 = 845,981 (Undesignated waters) Note: Numbers may not total due to rounding.
   Steps 3 and 3.A: Projection of Revenue. In Steps 3 and 3.A., we project the revenue that would be received in 2015 if demand for pilotage services matches the bridge hours we projected in Table 14, and if 2014 pilotage rates are left unchanged. Table 16 shows this calculation.
Table 16--Projection of Revenue By Area Pilotage area Projected 2014 Revenue 2015 bridge Pilotage projection hours rates for 2015 Area 1 (Designated 5,116 x$472.50 =$2,417,285 waters) Area 2 5,429 x 291.96 = 1,585,032 (Undesignated waters) Area 4 5,814 x 210.40 = 1,223,262 (Undesignated waters) Area 5 (Designated 5,052 x 521.64 = 2,635,314 waters) Area 6 9,611 x 204.95 = 1,969,800 (Undesignated waters) Area 7 (Designated 3,023 x 495.01 = 1,496,427 waters) Area 8 7,540 x 191.34 = 1,442,677 (Undesignated waters) Total 12,769,797 Note: Numbers may not total due to rounding.
   Step 4: Calculation of Investment Base. In this step, we calculate each association's investment base, which is the recognized capital investment in the assets employed by the association 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$532,237 $467,833 Total Current - 61,808 - 54,329 Liabilities Current Notes Payable + 23,413 + 20,579 Total Property and + 445,044 + 391,191 Equipment (NET) Land - 11,727 - 10,308 Total Other Assets + 0 + 0 Total Recognized = 927,159 = 814,966 Assets Non-Recognized Assets: Total Investments and + 6,452 + 5,672 Special Funds Total Non-Recognized = 6,452 = 5,672 Assets Total Assets: Total Recognized 927,159 814,966 Assets Total Non-Recognized + 6,452 + 5,672 Assets Total Assets = 933,611 = 820,638 Recognized Sources of Funds: Total Stockholder 659,141 579,380 Equity Long-Term Debt + 262,785 + 230,986 Current Notes Payable + 23,413 + 20,579 Advances from + 0 + 0 Affiliated Companies Long-Term + 0 + 0 Obligations--Capital Leases Total Recognized = 945,339 = 830,945 Sources Non-Recognized Sources of Funds: Pension Liability 0 0 Other Non-Current + 0 + 0 Liabilities Deferred Federal + 10,675 + 9,383 Income Taxes Other Deferred + 0 + 0 Credits Total Non-Recognized = 10,675 = 9,383 Sources Total Sources of Funds: Total Recognized 945,339 830,945 Sources Total Non-Recognized + 10,675 + 9,383 Sources Total Sources of = 956,014 = 840,328 Funds Note: Numbers may not total due to rounding.
Table 18--Total Sources of Funds, District Two Area 4 Area 5 Recognized Assets: Total Current$498,456 $747,683 Assets Total Current - 494,410 - 741,614 Liabilities Current Notes + 33,962 + 50,942 Payable Total Property + 436,063 + 654,094 and Equipment (NET) Land - 0 - 0 Total Other + 60,418 + 90,627 Assets Total = 534,488 = 801,733 Recognized Assets Non-Recognized Assets: Total + 0 + 0 Investments and Special Funds Total Non- = 0 = 0 Recognized Assets Total Assets: Total 534,488 801,733 Recognized Assets Total Non- + 0 + 0 Recognized Assets Total Assets = 534,488 = 801,733 Recognized Sources of Funds: Total 85,846 128,768 Stockholder Equity Long-Term Debt + 414,681 + 622,022 Current Notes + 33,962 + 50,942 Payable Advances from + 0 + 0 Affiliated Companies Long-Term + 0 + 0 Obligations-- Capital Leases Total = 534,488 = 801,733 Recognized Sources Non-Recognized Sources of Funds: Pension 0 0 Liability Other Non- + 0 + 0 Current Liabilities Deferred + 0 + 0 Federal Income Taxes Other Deferred + 0 + 0 Credits Total Non- = 0 = 0 Recognized Sources Total Sources of Funds: Total 534,488 801,733 Recognized Sources Total Non- + 0 + 0 Recognized Sources Total Sources = 534,488 = 801,733 of Funds Note: Numbers may not total due to rounding.
