[Federal Register: September 18, 2007 (Volume 72, Number 180)]
[Rules and Regulations]
[Page 53158-53161]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18se07-17]
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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: Final rule.
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SUMMARY: The Coast Guard is finalizing the February 2007 interim rule,
which updated rates for pilotage service on the Great Lakes by
increasing rates an average of 22.62% across all three pilotage
districts over the last ratemaking that was completed in April 2006.
Annual reviews of pilotage rates are required by law to ensure that
sufficient revenues are generated to cover the annual projected
allowable expenses, target pilot compensation, and returns on
investment of the pilot associations.
DATES: This final rule is effective October 18, 2007.
ADDRESSES: Comments and material received from the public, as well as
documents mentioned in this preamble as being available in the docket,
are part of docket USCG-2006-24414 and are available for inspection or
copying at the Docket Management Facility, U.S. Department of
Transportation, West Building Ground Floor, Room W12-140, 1200 New
Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays. You may also find this docket
on the Internet at http://dms.dot.gov.
FOR FURTHER INFORMATION CONTACT: For questions on this final rule,
please call Mr. Michael Sakaio, Program Analyst, Office of Great Lakes
Pilotage, Commandant (CG-3PWM), U.S. Coast Guard, at 202-372-1538, by
fax 202-372-1929, or by email at michael.sakaio@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.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background
II. Discussion of Comments and Changes
III. Discussion of the Final Rule
IV. Regulatory Evaluation
I. Background
The Great Lakes Pilotage Act of 1960, codified in Title 46, Chapter
93, of the United States Code (U.S.C.), 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. 9302, 9308. The Coast Guard is
responsible for administering this pilotage program, which includes
setting rates for pilotage service. 46 U.S.C. 9303.
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. 46
U.S.C. 9303(f) requires these reviews and, where deemed appropriate,
that adjustments be established by March 1 of every shipping season.
To assist in calculating pilotage rates, the three Great Lakes
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 full ratemaking, the
Coast Guard contracts with an independent accounting firm to conduct
audits of the accounts and records of the pilotage associations and to
submit financial reports relevant to the ratemaking process. In those
years when a full ratemaking is conducted, the Coast Guard generates
the pilotage rates using Appendix A to 46 CFR Part 404. Between the
five-year full ratemaking intervals, the Coast Guard annually reviews
the pilotage rates using Appendix C to 46 CFR Part 404, and adjusts
rates as appropriate.
The last full ratemaking was published in the Federal Register on
April 3, 2006 (71 FR 16501). The first annual review following the 2006
ratemaking showed a need to adjust rates for the 2007 Great Lakes
shipping season. That adjustment was the subject of a Notice of
Proposed Rulemaking (``NPRM,'' 71 FR 39629, Jul. 13, 2006), followed by
an Interim Rule (72 FR 8115, Feb. 23, 2007; corrected at 72 FR 13352,
Mar. 21, 2007) which took effect March 26, 2007. In addition to the
public comments, we received on the NPRM, we invited comments on the
interim rule.
II. Discussion of Comments
The Coast Guard received three comments in response to the interim
rule. One comment was received from the legal representative of the
pilot associations; one comment was received from the legal
representative for the Shipping Federation of Canada; and one comment
was received from the Saint Lawrence Seaway Pilots Association.
[[Page 53159]]
A. Comments Not Requiring Full Discussion. Several comments raised
issues that have either been fully addressed by the Coast Guard in the
interim rule or in preceding rulemakings, or which are not relevant to
the current rulemaking. These issues include the Coast Guard's pending
action on Rear Admiral J. Timothy Riker's bridge hour standards report;
whether delay and detention should be included in calculating bridge
hours; the use of actual versus rounded bridge hours in projecting
compensation; and whether the Coast Guard is correct in calculating
pilot compensation by multiplying mates' wages by 150% and then adding
benefits, as opposed to multiplying mates' wages and benefits by 150%.
