Notices. Final rule
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/register/2024/12/13/2024-29128A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
BILLING CODE 4184-41-P DEPARTMENT OF HOMELAND SECURITY Coast Guard 46 CFR Part 401 [Docket No. USCG-2024-0406] RIN 1625-AC94 Great Lakes Pilotage Rates—2025 Annual Review AGENCY: Coast Guard, DHS. ACTION: Final rule. SUMMARY: In accordance with the statutory provisions enacted by the Great Lakes Pilotage Act of 1960, the Coast Guard is issuing new pilotage rates for 2025. This rule adjusts the pilotage rates to account for changes in district operating expenses, an increase in the number of pilots, and anticipated inflation.
These changes, when combined, result in a 7-percent net increase in pilotage costs compared to the 2024 season. DATES: This final rule is effective January 13, 2025. ADDRESSES: To view documents mentioned in this preamble as being available in the docket, go to *www.regulations.gov,* type USCG-2024-0406 in the search box and click “Search.” Next, in the Document Type column, select “Supporting & Related Material.” FOR FURTHER INFORMATION CONTACT: For information about this document, call or email Mr.
Brian Rogers, Commandant, Office of Waterways and Ocean Policy—Great Lakes Pilotage Division (CG-WWM-2), Coast Guard; telephone 410-360-9260, email *Brian.Rogers@uscg.mil.* SUPPLEMENTARY INFORMATION: Table of Contents for Preamble I. Abbreviations II. Basis and Purpose, and Regulatory History III. Background IV. Final Pilotage Rates for 2025 V. Discussion of Comments and Changes VI. Summary of the Ratemaking Methodology VII. Discussion of the Rate Adjustments District One A. Step 1:
Recognize Previous Operating Expenses B. Step 2: Project Operating Expenses, Adjusting for Inflation or Deflation C. Step 3: Estimate Number of Registered Pilots and Apprentice Pilots D. Step 4: Determine Target Pilot Compensation Benchmark and Apprentice Pilot Wage Benchmark E. Step 5: Project Working Capital Fund F. Step 6: Project Needed Revenue G. Step 7: Calculate Initial Base Rates H. Step 8: Calculate Average Weighting Factors by Area I. Step 9: Calculate Revised Base Rates J.
Step 10: Review and Finalize Rates District Two A. Step 1: Recognize Previous Operating Expenses B. Step 2: Project Operating Expenses, Adjusting for Inflation or Deflation C. Step 3: Estimate Number of Registered Pilots and Apprentice Pilots D. Step 4: Determine Target Pilot Compensation Benchmark and Apprentice Pilot Wage Benchmark E. Step 5: Project Working Capital Fund F. Step 6: Project Needed Revenue G. Step 7: Calculate Initial Base Rates H. Step 8: Calculate Average Weighting Factors by Area I.
Step 9: Calculate Revised Base Rates J. Step 10: Review and Finalize Rates District Three A. Step 1: Recognize Previous Operating Expenses B. Step 2: Project Operating Expenses, Adjusting for Inflation or Deflation C. Step 3: Estimate Number of Registered Pilots and Apprentice Pilots D. Step 4: Determine Target Pilot Compensation Benchmark and Apprentice Pilot Wage Benchmark E. Step 5: Project Working Capital Fund F. Step 6: Project Needed Revenue G. Step 7: Calculate Initial Base Rates H.
Step 8: Calculate Average Weighting Factors by Area I. Step 9: Calculate Revised Base Rates J. Step 10: Review and Finalize Rates VIII. Regulatory Analyses A. Regulatory Planning and Review B. Small Entities C. Assistance for Small Entities D. Collection of Information E. Federalism F. Unfunded Mandates G. Taking of Private Property H. Civil Justice Reform I. Protection of Children J. Indian Tribal Governments K. Energy Effects L. Technical Standards M. Environment I. Abbreviations 2023 final rule Great Lakes Pilotage Rates—2023 Annual Ratemaking and Review of Methodology 2024 final rule Great Lakes Pilotage Rates—2024 Annual Review 2025 Ratemaking NPRM Great Lakes Pilotage Rates—2025 Annual Review notice of proposed rulemaking APA American Pilots' Association BLS Bureau of Labor Statistics CFR Code of Federal Regulations CPI Consumer Price Index DHS Department of Homeland Security Director U.S.
Coast Guard's Director of the Great Lakes Pilotage ECI Employment Cost Index FOMC Federal Open Market Committee FR Federal Register GLPAC Great Lakes Pilotage Advisory Committee LPA Lakes Pilots Association MOU Memorandum of Understanding NAICS North American Industry Classification System NPRM Notice of proposed rulemaking OMB Office of Management and Budget PCE Personal Consumption Expenditures § Section SBA Small Business Administration SLSPA Saint Lawrence Seaway Pilots Association U.S.C.
United States Code WGLPA Western Great Lakes Pilots Association II. Basis and Purpose, and Regulatory History The legal basis of this rulemaking is 46 U.S.C. Chapter 93, 1 which requires foreign merchant vessels and United States vessels operating “on register”—meaning United States vessels engaged in foreign trade—to use United States or Canadian pilots while transiting the United States waters of the St. Lawrence Seaway and the Great Lakes system. 2 For U.S. Great Lakes Pilots, the statute requires the Secretary to “prescribe by regulation rates and charges for pilotage services, giving consideration to the public interest and the costs of providing the services.
” Title 46 of the U.S.C. 9303(f) also requires that rates be established or reviewed and adjusted each year, no later than March 1. The Secretary's duties and authority under 46 U.S.C. Chapter 93 have generally been delegated to the Coast Guard. 3 1 46 U.S.C. 9301-9308. 2 46 U.S.C. 9302(a)(1). 3 Department of Homeland Security Delegation No. 00170.1 (II)(92)(f), Revision No. 01.4. The Secretary retains the authority under Section 9307 to establish, and appoint members to, a Great Lakes Pilotage Advisory Committee.
The purpose of this final rule is to issue new pilotage rates for 2025 by revising a base rate established in 2023. The Coast Guard believes that the new rates will continue to promote our goal, as outlined in 46 CFR 404.1(a), to promote safe, efficient, and reliable pilotage service in the Great Lakes by generating sufficient revenue for each pilot association, to reimburse its necessary and reasonable operating expenses, fairly compensate trained and rested Pilots, and provide appropriate funds to use for improvements.
III. Background Rates are the foundation for safe, efficient, and reliable pilotage service to facilitate maritime commerce, protect the marine environment, and comply with National Transportation Safety Board recommendations regarding staffing and pilot fatigue. The pilotage rates for the 2025 season range from $440 to $986 per pilot hour, depending on which of the specific six areas pilotage service is provided, and are paid by shippers to the pilot associations. There are three American pilotage districts on the Great Lakes, each represented by a pilot association. 4 Each pilotage district is further divided into “designated” and “undesignated” areas.
Designated areas, classified as such by Presidential Proclamation, are waters in which pilots must direct the navigation of vessels at all times. 5 Undesignated areas are open bodies of water where pilots must only “be on board and available to direct the navigation of the vessel” at the discretion of the vessel master. 6 For these reasons, pilotage rates in designated areas can be significantly higher than those in undesignated areas. 4 The Saint Lawrence Seaway Pilots Association provides pilotage services in District One, which includes all U.S. waters of the St.
Lawrence River and Lake Ontario. The Lakes Pilots Association provides pilotage services in District Two, which includes all U.S. waters of Lake Erie, the Detroit River, Lake St. Clair, and the St. Clair River. Finally, the Western Great Lakes Pilots Association provides pilotage services in District Three, which includes all U.S. waters of the St. Marys River; Sault Ste. Marie Locks; and Lakes Huron, Michigan, and Superior. 5 Presidential Proclamation 3385, *Designation of restricted waters under the Great Lakes Pilotage Act of 1960,* December 22, 1960, *https://www.archives.gov/federal-register/codification/proclamations/03385.html;* accessed 10/25/2024. 6 46 U.S.C. 9302(a)(1)(B).
The three pilot associations, which are the exclusive U.S. source of Registered Pilots on the Great Lakes, use the revenue from the shippers to cover operating expenses, maintain infrastructure, compensate Apprentice and Registered Pilots, acquire and implement technological advances, train new personnel, and provide for continuing professional development. Each pilot association is an independent business and is the sole provider of pilotage services in its district of operation.
Each pilot association is responsible for funding its own operating expenses, infrastructure maintenance, and compensation for Pilots and Apprentice Pilots. 7 7 Apprentice Pilots and Applicant Pilots are compensated by the pilot association they are training with, which is funded through the pilotage rates. The ratemaking methodology accounts for an Apprentice Pilot wage benchmark in Step 4, per 46 CFR 404.104(d). The Applicant Pilot salaries are included in the pilot associations' operating expenses used in Step 1, per 46 CFR 404.101.
The actual demand for service dictates the compensation amount for United States Registered Pilots. We divide that amount by the historic 10-year average for pilotage demand. We recognize that in years where demand for pilotage services exceeds the 10-year average, pilot associations will accrue more revenue than projected, while in years where demand is below average, they will take in less. We believe over the long term, however, this scheme ensures that infrastructure will be maintained, and that Pilots will receive adequate compensation and work a reasonable number of hours, with adequate rest between assignments, to ensure retention of highly trained personnel.
For this final rule, we conducted our annual review and interim adjustment to the base pilotage rates for 2025. The Coast Guard last conducted a full ratemaking in 2023, with the “Great Lakes Pilotage Rates—2023 Annual Ratemaking and Review of Methodology” final rule (hereafter the 2023 final rule) (88 FR 12226, published February 27, 2023). This final rule is an interim ratemaking under 46 CFR 404.100(b). IV. Final Pilotage Rates for 2025 In this final rule, we set new pilotage rates for 2025.
We conducted this 2025 ratemaking as an interim ratemaking, as we did with the “Great Lakes Pilotage Rates—2024 Annual Review” final rule (hereafter the 2024 final rule) (89 FR 9038, published February 9, 2024). Thus, the Coast Guard adjusts the compensation benchmark following the interim ratemaking procedures under § 404.100(b), rather than following the procedures for a full ratemaking under § 404.100(a). The Coast Guard is setting the rates shown in table 1. Table 1—Current and 2025 Pilotage Rates on the Great Lakes Area Name Final 2024 pilotage rate Final 2025 pilotage rate District One:
Designated St. Lawrence River $927 $986 District One: Undesignated Lake Ontario 608 643 District Two: Designated Navigable waters from Southeast Shoal to Port Huron, MI 667 753 District Two: Undesignated Lake Erie 597 576 District Three: Designated St. Marys River 836 825 District Three: Undesignated Lakes Huron, Michigan, and Superior 430 440 This final rule affects 61 U.S. Great Lakes Pilots, 3 Apprentice Pilots, 3 pilot associations, and the owners and operators of an average of 280 oceangoing vessels that transit the Great Lakes annually.
This final rule will not affect the Coast Guard's budget or increase Federal spending because foreign shippers, foreign cruise ships, and vessels requesting voluntary pilotage pay these rates directly to the respective pilot association The estimated overall annual regulatory economic impact of this rate change will be a net increase of $2,879,028 in payments made by the foreign shippers, foreign cruise ships, and vessels requesting voluntary pilotage service, which is a 7-percent increase from operating costs in the 2024 shipping season.
This represents an increase in revenue needed for target Pilot compensation, a decrease in revenue needed for the total Apprentice Pilot wage benchmark, an increase in the revenue needed for adjusted operating expenses, and an increase in the revenue needed for the working capital fund. This final rule establishes the 2025 yearly target compensation for Pilots on the Great Lakes at $464,317 per Pilot (a $23,659, or 5.37 percent, increase over their 2024 target compensation). Because the Coast Guard must review, and, if necessary, adjust rates each year, we analyze these as single-year costs and do not annualize them over 10 years.