Table 19--Total Sources of Funds, District Three Area 6 Area 7 Area 8 Recognized Assets: Total Current Assets$656,459 $281,340 $401,914 Total Current - 82,775 - 35,475 - 50,679 Liabilities Current Notes Payable + 7,730 + 3,313 + 4,733 Total Property and + 19,611 + 8,405 + 12,007 Equipment (NET) Land - 0 - 0 - 0 Total Other Assets + 490 + 210 + 300 Total Recognized = 601,515 = 257,793 = 368,275 Assets Non-Recognized Assets: Total Investments and + 0 + 0 + 0 Special Funds Total Non-Recognized = 0 = 0 = 0 Assets Total Assets: Total Recognized 601,515 257,793 368,275 Assets Total Non-Recognized + 0 + 0 + 0 Assets Total Assets = 601,515 = 257,793 = 368,275 Recognized Sources of Funds: Total Stockholder 586,300 251,271 358,959 Equity Long-Term Debt + 7,485 + 3,208 + 4,583 Current Notes Payable + 7,730 + 3,313 + 4,733 Advances from + 0 + 0 + 0 Affiliated Companies Long-Term + 0 + 0 + 0 Obligations--Capital Leases Total Recognized = 601,515 = 257,793 = 368,275 Sources Non-Recognized Sources of Funds: Pension Liability 0 0 0 Other Non-Current + 0 + 0 + 0 Liabilities Deferred Federal + 0 + 0 + 0 Income Taxes Other Deferred + 0 + 0 + 0 Credits Total Non-Recognized = 0 = 0 = 0 Sources Total Sources of Funds: Total Recognized 601,515 257,792 368,275 Sources Total Non-Recognized + 0 + 0 + 0 Sources Total Sources of = 601,515 = 257,792 = 368,275 Funds Note: Numbers may not total due to rounding.
   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 non-recognized sources of funds (sources we do not recognize as required to support pilotage operations) only exist for District One 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) for Districts Two and Three. District One has a multiplier of 0.99. Table 20 applies the multiplier of 0.99 and 1 as necessary and shows the investment base for each association. 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 District Area Total Recognized Total Multiplier Investment recognized sources of sources of (ratio of base assets funds funds recognized ( ] *1 ( ] ( ] ( ] to total sources) One 1 927,159 945,339 956,014 0.99 916,806 2 814,966 830,945 840,328 0.99 805,866 Total 1,722,672 Two *2 4 534,488 534,488 534,488 1 534,488 5 801,733 801,733 801,733 1 801,733 Total 1,336,221 Three 6 601,515 601,515 601,515 1 601,515 7 257,793 257,792 257,792 1 257,793 8 368,275 368,275 368,275 1 368,275 Total 1,227,581 *1 "Investment base" = "Total recognized assets" X "Multiplier (ratio of recognized to total sources)". *2 The pilot associations that provide pilotage services in Districts One and Three operate as partnerships. The pilot association that provides pilotage service for District Two operates as a corporation. Note: Numbers may not total due to rounding.
   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 2013, the preceding year, the allowed ROI was 4.24 percent, based on the average rate of return for that year on Moody's AAA corporate bonds, which can be found at: http://research.stlouisfed.org/fred2/series/AAA/downloaddata?cid=119.
   Step 6: Adjustment Determination. The first part of 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. GOES
Table 21--Projected ROI, Areas in District One Area 1 Area 2 Revenue (from Step 3)$2,417,285 $1,585,032 Operating Expenses (from Step 1) - 603,313 - 458,153 Pilot Compensation (from Step 2) - 1,393,964 - 845,981 Operating Profit/(Loss) = 420,009 = 280,899 Interest Expense (from audits) - 15,484 - 13,610 Earnings Before Tax = 404,525 = 267,289 Federal Tax Allowance - 0 - 0 Net Income = 404,525 = 267,289 Return Element (Net Income + 420,009 280,899 Interest) Investment Base (from Step 4) / 916,806 / 805,866 Projected Return on Investment = 0.46 = 0.35
GOES
