9038 Federal Register / Vol. 89, No. 28 / Friday, February 9, 2024 / Rules and Regulations 

Public Participation (Executive Order 

13563) 

The NEA encourages public 

participation by ensuring its 

documentation is understandable by the 

general public, and has written this final 

rule in compliance with Executive 

Order 13563 by ensuring its 

accessibility, consistency, simplicity of 

language, and overall 

comprehensibility. 

List of Subjects in 45 CFR Parts 1149 

and 1158 

Administrative practice and 

procedure, Government contracts, Grant 

programs, Loan programs, Lobbying, 

Penalties. 

For the reasons stated in the 

preamble, the NEA amends 45 CFR 

chapter XI, subchapter B, as follows: 

PART 1149—PROGRAM FRAUD CIVIL 

REMEDIES ACT REGULATIONS 

■ 1. The authority citation for part 1149 

continues to read as follows: 

Authority: 5 U.S.C. App. 8G(a)(2); 20 

U.S.C. 959; 28 U.S.C. 2461 note; 31 U.S.C. 

3801–3812. 

§ 1149.9 [Amended] 

■ 2. In § 1149.9 amend paragraph (a)(1) 

b removing the amount ‘‘$13,507’’ and 

adding in its place the amount 

‘‘$13,945’’. 

PART 1158—NEW RESTRICTIONS ON 

LOBBYING 

■ 3. The authority citation for part 1158 

continues to read as follows: 

Authority: 20 U.S.C. 959; 28 U.S.C. 2461; 

31 U.S.C. 1352. 

§ 1158.400 [Amended] 

■ 4. In § 1158.400 amend paragraphs (a), 

(b), and (e) by: 

■ a. Removing the amount ‘‘$23,714’’ 

and adding in its place the amount 

‘‘$24,483’’ wherever it appears; and 

■ b. Removing the amount ‘‘$237,268’’ 

and adding in its place the amount 

‘‘$244,958’’ wherever it appears. 

Appendix A to Part 1158 [Amended] 

■ 5. Amend appendix A to part 1158 by: 

■ a. Removing the amount ‘‘$23,714’’ 

and adding in its place the amount 

‘‘$24,483’’ wherever it appears. 

■ b. Removing the amount ‘‘$237,268’’ 

and adding in its place the amount 

‘‘$244,958’’ wherever it appears. 

Dated: January 10, 2024. 

Daniel Beattie, 

Director of Guidelines and Panel Operations. 

[FR Doc. 2024–00662 Filed 2–8–24; 8:45 am] 

BILLING CODE 7537–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

46 CFR Part 401 

[Docket No. USCG–2023–0438] 

RIN 1625–AC89 

Great Lakes Pilotage Rates—2024 

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 the 2024 shipping season. 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 2023 season. 

DATES: This final rule is effective March 

11, 2024. 

ADDRESSES: To view documents 

mentioned in this preamble as being 

available in the docket, go to 

www.regulations.gov, type USCG–2023– 

0438 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. Executive Summary 

III. Basis and Purpose 

IV. Background 

V. Discussion of Comments and Changes 

VI. Summary of the Ratemaking Methodology 

VII. Historic Methodological and Other 

Changes 

VIII. Individual Target Pilot Compensation 

Benchmark 

IX. Discussion of 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 

X. 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 final rule 

AMO American Maritime Officers Union 

APA American Pilots’ Association 

BLS Bureau of Labor Statistics 

CFR Code of Federal Regulations 

CPA Certified public accountant 

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 

GLPA Great Lakes Pilotage Authority 

(Canadian) 

GLPAC Great Lakes Pilotage Advisory 

Committee 

GLPMS Great Lakes Pilotage Management 

System 


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1 46 U.S.C. 9301–9308. 

2 81 FR 11908, March 7, 2016. 

3 87 FR 18488. March 30, 2022. 

4https://www.govinfo.gov/content/pkg/FR-2023- 

02-27/pdf/2023-03212.pdf. (Last accessed 5/12/ 

2023.) 

5 46 U.S.C. 9301–9308. 

6 46 U.S.C. 9302(a)(1). 

LPA Lakes Pilots Association 

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 Pilotage 

Association 

U.S.C. United States Code 

WGLPA Western Great Lakes Pilots 

Association 

II. Executive Summary 

In accordance with Title 46 of the 

United States Code (U.S.C.), Chapter 

93,1 the Coast Guard regulates pilotage 

for oceangoing vessels on the Great 

Lakes and St. Lawrence Seaway— 

including setting the rates for pilotage 

services and adjusting them on an 

annual basis for the upcoming shipping 

season. The shipping season begins 

when the locks open in the St. Lawrence 

Seaway, which allows traffic access to 

and from the Atlantic Ocean. The 

opening of the locks varies annually, 

depending on waterway conditions, but 

is generally in March or April. The 

rates, which for the 2024 season range 

from $430 to $927 per pilot hour 

(depending on which of the specific 6 

areas pilotage service is provided), are 

paid by shippers to the pilot 

associations. The three pilot 

associations, which are the exclusive 

U.S. source of registered pilots on the 

Great Lakes, use this revenue 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. 

These 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. 

In accordance with statutory and 

regulatory requirements, the Coast 

Guard employs the ratemaking 

methodology introduced in 2016 2 and 

last updated in 2022.3 Our ratemaking 

methodology calculates the revenue 

needed for each pilotage association 

(operating expenses, compensation for 

the number of pilots, and anticipated 

inflation), and then divides that amount 

by the expected demand for pilotage 

services over the course of the coming 

year to produce an hourly rate. This is 

a 10-step methodology to calculate rates, 

which is explained in detail in section 

VI., Summary of the Ratemaking 

Methodology, in the preamble to this 

rule. 

In this final rule, we conduct our 

annual review and interim adjustment 

to the base pilotage rates for 2024. 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).4 Per title 

46 of the Code of Federal Regulations 

(CFR), section 404.100(b), via this final 

rule, the Coast Guard’s Director of the 

Great Lakes Pilotage (‘‘the Director’’) 

establishes base pilotage rates by an 

interim ratemaking pursuant to 

§§ 404.101 through 404.110. 

The Coast Guard sets base rates to 

meet the goal of promoting safe, 

efficient, and reliable pilotage service on 

the Great Lakes by generating sufficient 

revenue for each pilotage association to 

reimburse its necessary and reasonable 

operating expenses, fairly compensate 

trained and rested pilots, and provide 

appropriate funds to use for 

improvements. A 10-year average is 

used when calculating traffic to smooth 

out anomalies caused by unexpected 

events, such as those caused by the 

COVID–19 pandemic. The Coast Guard 

estimates that this rule will result in 

$2,621,471 of additional costs. This 

represents an increase in revenue 

needed for target pilot compensation, an 

increase 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. 

Based on the ratemaking model 

discussed in this final rule, the Coast 

Guard is establishing the rates shown in 

table 1. 

TABLE 1—CURRENT AND 2024 PILOTAGE RATES ON THE GREAT LAKES

Area Name Final 2023 

pilotage rate 

Final 2024 

pilotage rate 

District One: Designated .............................................. St. Lawrence River ....................................................... $876 $927 

District One: Undesignated .......................................... Lake Ontario ................................................................. 586 608 

District Two: Designated .............................................. Navigable waters from Southeast Shoal to Port 

Huron, MI.

601 667 

District Two: Undesignated .......................................... Lake Erie ...................................................................... 704 597 

District Three: Designated ............................................ St. Mary’s River ............................................................ 834 836 

District Three: Undesignated ........................................ Lakes Huron, Michigan, and Superior .......................... 410 430 

This rule affects 58 U.S. Registered 

pilots, 6 apprentice pilots, 3 pilot 

associations, and the owners and 

operators of an average of 296 

oceangoing vessels that transit the Great 

Lakes annually. This rule will not affect 

the Coast Guard’s budget or increase 

Federal spending. The estimated overall 

annual regulatory economic impact of 

this rate change is a net increase of 

$2,621,471 in estimated payments made 

by shippers during the 2024 shipping 

season. This rule establishes the 2024 

yearly target compensation for pilots on 

the Great Lakes at $440,658 per pilot (a 

$16,260 increase, or 3.83 percent, over 

their 2023 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 X., Regulatory Analyses, 

in this preamble provides the regulatory 

impact analyses of this rule. 

III. Basis and Purpose 

The legal basis of this rulemaking is 

46 U.S.C. Chapter 93,5 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.6

For U.S. Great Lakes pilots, the statute 

requires the Secretary to ‘‘prescribe by 


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7 46 U.S.C. 9303(f). 

8 Ibid. 

9 Ibid. 

10 Department of Homeland Security (DHS) 

Delegation No. 00170.1 (II)(92)(f), Revision No. 01.3. 

The Secretary retains the authority under section 

9307 to establish, and appoint members to, a Great 

Lakes Pilotage Advisory Committee. https://

dhsconnect.dhs.gov/org/comp/mgmt/policies/ 

Delegations/00170.1.pdf. (Last accessed 11/8/2023.) 

11Apprentice 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. 

12 46 CFR part 404.101–404.110. https://

www.ecfr.gov/current/title-46/chapter-III/part-404. 

(Last accessed 5/17/23.) 