Section VIII., Regulatory Analyses, in this preamble, provides the regulatory impact analyses of this final rule. V. Discussion of Comments and Changes We received three comments in response to the notice of proposed rulemaking
(NPRM)for this this final rule, titled “Great Lakes Pilotage Rates—2025 Annual Review” (hereafter 2025 Ratemaking NPRM) (89 FR 63334, published August 5, 2024). We made no changes to the rates in response to those comments. One anonymous commenter was concerned that the ratemaking methodology was not accurately capturing trends in demand, citing this year's rate increase in District One as surprising, given that transits and time on task have gone down over the past couple of seasons. While the ratemaking methodology itself is not included in the scope of this rule, we note that the 10-year rolling average is designed to minimize volatility in the ratemaking. This decision has been confirmed by the courts as a “rational choice.” *Am. Great Lake Ports Assn.* v. *United States Coast Guard.* 8 8 443 F. Supp. 3d 44 (D.D.C. 2020). Another commenter, representing three trade associations, suggested that the Coast Guard should use Federal Open Market Committee
(FOMC)Projections for the inflation numbers used in Step 2 of the methodology. Modifying the ratemaking methodology is outside the scope of this rule—since this is an interim ratemaking—but we will consider this suggestion in the next full ratemaking. 9 9 This commenter also submitted an earlier comment requesting an extension for the comment period. The same commenter supported the elimination of the Working Capital Fund in Step 5 of the ratemaking process. We appreciate the commenter's support, but elimination of the Working Capital Fund is outside the scope of this rule and will be addressed in next year's full ratemaking. This commenter also supported District One's efforts to improve their dispatch operations and suggested that Districts Two and Three make similar efforts. Pilotage association dispatch operations are outside the scope of this rulemaking, but we will take the comment under advisement for potential future rulemakings. This commenter suggested that the Coast Guard should update the Memorandum of Understanding
(MOU)between the U.S. Coast Guard and the Canadian Great Lakes Pilotage Authority because that “document provides for the coordination of services, including the division of dispatch activity and the sharing of work assignments.” The MOU is outside the scope of this rulemaking, but we will take this comment under advisement and communicate it to the relevant parties. The commenter urged the Coast Guard to make individual pilot compensation publicly available. The Coast Guard will not accommodate this request. Compensation of individual pilots is not included in the expense base or methodology, and, therefore, we decline to add a regulatory requirement for pilot associations to publicly report the compensation of individual pilots. The Coast Guard does not use actual earnings or average earnings; instead, we use target pilot compensation (described in Step 4 of the existing methodology), which the Coast Guard has determined to be reasonable and necessary. Because actual individual salary values are not used in the ratemaking, the Coast Guard believes that a requirement to report pilot compensation is not in the public interest or necessary to provide for the costs of services. Concerns about equity among the pilots are outside the scope of this rulemaking. The commenter's last suggestion was that the Coast Guard should conduct a line-by-line inspection of pilot association expenses to determine if they meet the “necessary and reasonable” standard. This is a suggested change to the methodology, which is outside the scope of this rule. We will consider this comment for the next full ratemaking. The last comment, from the Western Great Lakes Pilots Association (WGLPA), contained three requests for the Coast Guard. First, WGLPA requested an upward adjustment of $47,924 based on legal expenses related to negotiations of the collective bargaining agreement between the WGLPA and the International Longshoremen's Association. However, the only evidence of these charges was a letter from WGLPA's outside counsel. In order to make a change to the expenses, the Coast Guard would need to see verifiable and detailed evidence that explains those charges. For legal work, a detailed record of an attorney's billable hours would be sufficient. Even with this information, we may not be able to recognize this expense as the other pilot associations perform this function without incurring substantial legal expenses. We would also need additional justification to determine if this was a necessary expense, and if so, whether all or some portion of the expense is a reasonable amount to include in the association's expense base. Second, WGLPA requested an upward adjustment of $45,296 based on a 2023 arbitration ruling that found that wages were owed for work performed by their dispatch team. These are 2023 expenses and, therefore, cannot be added to this year's ratemaking. If properly submitted next year to CohnReznick (the third-party firm under contract to create revenue and expense reports for the three pilot association expenses), the expenses will be evaluated in next year's ratemaking. Last, WGLPA alleged that they did not have sufficient opportunity to engage with the Coast Guard and CohnReznick to adequately provide explanation or documentation for certain expenses. The Coast Guard disagrees with this assertion. According to our records, the opportunity to provide documentation and information to CohnReznick commenced on August 10, 2023, and concluded on January 24, 2024, a day before the draft report was generated. We believe WGLPA had sufficient time to organize and segregate records to comply with the Coast Guard contract to perform this work. Additionally, the Director confirmed with CohnReznick personnel that they verbally communicated the project timeline to WGLPA personnel during the initial “prepared by client” phone call on August 10, 2023, and, on the same day, emailed the WGLPA with a list of documents and information the WGLPA would need to provide in order to successfully produce the report. The only change from the NPRM results from updated inflation data becoming available since the publication of the proposed rule. Table 2 summarizes the changes between the 2025 Ratemaking NPRM and this final rule. This table includes changes from the proposed rule that are not based on comments from the NPRM. Table 2—Changes Between the NPRM and Final Rule Change Reasoning Updates 2023 Employment Cost Index
(ECI)inflation from 5.1%, listed in the NPRM, to 5.6% More recent figures were published since the Coast Guard conducted the analysis for the NPRM. Updates 2024 Personal Consumption Expenditures
(PCE)inflation from 2.4%, listed in the NPRM, to 2.8% Updates 2025 PCE inflation from 2.2%, listed in the NPRM, to 2.3% VI. Summary of the Ratemaking Methodology The ratemaking methodology, outlined in 46 CFR 404.101 through 404.110, consists of 10 steps that are designed to account for the revenues needed and total traffic expected in each district. The first several steps of the methodology establish base pilotage rates. Additional steps to incorporate the weighting factors are necessary to establish the final pilotage rates. The result is an hourly rate, determined separately for each of the areas administered by the Coast Guard. In Step 1, “Recognize previous operating expenses,” (§ 404.101), the U.S. Coast Guard's Director of the Great Lakes Pilotage (Director) uses an independent third party to review each pilot association's audited operating expenses from each of the three pilot associations. Operating expenses include all allowable expenses, minus Pilot and Apprentice Pilot wages and benefits. This number forms the baseline amount that each association is budgeted. Because of the time delay between when the association submits raw numbers and when the Coast Guard receives audited numbers, this number is 3 years behind the projected year of expenses. Therefore, in calculating the 2025 rates in this final rule, we began with the audited expenses from the shipping activity in 2022. While each pilot association operates in an entire district, including both designated and undesignated areas, the Coast Guard determines costs by area. We allocate certain operating expenses to designated areas and certain operating expenses to undesignated areas. In some cases, we can allocate the costs based on where they are accrued. For example, we can allocate the costs of insurance for Apprentice Pilots who operate in undesignated areas only. In other situations, such as general legal expenses, expenses are distributed between designated and undesignated waters on a pro rata basis based upon the proportion of income forecasted from the respective portions of the district. In Step 2, “Project operating expenses, adjusting for inflation or deflation,” (§ 404.102), the Director develops the 2025 projected operating expenses. To do this, we apply inflation adjustors for 3 years to the operating expense baseline received in Step 1. The inflation factors are from the Bureau of Labor Statistics'
(BLS)Consumer Price Index
(CPI)for the Midwest Region, or, if not available, the FOMC median economic projections for Personal Consumption Expenditures
(PCE)inflation. This step produces the total operating expenses for each area and district. In Step 3, “Estimate number of registered pilots and apprentice pilots,” (§ 404.103), the Director calculates how many Registered and Apprentice Pilots are needed for each district. To do this, we employ a “staffing model,” described in § 401.220, paragraphs (a)(1) through (3), to estimate how many Pilots would be needed to handle shipping during the beginning and close of the season. This number provides guidance to the Director in approving an appropriate number of Pilots. At the September 7, 2023 Great Lakes Pilotage Advisory Committee (GLPAC) meeting, there was a unanimous recommendation for an August 1 cutoff date to allow an Apprentice Pilot, who has completed all their training, to be recognized as a fully registered Pilot in the rate. 10 The Coast Guard agrees that this change is both necessary and reasonable, as it provides the proper compensation based on the most accurate data. If an Apprentice Pilot is scheduled to complete training and becomes a fully registered Pilot before August 1, they will be counted as a fully registered Pilot in the rate; if they do not meet the August 1 deadline, those funds may be adjusted in the proceeding rate for up to the full amount. In addition, if a fully registered Pilot retires, or an Apprentice Pilot resigns, and has been counted in the rate, the proceeding rate may be adjusted accordingly for up to the full amount. 10 Transcript of United States Coast Guard GLPAC Meeting at 97 (Sept. 7, 2023), *https://www.regulations.gov/document/USCG-2023-0438-0009;* accessed 10/25/2024. In Step 4 of the ratemaking calculation, we determine the number of Pilots provided by the pilot associations (see § 404.103) and use that figure to determine how many Pilots need to be compensated via the pilotage fees collected. In the first part of Step 4, “Determine target pilot compensation benchmark and apprentice pilot wage benchmark,” (§ 404.104(b)(1)), the Director adjusts the previous year's individual target Pilot compensation by the difference between the previous year's BLS ECI for the Transportation and Materials sector and the FOMC median economic projections for PCE inflation value used to inflate the previous year's target Pilot compensation. In the second part of Step 4, (§ 404.104(b)(2)), the Director then adjusts that value by the FOMC median economic projections for PCE inflation for the upcoming year. In the final part of Step 4, § 404.104(c) and (d), the Director determines the total target compensation figure for each district. To do this, the Director multiplies the compensation benchmark by the number of Pilots for each area and district (from Step 3), producing a figure for total Pilot compensation. Based on the total Pilot compensation, the Director determines the individual Apprentice Pilot wage benchmark at the rate of 36 percent of the individual target Pilot compensation, as calculated according to paragraphs
(a)or