Table 22--Projected ROI, Areas in District Two Area 4 Area 5 Revenue (from Step 3)$1,223,262 $2,635,314 Operating Expenses (from Step 1) - 512,027 - 768,048 Pilot Compensation (from Step 2) - 676,785 - 1,393,964 Operating Profit/(Loss) = 34,450 = 473,302 Interest Expense (from audits) - 2,989 - 4,483 Earnings Before Tax = 31,461 = 468,819 Federal Tax Allowance - 5,200 - 7,800 Net Income = 26,261 = 461,019 Return Element (Net Income + 29,250 465,502 Interest) Investment Base (from Step 4) / 534,488 / 801,733 Projected Return on Investment = 0.05 = 0.58
Table 23--Projected ROI, Areas in District Three Area 6 Area 7 Area 8 Revenue (from Step 3) $ $$1,442,677 1,969,800 1,496,427 Operating Expenses - 811,899 - 347,957 - 497,081 (from Step 1) Pilot Compensation - 1,015,177 - 929,309 - 845,981 (from Step 2) Operating = 142,724 = 219,161 = 99,615 Profit/(Loss) Interest Expense - 2,692 - 1,154 - 1,648 (from audits) Earnings Before Tax = 140,032 = 218,007 = 97,967 Federal Tax Allowance - 0 - 0 - 0 Net Income = 140,032 = 218,007 = 97,967 Return Element (Net 142,724 219,161 99,615 Income + Interest) Investment Base (from / 601,515 / 257,793 / 368,275 Step 4) Projected Return on = 0.24 = 0.85 = 0.27 Investment
   The second part required for Step 6 compares the results of Tables 21 through 23 with the target ROI (4.24 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 St. Lake Lake Southeast Lakes St. Lake Lawrence Ontario Erie Shoal to Huron and Mary's Superior River Port Michigan River Huron, MI Projected 0.4581 0.3486 0.0547 0.5806 0.2373 0.8501 0.2705 return on investment Target 0.0424 0.0424 0.0424 0.0424 0.0424 0.0424 0.0424 return on investment Difference 0.4157 0.3062 0.0123 0.5382 0.1949 0.8077 0.2281 in return on investment *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 Pilotage area Operating Target pilot Investment expenses compensation base (Step (Step 1) (Step 2) 4) x 4.24% (Target ROI Step 5) Area 1 (Designated$603,313 +$1,393,964 +$38,873 waters) Area 2 458,153 + 845,981 + 34,169 (Undesignated waters) Area 4 512,027 + 676,785 + 22,662 (Undesignated waters) Area 5 (Designated 768,048 + 1,393,964 + 33,993 waters) Area 6 811,899 + 1,015,177 + 25,504 (Undesignated waters) Area 7 (Designated 347,957 + 929,309 + 10,930 waters) Area 8 497,081 + 845,981 + 15,615 (Undesignated waters) Total 3,998,479 + 7,101,160 + 181,747
Table 25--Revenue Needed To Recover Target ROI, by Area Pilotage area Federal tax Revenue allowance needed Area 1 (Designated +$0 =$2,036,149 waters) Area 2 + 0 = 1,338,302 (Undesignated waters) Area 4 + 5,200 = 1,216,674 (Undesignated waters) Area 5 (Designated + 7,800 = 2,203,805 waters) Area 6 + 0 = 1,852,580 (Undesignated waters) Area 7 (Designated + 0 = 1,288,197 waters) Area 8 + 0 = 1,358,677 (Undesignated waters) Total + 13,000 = 11,294,385
   The "Revenue Needed" column of Table 25 is less than the revenue we projected in Table 16.
   Step 7: Adjustment of Pilotage Rates. Finally, we calculate rate adjustments by dividing the Step 6 revenue needed (Table 25) by the Step 3 revenue projection (Table 16), to give us a rate multiplier for each area. These rate adjustments are subject to negotiation with
Table 26--Rate Multiplier, Areas in District One Area 1 Area 2 Ratemaking projections St. Lake Lawrence Ontario River Revenue Needed (from Step 6)$2,036,149 $1,338,302 Revenue (from Step 3) /$2,417,285 /$1,585,032 Rate Multiplier = 0.8423 = 0.8443
GOES
Table 27--Rate Multiplier, Areas in District Two Area 4 Area 5 Ratemaking Lake Erie Southeast projections Shoal to Port Huron, MI Revenue Needed$1,216,674 $2,203,805 (from Step 6) Revenue (from /$1,223,262 /$2,635,314 Step 3) Rate = 0.9946 = 0.8363 Multiplier
Table 28--Rate Multiplier, Areas in District Three Ratemaking Area 6 Area 7 Area 8 projection Lakes St. Mary's Lake s Huron and River Superior Michigan Revenue $ $$1,358,677 Needed 1,825,580 1,288,197 (from Step 6) Revenue / $ / $ /$1,442,677 (from Step 1,969,800 1,496,427 3) Rate = 0.9405 = 0.8608 = 0.9418 Multiplier Note: Numbers may not total due to rounding.
