FR Doc E6-11062

[Federal Register: July 13, 2006 (Volume 71, Number 134)]
[Proposed Rules]
[Page 39629-39642]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13jy06-45]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

46 CFR Part 401

[USCG-2006-24414]
RIN 1625-AB05

Rates for Pilotage on the Great Lakes

AGENCY: Coast Guard, DHS.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: The Coast Guard is proposing to update the rates for pilotage
on the Great Lakes. Based on our review we propose to adjust the
pilotage rates an average of 6% for the 2006 shipping season to
generate sufficient revenue to cover allowable expenses, target pilot
compensation, and returns on investment.

DATES: Comments and related material must reach the Docket Management
Facility on or before August 14, 2006.

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-2006-24414),
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. Anyone is able to search the

electronic form of all comments received into any of our dockets by the
name of the individual submitting the comment (or signing the comment,
if submitted on behalf of an association, business, labor union, etc.).
You may review DOT's complete Privacy Act Statement in the Federal
Register published on April 11, 2000 (Volume 65, Number 70; Pages
19477-78), or you may visit http://dms.dot.gov.

FOR FURTHER INFORMATION CONTACT: For questions on this proposed rule,
call Mr. Michael Sakaio, Program Analyst, Office of Great Lakes
Pilotage, Commandant (G-PWM), U.S. Coast Guard, at 202-372-1538, by fax
202-372-1929, or by e-mail at msakaio@comdt.uscg.mil. For questions on
viewing or submitting material to the docket, call Renee V. Wright,
Chief, Dockets, Department of Transportation, telephone 202-493-0402.

Table of Contents

I. Public Participation and Request for Comments
A. Submitting Comments
B. Viewing Comments and Documents
C. Public Meeting
D. Privacy Act
II. Program History
III. Purpose of the Proposed Rule
A. Proposed Pilotage Rate Changes--Summarized
B. Calculating the Rate Adjustment
Step 1: Calculating the Base Period Total Economic Cost (Cost
per Bridge Hour by Area for the Base Period)
Step 2. Calculating the Expense Multiplier
Step 3. Calculating the new annual ``projection of target pilot
compensation'' using the same procedures found in Step 2 of Appendix
A to 46 CFR part 404.
Step 4: Increase the new total target pilot compensation in Step
3 by the expense multiplier in Step 2.
Step 5(a): Adjust the result in Step 4, as required, for
inflation or deflation.
Step 5(b): Calculate Projected Total Economic Costs.
Step 6: Divide the Result in Step 5(b) by Projected Bridge Hours
to Determine Total Unit Costs (Adjusted Cost per Bridge Hour by
Area).
Step 7: Divide prospective unit costs in Step 6 by the base
period unit costs in Step 1.
Step 8: Adjust the base period rates by the percentage change in
unit costs in Step 7.
IV. Regulatory Evaluation
A. Small Entities
B. Assistance for Small Entities
C. Collection of Information
D. Federalism
E. Unfunded Mandates Reform Act
F. Taking of Private Property
G. Civil Justice Reform
H. Protection of Children

[[Page 39630]]

I. Indian Tribal Governments
J. Energy Effects
K. Technical Standards
L. Environment
V. Regulatory Text

SUPPLEMENTARY INFORMATION:

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://dms.dot.gov and will include any personal

information you have provided. We have an agreement with the Department
of Transportation (DOT) to use the Docket Management Facility. Please
see DOT's ``Privacy Act'' paragraph below.
A. Submitting Comments: If you submit a comment, please include
your name and address, identify the docket number for this rulemaking
(USCG-2006-24414), 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 electronic means, mail, fax,
or delivery 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 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 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. We may change this rule in
view of them.
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://dms.dot.gov at any time and conduct a simple search using

the docket number. You may also visit the Docket Management Facility in
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.
C. 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.
D. Privacy Act: Anyone can search the electronic form of all
comments received into any of our dockets by the name of the individual
submitting the comment (or signing the comment, if submitted on behalf
of an association, business, labor union, etc.). You may review the
Department of Transportation's Privacy Act Statement in the Federal
Register published on April 11, 2000 (65 FR 19477), or you may visit
http://dms.dot.gov.

II. Program History

The Great Lakes Pilotage Act of 1960 requires foreign-flag vessels
and U.S.-flag vessels in foreign trade to use federal Great Lakes
registered pilots while transiting the St. Lawrence Seaway and the
Great Lakes system. 46 U.S.C. Chapter 93, Sec. Sec. 9302 and 9308. The
Coast Guard is responsible for administering this pilotage program,
which includes setting rates for pilotage service.
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 Director of Great Lakes
Pilotage to operate a pilotage pool. It is important to note that,
while the Coast Guard sets rates, it does not control the actual
compensation that pilots receive. This is determined by each of the
three District associations, which use different compensation
practices.
District One, consisting of Areas 1 and 2, includes all U.S. waters
of the St. Lawrence River and Lake Ontario. District Two, consisting of
Areas 4 and 5, includes all U.S. waters of Lake Erie, the Detroit
River, Lake St. Clair, and the St. Clair River. District Three,
consisting of Areas 6, 7, and 8, includes all U.S. waters of the St.
Mary's River, Sault Ste. Marie Locks, and Lakes Michigan, Huron, and
Superior. Area 3 is the Welland Canal, which is serviced exclusively by
the Canadian Great Lakes Pilotage Authority and, accordingly, is not
included in the U.S. rate structure. Areas 1, 5, and 7 have been
designated by Presidential Proclamation, pursuant to the Great Lakes
Pilotage Act of 1960, to be waters in which pilots must at all times be
fully engaged in the navigation of vessels in their charge. These
waters were ``designated'' because they are difficult waters to
navigate. Areas 2, 4, 6 and 8 have not been so designated because they
are open bodies of water. Under the Great Lakes Pilotage Act of 1960,
pilots assigned to vessels in these areas are only required ``to be on
board and available to direct the navigation of a vessel at the
discretion of and subject to the customary authority of the master.''
46 U.S.C. 9302(a)(1)(A) and (B).
The Coast Guard pilotage regulations require annual reviews of
pilotage rates and the creation of a new rate at least once every five
years, or sooner, if annual reviews show a need. 46 CFR part 404. To
assist in calculating pilotage rates, the pilotage associations are
required to submit to the Coast Guard annual financial statements
prepared by certified public accounting firms. In addition, every fifth
year, in connection with the mandatory rate adjustment, the Coast Guard
contracts with an independent accounting firm to conduct a full
ratemaking by auditing the accounts and records of the pilotage
associations and by preparing and submitting financial reports relevant
to the ratemaking process. In those years when a full ratemaking is
conducted, the Coast Guard generates the pilotage rates using Appendix
A to 46 CFR part 404. Between the five-year full ratemaking intervals,
the Coast Guard annually reviews the pilotage rates using Appendix C to
46 CFR part 404, and adjusts rates when deemed appropriate.
The last full ratemaking was published in the Federal Register on
April 3, 2006 (71 FR 16501). In that ratemaking, the Coast Guard
applied the Appendix A methodology for calculating rates. For this
annual rate review and adjustment, we are using the methodology
contained in Appendix C.