13See 46 CFR part 401. https://www.ecfr.gov/ 

current/title-46/chapter-III/part-401 (Last accessed 

5/17/23). 

14 46 U.S.C. 9302(f). A ‘‘laker’’ is a commercial 

cargo vessel especially designed for and generally 

limited to use on the Great Lakes. https://

uscode.house.gov/view.xhtml?req=granuleid:U.S.C.- 

prelim-title46-section9302&num=0&edition=prelim 

(Last accessed 5/17/23). 

15Presidential 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) (Last accessed 5/31/23). 

16 46 U.S.C. 9302(a)(1)(B). 

regulation rates and charges for pilotage 

services, giving consideration to the 

public interest and the costs of 

providing the services.’’ 7 The statute 

requires that rates be established or 

reviewed and adjusted each year, no 

later than March 1.8 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.9 The 

Secretary’s duties and authority under 

46 U.S.C. Chapter 93 have generally 

been delegated to the Coast Guard.10

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, maintaining 

infrastructure, compensating pilots and 

apprentice pilots,11 acquiring and 

implementing technological advances, 

and training personnel and partners. 

The Coast Guard uses a 10-step 

ratemaking methodology to derive a 

pilotage rate, based on the estimated 

amount of traffic, which covers these 

expenses.12 The methodology is 

designed to measure how much revenue 

each pilotage association would need to 

cover expenses and to provide 

compensation to registered pilots. Since 

the Coast Guard cannot guarantee 

demand for pilotage services, target 

pilot compensation for registered pilots 

is a goal. The actual demand for service 

dictates the actual compensation for the 

registered pilots. We then divide that 

amount by the historic 10-year average 

for pilotage demand. We recognize that, 

in years where traffic is above average, 

pilot associations will accrue more 

revenue than projected while, in years 

where traffic is below average, they will 

take in less. We believe that, over the 

long term, however, this system 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. 

The purpose of this rule is to issue 

new pilotage rates for the 2024 shipping 

season. The Coast Guard believes that 

the new rates will continue to promote 

our goal, as outlined in 46 CFR 404.1, 

of promoting safe, efficient, and reliable 

pilotage service to facilitate commerce 

and protect the marine environment in 

the Great Lakes by generating sufficient 

revenue for each pilotage association to 

reimburse its necessary and reasonable 

operating expenses, fairly compensate 

trained and rested pilots, and provide 

appropriate funds to use for 

improvements. 

IV. Background 

Pursuant to 46 U.S.C. 9303, the Coast 

Guard regulates shipping practices and 

rates on the Great Lakes. Under Coast 

Guard regulations, all vessels engaged in 

foreign trade (often referred to as 

‘‘salties’’) are required to engage United 

States or Canadian pilots during their 

transit through the regulated waters.13

United States and Canadian ‘‘lakers,’’ 

which account for most commercial 

shipping on the Great Lakes, are not 

affected.14 Generally, vessels are 

assigned a United States or Canadian 

pilot, depending on the order in which 

they transit a particular area of the Great 

Lakes, and do not choose the pilot they 

receive. If a vessel is assigned a U.S. 

pilot, that pilot will be assigned by the 

pilotage association responsible for the 

district in which the vessel is operating, 

and the vessel operator will pay the 

pilotage association for the pilotage 

services. The Great Lakes Pilotage 

Authority (Canadian) (GLPA) 

establishes the rates for Canadian 

registered pilots. 

The waters of the Great Lakes and the 

St. Lawrence Seaway subject to U.S. 

jurisdiction are divided into three 

pilotage districts. Pilotage in each 

district is provided by an association 

certified by the Director to operate a 

pilotage pool. The Saint Lawrence 

Seaway Pilotage Association (SLSPA) 

provides pilotage services in District 

One, which includes all waters of the St. 

Lawrence River and Lake Ontario 

subject to U.S. jurisdiction. The Lakes 

Pilots Association (LPA) provides 

pilotage services in District Two, which 

includes all waters of Lake Erie, the 

Detroit River, Lake St. Clair, and the St. 

Clair River subject to U.S. jurisdiction. 

Finally, the Western Great Lakes Pilots 

Association (WGLPA) provides pilotage 

services in District Three, which 

includes all waters of the St. Mary’s 

River; Sault Ste. Marie Locks; and Lakes 

Huron, Michigan, and Superior subject 

to U.S. jurisdiction. 

Each pilotage district is further 

divided into ‘‘designated’’ and 

‘‘undesignated’’ areas, depicted in table 

2. Designated areas, classified as such 

by Presidential Proclamation, are waters 

in which pilots must direct the 

navigation of vessels at all times.15

Undesignated areas are open bodies of 

water not subject to the same pilotage 

requirements. While working in 

undesignated areas, pilots must ‘‘be on 

board and available to direct the 

navigation of the vessel at the discretion 

of and subject to the customary 

authority of the master.’’ 16 For these 

reasons, pilotage rates in designated 

areas can be significantly higher than 

those in undesignated areas. Table 2 

shows the districts and areas of the 

Great Lakes and St. Lawrence Seaway. 

TABLE 2—AREAS OF THE GREAT LAKES AND ST. LAWRENCE SEAWAY

District Pilotage association Designation Area 

No.17 Area name 18

One ............. Saint Lawrence Seaway Pilotage Association 

(SLPA).

Designated .......

Undesignated ...

1 

2 

St. Lawrence River. 

Lake Ontario. 

Two ............. Lakes Pilots Association (LPA) .......................... Designated ....... 5 Navigable waters from Southeast Shoal to Port 

Huron, MI. 

Undesignated ... 4 Lake Erie. 


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17Area 3 is the Welland Canal, which is serviced 

exclusively by the Canadian GLPA and, 

accordingly, is not included in the United States 

pilotage rate structure. 

18The areas are listed by name at 46 CFR 401.405. 

https://www.ecfr.gov/current/title-46/chapter-III/ 

part-401/subpart-D/section-401.405 (Last accessed 

5/17/23). 

19 87 FR 18488, March 30, 2022. 

20At least 76 Great Lakes cruises are listed online 

as scheduled for the 2024 season. Cruises listed at 

vikingcruises.com, hl-cruises.com, 

pearlseacruises.com, and us.ponant.com. (Last 

accessed 11/29/2023.) 

TABLE 2—AREAS OF THE GREAT LAKES AND ST. LAWRENCE SEAWAY—Continued 

District Pilotage association Designation Area 

No.17 Area name 18

Three .......... Western Great Lakes Pilots Association 

(WGLPA).

Designated .......

Undesignated ...

Undesignated ...

7 

6 

8 

St. Mary’s River. 

Lakes Huron and Michigan. 

Lake Superior. 

Over the past several years, the Coast 

Guard has adjusted the Great Lakes 

pilotage ratemaking methodology, per 

our authority in 46 U.S.C. 9303(f), to 

conduct annual reviews of base pilotage 

rates, and to adjust such base rates in 

each intervening year in consideration 

of the public interest and the costs of 

providing the services. The current 

methodology was finalized in the 2022 

final rule.19 We summarize the current 

methodology in section VI., Summary of 

the Ratemaking Methodology. 

V. Discussion of Comments and

Changes

In response to the notice of proposed 

rulemaking (NPRM) for this ratemaking 

(88 FR 55629, August 16, 2023) the 

Coast Guard received six comment 

submissions. These submissions include 

one comment filed jointly by the LPA, 

the SLSPA, and the WGLPA; one filed 

jointly by the Shipping Federation of 

Canada, the American Great Lakes Ports 

Association, and the United States Great 

Lakes Shipping Association 

(collectively, the Coalition); one from 

the president of the Saint Lawrence 

Seaway Pilots’ Association (SLSPA); 

one from the president of the LPA; one 

from the Director of the Port of Monroe; 

and one from the president of the 

International Longshoreman Association 

(ILA). 

As each of these commenters touched 

on numerous issues, for each response 

below, the Coast Guard notes which 

commenter raised the specific points 

addressed. In situations where multiple 

commenters raised similar issues, the 

Coast Guard provides one response to 

those issues. 

A. Requests for Additional Pilots

One of the major requests made by the

commenters was the addition of more 

pilots due to the increase in traffic, with 

several commenters pointing to cruise 

ship traffic as the driving force in the 

surge of vessels needing pilotage 

service. District One stated they 

estimate a need for three new pilots by 

2025, and Districts Two and Three 

requested one additional pilot each to 

be added to this rulemaking. 

The Coast Guard recognizes District 

One’s need for more pilots going 

forward, but we believe that this need 

is addressed by the inclusion of an 

additional apprentice pilot as proposed 

in the NPRM. Added to the two existing 

apprentice pilots that were authorized 

in the 2023 ratemaking, this inclusion 

brings the total number of apprentice 

pilots in District One to three for the 

2024 season. These apprentice pilots 

will be able to accommodate District 

One’s projected need for three 

additional fully registered pilots for the 

2025 season. The Coast Guard will, 

therefore, keep the pilot numbers for 

District One the same as they were in 

the proposed rule. 

The LPA, WGLPA, ILA, and Capt. 

Paul C. Lamarre II all made comments 

that an additional pilot is needed in 

both District Two and District Three. 