   We calculate a rate multiplier for adjusting the basic rates and charges described in 46 CFR 401.420 and 401.428, and it is applicable in all areas. We divide total revenue needed (Step 6, Table 25) by total projected revenue (Steps 3 and 3.A, Table 16). Table 29 shows this calculation. GOES
Table 29--Rate Multiplier for Basic Rates and Charges in 46 CFR 401.420 and 401.428 Ratemaking Projections: Total Revenue Needed (from Step 6)$11,294,385 Total revenue (from Step 3) /$12,769,797 Rate Multiplier = 0.884
   Using this table, we calculate 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). The result is a decrease by 11.55 percent in all areas.
   Without further action, the existing rates we established in our 2014 final rule would then be multiplied by the rate multipliers from Tables 29 through 31 to calculate the area by area rate changes for 2015. The resulting 2015 rates across the Great Lakes, on average, would then be decreased approximately 12 percent from the 2014 rates. This decrease is not due to increased efficiencies in pilotage services but rather a result of adjustments to AMOU contracts. We propose to decline to impose this decrease because it would have an adverse effect on providing safe, efficient, and reliable pilotage in the pilotage districts. Additionally, we propose to decline to impose this decrease because we are unable to independently verify the compensation data contained in the AMOU contracts. Our Memorandum of Arrangements (MOA) with
   FOOTNOTE 4 The Memorandum of Understanding between the GLPA and USCG was signed on
   * Executive Order (E.O.) 13609, "Promoting International Regulatory Cooperation," which calls on Federal agencies to eliminate "unnecessary differences" between U.S. and foreign regulations (77 FR 26413;
   * The risk that a significant rate decrease would jeopardize the ability of the three pilotage associations to provide safe, efficient, and reliable pilotage service.
   Therefore, we propose relying on the discretionary authority we have under Step 7 to further adjust rates so that they match those adopted by the
Table 30--Impact of Exercising Step 7 Discretion Area Percent change in rate Percent change in rate without exercising Step 7 with exercise of Step 7 discretion discretion Area 1 (Designated -15.77 2.50 waters) Area 2 (Undesignated -15.57 2.50 waters) Area 4 (Undesignated -0.54 2.50 waters) Area 5 (Designated -16.37 2.50 waters) Area 6 (Undesignated -5.95 2.50 waters) Area 7 (Designated -13.92 2.50 waters) Area 8 (Undesignated -5.82 2.50 waters)
   The following tables reflect our proposed rate adjustments of 2.5 percent across all areas.
   Tables 31 through 33 show these calculations. GOES
Table 31--Proposed Adjustment of Pilotage Rates, Areas in District One 2014 Rate Rate Adjusted multiplier rate for 2015 Area 1 St. Lawrence River Basic$19.22 /km, x 1.025 =$19.70 /km, Pilotage 34.02/mi 34.87/mi Each lock 426 x 1.025 = 437 transited Harbor 1,395 x 1.025 = 1,430 movage Minimum 931 x 1.025 = 954 basic rate, St. Lawrence River Maximum 4,084 x 1.025 = 4,186 rate, through trip Area 2 Lake Ontario 6-hour 872 x 1.025 = 894 period Docking or 832 x 1.025 = 853 undocking Note: Numbers may not total due to rounding.
   In addition to the proposed rate charges in Table 31, as we explain in the Summary section of Part V of this preamble, we propose authorizing District One to implement a temporary supplemental 5 percent charge on each source form (the "bill" for pilotage service) for the duration of the 2015 shipping season, which begins in
Table 32--Proposed Adjustment of Pilotage Rates, Areas in District Two 2014 Rate Rate Adjusted multiplier rate for 2015 Area 4 Lake Erie 6-hour period$849 x 1.025 =$870 Docking or 653 x 1.025 = 669 undocking Any point on 1,667 x 1.025 = 1,709 Niagara River below Black Rock Lock Area 5 Southeast Shoal to Port Huron, MI between any point on or in Toledo or any point 1,417 x 1.025 = 1,452 on Lake Erie W. of Southeast Shoal Toledo or any point 2,397 x 1.025 = 2,457 on Lake Erie W. of Southeast Shoal & Southeast Shoal Toledo or any point 3,113 x 1.025 = 3,191 on Lake Erie W. of Southeast Shoal & Detroit River Toledo or any point 2,397 x 1.025 = 2,457 on Lake Erie W. of Southeast Shoal & Detroit Pilot Boat Port Huron Change 4,176 x 1.025 = 4,280 Point & Southeast Shoal (when pilots are not changed at the Detroit Pilot Boat) Port Huron Change 4,837 x 1.025 = 4,958 Point &Toledo or any point on Lake Erie W. of Southeast Shoal (when pilots are not changed at the