III. Purpose of the Proposed Rule

The authority to establish pilotage rates on the Great Lakes
derives from 46 U.S.C. 9303(f), which states that: ``[t]he Secretary
shall prescribe by regulation rates and charges for pilotage services,
giving consideration to the public interest and the costs of providing
the services.''
The pilotage regulations require that pilotage rates be reviewed
annually. If the annual review shows that pilotage rates are within a
reasonable range of the base target pilot compensation set in the full
ratemaking, no adjustment to the rates will be initiated. (Target pilot
compensation is defined in 46 CFR part 404, Appendix B, and is the
compensation that pilots are intended to receive for full time
employment.) However, if the annual review indicates that an adjustment
is necessary, then the Coast Guard will establish new pilotage rates
using Sec. 404.10 and either Appendix A or Appendix C of part 404.
The Appendix C ratemaking methodology is intended for use during
the years between Appendix A full ratemaking reviews and adjustments.
This section is a description of the

[[Page 39631]]

analyses performed, and the eight-step methodology followed, in the
development of the Appendix C adjustment. The first part summarizes the
rate adjustments proposed in this rule. The second part describes the
ratemaking process and explains the formulas used in the methodology to
show how the rate adjustment was actually calculated.

A. Proposed Pilotage Rate Changes--Summarized

This proposed rule would adjust the rates for Federal pilots on the
Great Lakes, contained in 46 CFR 401.405, 401.407, and 401.410, in
accordance with Appendix C of 46 CFR part 404. Using this methodology,
the rate adjustment would result in an average increase of 6 percent
across all Districts over the last pilotage rate adjustment.

2006 Area Rate Changes
------------------------------------------------------------------------
Then the
percentage
If pilotage service is required in: increases over
the current
rate is:
------------------------------------------------------------------------
Area 1 (Designated waters).............................. 5.44
Area 2 (Undesignated waters)............................ 6.30
Area 4 (Undesignated waters)............................ 6.39
Area 5 (Designated waters).............................. 5.65
Area 6 (Undesignated waters)............................ 6.26
Area 7 (Designated waters).............................. 5.50
Area 8 (Undesignated waters)............................ 6.20
------------------------------------------------------------------------

Rates for ``Cancellation, delay or interruption in rendering
services (Sec. 401.420)'' and ``Basic rates and charges for carrying a
U.S. pilot beyond [the] normal change point, or for boarding at other
than the normal boarding point (Sec. 401.428)'' have been increased by
6 percent. These changes are the same in every Area.

B. Calculating the Rate Adjustment

The ratemaking analyses and methodology contained in Appendix C to
46 CFR part 404 is comprised of eight steps. These steps are:
1. Calculating the Base Period Total Economic Cost (Cost Per Bridge
Hour by Area for the Base Period);
2. Calculating the Expense Multiplier;
3. Calculating the Annual Projection of Target Pilot Compensation;
4. Increasing the Projected Pilot Compensation in Step 3 by the
Expense Multiplier;
5. Adjusting the Result for Inflation or Deflation;
6. Dividing the Result in Step 5 by Projected Bridge Hours to
Determine Total Unit Costs (Adjusted Cost per Bridge Hour by Area);
7. Dividing Prospective Unit Costs (Total Unit Cost) in Step 6 by
the Base Period Unit Costs in Step 1; and
8. Adjusting the Base Period rates by the Percentage Changes in
Unit Cost in Step 7.
The base data used to calculate each of the eight steps comes from
the final rule published in the Federal Register on April 3, 2006 (71
FR 16501), adjusting pilotage rates on the Great Lakes. 71 FR 16501.
The Coast Guard also used the most recent union contracts between the
American Maritime Officers' union (AMO) and vessel owners and operators
on the Great Lakes to determine target pilot compensation. Bridge hour
projections for the 2006 season have been obtained from historical
data, pilots, and industry. Bridge hours are the number of hours a
pilot is aboard a vessel providing pilotage service.
Some values may not total exactly due to format rounding for
presentation in charts and explanations in this section. The rounding
does not affect the integrity or truncate the real value of all
calculations in the ratemaking methodology described below.
Step 1: Calculating the Base Period Total Economic Cost (Cost per
Bridge Hour by Area for the Base Period).
The base period numbers used in all calculations are those that
were set by the final rule published in the Federal Register on April
3, 2006 (71 FR 16513). The data used for this first step is obtained
from the tables containing the base operating expense, base target
pilot compensation, and base return element computations. This first
step requires that we calculate the total economic cost for the base
period by taking from these tables, and adding together, the recognized
expenses, the total cost of target pilot compensation, and the return
element in each Area. We then take this sum and divide it by the total
bridge hours used in each Area in setting the base period rates. This
calculation gives us the cost of providing pilotage service per bridge
hour by Area for the base period.
The following tables summarize the Step 1 computations:

Table 1.--Base Period Total Economic Cost (Cost Per Bridge Hour)--District One
----------------------------------------------------------------------------------------------------------------
Area 1 St. Area 2 Lake Total--District
Lawrence River Ontario One
----------------------------------------------------------------------------------------------------------------
Base Operating Expenses................................... $368,186 $372,911 $741,097
Base Target Pilot compensation............................ +$1,207,209 +$725,848 +1,933,057
Base Return Element \1\................................... +$8,087 +$10,185 +$18,272
=====================================================
Subtotal.............................................. =$1,583,482 =$1,108,944 =$2,692,426
-----------------------------------------------------
Base Bridge Hours......................................... /6,000 /9,000 /15,000

[[Page 39632]]

Base Cost per Bridge Hour................................. =$263.91 =$123.22 =$179.50
----------------------------------------------------------------------------------------------------------------
\1\ The return element is defined at Appendix B to 46 CFR part 404 as the sum of net income and interest
expense. The return element can be considered the sum of the return to equity capital (net increase), and the
return to debt (the interest expense).