After review of the provided 

documentation, the Coast Guard agrees 

with these comments. The Coast Guard 

verified the numbers that LPA provided, 

which show that another full member 

pilot is needed to safely provide 

pilotage service. Based on these 

comments, our analysis of the increase 

in demand for pilotage services created 

by cruise ship traffic,20 and the 

unanimous recommendation made by 

the 2023 Great Lake Pilot Advisory 

Committee (See transcript, pages 87 and 

88), the Coast Guard has added an 

additional pilot to this year’s ratemaking 

for both Districts Two and Three. For 

District Two, the Coast Guard reduced 

the number of apprentice pilots from 

two to one, since the additional pilot 

referenced earlier will no longer be an 

apprentice. 

B. Bridge Hour Allocation

Numerous commenters noted

discrepancies in the allocation of bridge 

hours between designated and 

undesignated waters for all three 

districts. The error occurs in the ‘‘area’’ 

field of the data extract provided by the 

associations, where each trip number is 

only labeled with the area in which the 

trip started, rather than noting each area 

that the trip passed through. This error 

causes miscalculation of the designated 

and undesignated bridge hours in Step 

7 of the ratemaking methodology, and 

the transits by vessel class in Step 8. 

The commenters suggested to instead 

use monthly reports from SeaPro to 

provide the necessary bridge hour 

calculations for Step 7 and to use weight 

factor reports from SeaPro to provide 

the transits by vessel class for Step 8. 

The Coast Guard agrees with these 

comments and has worked with the 

pilot associations to correct Steps 7 and 

8 using the monthly reports and weight 

factor reports. The Coast Guard could 

not verify which trips had been 

incorrectly attributed to either a 

designated or undesignated area in the 

economist extract data set previously 

provided. The Coast Guard will work 

with the associations to refine the data 

extracts provided by the associations to 

ensure that all fields are correctly 

specified and interpreted. 

The reports used for this final rule are 

available in the docket. We appreciate 

the commenters who brought this to our 

attention and will take measures to 

ensure this error is corrected in data 

used in future rulemakings. These 

corrections are set out in further detail 

in tables 4 and 5. 

C. Methodology

Numerous commenters noted

concerns with the methodology by 

which the Coast Guard calculates this 

rate. Concerns included that weighting 

factors should be calculated using 

bridge hours instead of vessel transits 

per visit; that the Coast Guard should 

audit the pilotage program to find 

operational efficiencies and costsavings; and that the Coast Guard 

should conduct an annual look-back at 

expenses to find cost-savings. These 

comments are outside the scope of the 

current rulemaking, which does not 

modify the ratemaking methodology. 

The Coast Guard appreciates these 

comments and encourages the 

stakeholders to request that they be 

placed on a future GLPAC agenda for 


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9042 Federal Register / Vol. 89, No. 28 / Friday, February 9, 2024 / Rules and Regulations 

discussion, or to resubmit them during 

the next full ratemaking in 2027. 

D. Miscellaneous 

We received a number of comments 

that we categorized as ‘‘Miscellaneous’’ 

and are best addressed one by one. 

A few commenters urged the Coast 

Guard to continue having GLPAC 

meetings in person and in front of a 

stenographer, while another commenter 

urged the Coast Guard to investigate a 

hybrid in-person/virtual set up for 

future GLPAC meetings. These 

comments are outside the scope of this 

rule, but the Coast Guard will continue 

to engage with stakeholders to 

determine the best way to hold GLPAC 

meetings. 

One commenter asked the Coast 

Guard to require an anonymous listing 

of each pilot’s compensation in their 

annual reports. The Coast Guard 

disagrees with this recommendation. 

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 the 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 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. 

Progress toward pilot retention can be 

reviewed through pilot turnover and the 

association’s ability to promptly fill 

pilot vacancies for fully registered pilots 

and apprentice pilots. 

Many commenters took the 

opportunity to recognize the Director’s 

authority to add up to three additional 

pilots in each District. We agree with 

these commenters that the Director does 

have such authority, and, based on these 

comments and the unanimous 

recommendation at the 2023 GLPAC 

meeting, the Coast Guard has agreed to 

add one pilot each to Districts Two and 

Three, and one apprentice pilot to 

District One. 

E. Changes to the Proposed Rule 

Table 3 summarizes the changes 

between the 2024 Ratemaking NPRM 

and this final rule. This table includes 

changes from the proposed rule that are 

not based on comments from the NPRM. 

TABLE 3—CHANGES BETWEEN PROPOSED RULE AND FINAL RULE

Change Reasoning 

Revise number of pilots in District Two from 16 to 17 and adjust number of apprentice pilots from 2 to 1. Revise number of pilots in District Three from 22 to 23.An additional pilot will help Districts Two and Three handle an expected increase in cruise ship traffic in 2024. 

Correct traffic data in Steps 7 and 8 for all districts to reflect discrepancy in the assignment of bridge hours and transits by vessel class 

to designated and undesignated areas.

These corrections will improve the accuracy of our ratemaking as it 

pertains to designated and undesignated areas. 

Update inflation figures: 

• Updates 2022 Employment Cost Index (ECI) inflation from 4.4%, 

listed in the NPRM, to 3.9% 

More recent figures were published since the Coast Guard conducted 

the analysis for the NPRM. 

• Updates 2023 Personal Consumption Expenditures (PCE) inflation from 3.5%, listed in the NPRM, to 3.9%. 

• Updates 2024 PCE inflation from 2.5%, listed in the NPRM, to 

2.6%. 

Change average vessel population from 277 to 296. Change average 

customer count from 40 to 41.

In the 2023 final ratemaking, District Three provided updated traffic 

data that was used to revise bridge hours and transits by vessel 

class but was not used to update the Regulatory Flexibility Act analysis. This final rule corrects that oversight. The revised data included 

additional trips that introduced new vessels and customers to the affected population and relabeled the vessel for trip 26879. 

F. Changes to Step 7 Bridge Hours and 

Step 8 Transits 

Table 4 shows the difference between 

the published figures for bridge hours in 

Step 7 in the NPRM and the updated 

figures used for this final rule. 

TABLE 4—CHANGES TO STEP 7 BRIDGE HOURS FROM PROPOSED RULE TO FINAL RULE

Previously published Updated Difference 

Undesignated Designated Undesignated Designated Undesignated Designated 

District 1 

2021 ......................................................... 7,871 6,188 7,893 6,166 22 ¥22 

2022 ......................................................... 8,574 6,785 8,356 6,573 ¥218 ¥212 

District 2 

2021 ......................................................... 8,826 3,266 5,290 6,762 ¥3,536 3,496 

2022 ......................................................... 12,306 3,975 7,668 8,613 ¥4,638 4,638 

District 3 

2021 ......................................................... 18,286 2,516 18,149 2,484 ¥137 ¥32 


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I I I I 
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TABLE 4—CHANGES TO STEP 7 BRIDGE HOURS FROM PROPOSED RULE TO FINAL RULE—Continued 

Previously published Updated Difference 

Undesignated Designated Undesignated Designated Undesignated Designated 

2022 ......................................................... 23,985 4,424 23,914 3,345 ¥71 ¥1,079 

Further, the Coast Guard updated the 

number of transits by vessel class in 

Step 8, ‘‘Calculate Average Weighting 

Factors by Area,’’ using updated 

weighting factor reports provided by the 

associations from SeaPro. Table 5 

details the changes by area and vessel 

class for 2022, which will be used in 

this final rule; no changes are made to 

the 2021 figures. 

TABLE 5—CHANGES TO STEP 8 FROM PROPOSED RULE TO FINAL RULE

Area/vessel class Previous Updated Difference 

Number of Transits (2022) 

Area 1—Designated 

Class 2 ......................................................................................................................................... 466 482 16 

Class 3 ......................................................................................................................................... 104 106 2 

Class 4 ......................................................................................................................................... 461 478 17 

Area 2—Undesignated 

Class 1 ......................................................................................................................................... 32 41 9 

Class 2 ......................................................................................................................................... 358 371 13 

Class 3 ......................................................................................................................................... 69 73 4 

Class 4 ......................................................................................................................................... 393 401 8 

Area 5—Designated 

Class 1 ......................................................................................................................................... 34 117 83 

Class 2 ......................................................................................................................................... 184 717 533 

Class 3 ......................................................................................................................................... 3 13 10 

Class 4 ......................................................................................................................................... 273 1230 957 

Area 4—Undesignated 

Class 1 ......................................................................................................................................... 79 121 42 

Class 2 ......................................................................................................................................... 275 478 203 

Class 3 ......................................................................................................................................... 3 8 5 

Class 4 ......................................................................................................................................... 349 642 293 

Area 7—Designated 

Class 1 ......................................................................................................................................... 102 104 2 

Class 2 ......................................................................................................................................... 176 198 22 

Class 4 ......................................................................................................................................... 344 392 48 

Area 6—Undesignated 

Class 1 ......................................................................................................................................... 94 162 68 

Class 2 ......................................................................................................................................... 278 452 174 

Class 4 ......................................................................................................................................... 385 482 97 

Area 8—Undesignated 

Class 1 ......................................................................................................................................... 13 12 ¥1 

Class 2 ......................................................................................................................................... 103 95 ¥8 

Class 3 ......................................................................................................................................... 6 5 ¥1 

Class 4 ......................................................................................................................................... 271 306 35 

These refinements to the ratemaking 

continue to promote safe, efficient, and 

reliable pilotage service on the Great 

Lakes, and allow each pilotage 

association to generate sufficient 

revenue to cover its necessary and 

reasonable operating expenses, fairly 

compensate trained and rested pilots, 

and realize an appropriate revenue to 

use for improvements. 