Detroit Pilot Boat) Port Huron Change 3,137 x 1.025 = 3,215 Point & Detroit River Port Huron Change 2,441 x 1.025 = 2,502 Point & Detroit Pilot Boat Port Huron Change 1,735 x 1.025 = 1,778 Point & St. Clair River St. Clair River 1,417 x 1.025 = 1,452 St. Clair River & 4,176 x 1.025 = 4,280 Southeast Shoal (when pilots are not changed at the Detroit Pilot Boat) St. Clair River & 3,137 x 1.025 = 3,215 Detroit River/Detroit Pilot Boat Detroit, Windsor, 1,417 x 1.025 = 1,452 or Detroit River Detroit, Windsor, 2,397 x 1.025 = 2,457 orDetroit River & Southeast Shoal Detroit, Windsor, 3,113 x 1.025 = 3,191 orDetroit River & Toledo or any point on Lake Erie W. of Southeast Shoal Detroit, Windsor, 3,137 x 1.025 = 3,215 orDetroit River & St. Clair River Detroit Pilot Boat 1,735 x 1.025 = 1,778 & Southeast Shoal Detroit Pilot Boat 2,397 x 1.025 = 2,457 & Toledo or any point on Lake Erie W. of Southeast Shoal Detroit Pilot Boat 3,137 x 1.025 = 3,215 &St. Clair River Note: Numbers may not total due to rounding.
   In addition to the proposed rate charges in Table 32, and for the reasons we discussed in the Summary section of Part V of this preamble, we propose authorizing District Two to implement a temporary supplemental 10 percent charge on each source form for the duration of the 2015 shipping season, which begins in
Table 33--Proposed Adjustment of Pilotage Rates, Areas in District Three 2014 Rate Rate Adjusted multiplier rate for 2015 Area 6 Lakes Huron and Michigan 6-hour$708 x 1.025 =$726 Period Docking or 672 x 1.025 = 689 undocking Area 7 St. Mary's River between any point on or in Gros Cap & 2,648 x 1.025 = 2,714 De Tour Algoma Steel 2,648 x 1.025 = 2,714 Corp. Wharf, Sault Ste. Marie, Ont. & De Tour Algoma Steel 997 x 1.025 = 1,022 Corp. Wharf, Sault. Ste. Marie, Ont. & Gros Cap Any point in 2,219 x 1.025 = 2,274 Sault St. Marie, Ont., except the Algoma Steel Corp. Wharf & De Tour Any point in 997 x 1.025 = 1,022 Sault St. Marie, Ont., except the Algoma Steel Corp. Wharf & Gros Cap Sault Ste. 2,219 x 1.025 = 2,274 Marie, MI & De Tour Sault Ste. 997 x 1.025 = 1,022 Marie, MI & Gros Cap Harbor 997 x 1.025 = 1,022 movage Area 8 Lake Superior 6-hour 601 x 1.025 = 616 period Docking or 571 x 1.025 = 585 undocking Note: Numbers may not total due to rounding.
   In addition to the proposed rate charges in Table 33, and for the reasons we discussed in the Summary section of Part V of this preamble, we propose authorizing District Three to implement a temporary supplemental 1 percent charge on each source form for the duration of the 2015 shipping season, which begins in
VI. Regulatory Analyses
   We developed this proposed rule after considering numerous statutes and E.O.s related to rulemaking. Below we summarize our analyses based on these statutes or E.O.s.
A. Regulatory Planning and Review
   Executive Orders 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 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 proposed rule is not a significant regulatory action under section 3(f) of E.O. 12866 as supplemented by E.O. 13563, and does not require an assessment of potential costs and benefits under section 6(a)(3) of E.O. 12866.
   The Coast Guard is required to review and adjust pilotage rates on the Great Lakes annually. See Parts III and IV of this preamble for detailed discussions of the
   In addition to the increase in payments that would be incurred by shippers in all three districts from the previous year as a result of the proposed discretionary rate adjustments, we propose authorizing temporary, supplemental surcharges to traffic across all three districts in order for the pilotage associations to recover training expenses and technology improvements that were incurred throughout the 2013 and 2014 shipping seasons. These temporary surcharges would be authorized for the duration of the 2015 shipping season, which begins in March. We estimate that these temporary surcharges would generate a combined
   FOOTNOTE 5 Assuming our estimate is correct, we would credit District One shippers
   Therefore, after accounting for the implementation of the temporary surcharges on traffic across all three districts, the annual payments made by shippers are estimated to be approximately
   FOOTNOTE 6 Total payments across all three districts are equal to the increase in payments incurred by shippers as a result of the rate changes plus the temporary surcharges applied to traffic in Districts One, Two, and Three. END FOOTNOTE
   A regulatory assessment follows.