Table 2.--Base Period Total Economic Cost (Cost Per Bridge Hour)--District Two
----------------------------------------------------------------------------------------------------------------
Area 5--
Area 4--Lake Southeast Shoal Total--District
Erie to Port Huron, Two
MI
----------------------------------------------------------------------------------------------------------------
Base Operating Expenses................................... $427,333 $632,117 $1,059,450
Base Target Pilot compensation............................ +$725,848 +$1,408,410 +$2,134,258
Base Return Element....................................... +$20,354 +$24,275 +$44,629
-----------------------------------------------------
Subtotal.............................................. =$1,173,535 =$2,064,802 =$3,238,337
=====================================================
Base Bridge Hours......................................... /9,000 /7,000 /16,000
Base Cost per Bridge Hour................................. =$130.39 =$294.97 =$202.40
----------------------------------------------------------------------------------------------------------------

Table 3.--Base Period Total Economic Cost (Cost Per Bridge Hour)--District Three
----------------------------------------------------------------------------------------------------------------
Area 6--Lakes
Huron and Area 7--St. Area 8--Lake Total--District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Base Operating Expenses................. $693,924 $271,563 $433,484 $1,398,971
Base Target Pilot compensation.......... +$1,451,696 +$804,806 +$1,016,187 +$3,272,689
Base Return Element..................... +$25,283 +$9,768 +$15,451 +$50,502
-----------------------------------------------------------------------
Subtotal............................ =$2,170,903 =$1,086,137 =$1,465,122 =$4,722,162
=======================================================================
Base Bridge Hours....................... /18,000 /4,000 /12,600 /34,600
Base Cost per Bridge Hour............... =$120.61 =$271.53 =$116.28 =$136.48
----------------------------------------------------------------------------------------------------------------

Step 2. Calculating the Expense Multiplier.
The expense multiplier is the ratio of both the base operating
expenses and the base return element to the base target pilot
compensation by Area. This step requires that we add together the base
operating expense and the base return element. Then we divide the sum
by the base target pilot compensation to get the expense multiplier for
each Area. The following tables show the calculations:

1. Expense Multiplier for District One
----------------------------------------------------------------------------------------------------------------
Area 1--St. Area 2--Lake Total--District
Lawrence River Ontario One
----------------------------------------------------------------------------------------------------------------
Base Operating Expense.................................... $368,186 $372,911 $741,097
Base Return Element....................................... +$8,087 +$10,185 +$18,272
-----------------------------------------------------
Subtotal.............................................. =$376,273 =$383,096 =$759,369
=====================================================
Base Target Pilot Compensation............................ /$1,207,209 /$725,848 /$1,933,057
Expense Multiplier........................................ =.31169 =.52779 =.39283
----------------------------------------------------------------------------------------------------------------

2. Expense Multiplier for District Two
----------------------------------------------------------------------------------------------------------------
Area 5--
Area 4--Lake Southeast Shoal Total--District
Erie to Port Huron, Two
MI
----------------------------------------------------------------------------------------------------------------
Base Operating Expense.................................... $427,333 $632,117 $1,059,450
Base Return Element....................................... +$20,354 +$24,275 +$44,629
-----------------------------------------------------
Subtotal.............................................. =$447,687 =$656,392 =$1,104,079
=====================================================
Base Target Pilot Compensation............................ /$725,848 /$1,408,410 /$2,134,258

[[Page 39633]]

Expense Multiplier........................................ =.61678 =.46605 =.51731
----------------------------------------------------------------------------------------------------------------

3. Expense Multiplier for District Three
----------------------------------------------------------------------------------------------------------------
Area 6--Lakes
Huron and Area 7--St. Area 8--Lake Total--District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Base Operating Expense.................. $693,924 $271,563 $433,484 $1,398,971
Base Return Element..................... +$25,283 +$9,768 +$15,451 +$50,502
-----------------------------------------------------------------------
Subtotal............................ =$719,207 =$281,331 =$448,935 =$1,449,473
=======================================================================
Base Target Pilot Compensation.......... /$1,451,696 /$804,806 /$1,016,187 /$3,272,689
Expense Multiplier...................... =.49543 =.34956 =.44178 =.44290
----------------------------------------------------------------------------------------------------------------

Step 3. Calculating the new annual ``projection of target pilot
compensation'' using the same procedures found in Step 2 of Appendix A
to 46 CFR part 404.
Step 2 of Appendix A requires the Director of Great Lakes Pilotage
to:
1. Determine the new target rate of compensation;
2. Determine the new number of pilots needed in each pilotage Area;
and
3. Multiply new target compensation by the new number of pilots
needed to project total new target pilot compensation needed in each
Area.
Each step is detailed as follows:
1. Determination of New Target Pilot Compensation
Target pilot compensation for pilots providing services in
undesignated waters approximates the average annual compensation for
first mates on U.S. Great Lakes vessels. For this notice of proposed
rulemaking (NPRM), the average annual compensation for first mates is
determined based on the AMO union contract effective August 1, 2005,
for wages and benefits received by first mates.
Target pilot compensation for pilots providing services in
designated waters approximates the average annual compensation for
masters on U.S. Great Lakes vessels. It is calculated as 150 percent of
the compensation earned by first mates on U.S. Great Lakes vessels. The
Office of Great Lakes Pilotage has consistently calculated this by
first multiplying the first mates' salary by 150 percent and then
adding benefits, since this is the best approximation of the average
annual compensation for masters.
The following tables (7, 8, and 9) summarize how target pilot
compensation is determined for undesignated and designated waters:

Table 7.--Wages
----------------------------------------------------------------------------------------------------------------
(First mate)
pilots on (Master) pilots
Monthly component undesignated on designated
waters waters
----------------------------------------------------------------------------------------------------------------
$226.96 (Daily Rate) x 54 (Days)............................................ $12,256 N/A
-----------------------------------
Monthly Total x 9 Months = Total Wages.................................. $110,303 N/A
===================================
Wages: $226.96 (Daily Rate) x 54 x 1.5...................................... N/A $18,384
-----------------------------------
Monthly Total x 9 Months = Total Wages.................................. N/A $165,454
----------------------------------------------------------------------------------------------------------------