(b)of this section. In Step 5, “Project working capital fund,” (§ 404.105), the Director calculates an added value to pay for needed capital improvements and other non-recurring expenses, such as technology investments and infrastructure maintenance. This value is calculated by adding the total operating expenses (derived in Step 2) to the total target Pilot compensation and the total target Apprentice Pilot wage (derived in Step 4), then by multiplying that figure by the preceding year's average annual rate of return for new issues of high-grade corporate securities. This figure constitutes the “working capital fund” for each area and district. In Step 6, “Project needed revenue,” (§ 404.106), the Director simply adds the totals produced by the preceding steps. The projected operating expenses for each area and district (from Step 2) is added to the total target Pilot compensation, including Apprentice Pilot wage benchmarks (from Step 4), and the working capital fund contribution (from Step 5). The total figure, calculated separately for each area and district, is the “needed revenue.” In Step 7, “Calculate initial base rates,” (§ 404.107), the Director calculates an hourly pilotage rate to cover the needed revenue, as calculated in Step 6. This step consists of first calculating the 10-year average of traffic hours for each area. Next, we divide the revenue needed in each area (calculated in Step 6) by the 10-year average of traffic hours to produce an initial base rate. An additional element, the “weighting factor,” is required under § 401.400. Pursuant to that section, ships pay a multiple of the “base rate,” as calculated in Step 7, by a number ranging from 1.0 (for the smallest ships, or “Class I” vessels) to 1.45 (for the largest ships, or “Class IV” vessels). This significantly increases the revenue collected, and we need to account for the added revenue produced by the weighting factors to ensure that shippers are not overpaying for pilotage services. We do this in the next step. In Step 8, “Calculate average weighting factors by Area,” (§ 404.108), the Director calculates how much extra revenue, as a percentage of total revenue, has historically been produced by the weighting factors in each area. We do this by using a historical average of the applied weighting factors for each year since 2014 (the first year the current weighting factors were applied). In Step 9, “Calculate revised base rates,” (§ 404.109), the Director modifies the base rates by accounting for the extra revenue generated by the weighting factors. We do this by dividing the initial pilotage rate for each area (from Step 7) by the corresponding average weighting factor (from Step 8), to produce a revised rate. In Step 10, “Review and finalize rates,” (§ 404.110), often referred to informally as “Director's discretion,” the Director reviews the revised base rates (from Step 9) to ensure that they meet the goals set forth in 46 U.S.C. 9303(f) and 46 CFR 404.1(a), which include promoting efficient, safe, and reliable pilotage service on the Great Lakes; generating sufficient revenue for each pilot association to reimburse necessary and reasonable operating expenses; compensating trained and rested pilots fairly; and providing appropriate revenue for improvements. VII. Discussion of the Rate Adjustments District One A. Step 1: Recognize Previous Operating Expenses Step 1 in the ratemaking methodology requires that the Coast Guard review and recognize the operating expenses for the last full year for which figures are available (§ 404.101). To do so, we begin by reviewing the independent accountant's financial reports for each association's 2022 expenses and revenues. For accounting purposes, the financial reports divide expenses into designated and undesignated areas. For costs accrued by the pilot associations generally, such as employee benefits, the cost is divided between the designated and undesignated areas on a pro rata basis. Adjustments have been made by the auditors and are explained in the auditor's reports, which are available in the docket for this rulemaking, where indicated under the ADDRESSES portion of this preamble. The recognized operating expenses for District One are shown in table 3. Table 3—2022 Recognized Expenses for District One Reported operating expenses for 2022 District One Designated St. Lawrence River Undesignated Lake Ontario Total *Applicant Pilot Compensation:* *Salaries* $35,411 $23,608 $59,019 *Employee benefits* 11,628 7,752 19,380 Total Applicant Pilot Compensation 47,039 31,360 78,399 Other Pilotage Cost: Pilot Subsistence 148,350 98,900 247,250 Hotel/Lodging Costs 31,222 20,815 52,037 Travel 535,016 356,678 891,694 Payroll Taxes 228,222 152,148 380,370 Total Other Pilotage Costs 942,810 628,541 1,571,351 *Pilot Boat and Dispatch Costs:* Pilot boat costs 178,691 119,127 297,818 Dispatch costs 232,196 154,798 386,994 Salaries 253,761 169,174 422,935 Total Pilot and Dispatch Costs 664,648 443,099 1,107,747 *Administrative Expenses:* Legal 301 201 502 Legal—shared counsel (K&L Gates) 6,178 4,119 10,297 Legal—USCG Litigation 61,625 41,083 102,708 Insurance 44,603 29,735 74,338 Employee benefits 47,517 31,678 79,195 Payroll Taxes 48,433 32,288 80,721 Other taxes 81,576 54,384 135,960 Real Estate taxes 23,000 15,333 38,333 Travel 23,098 15,399 38,497 Depreciation/Auto leasing/Other 108,836 72,558 181,394 Interest 20,257 13,504 33,761 American Pilots' Association
(APA)Dues 32,927 21,951 54,878 Dues and subscriptions 4,560 3,040 7,600 Utilities 40,478 26,986 67,464 Salaries 223,539 149,026 372,565 Accounting/Professional fees 9,900 6,600 16,500 Applicant Pilot Training 69,383 46,255 115,638 Other expenses 19,083 12,722 31,805 Total Administrative Expenses 865,294 576,862 1,442,156 Total Expenses (OPEX + Applicant + Pilot Boats + Admin + Capital) 2,519,791 1,679,862 4,199,653 B. Step 2: Project Operating Expenses, Adjusting for Inflation or Deflation In accordance with the text in § 404.102, having identified the recognized 2022 operating expenses in Step 1, the next step is to estimate the current year's operating expenses by adjusting for inflation over the 3-year period. We calculate inflation using the BLS data from the CPI for the Midwest Region of the United States for the 2023 inflation rate. 11 Because the BLS does not provide forecasted inflation data, we use economic projections from the Federal Reserve for the 2024 and 2025 inflation modification. 12 Based on that information, the calculations for Step 2 are as presented in table 4. 11 The CPI is defined as “All Urban Consumers (CPI-U), All Items, 1982-4=100.” Series CUUR0200SA0 (Downloaded February 22, 2024). Available at *https://www.bls.gov/cpi/data.htm.,* All Urban Consumers (Current Series), multiscreen data, not seasonally adjusted, 0200 Midwest, Current, All Items, Monthly, 12-month Percent Change and Annual Data; accessed 10/25/2024. 12 The 2024 and 2025 inflation rates are available at *https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20240918.pdf.* We used the Core PCE June Projection found in table 1; accessed 10/02/2024. Table 4—Adjusted Operating Expenses for District One District One Designated Undesignated Total Total Operating Expenses (Step 1) $2,519,791 $1,679,862 $4,199,653 2023 Inflation Modification (@3.8%) 95,752 63,835 159,587 2024 Inflation Modification (@2.8%) 73,235 48,824 122,059 2025 Inflation Modification (@2.3%) 61,842 41,228 103,070 Adjusted 2025 Operating Expenses 2,750,620 1,833,749 4,584,369 C. Step 3: Estimate Number of Registered Pilots and Apprentice Pilots In accordance with the text in § 404.103, the Coast Guard estimates the number of fully registered Pilots in each district. In the past, this was done using the staffing model and the process described in § 404.103. During the 2023 GLPAC meeting, there was a unanimous recommendation by the GLPAC that, after 2024, the Director be given discretion to increase the staffing model plus three Pilots per District, based on industry demand and to ensure shipping reliability. 13 Additionally, the previous staffing model's maximum is now considered the minimum in regard to the number of Pilots needed in each district. 14 13 Transcript, *supra* note 8, at 89-90. 14 *Id.* at 57-58. We determine the number of fully registered Pilots based on data provided by the St. Lawrence Seaway Pilots Association (SLSPA) as well as the previously mentioned recommendation. We determine the number of Apprentice Pilots based on input from the district on anticipated retirements and staffing needs. These numbers can be found in table 5. Table 5—Authorized Pilots for District One Item District One 2025 Authorized Pilots (total) 20 2025 Pilots Assigned to Designated Areas 11 2025 Pilots Assigned to Undesignated Areas 9 2025 Apprentice Pilots 1 D. Step 4: Determine Target Pilot Compensation Benchmark and Apprentice Pilot Wage Benchmark In this step, we determine the total target Pilot compensation for each area. Because we are issuing an interim ratemaking this year, we follow the procedure outlined in paragraph
(b)of § 404.104, which adjusts the existing compensation benchmark by inflation. First, we adjust the 2024 target compensation benchmark of $440,658 by 3.0 percent for a value of $453,878. This accounts for the difference in actual third quarter 2024 ECI inflation, which is 5.6 percent, and the 2024 PCE estimate of 2.6 percent. 15 16 15 Employment Cost Index, Total Compensation for Private Industry workers in Transportation and Material Moving, Annual Average, Series ID: CIU2010000520000A. *https://www.bls.gov/news.release/eci.t05.htm;* accessed 10/31/2024. 16 2.6 percent was the latest figure available for the 2024 final rule. Table 1, Summary of Economic Projections, Median Core PCE Inflation June Projection. *https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20230920.pdf;.accessed05/31/2024.* The second step accounts for projected inflation from 2024 to 2025, which is 2.3 percent. 17 Based on the projected 2025 inflation estimate, the target compensation benchmark for 2025 is $464,317 per pilot. The Apprentice Pilot wage benchmark is 36 percent of the target Pilot compensation, or $167,154 ($464,317 × 0.36). 17 Table 1, Summary of Economic Projections, Median Core PCE Inflation June Projection. *https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20240918.pdf;* accessed 10/02/2024. In accordance with § 404.104(c), we use the revised target individual compensation level to derive the total target Pilot compensation by multiplying the individual target compensation by the estimated number of Registered Pilots for District One, as shown in table 6. We estimate that the number of Apprentice Pilots needed will be one for District One in the 2025 rulemaking. The total target wages for Apprentice Pilots are allocated with 60 percent for the designated area and 40 percent for the undesignated area, in accordance with the allocation for operating expenses. Table 6—Target Compensation for District One District One Designated Undesignated Total Target Pilot Compensation $464,317 $464,317 $464,317 Number of Pilots 11 9 20 Total Target Pilot Compensation 5,107,487 4,178,853 9,286,340 Target Apprentice Pilot Compensation 167,154 167,154 167,154 Number of Apprentice Pilots 1 Total Target Apprentice Pilot Compensation 100,292 66,862 167,154 E. Step 5: Project Working Capital Fund Next, the Coast Guard calculates the working capital fund revenues needed for each area. We first add the figures for projected operating expenses, total target Pilot compensation, and total target Apprentice Pilot wage for each area. Then we find the preceding year's average annual rate of return for new issues of high-grade corporate securities. Using Moody's data, the number is 4.8100 percent, rounded. 18 By multiplying the two figures, we obtain the working capital fund contribution for each area, as shown in table 7. 18 Moody's Seasoned Aaa Corporate Bond Yield, average of 2023 monthly data. The Coast Guard uses the most recent year of complete data. Moody's is taken from Moody's Investors Service, which is a bond credit rating business of Moody's Corporation. Bond ratings are based on creditworthiness and risk. The rating of “Aaa” is the highest bond rating assigned with the lowest credit risk. *See https://fred.stlouisfed.org/series/AAA;* accessed 10/25/2024. Table 7—Working Capital Fund Calculation for District One District One Designated Undesignated Total Adjusted Operating Expenses (Step 2) $2,750,620 $1,833,749 $4,584,369 Total Target Pilot Compensation (Step 4) 5,107,487 4,178,853 9,286,340 Total Target Apprentice Pilot Compensation (Step 4) 100,292 66,862 167,154 Total 2025 Expenses 7,958,399 6,079,464 14,037,863 Working Capital Fund (4.8100%) 382,799 292,422 675,221 F. Step 6: Project Needed Revenue In this step, we add the expenses accrued to derive the total revenue needed for each area. These expenses include the projected operating expenses (from Step 2), the total target Pilot compensation (from Step 4), total target Apprentice Pilot wage (from Step 4), and the working capital fund contribution (from Step 5). We show these calculations in table 8. Table 8—Revenue Needed for District One District One Designated Undesignated Total Adjusted Operating Expenses (Step 2) $2,750,620 $1,833,749 $4,584,369 Total Target Pilot Compensation (Step 4) 5,107,487 4,178,853 9,286,340 Total Target Apprentice Pilot Compensation (Step 4) 100,292 66,862 167,154 Working Capital Fund (Step 5) 382,799 292,422 675,221 Total Revenue Needed 8,341,198 6,371,886 14,713,084 G. Step 7: Calculate Initial Base Rates Having determined the revenue needed for each area in the previous six steps, we divide that number by the expected number of traffic hours to develop an hourly rate. Step 7 is a two-part process. The first part entails calculating the 10-year traffic average in District One, using the total time on task or Pilot bridge hours. To calculate the time on task for each district, the Coast Guard used billing data from SeaPro. Because we calculate separate figures for designated and undesignated waters, there are two parts for each calculation. We show these values in table 9. Table 9—Time on Task for District One [Hours] Year District One Designated Undesignated 2023 5,810 7,650 2022 6,577 8,356 2021 6,166 7,893 2020 6,265 7,560 2019 8,232 8,405 2018 6,943 8,445 2017 7,605 8,679 2016 5,434 6,217 2015 5,743 6,667 2014 6,810 6,853 Average 6,559 7,673 Next, we derive the initial hourly rate by dividing the revenue needed by the average number of hours for each area. This produces an initial rate, which is necessary to produce the revenue needed for each area, assuming the amount of traffic is as expected. We present the calculations for District One in table 10. Table 10—Initial Rate Calculations for District One Designated Undesignated Revenue needed (Step 6) $8,341,198 $6,371,886 Average time on task (hours) 6,559 7,673 Initial rate $1,272 $830 H. Step 8: Calculate Average Weighting Factors by Area In this step, the Coast Guard calculates the average weighting factor for each designated and undesignated area by first collecting the weighting factors, set forth in 46 CFR 401.400, for each vessel trip. Using the weight factor report from SeaPro, we calculate the average weighting factor for each area using the data from each vessel transit from 2014 onward, as shown in tables 11 and 12. Table 11—Average Weighting Factor for District One, Designated Areas Vessel class/year Number of transits Weighting factor Weighted transits * Class 1