   The proposed rule would apply the 46 CFR part 404, Appendix A, full ratemaking methodology, including the exercise of our discretion to increase Great Lakes pilotage rates, on average, approximately 2.5 percent overall from the current rates set in the 2014 final rule. The Appendix A methodology is discussed and applied in detail in Part V of this preamble. Among other factors described in Part V, it reflects audited 2012 financial data from the pilotage 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 2014 and used financial data from the 2011 base accounting year. The last annual rate review, conducted under 46 CFR part 404, Appendix C, was completed early in 2011.
   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
   Owners and operators of other vessels that are not affected by this proposed rule, such as recreational boats and vessels operating only within the Great Lakes system, may elect to purchase pilotage services. However, this election is voluntary and does not affect our calculation of the rate and is not a part of our estimated national cost to shippers.
   We used 2011-2013 vessel arrival data from the
   The impact of the rate adjustment to shippers is estimated from the District pilotage revenues. These revenues represent the costs ("economic costs") that shippers must pay for pilotage services. The
   We estimate the additional impact (cost increases or cost decreases) of the rate adjustment in this proposed rule to be the difference between the total projected revenue needed to cover costs in 2014, based on the 2014 rate adjustment, and the total projected revenue needed to cover costs in 2015, as set forth in this proposed rule, plus any temporary surcharges authorized by the
Table 34--Rate Adjustment by Area and District [ $U.S.; Non-discounted] 2014 Rate 2015 Projected Projected pilotage change(8M) pilotage 2015 bridge revenue rates(7M) rates(9M) hours(10M) needed in 2015(11M) Area 1$472.50 1.0250$484.31 5,116$2,477,717 Area 2 291.96 1.0250 299.26 5,429 1,624,658 Total, 4,102,375 District One Area 4 210.40 1.0250 215.66 5,814 1,253,843 Area 5 521.64 1.0250 534.68 5,052 2,701,197 Total, 3,955,040 District Two Area 6 204.95 1.0250 210.08 9,611 2,019,045 Area 7 495.01 1.0250 507.39 3,023 1,533,838 Area 8 191.34 1.0250 196.12 7,540 1,478,744 Total, 5,031,627 District Three
Table 35--Derivation of Temporary Surcharge Area 1 Area 2 Area 4 Area 5 Projected$2,477,717 $1,624,658 $1,253,843 $2,701,197 Revenue Needed in 2015 Surcharge Rate 5% 5% 10% 10% Surcharge$123,886 $81,233 $125,384 $270,120 Raised Total Surcharge$205,119 $395,504
Table 35--Derivation of Temporary Surcharge Area 6 Area 7 Area 8 Projected$2,019,045 $1,533,838 $1,478,744 Revenue Needed in 2015 Surcharge Rate 1% 1% 1% Surcharge$20,190 $15,338 $14,787 Raised Total Surcharge$50,316
GOES
Table 36--Impact of the Proposed Rule by Area and District [ $U.S.; Non-discounted] Projected Projected Temporary Additional revenue needed revenue needed surcharge costs or in 2014(12M) in 2015(13M) savings of this proposed rule Area 1$2,417,285 $2,477,717 $123,886 $184,318 Area 2 1,585,032 1,624,658 81,233 120,859 Total, 4,002,318 4,102,375 205,119 305,177 District One Area 4 1,223,262 1,253,843 125,384 155,966 Area 5 2,635,314 2,701,197 270,120 336,003 Total, 3,858,576 3,955,040 395,504 491,968 District Two Area 6 1,969,800 2,019,045 20,190 69,435 Area 7 1,496,427 1,533,838 15,338 52,749 Area 8 1,442,677 1,478,744 14,787 50,854 Total, 4,908,904 5,031,627 50,316 173,039 District Three
   After applying the discretionary rate change in this NPRM, the resulting difference between the projected revenue in 2014 and the projected revenue in 2015 is the annual change in payments from shippers to pilots after accounting for market conditions (i.e., a decrease in demand for pilotage services) and the change to pilotage rates as a result of this proposed rule. This figure is equivalent to the total additional payments or reduction in payments from the previous year that shippers would incur for pilotage services from this proposed rule.