Table 8.--Benefits
----------------------------------------------------------------------------------------------------------------
(First mate)
pilots on (Master) pilots
Monthly component undesignated on designated
waters waters
----------------------------------------------------------------------------------------------------------------
Employer Contribution--401(K) Plan........................................ $612.79 $919.19
Clerical.................................................................. +$340.44 +$340.44
Health.................................................................... +$2,512.51 +$2,512.51
Pension................................................................... +$1,283.10 +$1,283.10
-------------------------------------
Monthly Total Benefits................................................ =$4,748.84 =$5,055.24
=====================================
Monthly Total Benefits x 9 months..................................... =$42,740 =$45,497
----------------------------------------------------------------------------------------------------------------

[[Page 39634]]

Table 9.--Wages and Benefits
----------------------------------------------------------------------------------------------------------------
(First mate)
pilots on (Master) pilots
undesignated on designated
waters waters
----------------------------------------------------------------------------------------------------------------
Wages..................................................................... $110,303 $165,454
Benefits.................................................................. +$42,740 +$45,497
-------------------------------------
Total Wages Plus Benefits............................................. =$153,042 =$210,951
----------------------------------------------------------------------------------------------------------------

The monthly component for wages is derived by multiplying the daily
rate of pay by 54 days, instead of 30 days, based upon the following
formulation obtained from the AMO union contract:
a. Average Working Days per month--30.5
b. Vacation Days per month--15.0
c. Weekend days per month--4.0
d. Holidays per month--1.5
e. Bonus per month--3.0
Monthly Multiplier--54.0
Additionally, we use a nine-month multiplier in computing annual
wages and benefits because the season is nine months in duration vice
12 months.
Effective August 1, 2002, the matching benefit increased to 50
percent for each participating 401(k) employee up to a maximum of 5
percent of a participating employee's compensation. For purposes of
this benefit, the AMO union contracts interpret ``employee
compensation'' to mean base wages. District Two has a pension plan,
while District Three has a 401(k) plan. District One does not provide
either a 401(k) or pension plan for its members. Therefore, to conform
to the 401(k) matching benefit provision under the AMO union contracts,
pilot compensation for Districts Two and Three are increased. The
increase in undesignated waters is $5,515.20 and for designated waters
is $8,272.80 per pilot. These increases are 5 percent of compensation,
respectively.
District One does not administer any form of 401(k) or retirement
plan. At the recommendation of the independent accountant, the Coast
Guard has determined that the District One Association pilots should
receive the same employer matching benefits as Districts Two and Three.
Accordingly, the compensation base of District One is adjusted to
include an amount equivalent to an employer's contribution under the
AMO 401(k) matching plan, which increases pilot compensation in
undesignated waters by $5,515.20 and for designated waters by $8,272.80
per pilot.
2. Determination of New Number of Pilots Needed
The number of pilots needed in each Area of designated waters is
established by dividing the projected bridge hours for that Area by
1,000. Bridge hours are the number of hours a pilot is aboard a vessel
providing pilotage service. The number of pilots needed in each Area of
undesignated waters is established by dividing the projected bridge
hours for that Area by 1,800. These hours are the target number of
bridge hours a pilot needs to earn target pilot compensation.
Projected bridge hours are based on the vessel traffic that pilots
are expected to serve. The Coast Guard projects that traffic for the
2006 navigation season will remain the same as it did in 2005. As
indicated, these projections were made based upon historical data, and
all other relevant information provided by pilots and industry.
Dividing the projected annual number of bridge hours per Area by the
target number of bridge hours per pilot results in the number of pilots
that will be needed in each Area to service vessel traffic.
The following table, ``Number of Pilots Needed,'' shows the
calculation of the number of pilots needed in each Area for the 2006
navigation season rounded to the next whole pilot:

Number of Pilots Needed
----------------------------------------------------------------------------------------------------------------
Divided by
Pilotage area Projected 2006 bridge-hour Pilots needed
bridge hours target
----------------------------------------------------------------------------------------------------------------
AREA 1.................................................... 6,000 1,000 6
AREA 2.................................................... 9,000 1,800 5
AREA 4.................................................... 9,000 1,800 5
AREA 5.................................................... 7,000 1,000 7
AREA 6.................................................... 18,000 1,800 10
AREA 7.................................................... 4,000 1,000 4
AREA 8.................................................... 12,600 1,800 7
-----------------------------------------------------
Total Pilots Needed................................... ................ ................ 44
----------------------------------------------------------------------------------------------------------------

3. Projection of New Total Target Pilot Compensation
The projection of new total target pilot compensation is determined
separately for each pilotage Area by multiplying the number of pilots
needed in each Area by the target pilot compensation for pilots working
in that Area.
The results for each pilotage Area are set out as follows:

[[Page 39635]]

District One
----------------------------------------------------------------------------------------------------------------
Area 1--St. Area 2--Lake Total--District
Lawrence River Ontario One
----------------------------------------------------------------------------------------------------------------
Projection of target pilot compensation................ $1,265,708 $765,212 $2,030,920
----------------------------------------------------------------------------------------------------------------

District Two
----------------------------------------------------------------------------------------------------------------
Area 5--Southeast
Area 4--Lake Erie Shoal to Port Total--District
Huron, MI Two
----------------------------------------------------------------------------------------------------------------
Projection of target pilot compensation................ $765,212 $1,476,660 $2,241,872
----------------------------------------------------------------------------------------------------------------

District Three
----------------------------------------------------------------------------------------------------------------
Area 6--Lakes
Huron and Area 7--St. Area 8--Lake Total--District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Projection of target pilot $1,530,424 $843,805 $1,071,297 $3,445,526
compensation.......................
----------------------------------------------------------------------------------------------------------------

Step 4: Increase the new total target pilot compensation in Step 3
by the expense multiplier in Step 2.
The increase in Step 4 refers to the proportional increase of
operating expense when new total target pilot compensation is
multiplied by the expense multiplier. The calculations for Step 4
appear as follows:

District One
----------------------------------------------------------------------------------------------------------------
Area 1--St. Area 2--Lake Total--District
Lawrence River Ontario One
----------------------------------------------------------------------------------------------------------------
Pilot Compensation........................................ $1,265,708 $765,212 $2,030,920
Expense Multiplier........................................ x.31169 x.52779 x.39283
Projected Increase in Operating Expense................... =$394,506 =$403,872 =$797,813
----------------------------------------------------------------------------------------------------------------