(2014)31 1 31 Class 1
(2015)41 1 41 Class 1
(2016)31 1 31 Class 1
(2017)28 1 28 Class 1
(2018)54 1 54 Class 1
(2019)72 1 72 Class 1
(2020)8 1 8 Class 1
(2021)10 1 10 Class 1
(2022)39 1 39 Class 1
(2023)19 1 19 Class 2
(2014)285 1.15 328 Class 2
(2015)295 1.15 339 Class 2
(2016)185 1.15 213 Class 2
(2017)352 1.15 405 Class 2
(2018)559 1.15 643 Class 2
(2019)378 1.15 435 Class 2
(2020)560 1.15 644 Class 2
(2021)315 1.15 362 Class 2
(2022)462 1.15 531 Class 2
(2023)481 1.15 553 Class 3
(2014)50 1.3 65 Class 3
(2015)28 1.3 36 Class 3
(2016)50 1.3 65 Class 3
(2017)67 1.3 87 Class 3
(2018)86 1.3 112 Class 3
(2019)122 1.3 159 Class 3
(2020)67 1.3 87 Class 3
(2021)52 1.3 68 Class 3
(2022)103 1.3 134 Class 3
(2023)34 1.3 44 Class 4
(2014)271 1.45 393 Class 4
(2015)251 1.45 364 Class 4
(2016)214 1.45 310 Class 4
(2017)285 1.45 413 Class 4
(2018)393 1.45 570 Class 4
(2019)730 1.45 1059 Class 4
(2020)427 1.45 619 Class 4
(2021)407 1.45 590 Class 4
(2022)446 1.45 647 Class 4
(2023)420 1.45 609 Total 8,708 11,216 Average weighting factor (weighted transits ÷ number of transits) 1.29 * Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses unrounded figures. Table 12—Average Weighting Factor for District One, Undesignated Areas Vessel class/year Number of transits Weighting factor Weighted transits * Class 1
(2014)25 1 25 Class 1
(2015)28 1 28 Class 1
(2016)18 1 18 Class 1
(2017)19 1 19 Class 1
(2018)22 1 22 Class 1
(2019)30 1 30 Class 1
(2020)3 1 3 Class 1
(2021)19 1 19 Class 1
(2022)27 1 27 Class 1
(2023)31 1 31 Class 2
(2014)238 1.15 274 Class 2
(2015)263 1.15 302 Class 2
(2016)169 1.15 194 Class 2
(2017)290 1.15 334 Class 2
(2018)352 1.15 405 Class 2
(2019)366 1.15 421 Class 2
(2020)358 1.15 412 Class 2
(2021)463 1.15 532 Class 2
(2022)349 1.15 401 Class 2
(2023)346 1.15 398 Class 3
(2014)60 1.3 78 Class 3
(2015)42 1.3 55 Class 3
(2016)28 1.3 36 Class 3
(2017)45 1.3 59 Class 3
(2018)63 1.3 82 Class 3
(2019)58 1.3 75 Class 3
(2020)35 1.3 46 Class 3
(2021)71 1.3 92 Class 3
(2022)65 1.3 85 Class 3
(2023)44 1.3 57 Class 4
(2014)289 1.45 419 Class 4
(2015)269 1.45 390 Class 4
(2016)222 1.45 322 Class 4
(2017)285 1.45 413 Class 4
(2018)382 1.45 554 Class 4
(2019)326 1.45 473 Class 4
(2020)334 1.45 484 Class 4
(2021)466 1.45 676 Class 4
(2022)386 1.45 560 Class 4
(2023)328 1.45 476 Total 7,214 9,326 Average weighting factor (weighted transits ÷ number of transits) 1.29 * Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses unrounded figures. I. Step 9: Calculate Revised Base Rates After considering the impact of the weighting factors, we revise the base rates in this step so that the total costs of pilotage will be equal to the revenue needed. To do this, we divide the initial base rates calculated in Step 7 by the average weighting factors calculated in Step 8, as shown in table 13. Table 13—Revised Base Rates for District One Area Initial rate (Step 7) Average weighting factor (Step 8) Revised rate (initial rate ÷ average weighting factor) District One: Designated $1,272 1.29 $986 District One: Undesignated 830 1.29 643 J. Step 10: Review and Finalize Rates In this step, the Director reviews the base pilotage rates calculated in § 404.109 of this part to ensure it meets the goal of ensuring safe, efficient, and reliable pilotage service. To establish this, the Director considers whether the rates incorporate appropriate compensation for Pilots to handle heavy traffic periods and whether there are enough Pilots to handle those heavy traffic periods. The Director also considers whether the rates will cover operating expenses and infrastructure costs, including average traffic and weighting factors. Based on these considerations, the Director did not propose any alterations to the rates in this step. We modified § 401.405(a)(1) and
(2)to reflect the final rates shown in table 14. Table 14—Final Rates for District One Area Name Final 2024 pilotage rate Final 2025 pilotage rate District One: Designated St. Lawrence River $927 $986 District One: Undesignated Lake Ontario 608 643 District Two A. Step 1: Recognize Previous Operating Expenses Step 1 in our ratemaking methodology requires that the Coast Guard review and recognize the previous year's operating expenses (§ 404.101). To do so, we begin by reviewing the independent accountant's financial reports for each association's 2022 expenses and revenues. For accounting purposes, the financial reports divide expenses into designated and undesignated areas. For costs generally accrued by the pilot associations, such as employee benefits, the cost is divided between the designated and undesignated areas on a pro rata basis. Adjustments have been made by the auditors and are explained in the auditor's reports, which are available in the docket for this rulemaking, where indicated under the ADDRESSES portion of the preamble. The recognized operating expenses for District Two are shown in table 15. Table 15—2022 Recognized Expenses for District Two Reported operating expenses for 2022 District Two Undesignated Lake Erie Designated Southeast Shoal to Port Huron Total Applicant Pilot Compensation $236,674 $355,011 $591,685 Employee benefits 60 90 150 Total Other Applicant Cost 236,734 355,101 591,835 Other Pilotage Cost: Pilot Subsistence 93,840 140,760 234,600 Hotel/Lodging Costs 70,468 105,703 176,171 *Hotel/Lodging (D2-22-01)* (70,080) (105,120) (175,200) Travel 57,324 85,985 143,309 License renewal 396 594 990 Payroll Taxes 20,068 30,101 50,169 License Insurance 10,362 15,543 25,905 Total Other Pilotage Costs 182,378 273,566 455,944 *Pilot Boat and Dispatch Costs:* Pilot boat expense costs 100,642 150,963 251,605 Employee Benefits 40,409 60,613 101,022 Employee Benefits (D2-22-02) 46,599 69,899 116,498 Insurance 9,257 13,886 23,143 Salaries 171,763 257,645 429,408 Total Pilot and Dispatch Costs 368,670 553,006 921,676 *Administrative Expenses:* Legal 18 27 45 Legal—shared counsel (K&L Gates) 3,210 4,816 8,026 Insurance 15,698 23,547 39,245 Employee benefits 19,884 29,827 49,711 *Employee benefits (D2-22-02)* 14,208 21,312 35,520 Payroll Taxes 134,123 201,184 335,307 Other taxes 8,862 13,294 22,156 Real Estate taxes 8,754 13,130 21,884 Travel 24,482 36,723 61,205 Depreciation/Auto leasing/Other 19,136 28,703 47,839 APA Dues 14,843 22,264 37,107 Dues and subscriptions 470 704 1,174 Utilities 27,009 40,513 67,522 Salaries 78,662 117,994 196,656 Accounting/Professional fees 15,850 23,775 39,625 Pilot Training 17,661 26,491 44,152 Other expenses 10,306 15,458 25,764 Total Administrative Expenses 413,176 619,762 1,032,938 Total Expenses (OPEX + Applicant + Pilot Boats + Admin + Capital) 1,200,958 1,801,435 3,002,393 B. Step 2: Project Operating Expenses, Adjusting for Inflation or Deflation In accordance with the text in § 404.102, having identified the recognized 2022 operating expenses in Step 1, the next step is to estimate the current year's operating expenses by adjusting for inflation over the 3-year period. We calculate inflation using the BLS data from the CPI for the Midwest Region of the United States for the 2023 inflation rate. 19 Because the BLS does not provide forecasted inflation data, we use economic projections from the Federal Reserve for the 2024 and 2025 inflation modification. 20 Based on that information, the calculations for Step 2 are presented in table 16. 19 CPI, *supra* note 10. 20 Core PCE June Projection, *supra* note 11. Table 16—Adjusted Operating Expenses for District Two District Two Undesignated Designated Total Total Operating Expenses (Step 1) $1,200,958 $1,801,435 $3,002,393 2023 Inflation Modification (@3.8%) 45,636 68,455 114,091 2024 Inflation Modification (@2.8%) 34,905 52,357 87,262 2025 Inflation Modification (@2.3%) 29,474 44,212 73,686 Adjusted 2025 Operating Expenses 1,310,973 1,966,459 3,277,432 C. Step 3: Estimate Number of Registered Pilots and Apprentice Pilots In accordance with the text in § 404.103, the Coast Guard estimates the number of fully registered Pilots in each district. In the past, this was done using the staffing model and the process described in § 404.103. During the 2023 GLPAC meeting, there was a unanimous recommendation by the GLPAC that, after 2024, the Director be given discretion to increase the staffing model plus three Pilots per District, based on industry demand and to ensure shipping reliability. 21 Additionally, the previous staffing model's maximum is now considered the minimum in regard to the number of Pilots needed in each district. 22 21 Transcript, *supra* note 8 at 89-90. 22 *Id.* at 57-58. We determine the number of fully registered Pilots based on data provided by the Lakes Pilots Association
(LPA)as well as the previous mentioned recommendation. We determine the number of Apprentice Pilots based on input from the district on anticipated retirements and staffing needs. These numbers can be found in table 17. Table 17—Authorized Pilots for District Two Item District Two 2025 Authorized Pilots (total) 17 Pilots Assigned to Designated Areas 10 Pilots Assigned to Undesignated Areas 7 2025 Apprentice Pilots 1 D. Step 4: Determine Target Pilot Compensation Benchmark and Apprentice Pilot Wage Benchmark In this step, we determine the total target Pilot compensation for each area. Because we are issuing an interim ratemaking this year, we follow the procedure outlined in paragraph
(b)of § 404.104, which adjusts the existing compensation benchmark by inflation. First, we adjust the 2024 target compensation benchmark of $440,658 by 3.0 percent for a value of $453,878. This accounts for the difference in actual third quarter 2024 ECI inflation, which is 5.6 percent, and the 2024 PCE estimate of 2.6 percent. 23 24 The second step accounts for projected inflation from 2024 to 2025, which is 2.3 percent. 25 Based on the projected 2025 inflation estimate, the target compensation benchmark for 2025 is $464,317 per Pilot. The Apprentice Pilot wage benchmark is 36 percent of the target Pilot compensation, or $167,154 ($464,317 × 0.36). 23 ECI, *supra* note 14. 24 Median Core PCE Inflation June Projection, *supra* note 15. 25 Median Core PCE Inflation June Projection, *supra* note 16. In accordance with § 404.104(c), we used the revised target individual compensation level to derive the total target Pilot compensation by multiplying the individual target compensation by the estimated number of Registered Pilots for District Two, as shown in table 18. The total target wages for Apprentice Pilots are allocated with 60 percent for the designated area and 40 percent for the undesignated area, in accordance with the allocation for operating expenses. Table 18—Target Compensation for District Two District Two Undesignated Designated Total Target Pilot Compensation $464,317 $464,317 $464,317 Number of Pilots 7 10 17 Total Target Pilot Compensation $3,250,219 $4,643,170 $7,893,389 Target Apprentice Pilot Compensation $167,154 $167,154 $167,154 Number of Apprentice Pilots 1 Total Target Apprentice Pilot Compensation $66,862 $100,292 $167,154 E. Step 5: Project Working Capital Fund Next, the Coast Guard calculates the working capital fund revenues needed for each area. We first add the figures for projected operating expenses, total target Pilot compensation, and total target Apprentice Pilot wage for each area. Then we find the preceding year's average annual rate of return for new issues of high-grade corporate securities. Using Moody's data, the number is 4.8100 percent, rounded. 26 By multiplying the two figures, we obtain the working capital fund contribution for each area, as shown in table 19. 