On this last point, one commenter took issue with our statement, in the
interim rule, that in 2003 the District Court for the District of
Columbia upheld our method of applying the 150% multiplier. This
commenter remarked that a court ruling on this issue today might reach
a different result in light of the ``quantitative proof'' that the
Coast Guard's method is less successful than the commenter's preferred
method in producing the outcome intended by Congress. We disagree. No
such ``quantitative proof '' data has been submitted to the docket for
this rulemaking. Moreover, despite this commenter's statements to the
contrary, we have fully and consistently explained the rationale for
our method, most recently in the interim rule at 72 FR 8117.
Finally, comments concerning surcharges are not relevant to this
rulemaking inasmuch as no surcharges have been taken into consideration
in establishing the current rate. In the 2006 ratemaking, we
incorporated all surcharges that were determined reasonable and
necessary for the provision of pilotage service into each pilot
association's expense base, and terminated any further surcharges. No
surcharges are currently authorized by the Coast Guard to be charged by
the pilot associations and no future surcharges are contemplated.
Persons interested in the Coast Guard's treatment of surcharges are
referred to the 2006 ratemaking's final rule (71 FR 16501, Apr. 3,
2006).
B. Union Contracts. One of the comments stated that the Coast Guard
should consider using other union contracts, besides the American
Maritime Officers' (AMO) union contracts, in determining target pilot
compensation. It mentioned two other maritime labor unions, the Marine
Engineers' Beneficial Association (MEBA) and the National Organization
of Masters, Mates, and Pilots of North America (MMP). The comment
further stated that ``the Coast Guard has historically limited its
review to AMO union contracts. However, the regulations require a
review of all union contracts.''
We agree that the Coast Guard, since the implementation of the
Great Lakes Ratemaking Methodology in 1996, has consistently used the
AMO union contracts in its computation of target pilot compensation. We
disagree that the regulations require a review of all union contracts.
46 CFR part 404, Appendix A, states only that ``the average annual
compensation for first mates is determined based on the most current
union contracts.'' The Coast Guard has interpreted this language to
mean contracts most representative of first mates sailing on laker
vessels in the Great Lakes. We disagree with the commenter that MEBA
and MMP contracts should be included in our computation of rates.
Research leading to the publication of the interim rule shows that AMO
union contracts represent 62% of all laker tonnage compared to non-AMO
union contracts, which represent approximately 38% of the tonnage. We
do not know the exact percentage of laker tonnage represented by MEBA
or MMP. But even with their presence, or any other union's presence,
the majority of the tonnage (62%) is represented by the AMO union
contracts.
Another commenter stated that the Coast Guard should use ``only the
most lucrative union contract in calculating target pilot
compensation.'' We disagree. As previously discussed, 46 CFR part 404,
Appendix A, requires that the Coast Guard review ``the most current
contracts'' in computing target pilot compensation and that is what we
have done. Placing undue emphasis on a single ``most lucrative''
contract would inappropriately inflate compensation projections.
C. Magnitude of Rate Increase. One comment stated the Coast Guard,
by raising ``pilotage rates 22.62% ... over the last rulemaking
completed approximately one year ago, and just under 50% since 2005''
had, by that fact alone, ``breached its obligation to maintain a fair
and efficient pilotage system and adhere to the statutory requirement
to ensure that rates accurately reflect the costs of providing pilotage
services under the Great Lakes Pilotage Act.'' The Coast Guard
disagrees. 46 U.S.C. 9303(f) states that the ``Secretary shall
prescribe by regulation rates and charges for pilotage services, giving
consideration to the public interest and the costs of providing the
services.'' 46 CFR Part 404, Appendices A and C, set out two
methodologies, which were themselves the product of public rulemaking,
creating fair and impartial formulas for establishing those rates and
charges for pilot services. The Coast Guard has meticulously adhered to
these methodologies in the creation of the rates referred to by the
commenter.
This same commenter states that by switching to unrounded bridge
hour projections in the interim rule, vice the rounded bridge hour
projections used in the NPRM, rates actually increased by 7.2%,
overall, instead of the 3% claimed by the Coast Guard. We disagree. As
we stated in the preamble to the interim rule, this correction
increased the rate by 3%. The remaining percentage increases are
attributable to a 14.7% increase in wages and benefits under the most
recent AMO union contracts, a 5% increase in projected traffic, and .5%
to non-wage inflation.