District Two
----------------------------------------------------------------------------------------------------------------
Area 5--
Area 4--Lake Southeast Shoal Total--District
Erie to Port Huron, Two
MI
----------------------------------------------------------------------------------------------------------------
Pilot Compensation........................................ $765,212 $1,476,660 $2,241,872
Expense Multiplier........................................ x.61678 x.46605 x.51731
Projected increase in Operating Expense................... =$471,966 =$688,200 =$1,159,749
----------------------------------------------------------------------------------------------------------------

District Three
----------------------------------------------------------------------------------------------------------------
Area 6--Lakes
Huron and Area 7--St. Area 8--Lake Total--District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Pilot Compensation...................... $1,530,424 $843,805 $1,071,297 $3,445,526
Expense Multiplier...................... x.49543 x.34956 x.44178 x.44290
Projected Increase in Operating Expense. =$758,211 =$294,964 =$473,282 =$1,526,023
----------------------------------------------------------------------------------------------------------------

Step 5(a): Adjust the result in Step 4, as required, for inflation
or deflation.
The calculations for Step 5(a) appear below. Inflation rates were
obtained from the U.S. Department of Labor, Bureau of Labor Statistics,
``Midwest Economy--Consumer Prices,'' using the years 2003 to 2004
annual average in the amount of 2.4 percent per year.

[[Page 39636]]

Adjusted Projected Increase in Operating Expense.......... =$403,974 =$413,565 =$816,961
----------------------------------------------------------------------------------------------------------------

District Two
----------------------------------------------------------------------------------------------------------------
Area 5--
Area 4--Lake Southeast Shoal Total--District
Erie to Port Huron, Two
MI
----------------------------------------------------------------------------------------------------------------
Projected Increase in Operating Expense................... $471,966 $688,200 $1,159,749
Inflation Rate............................................ x1.024 x1.024 x1.024
Adjusted Projected Increase in Operating Expense.......... =$483,293 =$704,717 =$1,187,583
----------------------------------------------------------------------------------------------------------------

District Three
----------------------------------------------------------------------------------------------------------------
Area 6--Lakes
Huron and Area 7--St. Area 8--Lake Total--District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Projected Increase in Operating Expense. $758,211 $294,964 $473,282 $1,526,023
Inflation Rate.......................... x1.024 x1.024 x1.024 X 1.024
Adjusted Projected Increase in Operating =$776,408 =$302,043 =$484,641 =$1,562,648
Expense................................
----------------------------------------------------------------------------------------------------------------

Step 5(b): Calculate Projected Total Economic Costs.
After the inflation adjustments are made to the Operating Expenses
in Step 5(a), the adjusted amount (Adjusted Projected Increase in
Operating Expense) is added to the New Total Target Pilot Compensation,
as determined in Step 3, to arrive at a Projected Total Economic Cost.
The Total Economic Cost is necessary in order to determine the Total
Unit Cost in Step 6. The calculations for Step 5(b) appear as follows:

District One
----------------------------------------------------------------------------------------------------------------
Area 1--St. Area 2--Lake Total--District
Lawrence River Ontario One
----------------------------------------------------------------------------------------------------------------
Adjusted Projected Increase in Operating Expense.......... $403,974 $413,565 $816,961
Projected Target Pilot Compensation....................... +$1,265,708 +$765,212 +$2,030,920
Projected Total Economic Cost............................. =$1,669,683 =$1,178,777 =$2,847,881
----------------------------------------------------------------------------------------------------------------

District Two
----------------------------------------------------------------------------------------------------------------
Area 5--
Area 4--Lake Southeast Shoal Total--District
Erie to Port Huron, Two
MI
----------------------------------------------------------------------------------------------------------------
Adjusted Projected Increase in Operating Expense.......... $483,293 $704,717 $1,187,583
Projected Target Pilot Compensation....................... +$765,212 +$1,476,660 +$2,241,872
Projected Total Economic Cost............................. =$1,248,505 =$2,181,376 =$3,429,454
----------------------------------------------------------------------------------------------------------------

District Three
----------------------------------------------------------------------------------------------------------------
Area 6--Lakes
Huron and Area 7--St. Area 8--Lake Total--District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Adjusted Projected Increase in Operating $766,408 $302,043 $484,641 $1,562,648
Expense................................
Projected Target Pilot Compensation..... +$1,530,424 +$843,805 +$1,071,297 +$3,445,526
Projected Total Economic Cost........... =$2,306,832 =$1,145,848 =$1,555,937 =$5,008,174
----------------------------------------------------------------------------------------------------------------

Step 6: Divide the Result in Step 5(b) by Projected Bridge Hours to
Determine Total Unit Costs (Adjusted Cost per Bridge Hour by Area).

[[Page 39637]]

District One
----------------------------------------------------------------------------------------------------------------
Area 1--St. Area 2--Lake Total--District
Lawrence River Ontario One
----------------------------------------------------------------------------------------------------------------
Projected Total Economic Costs............................ $1,669,683 $1,178,777 $2,847,881
Projected Bridge Hours.................................... /6,000 /9,000 /15,000
Total Unit Costs.......................................... =$278.28 =$130.98 =$189.86
----------------------------------------------------------------------------------------------------------------

District Two
----------------------------------------------------------------------------------------------------------------
Area 5--
Area 4--Lake Southeast Shoal Total--District
Erie to Port Huron, Two
MI
----------------------------------------------------------------------------------------------------------------
Projected Total Economic Costs............................ $1,248,505 $2,181,376 $3,429,454
Projected Bridge Hours.................................... /9,000 /7,000 /16,000
Total Unit Costs.......................................... =$138.72 =$311.63 =$214.34
----------------------------------------------------------------------------------------------------------------

District Three
----------------------------------------------------------------------------------------------------------------
Area 6--Lakes
Huron and Area 7--St. Area 8--Lake Total--District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Projected Total Economic Costs.......... $2,306,832 $1,145,848 $1,555,937 $5,008,174
Projected Bridge Hours.................. /18,000 /4,000 /12,600 /34,600
Total Unit Costs........................ =$128.16 =$286.46 =$123.49 =$144.74
----------------------------------------------------------------------------------------------------------------

Step 7: Divide prospective unit costs in Step 6 by the base period
unit costs in Step 1.
(This step calculates the percent change in unit cost from the base
period to the prospective unit cost.)