26 Moody's Seasoned Aaa Corporate Bond Yield, *supra* note 17. Table 19—Working Capital Fund Calculation for District Two District Two Undesignated Designated Total Adjusted Operating Expenses (Step 2) $1,310,973 $1,966,459 $3,277,432 Total Target Pilot Compensation (Step 4) 3,250,219 4,643,170 7,893,389 Total Target Apprentice Pilot Compensation (Step 4) 66,862 100,292 167,154 Total 2025 Expenses 4,628,054 6,709,921 11,337,975 Working Capital Fund (4.8100%) 222,609 322,747 545,356 F. Step 6: Project Needed Revenue In this step, the Coast Guard adds all the expenses accrued to derive the total revenue needed for each area. These expenses include the projected operating expenses (from Step 2), the total target Pilot compensation (from Step 4), total target Apprentice Pilot wage (from Step 4), and the working capital fund contribution (from Step 5). We show these calculations in table 20. Table 20—Revenue Needed for District Two District Two Undesignated Designated Total Adjusted Operating Expenses (Step 2) $1,310,973 $1,966,459 $3,277,432 Total Target Pilot Compensation (Step 4) 3,250,219 4,643,170 7,893,389 Total Target Apprentice Pilot Compensation (Step 4) 66,862 100,292 167,154 Working Capital Fund (Step 5) 222,609 322,747 545,356 Total Revenue Needed 4,850,663 7,032,668 11,883,331 G. Step 7: Calculate Initial Base Rates Having determined the revenue needed for each area in the previous six steps, we divide that number by the expected number of traffic hours to develop an hourly rate. Step 7 is a two-part process. The first part entails calculating the 10-year traffic average in District Two, using the total time on task or Pilot bridge hours. To calculate the time on task for each district, the Coast Guard used billing data from SeaPro. Because we calculate separate figures for designated and undesignated waters, there are two parts for each calculation. We show these values in table 21. Table 21—Time on Task for District Two [Hours] Year District Two Undesignated Designated 2023 6,424 8,092 2022 7,695 9,044 2021 5,290 6,762 2020 6,232 8,401 2019 6,512 7,715 2018 6,150 6,655 2017 5,139 6,074 2016 6,425 5,615 2015 6,535 5,967 2014 7,856 7,001 Average 6,426 7,133 Next, we derive the initial hourly rate by dividing the revenue needed by the average number of hours for each area. This produces an initial rate, which is necessary to produce the revenue needed for each area, assuming the amount of traffic is as expected. We present the calculations for District Two in table 22. Table 22—Initial Rate Calculations for District Two Undesignated Designated Revenue needed (Step 6) $4,850,663 $7,032,668 Average time on task (hours) 6,426 7,133 Initial rate $755 $986 H. Step 8: Calculate Average Weighting Factors by Area In this step, the Coast Guard calculates the average weighting factor for each designated and undesignated area by first collecting the weighting factors, set forth in 46 CFR 401.400, for each vessel trip. Using the weight factor report from SeaPro, we calculate the average weighting factor for each area using the data from each vessel transit from 2014 onward, as shown in tables 23 and 24. Table 23—Average Weighting Factor for District Two, Undesignated Areas Vessel class/year Number of transits Weighting factor Weighted transits * Class 1
(2014)31 1 31 Class 1
(2015)35 1 35 Class 1
(2016)32 1 32 Class 1
(2017)21 1 21 Class 1
(2018)37 1 37 Class 1
(2019)54 1 54 Class 1
(2020)1 1 1 Class 1
(2021)7 1 7 Class 1
(2022)57 1 57 Class 1
(2023)54 1 54 Class 2
(2014)356 1.15 409 Class 2
(2015)354 1.15 407 Class 2
(2016)380 1.15 437 Class 2
(2017)222 1.15 255 Class 2
(2018)123 1.15 141 Class 2
(2019)127 1.15 146 Class 2
(2020)165 1.15 190 Class 2
(2021)206 1.15 237 Class 2
(2022)202 1.15 232 Class 2
(2023)152 1.15 175 Class 3
(2014)20 1.3 26 Class 3
(2015)0 1.3 0 Class 3
(2016)9 1.3 12 Class 3
(2017)12 1.3 16 Class 3
(2018)3 1.3 4 Class 3
(2019)1 1.3 1 Class 3
(2020)1 1.3 1 Class 3
(2021)5 1.3 7 Class 3
(2022)2 1.3 3 Class 3
(2023)2 1.3 3 Class 4
(2014)636 1.45 922 Class 4
(2015)560 1.45 812 Class 4
(2016)468 1.45 679 Class 4
(2017)319 1.45 463 Class 4
(2018)196 1.45 284 Class 4
(2019)210 1.45 305 Class 4
(2020)201 1.45 291 Class 4
(2021)227 1.45 329 Class 4
(2022)208 1.45 302 Class 4
(2023)169 1.45 245 Total 5,865 7,662 Average weighting factor (weighted transits ÷ number of transits) 1.31 * Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses unrounded figures. Table 24—Average Weighting Factor for District Two, Designated Areas Vessel class/year Number of transits Weighting factor Weighted transits * Class 1
(2014)20 1 20 Class 1
(2015)15 1 15 Class 1
(2016)28 1 28 Class 1
(2017)15 1 15 Class 1
(2018)42 1 42 Class 1
(2019)48 1 48 Class 1
(2020)7 1 7 Class 1
(2021)12 1 12 Class 1
(2022)53 1 53 Class 1
(2023)56 1 56 Class 2
(2014)237 1.15 273 Class 2
(2015)217 1.15 250 Class 2
(2016)224 1.15 258 Class 2
(2017)127 1.15 146 Class 2
(2018)153 1.15 176 Class 2
(2019)281 1.15 323 Class 2
(2020)342 1.15 393 Class 2
(2021)240 1.15 276 Class 2
(2022)327 1.15 376 Class 2
(2023)312 1.15 359 Class 3
(2014)8 1.3 10 Class 3
(2015)8 1.3 10 Class 3
(2016)4 1.3 5 Class 3
(2017)4 1.3 5 Class 3
(2018)14 1.3 18 Class 3
(2019)1 1.3 1 Class 3
(2020)5 1.3 7 Class 3
(2021)2 1.3 3 Class 3
(2022)4 1.3 5 Class 3
(2023)5 1.3 7 Class 4
(2014)359 1.45 521 Class 4
(2015)340 1.45 493 Class 4
(2016)281 1.45 407 Class 4
(2017)185 1.45 268 Class 4
(2018)379 1.45 550 Class 4
(2019)403 1.45 584 Class 4
(2020)405 1.45 587 Class 4
(2021)268 1.45 389 Class 4
(2022)391 1.45 567 Class 4
(2023)349 1.45 506 Total 6,171 8,069 Average weighting factor (weighted transits÷number of transits) 1.31 * Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses unrounded figures. I. Step 9: Calculate Revised Base Rates After considering the impact of the weighting factors, we revise the base rates in this step so that the total costs of pilotage will be equal to the revenue needed. To do this, we divide the initial base rates calculated in Step 7 by the average weighting factors calculated in Step 8, as shown in table 25. Table 25—Revised Base Rates for District Two Area Initial rate (Step 7) Average weighting factor (Step 8) Revised rate (initial rate ÷ average weighting factor) District Two: Undesignated $755 1.31 $576 District Two: Designated 986 1.31 753 J. Step 10: Review and Finalize Rates In this step, the Director reviews the base pilotage rates calculated in § 404.109 of this part to ensure it meets the goal of ensuring safe, efficient, and reliable pilotage service. To establish this, the Director considers whether the rates incorporate appropriate compensation for Pilots to handle heavy traffic periods and whether there are enough Pilots to handle those heavy traffic periods. The Director also considers whether the rates will cover operating expenses and infrastructure costs, including average traffic and weighting factors. Based on these considerations, the Director did not propose any alterations to the rates in this step. We modified § 401.405(a)(3) and
(4)to reflect the final rates shown in table 26. Table 26—Final Rates for District Two Area Name Final 2024 pilotage rate Final 2025 pilotage rate District Two: Designated Navigable waters from Southeast Shoal to Port Huron, MI $667 $753 District Two: Undesignated Lake Erie 597 576 District Three A. Step 1: Recognize Previous Operating Expenses Step 1 in our ratemaking methodology requires that the Coast Guard review and recognize the previous year's operating expenses (§ 404.101). To do so, we review the independent accountant's financial reports for each association's 2022 expenses and revenues. For accounting purposes, the financial reports divide expenses into designated and undesignated areas. For costs generally accrued by the pilot associations, such as employee benefits, the cost is divided between the designated and undesignated areas on a pro rata basis. Adjustments have been made by the auditors and are explained in the auditor's reports, which are available in the docket for this rulemaking, where indicated in the ADDRESSES portion of the preamble. The recognized operating expenses for District Three are shown in table 27. Table 27—2022 Recognized Expenses for District Three Reported Operating Expenses for 2022 District Three Undesignated Lakes Huron and Michigan Designated St. Marys River Undesignated Lake Superior Total *Applicant Cost:* Salaries $417,221 $154,305 $177,126 $748,652 Salaries (D3-22-04) (173,587) (64,199) (73,694) (311,480) Applicant Benefits 54,874 20,295 23,296 98,465 Total Applicant Cost 298,508 110,401 126,728 535,637 *Other Pilotage Costs:* Pilot subsistence 168,607 62,357 71,580 302,544 Pilot subsistence (D3-22-06) 7,664 2,834 3,254 13,752 Hotel/Lodging Cost 163,971 60,643 69,612 294,225 Hotel/Lodging Cost (D3-22-01) (22,392) (8,282) (9,506) (40,180) Travel 233,386 86,315 99,081 418,783 Travel (D3-22-01), (D3-22-03) (54,224) (20,054) (23,020) (97,298) License Renewal 315 117 134 566 Payroll taxes (D3-22-04) 192,009 71,013 81,515 344,537 License Insurance 17,757 6,567 7,539 31,863 Total Other Pilotage Costs 707,093 261,510 300,189 1,268,792 *Pilot Boat and Dispatch Costs:* Pilot boat costs 536,327 198,355 227,691 962,373 Pilot Boat Costs (D3-22-03) (9,518) (3,520) (4,041) (17,079) Dispatch costs 162,843 60,226 69,133 292,201 Dispatch costs (25,243) (9,336) (10,717) (45,296) Insurance 26,193 9,687 11,120 47,000 Total Pilot Boat and Dispatch Costs 690,602 255,412 293,186 1,239,200 *Administrative Cost:* Legal 58,159 21,510 24,691 104,360 Legal (D3-22-05) (48,792) (18,045) (20,714) (87,551) Legal—shared counsel (K&L Gates) 4,473 1,654 1,899 8,026 Insurance 22,952 8,489 9,744 41,185 Employee benefits 137,044 50,684 58,180 245,908 Employee benefits (D3-22-03) (6,129) (2,267) (2,602) (10,998) Payroll Tax 50,962 18,848 21,635 91,445 Payroll Tax (D3-22-05) (13,015) (4,813) (5,525) (23,354) Other taxes 4,924 1,821 2,090 8,835 Real Estate Taxes 1,524 564 647 2,735 Depreciation/Auto leasing/Other 163,196 60,356 69,283 292,835 APA Dues 24,610 9,102 10,448 44,160 APA Dues (D3-22-02) (1,231)
(522)(2,208) Dues and subscriptions 15,716 5,812 6,672 28,200 Utilities 45,613 16,869 19,364 81,846 Utilities (D3-22-03) (5,449) (2,015) (2,313) (9,778) Salaries 47,719 17,648 20,259 85,626 Accounting/Professional fees 28,079 10,385 11,921 50,385 Pilot Training 45,010 16,646 19,108 80,764 Other expenses 23,172 8,570 9,837 41,579 Other expenses (D3-22-07) (1,250)
(531)(2,243) Total Administrative Expenses 597,287 220,901 253,571 1,071,759 Total Operating Expenses (Other Costs + Applicant Cost + Pilot Boats + Admin) 2,293,490 848,224 973,674 4,115,388 B. Step 2: Project Operating Expenses, Adjusting for Inflation or Deflation In accordance with the text in § 404.102, having identified the recognized 2022 operating expenses in Step 1, the next step is to estimate the current year's operating expenses by adjusting those expenses for inflation over the 3-year period. We calculate inflation using the BLS data from the CPI for the Midwest Region of the United States for the 2023 inflation rate. 27 Because the BLS does not provide forecasted inflation data, we use economic projections from the Federal Reserve for the 2024 and 2025 inflation modification. 28 Based on that information, the calculations for Step 2 are as presented in table 28. 27 CPI, *supra* note 10. 28 Core PCE June Projection, *supra* note 11. Table 28—Adjusted Operating Expenses for District Three District Three Undesignated Designated Total Total Operating Expenses (Step 1) $3,267,164 $848,224 $4,115,388 2023 Inflation Modification (@3.8%) 124,152 32,233 156,385 2024 Inflation Modification (@2.8%) 94,957 24,653 119,610 2025 Inflation Modification (@2.3%) 80,184 20,818 101,002 Adjusted 2025 Operating Expenses 3,566,457 925,928 4,492,385 C. Step 3: Estimate Number of Registered Pilots and Apprentice Pilots In accordance with the text in § 404.103, the Coast Guard estimates the number of fully registered Pilots in each district. In the past, this was done using the staffing model and the process described in § 404.103. During the 2023 GLPAC meeting, there was a unanimous recommendation by the GLPAC that, after 2024, the Director be given discretion to increase the staffing model plus three Pilots per District, based on industry demand and to ensure shipping reliability. 29 Additionally, the previous staffing model's maximum are now considered the minimum regarding the number of Pilots needed in each district. 30 29 Transcript, *supra* note 8, at 89-90. 30 *Id.* at 57-58. We determine the number of fully registered Pilots based on data provided by the WGLPA, as well as the previous mentioned recommendation. We determine the number of Apprentice Pilots based on input from the district on anticipated retirements and staffing needs. These numbers can be found in table 29. Table 29—Authorized Pilots for District Three Item District Three 2025 Authorized Pilots (total) 24 Pilots Assigned to Designated Areas 5 Pilots Assigned to Undesignated Areas 19 2025 Apprentice Pilots 1 D. Step 4: Determine Target Pilot Compensation Benchmark and Apprentice Pilot Wage Benchmark In this step, we determine the total target Pilot compensation for each area. Because we are issuing an interim ratemaking this year, we follow the procedure outlined in paragraph