   FOOTNOTE 8 The estimated rate changes are described in Table 30 of this NPRM. END FOOTNOTE
   FOOTNOTE 9 2015 Pilotage Rates--2014 Pilotage Rates x Rate Change. END FOOTNOTE
   FOOTNOTE 10 Projected 2015 Bridge Hours are described in Table 14 of this NPRM. END FOOTNOTE
   FOOTNOTE 11 Projected Revenue Needed in 2015--2015 Pilotage Rates x Projected 2015 Bridge Hours. END FOOTNOTE
   FOOTNOTE 12 Projected revenue needed in 2014 is described in Table 16 of this NPRM. END FOOTNOTE
   FOOTNOTE 13 Projected revenue needed in 2015 is described in Table 34 of this NPRM. END FOOTNOTE
   The impact of the discretionary rate adjustment in this proposed rule on shippers varies by area and district. The discretionary rate adjustments would lead to affected shippers operating in District One, District Two, and District Three experiencing an increase in payments of
   In addition to the rate adjustments, temporary surcharges on traffic in District One, District Two, and District Three would be applied for the duration of the 2015 season in order for the pilotage associations to recover training expenses and technology investments incurred during the 2013 and 2014 shipping seasons. We estimate that these surcharges would generate an additional
   FOOTNOTE 14 Assuming our estimate is correct, we would credit District One shippers
   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 travelled and the number of port arrivals by their vessels. However, the increase in costs reported earlier in this NPRM does capture the adjustment in payments that shippers would experience from the previous year. The overall adjustment in payments, after taking into account the increase in pilotage rates and the addition of temporary surcharges would be an increase in payments by shippers of approximately
   This proposed rule would allow the
   Alternatively, if we imposed the new rates based on the new contract data from AMOU, instead of using the discretionary rate adjustment described in Step 7, there would be an approximately 12 percent decrease in rates across the system. Instead of shippers experiencing an increase in payments of approximately
   FOOTNOTE 15 These figures do not include the additional payments incurred by shippers as a result of the temporary surcharges applied to traffic in all three districts. END FOOTNOTE
   FOOTNOTE 16 The estimated rate changes are described in Table 30 of this NPRM. END FOOTNOTE GOES
Table 37--Alternative Rate Adjustment by Area and District [ $U.S.; Non-discounted] 2014 Rate 2015 Projected Projected pilotage change pilotage 2015 revenue rates *16 rates bridge needed hours in 2015 Area 1$472.50 0.8423$398.00 5,116$2,036,149 Area 2 291.96 0.8443 246.51 5,429 1,338,302 Total, District One 3,374,451 Area 4 210.40 0.9946 209.27 5,814 1,216,674 Area 5 521.64 0.8363 436.22 5,052 2,203,805 Total, District Two 3,420,480 Area 6 204.95 0.9405 192.76 9,611 1,852,580 Area 7 495.01 0.8608 426.13 3,023 1,288,197 Area 8 191.34 0.9418 180.20 7,540 1,358,677 Total, District Three 4,499,454 * Some values may not total due to rounding.
GOES
Table 38--Alternative Impact of the Rule by Area and District [ $U.S.; Non-discounted] Projected Projected Temporary Additional revenue needed revenue needed surcharge costs or in 2014 in 2015 savings of this proposed rule Area 1$2,417,285 $2,036,149 $101,807 ($279,329 ) Area 2 1,585,032 1,338,302 66,915 (179,815) Total, 4,002,318 3,374,451 168,723 (459,144) District One Area 4 1,223,262 1,216,674 121,667 115,080 Area 5 2,635,314 2,203,805 220,381 (211,128) Total, 3,858,576 3,420,480 342,048 (96,048) District Two Area 6 1,969,800 1,852,580 18,526 (98,694) Area 7 1,496,427 1,288,197 12,882 (195,348) Area 8 1,442,677 1,358,677 13,587 (70,413) Total, 4,908,904 4,499,454 44,995 (364,455) District Three * Some values may not total due to rounding.
   We reject this alternative, however, because a rate decrease would jeopardize the ability of the three pilotage associations to provide safe, efficient, and reliable pilotage service as well as violate the Memorandum of Arrangements, which calls for
B. Small Entities
   Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, we have considered whether this proposed rule would have a significant economic impact on a substantial number of small entities. The term "small entities" comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000 people.