District One
----------------------------------------------------------------------------------------------------------------
Area 1--St. Area 2--Lake Total--District
Lawrence River Ontario One
----------------------------------------------------------------------------------------------------------------
Prospective Unit Cost (Total Unit Cost)................... $278.28 $130.98 $189.86
Base Period Unit Cost..................................... /$263.91 /$123.22 /$179.50
Percentage Change in Unit Cost (Rate Adjustment).......... =1.0544 =1.0630 =1.0577
----------------------------------------------------------------------------------------------------------------

District Two
----------------------------------------------------------------------------------------------------------------
Area 5--
Area 4--Lake Southeast Shoal Total--District
Erie to Port Huron, Two
MI
----------------------------------------------------------------------------------------------------------------
Prospective Unit Cost (Total Unit Cost)................... $138.72 $311.63 $214.34
Base Period Unit Cost..................................... /$130.39 /$294.97 /$202.40
Percentage Change in Unit Cost (Rate Adjustment).......... =1.0639 =1.0565 =1.0590
----------------------------------------------------------------------------------------------------------------

District Three
----------------------------------------------------------------------------------------------------------------
Area 6--Lakes
Huron and Area 7--St. Area 8--Lake Total--District
Michigan Mary's River Superior Three
----------------------------------------------------------------------------------------------------------------
Prospective Unit Cost (Total Unit Cost). $128.16 $286.46 $123.49 $144.74
Base Period Unit Cost................... /$120.61 /$271.53 /$116.28 /$136.48
Percentage Change in Unit Cost (Rate =1.0626 =1.0550 =1.0620 =1.0606
Adjustment)............................
----------------------------------------------------------------------------------------------------------------

Step 8: Adjust the base period rates by the percentage change in
unit costs in Step 7.
The ``Percentage Change in Unit Cost'' in Step 7 represents the
percentage change or rate adjustment that will be applied to existing
base period rates and charges in subpart D of 46 CFR part 401. For
instance, in Area 1, the Percentage Change in Unit Cost of 1.0544
represents a 5.44 percent rate adjustment over the existing Area 1
rate. The rate adjustments are summarized by Areas in the following
table. The actual adjustments are shown in the proposed amendments to
regulatory text that follow this preamble. Each of the area rates
listed in part 401 has been

[[Page 39638]]

adjusted according to this table. Results are rounded to nearest whole
dollar.

IV. Regulatory Evaluation

Executive Order 12866, ``Regulatory Planning and Review,'' 58 FR
51735, October 4, 1993, requires a determination whether a regulatory
action is ``significant'' and therefore subject to review by the Office
of Management and Budget (OMB) and subject to the requirements of the
Executive Order. This rulemaking is not significant under Executive
Order 12866 and has not been reviewed by OMB.
The Coast Guard is required to conduct an annual review of pilotage
rates on the Great Lakes and, if necessary, adjust these rates to align
compensation levels between Great Lakes pilots and industry. (See the
``Purpose of the Proposed Rule'' section for a detailed explanation of
the legal authority and requirements for the Coast Guard to conduct an
annual review and provide possible adjustments of pilotage rates on the
Great Lakes.) Based on our review, we are adjusting the pilotage rates
for the 2006 shipping season to generate sufficient revenue to cover
allowable expenses, target pilot compensation, and returns on
investment.
This proposed rule would provide an additional six percent average
rate adjustment for the Great Lakes system over the rate adjustment
found in the 2005 final rule. This proposed increase is the result of
adjustments for inflation, target pilot compensation, and operating
expenses of the pilot associations.
These adjustments to Great Lakes pilotage rates meet the
requirements set forth in 46 CFR part 404 for similar compensation
levels between Great Lakes pilots and industry. They also include
adjustments for inflation and changes in association expenses to
maintain these compensation levels.
The increase in pilotage rates will be an additional cost for
shippers to transit the Great Lakes system. This proposed rule would
result in a distributional effect that transfers payments (income) from
vessel owners and operators to the Great Lakes' pilot associations
through Coast Guard regulated pilotage rates.
The shippers affected by these rate adjustments are those owners
and operators of domestic vessels operating on register (employed in
the foreign trade) and owners and operators of foreign vessels on a
route within the Great Lakes system. These owners and operators must
have pilots or pilotage service as required by 46 U.S.C. 9302. There is
no minimum tonnage limit or exemption for these vessels. However, the
Coast Guard issued a policy position several years ago stating that the
statute applies only to commercial vessels and not to recreational
vessels.
Owners and operators of other vessels that are not affected by this
proposed rule, such as recreational boats and vessels only operating
within the Great Lakes system, may elect to purchase pilotage services.
However, this election is voluntary and does not affect the Coast
Guard's calculation of the rate increase and is not a part of our
estimated national cost to shippers.
We reviewed a sample of pilot source forms, which are the forms
used to record pilotage transactions on vessels, and discovered very
few cases of U.S. Great Lakes vessels (i.e., domestic vessels without
registry operating only in the Great Lakes) that purchased pilotage
services. There was one case where the vessel operator purchased
pilotage service in District One to presumably leave the Great Lakes
system. We assume some vessel owners and operators may also choose to
purchase pilotage services if their vessels are carrying hazardous
substances or were navigating the Great Lakes system with inexperienced
personnel. Based on information from the Coast Guard Office of Great
Lakes Pilotage, we have determined that these vessels voluntarily chose
to use pilots and, therefore, are exempt from pilotage requirements.
We used 2003 arrival data from the Coast Guard's National Vessel
Movement Center (NVMC) to estimate the annual number of vessels
affected by the rate adjustment to be 214 vessels that, for some, make
several journeys or trips into the Great Lakes system. These vessels
entered the Great Lakes by transiting through or in part of at least
one of the three pilotage Districts before leaving the Great Lakes
system. These vessels often make several distinct stops docking,
offloading, and onloading at facilities in Great Lakes ports. Of the
total trips for the 214 vessels, there were approximately 1,090 U.S.
port arrivals before the vessels left the Great Lakes system, based on
2003 vessel arrival data from the NVMC.
We used district pilotage revenues from the independent
accountant's reports of the Districts' financial statements to estimate
the additional cost to shippers of the rate adjustments in this
proposed rule. These revenues represent the direct and indirect
pilotage costs that shippers must pay for pilotage services in order to
transit their vessels in the Great Lakes. Table 1 shows historical
pilotage revenues by District.