(b)of § 404.104, which adjusts the existing compensation benchmark by inflation. First, we adjust the 2024 target compensation benchmark of $440,658 by 3.0 percent for a value of $453,878. This accounts for the difference in actual third quarter 2024 ECI inflation, which is 5.6 percent, and the 2024 PCE estimate of 2.6 percent. 31 32 The second step accounts for projected inflation from 2024 to 2025, which is 2.3 percent. 33 Based on the projected 2025 inflation estimate, the target compensation benchmark for 2025 is $464,317 per pilot. The apprentice pilot wage benchmark is 36 percent of the target Pilot compensation, or $167,154 ($464,317 × 0.36). 31 ECI, *supra* note 14. 32 Median Core PCE Inflation June Projection, *supra* note 15. 33 Median Core PCE Inflation June Projection, *supra* note 16. In accordance with § 404.104(c), we use the revised target individual compensation level to derive the total target Pilot compensation by multiplying the individual target compensation by the estimated number of Registered Pilots for District Three, as shown in table 30. We estimate that the number of Apprentice Pilots needed for District Three in the 2024 season will be one. The total target wages for Apprentice Pilots are allocated with 21 percent for the designated area, and 79 percent for the undesignated areas, in accordance with the allocation for operating expenses. Table 30—Target Compensation for District Three District Three Undesignated Designated Total Target Pilot Compensation $464,317 $464,317 $464,317 Number of Pilots 19 5 24 Total Target Pilot Compensation $8,822,023 $2,321,585 $11,143,608 Target Apprentice Pilot Compensation $167,154 $167,154 $167,154 Number of Apprentice Pilots 1 Total Target Apprentice Pilot Compensation $132,052 $35,102 $167,154 E. Step 5: Project Working Capital Fund Next, the Coast Guard calculates the working capital fund revenues needed for each area. We first add the figures for projected operating expenses, total target Pilot compensation, and total target Apprentice Pilot wage for each area, and then we find the preceding year's average annual rate of return for new issues of high-grade corporate securities. Using Moody's data, the number is 4.8100 percent, rounded. 34 By multiplying the two figures, we obtain the working capital fund contribution for each area, as shown in table 31. 34 Moody's Seasoned Aaa Corporate Bond Yield, *supra* note 17. Table 31—Working Capital Fund Calculation for District Three District Three Undesignated Designated Total Adjusted Operating Expenses (Step 2) $3,566,457 $925,928 $4,492,385 Total Target Pilot Compensation (Step 4) 8,822,023 2,321,585 11,143,608 Total Target Apprentice Pilot Compensation (Step 4) 132,052 35,102 167,154 Total 2025 Expenses 12,520,532 3,282,615 15,803,147 Working Capital Fund (4.8100%) 602,238 157,894 760,132 F. Step 6: Project needed revenue In this step, the Coast Guard adds all the expenses accrued to derive the total revenue needed for each area. These expenses include the projected operating expenses (from Step 2), the total target Pilot compensation (from Step 4), and the working capital fund contribution (from Step 5). The calculations are shown in table 32. Table 32—Revenue Needed for District Three District Three Undesignated Designated Total Adjusted Operating Expenses (Step 2) $3,566,457 $925,928 $4,492,385 Total Target Pilot Compensation (Step 4) 8,822,023 2,321,585 11,143,608 Total Target Apprentice Pilot Compensation (Step 4) 132,052 35,102 167,154 Working Capital Fund (Step 5) 602,238 157,894 760,132 Total Revenue Needed 13,122,770 3,440,509 16,563,279 G. Step 7: Calculate Initial Base Rates Having determined the revenue needed for each area in the previous six steps, we divide that number by the expected number of traffic hours to develop an hourly rate. Step 7 is a two-part process. The first part is calculating the 10-year traffic average in District Three using the total time on task or Pilot bridge hours. To calculate the time on task for each district, the Coast Guard used billing data from SeaPro. Because we calculate separate figures for designated and undesignated waters, there are two parts for each calculation. We show these values in table 33. Table 33—Time on Task for District Three [Hours] Year District Three Undesignated Designated 2023 25,690 3,501 2022 24,148 3,426 2021 18,149 2,484 2020 23,678 3,520 2019 24,851 3,395 2018 19,967 3,455 2017 20,955 2,997 2016 23,421 2,769 2015 22,824 2,696 2014 25,833 3,835 Average 22,952 3,208 Next, we derive the initial hourly rate by dividing the revenue needed by the average number of hours for each area. This produces an initial rate, which is necessary to produce the revenue needed for each area, assuming the amount of traffic is as expected. We present the calculations for District Three in table 34. Table 34—Initial Rate Calculations for District Three Undesignated Designated Revenue needed (Step 6) $13,122,770 $3,440,509 Average time on task (hours) 22,952 3,208 Initial rate $572 $1,073 H. Step 8: Calculate Average Weighting Factors by Area In this step, the Coast Guard calculates the average weighting factor for each designated and undesignated area by first collecting the weighting factors, set forth in 46 CFR 401.400, for each vessel trip. Using the weight factor report from SeaPro, we calculate the average weighting factor for each area using the data from each vessel transit from 2014 onward, as shown in tables 35 and 36. Transits are listed in both the bridge hour report and the weight factor report. For this step, the Coast Guard uses the transits from the weight factor report. Table 35—Average Weighting Factor for District Three, Undesignated Areas Vessel class/year Number of transits Weighting factor Weighted transits * Area 6 Class 1
(2014)45 1 45 Class 1
(2015)56 1 56 Class 1
(2016)136 1 136 Class 1
(2017)148 1 148 Class 1
(2018)103 1 103 Class 1
(2019)173 1 173 Class 1
(2020)4 1 4 Class 1
(2021)8 1 8 Class 1
(2022)116 1 116 Class 1
(2023)155 1 155 Class 2
(2014)274 1.15 315 Class 2
(2015)207 1.15 238 Class 2
(2016)236 1.15 271 Class 2
(2017)264 1.15 304 Class 2
(2018)169 1.15 194 Class 2
(2019)279 1.15 321 Class 2
(2020)332 1.15 382 Class 2
(2021)273 1.15 314 Class 2
(2022)276 1.15 317 Class 2
(2023)295 1.15 339 Class 3
(2014)15 1.3 20 Class 3
(2015)8 1.3 10 Class 3
(2016)10 1.3 13 Class 3
(2017)19 1.3 25 Class 3
(2018)9 1.3 12 Class 3
(2019)9 1.3 12 Class 3
(2020)4 1.3 5 Class 3
(2021)5 1.3 7 Class 3
(2022)3 1.3 4 Class 3
(2023)5 1.3 7 Class 4
(2014)394 1.45 571 Class 4
(2015)375 1.45 544 Class 4
(2016)332 1.45 481 Class 4
(2017)367 1.45 532 Class 4
(2018)337 1.45 489 Class 4
(2019)334 1.45 484 Class 4
(2020)339 1.45 492 Class 4
(2021)356 1.45 516 Class 4
(2022)363 1.45 526 Class 4
(2023)356 1.45 516 Total for Area 6 7,189 9,205 Area 8 Class 1
(2014)3 1 3 Class 1
(2015)0 1 0 Class 1
(2016)4 1 4 Class 1
(2017)4 1 4 Class 1
(2018)0 1 0 Class 1
(2019)0 1 0 Class 1
(2020)1 1 1 Class 1
(2021)5 1 5 Class 1
(2022)10 1 10 Class 1
(2023)5 1 5 Class 2
(2014)177 1.15 204 Class 2
(2015)169 1.15 194 Class 2
(2016)174 1.15 200 Class 2
(2017)151 1.15 174 Class 2
(2018)102 1.15 117 Class 2
(2019)120 1.15 138 Class 2
(2020)180 1.15 207 Class 2
(2021)124 1.15 143 Class 2
(2022)89 1.15 102 Class 2
(2023)118 1.15 136 Class 3
(2014)3 1.3 4 Class 3
(2015)0 1.3 0 Class 3
(2016)7 1.3 9 Class 3
(2017)18 1.3 23 Class 3
(2018)7 1.3 9 Class 3
(2019)6 1.3 8 Class 3
(2020)1 1.3 1 Class 3
(2021)1 1.3 1 Class 3
(2022)6 1.3 8 Class 3
(2023)0 1.3 0 Class 4
(2014)243 1.45 352 Class 4
(2015)253 1.45 367 Class 4
(2016)204 1.45 296 Class 4
(2017)269 1.45 390 Class 4
(2018)188 1.45 273 Class 4
(2019)254 1.45 368 Class 4
(2020)265 1.45 384 Class 4
(2021)319 1.45 463 Class 4
(2022)243 1.45 352 Class 4
(2023)268 1.45 389 Total for Area 8 3,991 5,344 Combined total 11,180 14,549 Average weighting factor (weighted transits ÷ number of transits) 1.30 * Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses unrounded figures. Table 36—Average Weighting Factor for District Three, Designated Areas Vessel class/year Number of transits Weighting factor Weighted transits * Class 1
(2014)27 1 27 Class 1
(2015)23 1 23 Class 1
(2016)55 1 55 Class 1
(2017)62 1 62 Class 1
(2018)47 1 47 Class 1
(2019)45 1 45 Class 1
(2020)15 1 15 Class 1
(2021)15 1 15 Class 1
(2022)74 1 74 Class 1
(2023)68 1 68 Class 2
(2014)221 1.15 254 Class 2
(2015)145 1.15 167 Class 2
(2016)174 1.15 200 Class 2
(2017)170 1.15 196 Class 2
(2018)126 1.15 145 Class 2
(2019)162 1.15 186 Class 2
(2020)218 1.15 251 Class 2
(2021)131 1.15 151 Class 2
(2022)162 1.15 186 Class 2
(2023)142 1.15 163 Class 3
(2014)15 1.3 20 Class 3
(2015)0 1.3 0 Class 3
(2016)6 1.3 8 Class 3
(2017)14 1.3 18 Class 3
(2018)6 1.3 8 Class 3
(2019)3 1.3 4 Class 3
(2020)1 1.3 1 Class 3
(2021)2 1.3 3 Class 3
(2022)5 1.3 7 Class 3
(2023)0 1.3 0 Class 4
(2014)321 1.45 465 Class 4
(2015)245 1.45 355 Class 4
(2016)191 1.45 277 Class 4
(2017)234 1.45 339 Class 4
(2018)225 1.45 326 Class 4
(2019)308 1.45 447 Class 4
(2020)336 1.45 487 Class 4
(2021)258 1.45 374 Class 4
(2022)249 1.45 361 Class 4
(2023)300 1.45 435 Total 4,801 6,264 Average weighting factor (weighted transits ÷ number of transits) 1.30 * Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses unrounded figures. I. Step 9: Calculate Revised Base Rates After considering the impact of the weighting factors, we revise the base rates in this step so that the total costs of pilotage will be equal to the revenue needed. To do this, we divide the initial base rates calculated in Step 7 by the average weighting factors calculated in Step 8, as shown in table 37. Table 37—Revised Base Rates for District Three Area Initial rate (Step 7) Average weighting factor (Step 8) Revised rate (initial rate ÷ average weighting factor) District Three: Undesignated $572 1.30 $440 District Three: Designated 1,073 1.30 825 J. Step 10: Review and Finalize Rates In this step, the Director reviews the base pilotage rates calculated in § 404.109 of this part to ensure it meets the goal of ensuring safe, efficient, and reliable pilotage service. To establish this, the Director considers whether the rates incorporate appropriate compensation for Pilots to handle heavy traffic periods and whether there are enough Pilots to handle those heavy traffic periods. The Director also considers whether the rates will cover operating expenses and infrastructure costs, including average traffic and weighting factors. Based on these considerations, the Director did not propose any alterations to the rates in this step. We modified § 401.405(a)(5) and
(6)to reflect the rates shown in table 38. Table 38—Final Rates for District Three Area Name Final 2024 pilotage rate Final 2025 pilotage rate District Three: Designated St. Marys River $836 $825 District Three: Undesignated Lakes Huron, Michigan, and Superior 430 440 VIII. Regulatory Analyses We developed this final rule after considering numerous statutes and Executive orders related to rulemaking. A summary of our analyses based on these statutes or Executive orders follows. A. Regulatory Planning and Review Executive Orders 12866 (Regulatory Planning and Review), as amended by Executive Order 14094 (Modernizing Regulatory Review), and 13563 (Improving Regulation and Regulatory Review) direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits—including potential economic, environmental, public health and safety effects, distributive impacts, and equity. Executive Order 13563 emphasizes the importance of quantifying costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. The Office of Management and Budget
(OMB)has not designated this final rule a significant regulatory action under section 3(f) of Executive Order 12866, as amended by Executive Order 14094. Accordingly, OMB has not reviewed this regulatory action. The purpose of this final rule is to establish new pilotage rates, as 46 U.S.C. 9303(f) requires that rates be established or reviewed and adjusted each year. The statute also requires that base rates be established by a full ratemaking at least once every 5 years, and, in years when base rates are not established, they must be reviewed and, if necessary, adjusted. The Coast Guard concluded the last full ratemaking in February of 2023. 35 For this final rule, the Coast Guard estimates an increase in cost of approximately $2.88 million to industry. This is approximately a 7-percent increase because of the change in revenue needed in 2025 compared to the revenue needed in 2024. Primarily driving this 7-percent increase is the addition of 3 pilots compared to the 2024 season, as well as general increases in inflation and the rate of return used for the working capital fund. See table 39. 35 88 FR 12226. Table 39—Economic Impacts Due to Rate Changes Change Description Affected population Costs Benefits Rate changes In accordance with 46 U.S.C. Chapter 93, the Coast Guard is required to review and adjust pilotage rates annually Owners and operators of 280 vessels transiting the Great Lakes system annually, 61 United States Great Lakes Pilots, 3 Apprentice Pilots, and 3 pilot associations Increase of $2,879,028 due to change in revenue needed for 2025 ($43,159,694) from revenue needed for 2024 ($40,280,666) as shown in table 41 New rates cover an association's necessary and reasonable operating expenses. Promotes safe, efficient, and reliable pilotage service on the Great Lakes. Provides fair compensation, adequate training, and sufficient rest periods for Pilots. Ensures the association receives sufficient revenues to fund future improvements. The Coast Guard is required to review and adjust pilotage rates on the Great Lakes annually. See Section II., Basis and Purpose, and Regulatory History, of this preamble for detailed discussions of the legal basis and purpose for this rulemaking. Based on our annual review for this rulemaking, we are adjusting the pilotage rates in 2025 to generate sufficient revenues for each district to reimburse its necessary and reasonable operating expenses, to fairly compensate properly trained and rested Pilots, and to provide an appropriate working capital fund to use for improvements. The result is an increase in rates for both areas in District One, the designated area for District Two, and the undesignated area in District Three. There is also a decrease in rates for the undesignated area for District Two and the designated area for District Three. These changes lead to a net increase in the cost of service to shippers. The change in per-unit cost to each individual shipper depends on their area of operation. A detailed discussion of our economic impact analysis follows. Affected Population This final rule affects United States Great Lakes Pilots and Apprentice Pilots, the 3 pilot associations, and the owners and operators of 280 oceangoing vessels that transit the Great Lakes annually, on average, from 2021 to 2023. The Coast Guard estimates that there will be 61 Registered Pilots and 3 Apprentice Pilots during 2025, an increase of three Pilots from the 2024 season. The shippers affected by these rate changes are those owners and operators of domestic vessels operating “on register” (engaged in foreign trade) and the owners and operators of non-Canadian foreign vessels on routes within the Great Lakes system. These owners and operators must have Pilots or pilotage service as required by 46 U.S.C. 9302. There is no minimum tonnage limit or exemption for these vessels. The statute applies only to commercial vessels, not to recreational vessels. United States-flagged vessels not operating on register, and Canadian “lakers,” which account for most commercial shipping on the Great Lakes, are not required by 46 U.S.C. 9302 to have pilots. However, these United States- and Canadian-flagged lakers may voluntarily choose to engage a Great Lakes Registered Pilot. Vessels that are U.S.