D. Petition for Full Review. One commenter petitioned the Coast
Guard to perform a full review of pilotage rates, to include an
independent audit of each pilot association's expense records and
accounts pursuant to 46 CFR 404.1(b). That section requires that the
Coast Guard perform such a review and audit at least once every five
years. The last time the Coast Guard conducted such an audit was
following the 2002 navigation season. Accordingly, the Coast Guard
will, in the ordinary course, and consistent with the commenter's
request, conduct a five year review and audit at the completion of the
2007 navigation season.
III. Discussion of the Final Rule
This final rule finalizes the interim rule's rates that Federal
Great Lakes Registered Pilots may charge for the provision of pilotage
services. Because this final rule changes none of the calculations or
rates contained in the interim rule, we will not repeat the rate
calculations or the regulatory evaluation contained in that document
(72 IR 8115, Feb. 23, 2007).
IV. Regulatory Evaluation
This rule is not a ``significant regulatory action'' under section
3(f) of Executive Order 12866, Regulatory Planning and Review, and does
not require an assessment of potential costs and benefits under section
6(a)(3) of that Order. The Office of Management and Budget has not
reviewed it under that Order.
The interim rule published in February 2007 is unchanged for this
final rule. The cost and population data
[[Page 53160]]
contained in the interim analysis is also unchanged for this final
rule. In addition, there were no comments on the evaluation of the
interim rule published in February 2007. Consequently, we adopt the
analysis from the interim rule, available in the preamble of the
interim rule, for this final rule. This rule makes final the 22.62
percent average rate adjustment for the Great Lakes system over the
rate adjustment found in the 2006 final rule. The annual cost of the
rate adjustment in this rule to shippers is approximately $2.3 million
(non-discounted). The total five-year present value cost estimate
(2007-2011) of this rule to shippers is $10.2 million discounted at a
seven percent discount rate and $11.0 million discounted at a three
percent discount rate. We use a five-year cost estimate because the
Coast Guard is required to determine and, if necessary, perform a full
adjustment of Great Lakes pilotage rates every five years.
A. Small Entities
Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have
considered whether this rule has 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.
The analysis of the impact to small entities in the interim rule
resulted in no small entities affected by this rule. Since we received
no comments pertaining to small entities and the analysis has not
changed, we adopt the interim analysis for this final rule. Therefore,
the Coast Guard certifies under 5 U.S.C. 605(b) that this rule does not
have a significant economic impact on a substantial number of U.S.
small entities.
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 rule so that they could better evaluate
its effects on them and participate in the rulemaking. If the rule
affects your small business, organization, or governmental jurisdiction
and you have questions concerning its provisions or options for
compliance, please call Mike Sakaio, Office of Great Lakes Pilotage,
(CG-3PWM-2), U.S. Coast Guard, telephone 202-372-1538, or send him e-
mail at Michael.Sakaio@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 of 1995, (44 U.S.C. 3501-3520),
the Office of Management and Budget (OMB) reviews each 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 rule calls for no new collection of information under the
Paperwork Reduction Act. This rule does not change the burden in the
collection currently approved by the Office of Management and Budget
under OMB Control Number 1625-0086, Great Lakes Pilotage Methodology.
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 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 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 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 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 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 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 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.
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
[[Page 53161]]
technical standards (e.g., specifications of materials, performance,
design, or operation; test methods; sampling procedures; and related
management systems practices) that are developed or adopted by
voluntary consensus standards bodies. This rule does not use technical
standards. Therefore, we did not consider the use of voluntary
consensus standards.
L. Environment
We have analyzed this 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). 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, this rule is 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
rule adjusts rates in accordance with applicable statutory and
regulatory mandates. A final ``Environmental Analysis Check List'' and
a final ``Categorical Exclusion Determination'' are available in the
docket where indicated under ADDRESSES.
List of Subjects in 46 CFR Part 401
Administrative practice and procedure, Great Lakes, Navigation
(water), Penalties, Reporting and recordkeeping requirements, Seamen.
0
For the reasons set forth in the preamble, the Coast Guard adopts as
final without change the interim rule published at 72 FR 8115, February
23, 2007.
Dated: September 10, 2007.
J.G. Lantz,
Acting Assistant Commandant for Prevention, U.S. Coast Guard.
[FR Doc. E7-18306 Filed 9-17-07; 8:45 am]
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