Table 1.--District Revenues ($U.S.)
----------------------------------------------------------------------------------------------------------------
Year District One District Two District Three Total
----------------------------------------------------------------------------------------------------------------
1998.................................... 2,127,577 3,202,374 4,026,802 9,356,753

[[Page 39639]]

1999.................................... 2,009,180 2,727,688 3,599,993 8,336,861
2000.................................... 1,890,779 2,947,798 4,036,354 8,874,931
2001.................................... 1,676,578 2,375,779 3,657,756 7,710,113
2002.................................... 1,686,655 2,089,348 3,460,560 7,236,563
----------------------------------------------------------------------------------------------------------------
Source: Annual independent accountant's reports of the Districts to the Coast Guard's Office of Great Lake
Pilotage.

While the revenues have decreased over time, the Coast Guard
adjusts pilotage rates to achieve a target pilot compensation similar
to masters and first mates working on U.S. vessels engaged in the Great
Lakes trade.
We estimate the additional cost of the rate adjustment in this
proposed rule to be the difference between the total adjusted revenue
based on the 2005 rate adjustment and the proposed rate adjustment
(change) revenue in this proposed rule. These revenue values and
adjustments are described and calculated in the ``Calculating the Rate
Adjustment'' section of this rulemaking. The projected revenue uses the
2002 revenues in Table 1 adjusted for the 2005 final rule and the
proposed adjustments for inflation, wages, and 401(k) contributions
from this proposed rule. Table 2 compares projected and adjusted
revenues and costs of the proposed rule to industry by district.

Table 2.--Revenues, Rate Adjustment Factors and Additional Cost of the Rulemaking ($U.S.) \1\
----------------------------------------------------------------------------------------------------------------
District District One District Two District Three Total \2\
----------------------------------------------------------------------------------------------------------------
Base Revenue \1\........................ 1,686,655 2,089,348 3,460,560 7,236,563
-----------------------------------------------------------------------
Total Adjusted Revenue \3\.......... 2,643,732 3,125,036 4,722,162 10,490,930
=======================================================================
Proposed Rate Change \4\................ 1.0577 1.059 1.0606 1.0594
Revenue Needed \5\...................... 2,796,275 3,309,413 5,008,325 11,114,013
Additional Revenue or Cost of this 152,543 184,377 286,163 623,083
Rulemaking \6\.........................
----------------------------------------------------------------------------------------------------------------
\1\ Base revenue is from the 2002 base accounting year data.
\2\ Some values may not total due to rounding.
\3\ Total adjusted revenue = `2002 base revenue' + `2005 final rule rate adjustment revenue'.
\4\ See step 7 of the ``Calculating the Rate Adjustment'' section of this proposed rule. We used the districts'
percent change in unit costs for the rate change.
\5\ Revenue needed = `total adjusted revenue' x `proposed rate change'.
\6\ Additional revenue or cost of this proposed rule = `revenue needed'--`total adjusted revenue'.

After applying the rate change in this proposed rule, the resulting
difference between the revenue projected and the revenue needed is the
annual cost for the affected population of this proposed rule. This
figure will be equivalent to the total additional payments that
shippers will make for pilotage services from this proposed rule.
The annual cost of the rate adjustment in this proposed rule to
shippers is approximately $623,083 (non-discounted). To calculate an
exact cost 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 will pay more and some will pay
less depending on the distance and port arrivals of their vessels'
trips. However, the annual cost reported above does capture all of the
additional cost the shippers would face as a result of the rate
adjustment in this proposed rule.
We estimated the total cost to shippers of the rate adjustments in
this proposed rule over a five-year period, because the Coast Guard is
required to determine and, if necessary, adjust Great Lakes pilotage
rates at a minimum of at least once every five years from the 2005 rate
adjustment. However, the Coast Guard does evaluate and analyze the
Great Lakes pilotage rates every year, regardless of whether an
adjustment is needed or not. The total five-year (2006-2010) present
value cost estimate of this rulemaking to shippers is $2.7 million
discounted at a seven percent discount rate and $2.9 million discounted
at a three percent discount rate.
The cost to shippers of this proposed rule is minimal compared with
the travel cost shippers save when they use the Great Lakes system. The
alternative to Great Lakes waterborne transportation is to choose
coastal delivery, such as East Coast and Gulf Coast ports that are more
expensive, and extra-modal transportation overland, which is far less
practical and has additional transportation costs for all commodity
groups. See Coast Guard docket number USCG-2006-24414 for an assessment
of alternatives to Great Lakes waterborne transportation and the
associated costs entitled ``Analysis of Great Lakes Pilotage Costs on
Great Lakes Shipping and the Potential Impact of Pilotage Rate
Increases'' (October 1, 2004).

A. 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.
In 2003, most vessels engaged in foreign trade on the Great Lakes
were large foreign-owned shipping conglomerates. There were two U.S.
companies that were operating vessels engaged in foreign trade in the
Great Lakes system that would be affected by the rate adjustments in
this proposed rule and pay additional costs for pilotage services.
However, these two companies are subsidiaries of large foreign parent
entities. The North American Industry Classification

[[Page 39640]]

System (NAICS) code subsector for these shippers is 483--Water
Transportation, and includes one or all of the following 6-digit NAICS
codes for freight transportation: 483111--Deep Sea Freight
Transportation, 483113--Coastal and Great Lakes Freight Transportation,
and 483211--Inland Water Freight Transportation. According to the Small
Business Administration's definition, a U.S. company with these NAICS
codes and employing less than 500 employees is considered a small
entity. These large foreign-owned shippers do not qualify as small
entities because their number of employees exceeds 500. We assume that
new industry entrants will be comparable in size to these shippers with
a large enough employee base and the financial resources to support
long international trade routes and, thus, will not be small
businesses.
There are three U.S. entities that are affected by the proposed
rule that will receive the additional revenues from the proposed rate
adjustment. These are the three pilot associations that are the only
entities providing pilotage services within the Great Lakes districts.
Two of the associations operate as partnerships and one operates as a
corporation. These associations are classified with the same NAICS
industry classification and small entity size standards as the U.S.
shippers above, but they have far fewer than 500 employees:
approximately 65 total employees combined. However, they are not
adversely impacted with the additional costs of the proposed rate
adjustments, but instead receive the additional revenue benefits for
operating expenses and pilot compensation.
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 U.S. 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.

B. Assistance for Small Entities

Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104-121), we offered to assist small
entities in understanding the proposed rule so that they could 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 call Paul Wasserman, Director, Office of
Great Lakes Pilotage, (G-PWM-2), U.S. Coast Guard, telephone 202-372-
1535 or send him e-mail at pwasserman@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).