-flagged may opt to have a Pilot for varying reasons, such as unfamiliarity with designated waters and ports, or for insurance purposes. The Coast Guard used billing information from the years 2021 through 2023 from SeaPro to estimate the average annual number of vessels affected by the rate adjustment. SeaPro tracks data related to managing and coordinating the dispatch of Pilots on the Great Lakes and billing in accordance with the services. As described in Step 7 of the ratemaking methodology, we use a 10-year average to estimate the traffic. We used 3 years of the most recent billing data to estimate the affected population. We believe that using 3 years of billing data is a better representation of the vessel population currently using pilotage services and impacted by this rule. We found that 484 unique vessels used pilotage services during the years 2021 through 2023. That is, these vessels had a Pilot dispatched to the vessel and billing information was recorded in SeaPro. Of these vessels, 451 were foreign-flagged vessels, and 33 were U.S.-flagged vessels. U.S.-flagged vessels not operating on register are not required to have a Registered Pilot, per 46 U.S.C. 9302, but can voluntarily choose to have one. Numerous factors affect vessel traffic, which varies from year to year. Therefore, rather than using the total number of vessels over the time period, the Coast Guard took an average of the unique vessels using pilotage services from the years 2021 through 2023 as the best representation of vessels estimated to be affected by the rates in this final rule. From 2021 through 2023, an average of 280 vessels used pilotage services annually. 36 On average, 268 of these vessels were foreign-flagged, and 13 were U.S.-flagged vessels that voluntarily opted into the pilotage service (these figures are rounded averages). 36 Some vessels entered the Great Lakes multiple times in a single year, affecting the average number of unique vessels using pilotage services in any given year. Total Cost to Shippers The rate changes resulting from this adjustment to the rates result in a net increase in the cost of service to shippers. However, the change in per-unit cost to each individual shipper depends on their area of operation. The Coast Guard estimates the effect of the rate changes on shippers by comparing the total projected revenues needed to cover costs in 2024 with the total projected revenues to cover costs in 2025. We set pilotage rates so that pilot associations receive enough revenue to cover their necessary and reasonable expenses. Shippers pay these rates when they engage a Pilot, as required by 46 U.S.C. 9302. Therefore, the aggregate payments of shippers to pilot associations are equal to the projected necessary revenues for pilot associations. The revenues each year represent the total costs that shippers must pay for pilotage services. The change in revenue from the previous year is the additional cost to shippers discussed in this rule. The impacts of the rate changes on shippers are estimated from the district pilotage projected revenues (shown in tables 8, 20, and 32 of this preamble). The Coast Guard estimates that, for 2025, the projected revenue needed for all three districts is $43,159,694. To estimate the change in cost to shippers from this final rule, the Coast Guard compared the 2025 total projected revenues to the 2024 projected revenues. Because we review and prescribe rates for Great Lakes pilotage annually, the effects are estimated as a single-year cost rather than annualized over a 10-year period. In the 2024 final rule, we estimated the total projected revenue needed for 2024 as $40,280,666. 37 This is the best approximation of 2024 revenues, as, at the time of publication of this final rule, the Coast Guard does not have enough audited data available for 2024 to revise these projections. Table 40 shows the revenue projections for 2024 and 2025 and details the additional cost increases to shippers by area and district as a result of the rate changes on traffic in Districts One, Two, and Three. 37 2024 final rule (89 FR 9066), Table 43. Table 40—Effect of the Final Rule by Area and District [U.S. Dollars; non-discounted] Area Revenue needed in 2024 Revenue needed in 2025 Additional costs of this rule Total, District One $13,695,935 $14,713,084 $1,017,149 Total, District Two 10,830,491 11,883,331 1,052,840 Total, District Three 15,754,240 16,563,279 809,039 System Total 40,280,666 43,159,694 2,879,028 * All figures are rounded to the nearest dollar and may not sum. The resulting difference between the projected revenue in 2024 and the projected revenue in 2025 is the annual change in payments from shippers to pilots as a result of the rate changes in this final rule. The effect of the rate changes to shippers varies by area and district. After considering the change in pilotage rates, the rate changes will lead to affected shippers operating in District One experiencing an increase in payments of $1,017,149 over the previous year. Affected shippers operating in District Two and District Three will experience an increase in payments of $1,052,840 and $809,039, respectively, when compared with 2024. The overall adjustment in payments will increase payments by shippers of $2,879,028 across all three districts (a 7-percent increase when compared with 2024). Again, because the Coast Guard reviews and sets rates for Great Lakes pilotage annually, we estimate the impacts as single-year costs, rather than annualizing them over a 10-year period. Table 41 shows the difference in revenue by revenue-component from 2024 to 2025 and presents each revenue-component as a percentage of the total revenue needed. In both 2024 and 2025, the largest revenue component was target pilotage compensation (63 percent of total revenue needed in 2024, and 66 percent of total revenue needed in 2025), followed by operating expenses (30 percent of total revenue needed in 2024, and 29 percent of total revenue needed in 2025). The large increase in the working capital fund, 26 percent from 2024 to 2025, is driven by an increase in the Target Rate of Return on Investment, from 4.0742 percent in 2022 to 4.8100 percent in 2023. 38 38 Moody's Seasoned Aaa Corporate Bond Yield, *supra* note 17. Table 41—Difference in Revenue by Revenue-Component Revenue component Revenue needed in 2024 Percentage of total revenue needed in 2024 Revenue needed in 2025 Percentage of total revenue needed in 2025 Difference (2025 revenue— 2024 revenue) Percentage change from previous year Adjusted Operating Expenses $12,193,810 30 $12,354,186 29 $160,376 1 Total Target Pilot Compensation 25,558,164 63 28,323,337 66 2,765,173 11 Total Target Apprentice Pilot Compensation 951,822 2 501,462 1 (450,360)
(47)Working Capital Fund 1,576,870 4 1,980,709 5 403,839 26 Total Revenue Needed 40,280,666 100 43,159,694 100 2,879,028 7 * All figures are rounded to the nearest dollar and may not sum. As stated previously, we estimate that there will be a total increase of $2,879,028 in revenue needed by the pilot associations. This represents an increase in revenue needed for target Pilot compensation of $2,765,173; a decrease in revenue needed for the total target Apprentice Pilot wage benchmark of ($450,360); an increase in the revenue needed for adjusted operating expenses of $160,376; and an increase in the revenue needed for the working capital fund of $403,839. The change in revenue needed for Pilot compensation, $2,765,173, is due to three factors:
(1)The changes to adjust 2024 pilotage compensation to account for the difference between actual ECI inflation 39 (5.6 percent) and predicted PCE inflation 40 (2.6 percent) for 2024;
(2)projected inflation of pilotage compensation in Step 2 of the methodology, using predicted inflation through 2025; 41 and
(3)an increase of three authorized Pilots. 39 ECI, *supra* note 14. 40 Median Core PCE Inflation June Projection, *supra* note 15. 41 Median Core PCE Inflation June Projection, *supra* note 16. The target compensation is $464,317 per Pilot in 2025, compared to $440,658 in 2024. The changes modify the 2024 Pilot compensation to account for the difference between predicted and actual inflation and will increase the 2024 target compensation value by 3.0 percent. As shown in table 42, this inflation adjustment increases total compensation by $13,220 per Pilot, and the total revenue needed by $806,404, when accounting for all 61 Pilots. Table 42—Change in Revenue Resulting From the Change to Inflation of Pilot Compensation Calculation in Step 4 2024 Target Pilot Compensation $440,658 Adjusted 2024 Compensation ($440,658 × 1.03) 453,878 Difference between Adjusted Target 2024 Compensation and Target 2024 Compensation ($453,878−$440,658) 13,220 Increase in total Revenue for 61 Pilots ($13,220 × 61) 806,404 * All figures are rounded to the nearest dollar and may not sum. Similarly, table 43 shows the impact of the difference between predicted and actual inflation on the target Apprentice Pilot compensation benchmark. The inflation adjustment increases the compensation benchmark by $4,759 per Apprentice Pilot, and the total revenue needed by $14,277 when accounting for all three Apprentice Pilots. Table 43—Change in Revenue Resulting From the Change to Inflation of Apprentice Pilot Compensation Calculation in Step 4 2024 Target Apprentice Pilot Compensation $158,637 Adjusted 2024 Compensation ($158,637 × 1.03) 163,396 Difference between Adjusted Target 2024 Compensation and Target Compensation ($163,396−$158,637) 4,759 Increase in total Revenue for Apprentices ($4,759 × 3) 14,277 * All figures are rounded to the nearest dollar and may not sum. The Coast Guard predicts that 61 Pilots will be needed for the 2025 season. This is an increase of three Pilots from the 2024 season. Table 44 shows the increase of $1,353,292 in revenue needed for Pilot compensation. To avoid double counting, this value excludes the change in revenue resulting from the change to adjust 2024 Pilot compensation to account for the difference between actual and predicted inflation. Table 44—Change in Revenue Resulting From Increase of Three Pilots 2025 Target Compensation $464,317 Total Number of New Pilots 3 Total Cost of new Pilots (464,317 × 3) $1,392,951 Difference between Adjusted Target 2024 Compensation and Target 2024 Compensation (453,878−440,658) $13,220 Increase in total Revenue for 3 Pilots (13,220 × 3) $39,659 Net Increase in total Revenue for 3 Pilots (1,392,951−39,659) $1,353,292 * All figures are rounded to the nearest dollar and may not sum. Similarly, the Coast Guard predicts that three Apprentice Pilots will be needed for the 2025 season. This will be a decrease of three Apprentice Pilots from the 2024 season. Table 45 shows the decrease of ($487,185) in revenue needed solely for Apprentice Pilot compensation. To avoid double counting, this value excludes the change in revenue resulting from the change to adjust 2024 Apprentice Pilot compensation to account for the difference between actual and predicted inflation. Table 45—Change in Revenue Resulting From Decrease of Three Apprentice Pilots 2025 Apprentice Target Compensation $167,154 Total Number of New Apprentices −3 Total Cost of new Apprentices ($167,154 × −3) ($501,462) Difference between Adjusted Target 2024 Compensation and Target 2024 Compensation ($163,396−$158,637) $4,759 Increase in total Revenue for -3 Apprentices ($4,759 × −3) ($14,277) Net Increase in total Revenue for -3 Apprentices (−$501,462−−$14,277) ($487,185) * All figures are rounded to the nearest dollar and may not sum. Another $605,477 increase is the result of increasing compensation for the 61 Pilots, to account for future inflation of 2.3 percent in 2025. This increases total compensation by $10,439 per Pilot, as shown in table 46. Table 46—Change in Revenue Resulting From Inflating 2024 Compensation to 2025 Adjusted 2024 Compensation $453,878 2025 Target Compensation ($453,878 × 1.023) 464,317 Difference between Adjusted 2024 Compensation and Target 2025 Compensation ($464,317−$453,878) 10,439 Increase in total Revenue for 58 Pilots ($10,439 × 58) 605,477 * All figures are rounded to the nearest dollar and may not sum. Similarly, a $22,548 increase is the result of increasing compensation for the three Apprentice Pilots, to account for future inflation of 2.3 percent in 2025. This increases total compensation by $3,758 per Apprentice Pilot, as shown in table 47. 42 The 2024 projected revenues are from the 2024 final rule (89 FR 9038), tables 11, 23, and 35. The 2025 projected revenues are from tables 8, 20, and 32 of this final rule. Table 47—Change in Revenue Resulting From Inflating 2024 Apprentice Pilot Compensation to 2025 Adjusted 2024 Compensation $163,396 2025 Target Compensation ($464,317 × 36%) 167,154 Difference between Adjusted Compensation and Target Compensation ($167,154−$163,396) 3,758 Increase in total Revenue for 6 Apprentices ($3,758 × 6) 22,548 * All figures are rounded to the nearest dollar and may not sum. Table 48 presents the percentage change in revenue by area and revenue-component, excluding surcharges, as they are applied at the district level. 42 Table 48—Difference in Revenue by Revenue-Component and Area Adjusted operating expenses 2024 2025 Percentage change Total target pilot compensation 2024 2025 Percentage change Total target apprentice pilot compensation 2024 2025 Percentage change Working capital fund 2024 2025 Percentage change Total revenue needed 2024 2025 Percentage change District One: Designated $2,851,215 $2,750,620