VI. Summary of the Ratemaking 

Methodology 

As stated previously, 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 


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9044 Federal Register / Vol. 89, No. 28 / Friday, February 9, 2024 / Rules and Regulations 

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 pilot 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 

Director reviews audited operating 

expenses from each of the three pilotage 

associations. Operating expenses 

include all allowable expenses, minus 

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 2024 rates 

in this rule, we begin with the audited 

expenses from the 2021 shipping 

season. 

While each pilotage 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 2024 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 Federal Open 

Market Committee (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, 

including apprentice pilots with limited 

registrations, 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. 

For the purpose of the ratemaking 

calculation, we determine the number of 

pilots provided by the pilotage 

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)), the previous 

year’s target compensation value is first 

adjusted by actual inflation using the 

ECI inflation value. If the ECI inflation 

value is not available, § 404.104(b)(1) 

and (2) specify the compensation 

inflation process the Director will use 

instead. 

In the second part of Step 4, 

(§ 404.104(c)), the Director determines 

the total 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. 

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 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 expense for 

each area and district (from Step 2) is 

added to the total 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 pilotage association to reimburse 

necessary and reasonable operating 

expenses; compensating trained and 

rested pilots fairly; and providing 

appropriate revenue for improvements. 

After the base rates are set, § 401.401 

permits the Coast Guard to apply 

surcharges. We are not using any 

surcharges in this final rule. In previous 

ratemakings, where apprentice pilot 

wages were not built into the rate, the 

Coast Guard used surcharges to cover 

applicant pilot compensation in those 

years to help with applicant 

recruitment. In this final rule, we 

include the applicant trainee 

compensation in the district’s operating 

expenses used in Step 1. Consistent 

with the 2021, 2022, and 2023 

rulemakings, in this final rule we 


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Federal Register / Vol. 89, No. 28 / Friday, February 9, 2024 / Rules and Regulations 9045 

21https://www.govinfo.gov/content/pkg/FR-2017- 

08-31/pdf/2017-18411.pdf (last accessed 5/12/ 

2023). 

22https://www.govinfo.gov/content/pkg/FR-2018- 

06-05/pdf/2018-11969.pdf (last accessed 5/12/ 

2023). 

23https://www.govinfo.gov/content/pkg/FR-2020- 

04-09/pdf/2020-06968.pdf (last accessed 5/12/ 

2023). 

24https://www.govinfo.gov/content/pkg/FR-2021- 

03-12/pdf/2021-05050.pdf (last accessed 5/12/ 

2023). 

25https://www.govinfo.gov/content/pkg/FR-2022- 

03-30/pdf/2022-06394.pdf (last accessed 5/12/ 

2023). 

26https://www.govinfo.gov/content/pkg/FR-2016- 

03-07/pdf/2016-04894.pdf (last accessed 5/12/ 

2023). 

continue to believe that the pilot 

associations are able to plan for the 

costs associated with hiring applicant 

pilots to fill pilot vacancies without 

relying on the Coast Guard to impose 

surcharges to help with recruiting. 

VII. Historic Methodological and Other 

Changes 

The Coast Guard is using the existing 

ratemaking methodology to establish the 

base rates in this ratemaking. The Coast 

Guard is not issuing any methodological 

or other policy changes to the 

ratemaking within this final rule. 

According to 46 U.S.C. 9303(f), and 

restated in 46 CFR 404.100(a), the Coast 

Guard must establish base rates by a full 

ratemaking at least once every 5 years. 

The Coast Guard has determined that 

the current base rates and methodology 

still adequately adhere to the Coast 

Guard’s goals through rate and 

compensation stability, while promoting 

recruitment and retention of qualified 

U.S.-registered pilots. 

The Coast Guard has made several 

changes to the ratemaking methodology 

over the last several years in 

consideration of the public interest and 

the costs of providing services. The 

recent changes and their impacts are 

summarized as follows. 

In the 2017 ratemaking, Great Lakes 

Pilotage Rates—2017 Annual Review 

(82 FR 41466, published August 31, 

2017),21 the Coast Guard modified the 

methodology to account for the 

additional revenue produced by the 

application of weighting factors. This is 

discussed in detail in Steps 7 through 9 

for each district, in section IX., 

Discussion of Rate Adjustments, of this 

preamble. 

In the 2018 ratemaking, Great Lakes 

Pilotage Rates—2018 Annual Review 

and Revisions to Methodology (83 FR 

26162, published June 5, 2018),22 the 

Coast Guard adopted a new approach in 

the methodology for the compensation 

benchmark, based upon United States 

mariners, rather than Canadian working 

pilots. 

In the 2020 ratemaking, Great Lakes 

Pilotage Rates—2020 Annual Review 

and Revisions to Methodology (85 FR 

20088, published April 9, 2020),23 the 

Coast Guard revised the methodology to 

accurately capture all costs and 

revenues associated with Great Lakes 

pilotage requirements, and to produce 

an hourly rate that adequately and 

accurately compensates pilots and 

covers expenses. 

The 2021 ratemaking, Great Lakes 

Pilotage Rates—2021 Annual Review 

and Revisions to Methodology (86 FR 

14184, published March 12, 2021),24

changed the inflation calculation in 

Step 4, § 404.104(b), for interim 

ratemakings, so that the previous year’s 

target compensation value is first 

adjusted by actual inflation value using 

the ECI. That change ensures that the 

target pilot compensation reimbursed to 

the association remains current with 

inflation and competitive with industry 

pay increases. 

The 2022 ratemaking, Great Lakes 

Pilotage Rates—2022 Annual Review 

and Revisions to Methodology (87 FR 

18488, published March 30, 2022),25

implemented an apprentice pilot wage 

benchmark in Steps 3 and 4 to provide 

predictability and stability to pilot 

associations training apprentice pilots. 

The 2022 final rule also codified 

rounding up the staffing model’s final 

number to ensure that the ratemaking 

does not undercount the pilot need 

presented by the staffing model and 

association circumstances. 

VIII. Individual Target Pilot 

Compensation Benchmark 

The Coast Guard is issuing the target 

pilot compensation benchmark in this 

final rule at the target compensation for 

the ratemaking year 2023, adjusted for 

inflation. In an interim ratemaking year, 

the base target pilot compensation is 

adjusted annually in accordance with 

§ 404.104(b). The Coast Guard arrived at 

this compensation benchmark as 

explained in the following paragraphs. 

Before 2016, the Coast Guard based 

the compensation benchmark on data 

provided by the American Maritime 

Officers Union (AMOU) regarding its 

contract for first mates on the Great 

Lakes. However, in 2016, the AMOU 

elected to no longer provide this data to 

the Coast Guard. In the 2016 

ratemaking, Great Lakes Pilotage Rates— 

2016 Annual Review and Changes to 

Methodology (81 FR 11908, published 

March 7, 2016),26 the Coast Guard used 

the average compensation for a 

Canadian pilot, plus a 10-percent 

adjustment. The shipping industry 

challenged the compensation 

benchmark, and the court found that the 

Coast Guard did not adequately support 

the 10-percent addition to the Canadian 

GLPA compensation benchmark. 

American Great Lakes Ports Association 

v. Zukunft, 296 F.Supp. 3d 27, 48 

(D.D.C. 2017), aff’d sub nom. American 

Great Lakes Ports Association v. 

Schultz, 962 F.3d 510 (D.C. Cir. 2020). 

The Coast Guard then based the 2018 

full ratemaking compensation 

benchmark on data provided by the 

AMOU, regarding its contract for first 

mates on the Great Lakes in the 2011 to 

2015 period (83 FR 26162). The 2018 

final rule adjusted the AMOU 2015 data 

for inflation using Federal Open Market 

FOMC median economic projections for 

PCE inflation. 

In the 2020 interim year ratemaking 

final rule (85 FR 20088), the Coast 

Guard established its most recent pilot 

compensation benchmark. Given the 

lack of access to AMOU data, the Coast 

Guard did not rely on the AMOU 

aggregated wage and benefit information 

as the basis for the compensation 

benchmark. Instead, the Coast Guard 

adopted the 2019 target pilot 

compensation (with inflation) as our 

compensation benchmark going 

forward. The Coast Guard stated in the 

2020 final rule that no other United 

States or Canadian pilot compensation 

data was appropriate to use as a 

benchmark at that time, and that the 

2020 benchmark will be used for future 

rates (85 FR 20091). The Director 

determined that the ratemaking 

provided adequate compensation for 

pilots. 