   We expect that entities affected by the proposed rule would 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
   For the proposed rule, we reviewed recent company size and ownership data for the period 2011 through 2013 in the
   There are three U.S. entities affected by the proposed rule that receive revenue from pilotage services. These are the three pilot associations that provide and manage pilotage services within the Great Lakes districts. Two of the associations operate as partnerships and one operates as a corporation. These associations are designated with the same NAICS industry classification and small-entity size standards described above, but they have fewer than 500 employees; combined, they have approximately 65 total employees. We expect no adverse impact to these entities from this proposed rule because all associations receive enough revenue to balance the projected expenses associated with the projected number of bridge hours and pilots.
   Therefore, the
C. 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 proposed rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please consult Mr.
   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
D. Collection of Information
   This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). This proposed rule would not change the burden in the collection currently approved by the OMB under OMB Control Number 1625-0086, Great Lakes Pilotage Methodology.
E. Federalism
   A rule has implications for federalism under E.O. 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under that order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in E.O. 13132. Our analysis is explained below.
   Congress directed the
   While it is well settled that States may not regulate in categories in which
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
G. Taking of Private Property
   This proposed rule would 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 proposed 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 proposed rule under E.O. 13045, Protection of Children from Environmental Health Risks and Safety Risks. This proposed rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might disproportionately affect children.
J. Indian Tribal Governments
   This proposed 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 proposed 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 E.O. 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
L. Technical Standards
   The National Technology Transfer and Advancement Act (15 U.S.C. 272, note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides
M. Environment
   We have analyzed this proposed rule under
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
Title 46--Shipping
PART 401--GREAT LAKES PILOTAGE REGULATIONS
   1. The authority citation for part 401 continues to read as follows:
   Authority: 46 U.S.C. 2104(a), 6101, 7701, 8105, 9303, 9304;
   2. In
* * * * *
   (a) Area 1 (Designated Waters): GOES
ServiceSt. Lawrence River Basic Pilotage$19.70 per kilometer or$34.87 per mile. *1 Each Lock$437 . *1 Transited Harbor Movage$1,430 . n1 *1 The minimum basic rate for assignment of a pilot in theSt. Lawrence River is$954 , and the maximum basic rate for a through trip is$4,186 .
   (b) Area 2 (Undesignated Waters): GOES
ServiceLake Ontario 6-Hour Period$894 Docking or Undocking 853
   3. In
* * * * *
   (a) Area 4 (Undesignated Waters): GOES
Service Lake Erie (East Buffalo of Southeast Shoal) 6-hour Period$870 $870 Docking or Undocking 669 669 Any point on the Niagara River below the N/A 1,709 Black Rock Lock
   (b) Area 5 (Designated Waters): GOES
Any point on or in Southeast Toledo or Detroit Detroit St. Clair Shoal any point River Pilot River on Lake Boat Erie west of Southeast Shoal Toledo or any port on Lake 2,457 1,452 3,191 2,457 N/AErie west of Southeast Shoal Port Huron Change Point *1 4,280 *1 4,958 3,215 2,502 1,778 St. Clair River *1 4,280 N/A 3,215 3,215 1,452 Detroit or Windsor or the 2,457 3,191 1,452 N/A 3,215 Detroit River Detroit Pilot Boat 1,778 2,457 N/A N/A 3,215 *1 When pilots are not changed at the Detroit Pilot Boat.
   4. In
* * * * *
   (a) Area 6 (Undesignated Waters): GOES
Service LakesHuron andMichigan 6-hour Period$726 Docking or Undocking 689
   (b) Area 7 (Designated Waters): GOES
Area De Tour Gros Cap Any harbor Gros Cap$2,714 N/A N/A Algoma Steel Corporation Wharf at Sault 2,714$1,022 N/A Ste. Marie, Ontario Any point in Sault Ste. Marie, Ontario, 2,274 1,022 N/A except theAlgoma Steel Corporation Wharf Sault Ste. Marie, MI 2,274 1,022 N/A Harbor Movage N/A N/A$1,022
   (c) Area 8 (Undesignated Waters): GOES
ServiceLake Superior 6-hour Period$616 Docking or Undocking 585
   5. Amend
   a. In paragraph (a), remove the text "
   b. In paragraph (b), remove the text "
   c. In paragraph (c)(1), remove the text "
   6. In
   Dated:
Director of Marine Transportation Systems,
[FR Doc. 2014-21046 Filed 9-3-14;
BILLING CODE 9110-04-P
| Copyright: | (c) 2014 Federal Information & News Dispatch, Inc. |
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Endangered and Threatened Wildlife and Plants; Endangered Species Status for Brickellia mosieri (Florida Brickell-bush) and Linum carteri var….
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