(4)$4,406,580 $5,107,487 16 $285,547 $100,292
(65)$307,331 $382,799 25 $7,850,673 $8,341,198 6.2 District One: Undesignated 1,900,809 1,833,749
(4)3,525,264 4,178,853 19 190,364 66,862
(65)228,825 292,422 28 5,845,262 6,371,886 9.0 District Two: Undesignated 1,102,673 1,310,973 19 3,525,264 3,250,219
(8)63,455 66,862 5 191,137 222,609 16 4,882,529 4,850,663 (0.7) District Two: Designated 1,654,014 1,966,459 19 3,965,922 4,643,170 17 95,182 100,292 5 232,845 322,747 39 5,947,963 7,032,668 18.2 District Three: Undesignated 3,679,209 3,566,457
(3)7,931,844 8,822,023 11 250,646 132,052
(47)483,269 602,238 25 12,344,968 13,122,770 6.3 District Three: Designated 1,005,891 925,928
(8)2,203,290 2,321,585 5 66,628 35,102
(47)133,463 157,894 18 3,409,272 3,440,509 0.9 * All figures are rounded to the nearest dollar and may not sum. Benefits This final rule allows the Coast Guard to meet the requirements in 46 U.S.C. 9303 to review the rates for pilotage services on the Great Lakes. The rate changes promote safe, efficient, and reliable pilotage service on the Great Lakes by
(1)ensuring that rates cover an association's operating expenses;
(2)providing fair Pilot compensation, adequate training, and sufficient rest periods for Pilots; and
(3)ensuring that pilot associations produce enough revenue to fund future improvements. The rate changes also help recruit and retain Pilots, which ensures enough Pilots to meet peak shipping demand, helping to reduce delays caused by Pilot shortages. B. Small Entities Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, we considered whether this final rule will have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. For this final rule, the Coast Guard reviewed recent company size and ownership data for the vessels identified in SeaPro, and we reviewed business revenue and size data provided by publicly available sources such as ReferenceUSA. 43 As described in Section VIII., Regulatory Analyses, of this preamble, we found that 484 unique vessels used pilotage services during the years 2021 through 2023. These vessels are owned by 63 entities, of which 49 are foreign entities that operate primarily outside the United States, and the remaining 14 entities are U.S. entities. We compared the revenue and employee data found in the company search to the Small Business Administration's
(SBA)small business threshold, as defined in the SBA's “Table of Size Standards” for small businesses, to determine how many of these companies are considered small entities. 44 Table 49 shows the North American Industry Classification System (NAICS) codes of the U.S. entities, and the small entity standard size established by the SBA. 43 *See Resources for Reference Solutions Users,* ReferenceUSA, *https://resource.referenceusa.com;* accessed 04/22/2024. 44 *See Table of Size Standards, https://www.sba.gov/document/support--table-size-standards;* accessed 05/01/24. SBA has established a “Table of Size Standards” for small businesses that sets small business size standards by NAICS code. A size standard, which is usually stated in number of employees or average annual receipts (“revenues”), represents the largest size that a business (including its subsidiaries and affiliates) may be in order to remain classified as a small business for SBA and Federal contracting programs. Table 49—NAICS Codes and Small Entities Size Standards NAICS Description Small entity size standard 238910 Site Preparation Contractors $19,000,000. 423860 Transportation Equipment and Supplies (except Motor Vehicle) Merchant Wholesalers 175 Employees. 488330 Navigational Services to Shipping $47,000,000. 488390 Other Support Activities for Water Transportation $47,000,000. 541611 Administrative Management and General Management Consulting Services $24,500,000. 561510 Travel Agencies $25,000,000. 562910 Remediation Services $25,000,000. 713930 Marinas $11,000,000. Of the 14 U.S. entities, four exceed the SBA's small business standards for small entities. To estimate the potential impact on the remaining 10 small entities, the Coast Guard used their 2023 invoice data to estimate their pilotage costs in 2025. We increased their 2023 costs to account for the changes in pilotage rates resulting from this final rule and the 2024 final rule. We estimated the change in cost to these entities resulting from this final rule by subtracting their estimated 2024 pilotage costs from their estimated 2025 pilotage costs and found the average costs to small firms are approximately $13,643, with a range of $1,411 to $42,691. We then compared the estimated change in pilotage costs between 2024 and 2025 with each firm's annual revenue. In all but one case, the impact of the change in estimated pilotage expenses will be below 1 percent of revenues. For one entity, the impact will be 6.9 percent of revenues. In addition to the owners and operators discussed previously, three U.S. entities that receive revenue from pilotage services will be affected by this final rule. These are the three pilot associations that provide and manage pilotage services within the Great Lakes districts. District One, SLSPA, uses the NAICS code “Inland Water Freight Transportation” with a small-entity size standard of 1,050 employees. District Two, “LPA” uses the NAICS code, “Business Associations” with a small-entity size standard of $15,500,000 in revenue. District Three, “WGLPA” did not have a registered NAICS code through ReferenceUSA. All three associations are considered small entities. Finally, the Coast Guard did not find any small not-for-profit organizations that are independently owned and operated and are not dominant in their fields that will be impacted by this final rule. We also did not find any small governmental jurisdictions with populations of fewer than 50,000 people that will be impacted by this final rule. Based on this analysis, we conclude this final rule will not have a significant economic impact on a substantial number of small entities. Therefore, the Coast Guard certifies under 5 U.S.C. 605(b) that this final rule will not have a significant economic impact on a substantial number of small entities. C. Assistance for Small Entities Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121, we want to assist small entities in understanding this final rule so that they can better evaluate its effects on them and participate in the rulemaking. The Coast Guard will not retaliate against small entities that question or complain about this final rule or any policy or action of the Coast Guard. Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). D. Collection of Information This final rule calls for no new collection of information under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3520. E. Federalism A final rule has implications for federalism under Executive Order 13132 (Federalism) if it has a substantial direct effect on States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this final rule under Executive Order 13132 and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132. Our analysis follows. Congress directed the Coast Guard to establish “rates and charges for pilotage services.” 46 U.S.C. 9303(f). This regulation is issued pursuant to that statute and is preemptive of State law as specified in 46 U.S.C. 9306. Under 46 U.S.C. 9306, a “State or political subdivision of a State may not regulate or impose any requirement on pilotage on the Great Lakes.” As a result, States or local governments are expressly prohibited from regulating within this category. Therefore, this final rule is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132. F. Unfunded Mandates 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 million (adjusted for inflation) or more in any one year. Although this final rule will not result in such an expenditure, we do discuss the effects of this final rule elsewhere in this preamble. G. Taking of Private Property This final rule will not cause a taking of private property or otherwise have taking implications under Executive Order 12630 (Governmental Actions and Interference with Constitutionally Protected Property Rights). H. Civil Justice Reform This final 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. I. Protection of Children We have analyzed this final rule under Executive Order 13045 (Protection of Children from Environmental Health Risks and Safety Risks). This final rule is not an economically significant final rule and will not create an environmental risk to health or risk to safety that might disproportionately affect children. J. Indian Tribal Governments This final rule does not have tribal implications under Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments) because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. K. Energy Effects We have analyzed this final 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, and the Administrator of OMB's Office of Information and Regulatory Affairs has not designated it as a significant energy action. L. Technical Standards The National Technology Transfer and Advancement Act, codified as a note to 15 U.S.C. 272, directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through OMB, 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 final rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards. M. Environment We have analyzed this final rule under Department of Homeland Security Management Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. A Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble. This final rule is categorically excluded under paragraphs A3 and L54 of Appendix A, Table 1 of the Department of Homeland Security
(DHS)Instruction Manual 023-01-001-01, Rev. 1. Paragraph A3 pertains to the promulgation of rules of the following nature:
(a)those of a strictly administrative or procedural nature;
(b)those that implement, without substantive change, statutory or regulatory requirements;
(c)those that implement, without substantive change, procedures, manuals, and other guidance documents;
(d)those that interpret or amend an existing regulation without changing its environmental effect;
(e)those that provide technical guidance on safety and security matters; and
(f)those that provide guidance for the preparation of security plans. Paragraph L54 pertains to regulations which are editorial or procedural. This final rule involves adjusting the pilotage rates for 2025 to account for changes in district operating expenses, changes in the number of pilots, and anticipated inflation. All changes are consistent with the Coast Guard's maritime safety missions. List of Subjects in 46 CFR Part 401 Administrative practice and procedure, Great Lakes; Navigation (water), Penalties, Reporting and recordkeeping requirements, Seamen. For the reasons discussed in the preamble, the Coast Guard amends 46 CFR part 401 as follows: PART 401—GREAT LAKES PILOTAGE REGULATIONS 1. The authority citation for part 401 is revised to read as follows: Authority: 46 U.S.C. 2103, 2104(a), 6101, 7701, 8105, 9303, 9304; DHS Delegation No. 00170.1, Revision No. 01.4, paragraphs (II)(92)(a), (d), (e), (f). 2. Amend § 401.405 by revising paragraphs (a)(1) through
(6)to read as follows: § 401.405 Pilotage rates and charges.
(a)* * *
(1)The St. Lawrence River is $986;
(2)Lake Ontario is $643;
(3)Lake Erie is $576;
(4)The navigable waters from Southeast Shoal to Port Huron, MI is $753;
(5)Lakes Huron, Michigan, and Superior is $440; and
(6)The St. Marys River is $825. Dated: December 6, 2024. A.M. Beach, Captain, U.S. Coast Guard, Acting, Assistant Commandant for Prevention Policy. [FR Doc. 2024-29128 Filed 12-12-24; 8:45 am]
Connectionstraces to 13
Traces to 13 documents
U.S. Code
13 references not yet in our index
- 46 CFR 401
- 46 USC 9301-9308
- 46 CFR 404.1(a)
- 46 CFR 404.104(d)
- 46 CFR 404.101
- 46 CFR 404.100(b)
- 443 F. Supp. 3d 44
- 46 CFR 401.400
- 5 USC 601-612
- Pub. L. 104-121
- 44 USC 3501-3520
- 2 USC 1531-1538
- 42 USC 4321-4370f
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F. Supp.443 F. Supp. 3d 44
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