Based on our experience over the past 

four ratemakings (2020–2023), the 

Director continues to believe that the 

level of target pilot compensation for 

those years provided an appropriate 

level of compensation for U.S.- 

registered pilots. According to 

§ 404.104(a), the Director may make 

necessary and reasonable adjustments to 

the benchmark based on current 

information. However, current 

circumstances do not indicate that an 

adjustment, other than for inflation, is 

necessary. The Director bases this 

decision on the fact that there is no 

indication that registered pilots are 

resigning due to their compensation, or 

that this compensation benchmark is 

causing shortfalls in achieving reliable 

pilotage service. The Coast Guard also 

does not believe that the pilot 

compensation benchmark is too high 

relative to the expertise required to 

perform the job. The compensation will 

continue to be adjusted annually, in 

accordance with published inflation 

rates, which will ensure the 


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9046 Federal Register / Vol. 89, No. 28 / Friday, February 9, 2024 / Rules and Regulations 

27Employment Cost Index, Total Compensation 

for Private Industry workers in Transportation and 

Material Moving, Annual Average, Series ID: 

CIU2010000520000A. https://beta.bls.gov/ 

dataViewer/view/timeseries/CIU2010000520000A 

(Last accessed 11/01/23); and Table 1 Summary of 

Economic Projections, Median PCE Inflation. 

https://www.federalreserve.gov/monetarypolicy/ 

files/fomcprojtabl20220316.pdf (Last accessed 05/ 

17/23). 28Table 1 Summary of Economic Projections, 

Median Core PCE Inflation June Projection. https:// 

www.federalreserve.gov/monetarypolicy/files/ 

fomcprojtabl20230920.pdf (Last accessed 09/2023). 

29For more information on the apprentice pilot 

wage benchmark, see the Coast Guard’s 2022 

Annual Review and Revisions to Methodology. 87 

FR 18488. 

30These reports are available in the docket for 

this final rule. 

compensation remains competitive and 

current for upcoming years. 

Therefore, the Coast Guard does not 

seek alternative benchmarks for target 

compensation at this time and, instead, 

simply adjusts the amount of target pilot 

compensation for inflation as our target 

compensation benchmark for 2024, as 

shown in Step 4. This target 

compensation benchmark approach has 

advanced and will continue to advance 

the Coast Guard’s goals through rate and 

compensation stability while also 

promoting recruitment and retention of 

qualified U.S. pilots. 

The target compensation for 2024 is 

$440,658 per registered pilot and 

$158,637 per apprentice pilot, using the 

2023 compensation as a benchmark. We 

follow the procedure outlined in 

paragraph (b) of § 404.104, which 

adjusts the existing compensation 

benchmark for inflation. We use a twostep process to adjust target pilot 

compensation for inflation. First, we 

adjust the 2023 target compensation 

benchmark of $424,398 by 1.2 percent 

for an adjusted value of $429,491. This 

first adjustment accounts for the 

difference in actual third quarter 2023 

ECI inflation, which is 3.9 percent, and 

the 2023 PCE estimate of 2.7 percent.27

The second step accounts for projected 

inflation from 2023 to 2024, which is 

2.6 percent.28 Based on the projected 

2024 inflation estimate, the target 

compensation benchmark for 2024 is 

$440,658 per pilot. The apprentice pilot 

wage benchmark is 36 percent of the 

target pilot compensation, or $158,637 

($440,658 × 0.36).29

IX. Discussion of Rate Adjustments 

In this final rule, based on the policy 

changes described in the previous 

section, we are issuing new pilotage 

rates for 2024. We conducted the 2024 

ratemaking as an interim ratemaking, as 

we last did in 2022 (87 FR 18488). Thus, 

the Coast Guard adjusted the 

compensation benchmark following the 

interim ratemaking year procedures 

under § 404.100(b) rather than the 

procedures for a full ratemaking year in 

§ 404.100(a). 

This section discusses the rate 

changes using the ratemaking steps 

provided in 46 CFR part 404. We will 

detail all 10 steps of the ratemaking 

procedure for each of the 3 districts to 

show how we arrive at the new rates. 

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 2021 expenses and 

revenues.30 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. 

The recognized operating expenses for 

District One are shown in table 6. 

In the 2021 expenses used as the basis 

for this final rule, districts used the term 

‘‘applicant’’ to describe applicant 

trainees and persons who will be called 

apprentices (applicant pilots), under the 

definition of ‘‘apprentice pilot’’, which 

was introduced in the 2022 final rule. 

Therefore, when describing past 

expenses, the term ‘‘applicant’’ is used 

to match what was reported from 2021, 

which includes both applicant and 

apprentice pilots. The term 

‘‘apprentice’’ is used to distinguish 

apprentice pilot wages and describe the 

impacts of the ratemaking going 

forward. 

The Coast Guard continues to include 

apprentice salaries as an allowable 

expense in the 2024 ratemaking, as this 

final rule is based on 2021 operating 

expenses, when salaries were still an 

allowable expense. Beginning with the 

2025 ratemaking, apprentice pilot 

salaries will no longer be included as a 

2022 operating expense, because 

apprentice pilot wages will have already 

been factored into the ratemaking Steps 

3 and 4 in calculation of the 2022 rates. 

Beginning in 2025, the applicant 

salaries’ operating expenses for 2022 

will consist of only applicant trainees 

(those who are not yet apprentice 

pilots). The recognized operating 

expenses for District One are shown in 

table 6. 

TABLE 6—2021 RECOGNIZED EXPENSES FOR DISTRICT ONE

District One reported operating expenses for 2021 

Designated Undesignated 

Total St. Lawrence 

River Lake Ontario 

Applicant Pilot Compensation 

Salaries ........................................................................................................................................ $247,735 $165,157 $412,892 

Employee Benefits ....................................................................................................................... 10,367 6,911 17,278 

Total Applicant Pilot Compensation ..................................................................................... 258,102 172,068 430,170 

Other Applicant Cost 

Applicant Subsistence ................................................................................................................. 1,723 1,148 2,871 

Travel ........................................................................................................................................... 1,832 1,221 3,053 

License Insurance ........................................................................................................................ 752 502 1,254 

Payroll taxes ................................................................................................................................ 1,945 1,296 3,241 

Other—Pilotage Cost ................................................................................................................... 833 555 1,388 

Total Other Applicant Cost ................................................................................................... 7,085 4,722 11,807 


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31The CPI is defined as ‘‘All Urban Consumers 

(CPI–U), All Items, 1982–84=100.’’ Series 

CUUR0200SA0 (Downloaded March 21, 2023). 

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. 

32The 2023 and 2024 inflation rates are available 

at https://www.federalreserve.gov/monetarypolicy/ 

files/fomcprojtabl20230920.pdf. We used the 

Median Core PCE June Projection found in table 1. 

(Downloaded September 2023). 

TABLE 6—2021 RECOGNIZED EXPENSES FOR DISTRICT ONE—Continued 

District One reported operating expenses for 2021 

Designated Undesignated 

Total St. Lawrence 

River Lake Ontario 

Other Pilotage Cost 

Subsistence ................................................................................................................................. 133,993 89,329 223,322 

Hotel/Lodging ............................................................................................................................... 32,424 21,616 54,040 

Travel ........................................................................................................................................... 453,718 302,478 756,196 

License renewal ........................................................................................................................... 1,200 800 2,000 

Payroll Taxes ............................................................................................................................... 198,901 132,601 331,502 

License Insurance ........................................................................................................................ 53,174 35,450 88,624 

Total Other Pilotage Costs .......................................................................................................... 873,410 582,274 1,455,684 

Pilot Boat and Dispatch Costs 

Pilot boat expense (Operating) .................................................................................................... 200,672 133,782 334,454 

Dispatch expense ........................................................................................................................ 167,291 111,527 278,818 

Employee Benefits ....................................................................................................................... 50,560 33,707 84,267 

Salaries ........................................................................................................................................ 249,396 166,264 415,660 

Payroll taxes ................................................................................................................................ 10,269 6,846 17,115 

Total Pilot Boat and Dispatch Costs .................................................................................... 678,188 452,126 1,130,314 

Administrative Expenses 

Legal—general counsel ............................................................................................................... 1,078 719 1,797 

Legal—shared counsel (K&L Gates) ........................................................................................... 4,402 2,935 7,337 

Legal—Coast Guard Litigation .................................................................................................... 14,641 9,760 24,401 

Insurance ..................................................................................................................................... 44,108 29,405 73,513 

Employee benefits ....................................................................................................................... 4,470 2,980 7,450 

Payroll Taxes ............................................................................................................................... 42,464 28,310 70,774 

Other taxes .................................................................................................................................. 79,200 52,800 132,000 

Real Estate taxes ........................................................................................................................ 22,918 15,278 38,196 

Travel ........................................................................................................................................... 1,568 1,045 2,613 

Depreciation ................................................................................................................................. 186,517 124,345 310,862 

Interest ......................................................................................................................................... 54,271 36,180 90,451 

APA Dues .................................................................................................................................... 25,250 16,834 42,084 

APA Dues (D1–21–01) ................................................................................................................ 2,971 1,980 4,951 

Dues and subscriptions ............................................................................................................... 4,320 2,880 7,200 

Utilities ......................................................................................................................................... 41,343 27,562 68,905 

Salaries ........................................................................................................................................ 73,890 49,260 123,150 

Accounting/Professional fees ...................................................................................................... 4,320 2,880 7,200 

Pilot Training ................................................................................................................................ 4,680 3,120 7,800 

Applicant Pilot Training ................................................................................................................ 18,911 12,607 31,518 

Other ............................................................................................................................................ 28,422 18,948 47,370 

Total Administrative Expenses ............................................................................................. 659,744 439,828 1,099,572 

Total Operating Expenses (OpEx) ....................................................................................... 2,476,529 1,651,018 4,127,547 

B. Step 2: Project Operating Expenses, 

Adjusting for Inflation or Deflation 

In accordance with the text in 

§ 404.102, having identified the 

recognized 2021 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 2022 

inflation rate.31 Because the BLS does 

not provide forecasted inflation data, we 

use economic projections from the 

Federal Reserve for the 2023 and 2024 

inflation modification.32 Based on that 

information, the calculations for Step 2 

are as presented in table 7. 