C. Collection of Information

Under the Paperwork Reduction Act (44 U.S.C. 3501-3520), the Office
of Management and Budget (OMB) reviews each proposed rule that contains
a collection of information requirement to determine whether the
practical value of the information is worth the burden imposed by its
collection. Collection of information requirements include reporting,
record keeping, notification, and other similar requirements.
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 Office of Management and Budget (OMB) under OMB Control
Number 1625-0086, Great Lakes Pilotage Methodology.

D. Federalism

A rule has implications for federalism under Executive Order 13132,
Federalism, if it has a substantial direct effect on State or local
governments and would either preempt State law or impose a substantial
direct cost of compliance on them. We have analyzed this proposed rule
under that Order and have determined that it does not have implications
for federalism because there are no similar State regulations, and the
States do not have the authority to regulate and adjust rates for
pilotage services in the Great Lakes system.

E. Unfunded Mandates Reform Act

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

F. Taking of Private Property

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

G. Civil Justice Reform

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

H. Protection of Children

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

I. Indian Tribal Governments

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

J. Energy Effects

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

[[Page 39641]]

K. Technical Standards

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

L. Environment

We have analyzed this proposed rule under Commandant Instruction
M16475.lD and Department of Homeland Security Management Directive
5100.1, which guide the Coast Guard in complying with the National
Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and
have made a preliminary determination that there are no factors in this
case that would limit the use of a categorical exclusion under section
2.B.2 of the Instruction. Therefore, we believe that this rule should
be categorically excluded, under figure 2-1, paragraph (34)(a), of the
Instruction, from further environmental documentation. Paragraph 34(a)
pertains to minor regulatory changes that are editorial or procedural
in nature. This NPRM proposes rate adjustments in accordance with
applicable statutory and regulatory mandates. A preliminary
``Environmental Analysis Check List'' is available in the docket where
indicated under the ``Public Participation and Request for Comments''
section of this preamble. Comments on this section will be considered
before we make the final decision on whether this rule should be
categorically excluded from further environmental review.

List of Subjects in 46 CFR Part 401

Administrative practice and procedure, Great Lakes, Navigation
(water), Penalties, Reporting and recordkeeping requirements, Seamen.
For the reasons discussed in the preamble, the Coast Guard proposes
to amend 46 CFR part 401 as follows:

PART 401--GREAT LAKES PILOTAGE REGULATIONS

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

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

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

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

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

------------------------------------------------------------------------
Service St. Lawrence River
------------------------------------------------------------------------
Basic Pilotage..................... \1\ $12 per Kilometer or $20 per
mile.
Each Lock Transited................ \1\ 251.
Harbor Movage...................... \1\ 821.
------------------------------------------------------------------------
\1\ The minimum basic rate for assignment of a pilot in the St. Lawrence
River is $548, and the maximum basic rate for a through trip is
$2,405.

(b) Area 2 (Undesignated Waters):

------------------------------------------------------------------------
Service Lake Ontario
------------------------------------------------------------------------
Six-Hour Period..................................... $391
Docking or Undocking................................ 373
------------------------------------------------------------------------

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

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

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

------------------------------------------------------------------------
Lake Erie (East of
Service Southeast Shoal) Buffalo
------------------------------------------------------------------------
Six-Hour Period................. $559 $559
Docking or Undocking............ 431 431
Any Point on the Niagara River N/A 1,099
below the Black Rock Lock......
------------------------------------------------------------------------

(b) Area 5 (Designated Waters):

--------------------------------------------------------------------------------------------------------------------------------------------------------
Toledo or any
Point on Lake Detroit Pilot
Any point on or in Southeast Shoal Erie west of Detroit River Boat St. Clair River
Southeast Shoal
--------------------------------------------------------------------------------------------------------------------------------------------------------
Toledo or any port on Lake Erie west of Southeast Shoal....... $1,433 $846 $1,859 $1,433 N/A
Port Huron Change Point....................................... \1\ 2,494 \1\ 2,890 1,874 1,458 1,036
St. Clair River.............................................. \1\ 2,494 N/A 1,874 1,874 846
Detroit or Windsor Or the Detroit River....................... 1,433 1,859 846 N/A 1,874

[[Page 39642]]

Detroit Pilot Boat............................................ 1,036 1,433 N/A N/A 1,874
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ When pilots are not changed at the Detroit Pilot Boat.

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

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

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

------------------------------------------------------------------------
Lakes Huron and
Service Michigan
------------------------------------------------------------------------
Six-Hour Period..................................... $443
Docking or Undocking................................ 421
------------------------------------------------------------------------

(b) Area 7 (Designated Waters):

------------------------------------------------------------------------
Any
Area De Tour Gros Cap Harbor
------------------------------------------------------------------------
Gros Cap............................ $1,532 N/A N/A
Algoma Steel Corporation Wharf at 1,532 577 N/A
Sault Ste. Marie Ontario...........
Any point in Sault Ste. Marie, 1,284 577 N/A
Ontario, except the Algoma Steel
Corporation Wharf..................
Sault Ste. Marie, MI................ 1,284 577 N/A
Harbor Movage....................... N/A N/A 577
------------------------------------------------------------------------

------------------------------------------------------------------------
Service Lake Superior
------------------------------------------------------------------------
Six-Hour Period..................................... $388
Docking or Undocking................................ 369
------------------------------------------------------------------------

Sec. 401.420 [Amended]

5. In Sec. 401.420--
a. In paragraph (a), remove the number ``$70'' and add, in its
place, the number ``$74''; and remove the number ``$1,100'' and add, in
its place, the number ``$1,166''.
b. In paragraph (b), remove the number ``$70'' and add, in its
place, the number ``$74''; and remove the number ``$1,100'' and add, in
its place, the number ``$1,166''.
c. In paragraph (c)(1), remove the number ``$416'' and add, in its
place, the number ``$441''; in paragraph (c)(3), remove the number
``$70'' and add, in its place, the number ``$74''; and, also in
paragraph (c)(3), remove the number ``$1,100'' and add, in its place,
the number ``$1,166''.

Sec. 401.428 [Amended]

6. In Sec. 401.428, remove the number ``$424'' and add, in its
place, the number ``$449''.

Dated: May 30, 2006.
C.E. Bone,
Rear Admiral, U.S. Coast Guard, Assistant Commandant for Prevention.
[FR Doc. E6-11062 Filed 7-12-06; 8:45 am]

BILLING CODE 4910-15-P