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33Employment Cost Index, Total Compensation 

for Private Industry workers in Transportation and 

Material Moving, Annual Average, Series ID: 

CIU2010000520000A. https://beta.bls.gov/ 

dataViewer/view/timeseries/CIU2010000520000A. 

(Last accessed 11/01/23.) 

34Table 1 Summary of Economic Projections, 

Median PCE Inflation. https://

www.federalreserve.gov/monetarypolicy/files/ 

fomcprojtabl20220316.pdf. (Last accessed 05/17/ 

23.) 

35Table 1 Summary of Economic Projections, 

Median Core PCE Inflation June Projection. https:// 

www.federalreserve.gov/monetarypolicy/files/ 

fomcprojtabl20230920.pdf. (Last accessed 09/2023.) 

TABLE 7—ADJUSTED OPERATING EXPENSES FOR DISTRICT ONE

District One 

Designated Undesignated Total 

Total Operating Expenses (Step 1) ............................................................................................. $2,476,529 $1,651,018 $4,127,547 

2022 Inflation Modification (@8%) .............................................................................................. 198,122 132,081 330,203 

2023 Inflation Modification (@3.9%) ........................................................................................... 104,311 69,541 173,852 

2024 Inflation Modification (@2.6%) ........................................................................................... 72,253 48,169 120,422 

Adjusted 2024 Operating Expenses ..................................................................................... 2,851,215 1,900,809 4,752,024 

* Figures are rounded to the nearest dollar and may not sum to totals. 

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. We determine the number of 

fully registered pilots based on data 

provided by the SLSPA. Using these 

numbers, we estimate that there will be 

18 registered pilots in 2024 in District 

One. We determine the number of 

apprentice pilots based on input from 

the district on anticipated retirements 

and staffing needs. Using these 

numbers, we estimate that there will be 

three apprentice pilots in 2024 in 

District One. Based on the seasonal 

staffing model discussed in the 2017 

ratemaking (82 FR 41466) and rounding 

introduced in the 2022 ratemaking (87 

FR 18488), a certain number of pilots 

are assigned to designated waters, and a 

certain number of pilots are assigned to 

undesignated waters, as shown in table 

8. These numbers are used to determine 

the amount of revenue needed in their 

respective areas. 

TABLE 8—AUTHORIZED PILOTS FOR DISTRICT ONE

Item District One 

Maximum Number of Pilots (per § 401.220(a)) * ................................................................................................................................. 18 

2024 Authorized Pilots (total) .............................................................................................................................................................. 18 

Pilots Assigned to Designated Areas .................................................................................................................................................. 10 

Pilots Assigned to Undesignated Areas .............................................................................................................................................. 8 

2024 Apprentice Pilots ......................................................................................................................................................................... 3 

* For a detailed calculation, refer to the Great Lakes Pilotage Rates—2017 Annual Review final rule, which contains the staffing model. See 82 

FR 41466, table 6 at 41480 (August 31, 2017). 

D. Step 4: Determine Target Pilot 

Compensation Benchmark and 

Apprentice Pilot Wage Benchmark 

In this step, we determine the total 

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 2023 target 

compensation benchmark of $424,398 

by 1.2 percent for a value of $429,491. 

This accounts for the difference in 

actual third quarter 2023 ECI inflation, 

which is 3.9 percent, and the 2023 PCE 

estimate of 2.7 percent.33 34 The second 

step accounts for projected inflation 

from 2023 to 2024, which is 2.6 

percent.35 Based on the projected 2024 

inflation estimate, the target 

compensation benchmark for 2024 is 

$440,658 per pilot. The apprentice pilot 

wage benchmark is 36 percent of the 

target pilot compensation, or $158,637 

($440,658 × 0.36). 

In accordance with § 404.104(c), we 

use the revised target individual 

compensation level to derive the total 

pilot compensation by multiplying the 

individual target compensation by the 

estimated number of registered pilots for 

District One, as shown in table 9. We 

estimate that the number of apprentice 

pilots with limited registration needed 

for District One in the 2024 season will 

be three. The total target wages for 

apprentices 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 9—TARGET COMPENSATION FOR DISTRICT ONE

District One 

Designated Undesignated Total 

Target Pilot Compensation .......................................................................................................... $440,658 $440,658 $440,658 

Number of Pilots .......................................................................................................................... 10 8 18 

Total Target Pilot Compensation .......................................................................................... $4,406,580 $3,525,264 $7,931,844 

Target Apprentice Pilot Compensation ........................................................................................ $158,637 $158,637 $158,637 


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36Moody’s Seasoned Aaa Corporate Bond Yield, 

average of 2022 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. (Last accessed 03/ 

21/23.) 

TABLE 9—TARGET COMPENSATION FOR DISTRICT ONE—Continued 

District One 

Designated Undesignated Total 

Number of Apprentice Pilots ........................................................................................................ ........................ ........................ 3 

Total Target Apprentice Pilot Compensation ....................................................................... $285,547 $190,364 $475,911 

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 

4.0742 percent rounded.36 By 

multiplying the two figures, we obtain 

the working capital fund contribution 

for each area, as shown in table 10. 

TABLE 10—WORKING CAPITAL FUND CALCULATION FOR DISTRICT ONE

District One 

Designated Undesignated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $2,851,215 $1,900,809 $4,752,024 

Total Target Pilot Compensation (Step 4) ................................................................................... 4,406,580 3,525,264 7,931,844 

Total Target Apprentice Pilot Compensation (Step 4) ................................................................ 285,547 190,364 475,911 

Total 2024 Expenses ................................................................................................................... 7,543,342 5,616,437 13,159,779 

Working Capital Fund (4.0742%) ................................................................................................ 307,331 228,825 536,156 

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 target total 

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 11. 

TABLE 11—REVENUE NEEDED FOR DISTRICT ONE

District One 

Designated Undesignated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $2,851,215 $1,900,809 $4,752,024 

Total Target Pilot Compensation (Step 4) ................................................................................... 4,406,580 3,525,264 7,931,844 

Total Target Apprentice Pilot Compensation (Step 4) ................................................................ 285,547 190,364 475,911 

Working Capital Fund (Step 5) .................................................................................................... 307,331 228,825 536,156 

Total Revenue Needed ................................................................................................................ 7,850,673 5,845,262 13,695,935 

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 One using the total 

time on task or pilot bridge hours. To 

calculate the time on task for each 

district from 2013–2020, the Coast 

Guard used billing data from SeaPro. 

The data is pulled from the system 

filtering by district, year, job status 

(including only processed jobs), and 

flagging code (including only U.S. jobs). 

Because we calculate separate figures 

for designated and undesignated waters, 

there are two parts for each calculation. 

For 2021–2022, the Coast Guard used 

figures provided by the associations 

through SeaPro monthly reports. Where 

bridge hour figures did not match 

between the monthly reports and the 

weighted factor reports, the Coast Guard 

opted to use the figures from the 

monthly report for Step 7. We show 

these values in table 12. 

TABLE 12—TIME ON TASK FOR DISTRICT ONE

[Hours] 

District One 

Designated Undesignated 

2022 ......................................................................................................................................................................... 6,573 8,356 


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TABLE 12—TIME ON TASK FOR DISTRICT ONE—Continued 

[Hours] 

District One 

Designated Undesignated 

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 

2013 ......................................................................................................................................................................... 5,864 5,529 

Average .................................................................................................................................................................... 6,564 7,460 

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 13. 

TABLE 13—INITIAL RATE CALCULATIONS FOR DISTRICT ONE

District One 

Designated Undesignated 

Revenue needed (Step 6) ....................................................................................................................................... $7,850,673 $5,845,262 

Average time on task (hours) .................................................................................................................................. 6,564 7,460 

Initial rate ................................................................................................................................................................. $1,196 $784 

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 this data, we 

calculate the average weighting factor 

for each area using the data from each 

vessel transit from 2014 to 2021, as 

shown in tables 14 and 15. Data for 2022 

was provided by the associations in a 

weighting factor report. 

TABLE 14—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 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) ............................................................................................................................. 482 1.15 554 

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) ............................................................................................................................. 106 1.3 138 

Class 4 (2014) ............................................................................................................................. 271 1.45 393 

Class 4 (2015) ............................................................................................................................. 251 1.45 364 


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TABLE 14—AVERAGE WEIGHTING FACTOR FOR DISTRICT ONE, DESIGNATED AREAS—Continued 

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

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) ............................................................................................................................. 478 1.45 693 

Total ...................................................................................................................................... 7,809 ........................ 10,064 

Average weighting factor (weighted transits ÷ number of transits) ...................................... ........................ 1.29 ........................

* Figures may not sum due to rounding. 

TABLE 15—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) ............................................................................................................................. 41 1 41 

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) ............................................................................................................................. 371 1.15 427 

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) ............................................................................................................................. 73 1.3 95 

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) ............................................................................................................................. 401 1.45 581 

Total ...................................................................................................................................... 6,524 ........................ 8,435 

Average weighting factor (weighted transits/number of transits) ......................................... ........................ 1.29 ........................

* Figures may not sum due to rounding. 

I. Step 9: Calculate Revised Base Rates 

In this step, we revise the base rates 

so that the total cost of pilotage will be 

equal to the revenue needed, after 

considering the impact of the weighting 

factors. To do this, the initial base rates 

calculated in Step 7 are divided by the 

average weighting factors calculated in 

Step 8, as shown in table 16. 


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9052 Federal Register / Vol. 89, No. 28 / Friday, February 9, 2024 / Rules and Regulations 

37These reports are available in the docket for 

this final rule. 

TABLE 16—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 ............................................................................................ $1,196 1.29 $927 

District One: Undesignated ........................................................................................ 784 1.29 608 

J. Step 10: Review and Finalize Rates 

In this step, the Director reviews the 

rates set forth by the staffing model and 

ensures that they meet the goal of 

ensuring safe, efficient, and reliable 

pilotage. 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 cover operating expenses and 

infrastructure costs, including average 

traffic and weighting factors. Based on 

the financial information submitted by 

the pilots, the Director is not 

establishing any alterations to the rates 

in this step. We modified § 401.405(a)(1) 

and (2) to reflect the final rates shown 

in table 17. 

TABLE 17—FINAL RATES FOR DISTRICT ONE

Area Name Final 2023 

pilotage rate 

Final 2024 

pilotage rate 

District One: Designated ............................................. St. Lawrence River ..................................................... $876 $927 

District One: Undesignated ......................................... Lake Ontario ............................................................... 586 608 

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 2021 

expenses and revenues.37 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. 

In the 2021 expenses used as the basis 

for this final rule, districts used the term 

‘‘applicant’’ to describe applicant 

trainees and persons who will be called 

apprentices (applicant pilots), under the 

definition of ‘‘apprentice pilot’’, which 

was introduced in the 2022 final rule. 

Therefore, when describing past 

expenses, the term ‘‘applicant’’ is used 

to match what was reported from 2021, 

which includes both applicant and 

apprentice pilots. The term 

‘‘apprentice’’ is used to distinguish 

apprentice pilot wages and describe the 

impacts of the ratemaking going 

forward. 

The Coast Guard continues to include 

apprentice salaries as an allowable 

expense in the 2024 ratemaking, as this 

final rule is based on 2021 operating 

expenses, when salaries were still an 

allowable expense. Beginning with the 

2025 ratemaking, apprentice pilot 

salaries will no longer be included as a 

2022 operating expense, because 

apprentice pilot wages will have already 

been factored into the ratemaking Steps 

3 and 4 in calculation of the 2022 rates. 

Beginning in 2025, the applicant 

salaries’ operating expenses for 2022 

will consist of only applicant trainees 

(those who are not yet apprentice 

pilots). The recognized operating 

expenses for District Two are shown in 

table 18. 

TABLE 18—2021 RECOGNIZED EXPENSES FOR DISTRICT TWO

Reported operating expenses for 2021 

Undesignated Designated 

Total 

Lake Erie 

Southeast 

Shoal to 

Port Huron 

Applicant Pilot Compensation 

Salaries ........................................................................................................................................ $79,538 $119,306 $198,844 

Employee Benefits ....................................................................................................................... 11,066 16,599 27,665 

Total Applicant Pilot Compensation ..................................................................................... 90,604 135,905 226,509 

Other Applicant Cost 

Applicant Subsistence ................................................................................................................. 5,280 7,920 13,200 

Hotel/Lodging Costs .................................................................................................................... 2,976 4,464 7,440 

Hotel/Lodging Costs (D2–21–01) ................................................................................................ (2,976) (4,464) (7,440) 


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38The CPI is defined as ‘‘All Urban Consumers 

(CPI–U), All Items, 1982–84=100.’’ Series 

CUUR0200SA0 (Downloaded March 21, 2023). 

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. 

39The 2023 and 2024 inflation rates are available 

at Table 1 Summary of Economic Projections, 

Median Core PCE Inflation June Projection. https:// 

www.federalreserve.gov/monetarypolicy/files/ 

fomcprojtabl20230920.pdf. (Last accessed 12/4/ 

2023). 

TABLE 18—2021 RECOGNIZED EXPENSES FOR DISTRICT TWO—Continued 

Reported operating expenses for 2021 

Undesignated Designated 

Total 

Lake Erie 

Southeast 

Shoal to 

Port Huron 

Payroll taxes ................................................................................................................................ 6,901 10,352 17,253 

Total Other Applicant Cost ................................................................................................... 12,181 18,272 30,453 

Other Pilotage Cost 

Subsistence ................................................................................................................................. 73,921 110,880 184,800 

Hotel/Lodging ............................................................................................................................... 62,496 93,744 156,240 

Hotel/Lodging (D2–21–01) ........................................................................................................... (55,307) (82,960) (138,267) 

Travel ........................................................................................................................................... 42,625 63,937 106,562 

License renewal ........................................................................................................................... 1,958 2,938 4,896 

Payroll Taxes ............................................................................................................................... 87,620 131,430 219,050 

License Insurance ........................................................................................................................ 9,007 13,510 22,517 

Total Other Pilotage Costs ................................................................................................... 222,320 333,479 555,798 

Pilot Boat and Dispatch Costs 

Pilot boat costs ............................................................................................................................ 60,067 90,101 150,168 

Employee Benefits ....................................................................................................................... 80,273 120,410 200,683 

Insurance ..................................................................................................................................... 4,317 6,475 10,792 

Salaries ........................................................................................................................................ 148,260 222,391 370,651 

Payroll taxes ................................................................................................................................ 13,277 19,915 33,192 

Total Pilot and Dispatch Costs ............................................................................................. 306,194 459,292 765,486 

Administrative Expenses 

Legal ............................................................................................................................................ 2,186 3,278 5,464 

Legal—shared counsel (K&L Gates) ........................................................................................... 7,167 10,751 17,918 

Office Rent ................................................................................................................................... 27,627 41,440 69,067 

Insurance ..................................................................................................................................... 15,084 22,627 37,711 

Employee benefits ....................................................................................................................... 35,010 52,516 87,526 

Payroll Taxes ............................................................................................................................... 5,161 7,741 12,902 

Other taxes .................................................................................................................................. 55,252 82,879 138,131 

Real Estate taxes ........................................................................................................................ 7,879 11,819 19,698 

Travel ........................................................................................................................................... 8,688 13,033 21,721 

Depreciation ................................................................................................................................. 11,121 16,682 27,803 

Interest ......................................................................................................................................... 2 2 4 

APA Dues .................................................................................................................................... 14,683 22,025 36,708 

Dues and subscriptions ............................................................................................................... 505 757 1,262 

Utilities ......................................................................................................................................... 24,356 36,535 60,891 

Salaries ........................................................................................................................................ 48,532 72,797 121,329 

Accounting/Professional fees ...................................................................................................... 17,846 26,769 44,615 

Pilot Training ................................................................................................................................ 23,909 35,864 59,773 

Applicant Pilot Training ................................................................................................................ 209 313 522 

Other ............................................................................................................................................ 21,252 31,879 53,131 

Total Administrative Expenses ............................................................................................. 326,469 489,707 816,176 

Total Expenses (OPEX + Applicant + Pilot Boats + Admin + Capital) ................................ 957,768 1,436,655 2,394,422 

Total Operating Expenses (OpEx + Adjustments) ............................................................... 957,768 1,436,655 2,394,422 

B. Step 2: Project Operating Expenses, 

Adjusting for Inflation or Deflation 

In accordance with the text in 

§ 404.102, having identified the 

recognized 2021 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 2022 

inflation rate.38 Because the BLS does 

not provide forecasted inflation data, we 

use economic projections from the 

Federal Reserve for the 2023 and 2024 

inflation modification.39 Based on that 

information, the calculations for Step 2 

are presented in table 19. 


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40Employment Cost Index, Total Compensation 

for Private Industry workers in Transportation and 

Material Moving, Annual Average, Series ID: 

CIU2010000520000A. https://beta.bls.gov/ 

dataViewer/view/timeseries/CIU2010000520000A. 

(Last accessed 11/01/23.) 

41Table 1 Summary of Economic Projections, 

Median PCE Inflation. https://

www.federalreserve.gov/monetarypolicy/files/ 

fomcprojtabl20220316.pdf. (Last accessed 05/17/ 

23.) 

42Table 1 Summary of Economic Projections, 

Median Core PCE Inflation June Projection. https:// 

www.federalreserve.gov/monetarypolicy/files/ 

fomcprojtabl20230920.pdf (Last accessed 12/4/ 

2023). 

TABLE 19—ADJUSTED OPERATING EXPENSES FOR DISTRICT TWO

District Two 

Undesignated Designated Total 

Total Operating Expenses (Step 1) ............................................................................................. $957,768 $1,436,655 $2,394,422 

2022 Inflation Modification (@8%) .............................................................................................. $76,621 114,932 191,553 

2023 Inflation Modification (@3.9%) ........................................................................................... 40,341 60,512 100,853 

2024 Inflation Modification (@2.6%) ........................................................................................... 27,943 41,915 69,858 

Adjusted 2024 Operating Expenses ..................................................................................... 1,102,673 1,654,014 2,756,686 

* Figures are rounded to the nearest dollar and may not sum to totals. 

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. We determine the number of 

fully registered pilots based on data 

provided by the LPA. Using these 

numbers, we estimate that there will be 

17 registered pilots in 2024 in District 

Two, including the additional pilot 

being granted for 2024. We determine 

the number of apprentice pilots based 

on input from the district on anticipated 

retirements and staffing needs. Using 

these numbers, we estimate that there 

will be one apprentice pilot in 2024 in 

District Two. 

Based on the seasonal staffing model 

discussed in the 2017 ratemaking (82 FR 

41466) and rounding introduced in the 

2022 ratemaking (87 FR 18488), a 

certain number of pilots are assigned to 

designated waters, and a certain number 

of pilots are assigned to undesignated 

waters, as shown in table 20. These 

numbers are used to determine the 

amount of revenue needed in their 

respective areas. 

TABLE 20—AUTHORIZED PILOTS FOR DISTRICT TWO

Item District Two 

Maximum Number of Pilots (per § 401.220(a)) * ................................................................................................................................. 16 

2024 Authorized Pilots (total) .............................................................................................................................................................. 17 

Pilots Assigned to Designated Areas .................................................................................................................................................. 9 

Pilots Assigned to Undesignated Areas .............................................................................................................................................. 8 

2024 Apprentice Pilots ......................................................................................................................................................................... 1 

* For a detailed calculation, refer to the Great Lakes Pilotage Rates—2017 Annual Review final rule, which contains the staffing model. See 82 

FR 41466, table 6 at 41480 (August 31, 2017). 

D. Step 4: Determine Target Pilot 

Compensation Benchmark and 

Apprentice Pilot Wage Benchmark 

In this step, we determine the total 

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 2023 target 

compensation benchmark of $424,398 

by 1.2 percent for a value of $429,491. 

This accounts for the difference in 

actual third quarter 2023 ECI inflation, 

which is 3.9 percent, and the 2023 PCE 

estimate of 2.7 percent.40 41 The second 

step accounts for projected inflation 

from 2023 to 2024, which is 2.6 

percent.42 Based on the projected 2024 

inflation estimate, the target 

compensation benchmark for 2024 is 

$440,658 per pilot. The apprentice pilot 

wage benchmark is 36 percent of the 

target pilot compensation, or $158,637 

($440,658 × 0.36). 

In accordance with § 404.104(c), the 

Coast Guard uses the revised target 

individual compensation level to derive 

the total pilot compensation by 

multiplying the individual target 

compensation by the estimated number 

of registered pilots for District Two, as 

shown in table 21. The Coast Guard 

estimates that the number of apprentice 

pilots with limited registration needed 

for District Two in the 2024 season will 

be one. The total target wages for 

apprentices are allocated at 60 percent 

for the designated area and 40 percent 

for the undesignated area, in accordance 

with the allocation for operating 

expenses. 

TABLE 21—TARGET COMPENSATION FOR DISTRICT TWO

District Two 

Undesignated Designated Total 

Target Pilot Compensation .......................................................................................................... $440,658 $440,658 $440,658 

Number of Pilots .......................................................................................................................... 8 9 17 

Total Target Pilot Compensation .......................................................................................... 3,525,264 3,965,922 7,491,186 


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43Moody’s Seasoned Aaa Corporate Bond Yield, 

average of 2022 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. (Last accessed 

03/21/2023). 

TABLE 21—TARGET COMPENSATION FOR DISTRICT TWO—Continued 

District Two 

Undesignated Designated Total 

Target Apprentice Pilot Compensation ........................................................................................ 158,637 158,637 158,637 

Number of Apprentice Pilots ........................................................................................................ ........................ ........................ 1 

Total Target Apprentice Pilot Compensation ....................................................................... 63,455 95,182 158,637 

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 4.0742 percent, rounded.43

By multiplying the two figures, we 

obtain the working capital fund 

contribution for each area, as shown in 

table 22. 

TABLE 22—WORKING CAPITAL FUND CALCULATION FOR DISTRICT TWO

District Two 

Undesignated Designated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $1,102,673 $1,654,014 $2,756,686 

Total Target Pilot Compensation (Step 4) ................................................................................... 3,525,264 3,965,922 7,491,186 

Total Target Apprentice Pilot Compensation (Step 4) ................................................................ 63,455 95,182 158,637 

Total 2024 Expenses ................................................................................................................... 4,691,392 5,715,118 10,406,509 

Working Capital Fund (4.0742%) ................................................................................................ 191,137 232,845 423,982 

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 23. 

TABLE 23—REVENUE NEEDED FOR DISTRICT TWO

District Two 

Undesignated Designated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $1,102,673 $1,654,014 $2,756,686 

Total Target Pilot Compensation (Step 4) ................................................................................... 3,525,264 3,965,922 7,491,186 

Total Target Apprentice Pilot Compensation (Step 4) ................................................................ 63,455 95,182 158,637 

Working Capital Fund (Step 5) .................................................................................................... 191,137 232,845 423,982 

Total Revenue Needed ................................................................................................................ 4,882,529 5,947,963 10,830,491 

G. Step 7: Calculate Initial Base Rates 

Having determined the revenue 

needed for each area in the previous six 

steps, the Coast Guard divides that 

number by the expected number of 

traffic hours to develop an hourly rate. 

Step 7 is a two-part process. In the 

first part, we calculate 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 from 2013–2020, the Coast 

Guard used billing data from SeaPro. 

The data is pulled from the system 

filtering by district, year, job status 

(including only processed jobs), and 

flagging code (including only U.S. jobs). 

Because we calculate separate figures 

for designated and undesignated waters, 

there are two parts for each calculation. 

For 2021–2022, the Coast Guard used 

figures provided by the associations 

through SeaPro monthly reports. Where 

bridge hour figures did not match 

between the monthly reports and the 

weighted factor reports, the Coast Guard 

opted to use the figures from the 

monthly report for Step 7. We show 

these values in table 24. 


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TABLE 24—TIME ON TASK FOR DISTRICT TWO

[Hours] 

Year 

District Two 

Undesignated Designated 

2022 ......................................................................................................................................................................... 7,668 8,613 

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 

2013 ......................................................................................................................................................................... 4,603 4,750 

Average ............................................................................................................................................................ 6,241 6,755 

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 25. 

TABLE 25—INITIAL RATE CALCULATIONS FOR DISTRICT TWO

Undesignated Designated 

Revenue needed (Step 6) ....................................................................................................................................... $4,882,529 $5,947,963 

Average time on task (hours) .................................................................................................................................. 6,241 6,755 

Initial rate ................................................................................................................................................................. $782 $881 

H. Step 8: Calculate Average Weighting 

Factors by Area 

In this step, we calculate the average 

weighting factor for each designated and 

undesignated area. We collect the 

weighting factors, set forth in 46 CFR 

401.400, for each vessel trip. Using this 

data, we calculate the average weighting 

factor for each area using the data from 

each vessel transit from 2014–2021, as 

shown in tables 26 and 27. Data for 2022 

was provided by the associations in a 

weighting factor report. 

TABLE 26—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) ............................................................................................................................. 121 1 121 

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) ............................................................................................................................. 478 1.15 550 

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) ............................................................................................................................. 8 1.3 10 

Class 4 (2014) ............................................................................................................................. 636 1.45 922 

Class 4 (2015) ............................................................................................................................. 560 1.45 812 


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TABLE 26—AVERAGE WEIGHTING FACTOR FOR DISTRICT TWO, UNDESIGNATED AREAS—Continued 

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

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) ............................................................................................................................. 642 1.45 931 

Total ...................................................................................................................................... 6,268 ........................ 8,204 

Average weighting factor (weighted transits/number of transits) ......................................... ........................ 1.31 ........................

* Figures may not sum due to rounding. 

TABLE 27—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) ............................................................................................................................. 117 1 117 

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) ............................................................................................................................. 717 1.15 825 

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) ............................................................................................................................. 13 1.3 17 

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) ............................................................................................................................. 1,230 1.45 1,784 

Total ...................................................................................................................................... 6,751 ........................ 8,882 

Average weighting factor (weighted transits/number of transits) ......................................... ........................ 1.32 ........................

* Figures may not sum due to rounding. 

I. Step 9: Calculate Revised Base Rates 

In this step, the Coast Guard revises 

the base rates, so that the total cost of 

pilotage will be equal to the revenue 

needed after considering the impact of 

the weighting factors. 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 

28. 


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9058 Federal Register / Vol. 89, No. 28 / Friday, February 9, 2024 / Rules and Regulations 

44These reports are available in the docket for 

this final rule. 

TABLE 28—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 ........................................................................................ $782 1.31 $597 

District Two: Designated ............................................................................................ 881 1.32 667 

J. Step 10: Review and Finalize Rates 

In this step, the Director reviews the 

rates set forth by the staffing model and 

ensures that they meet the goal of 

ensuring safe, efficient, and reliable 

pilotage. 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 cover operating expenses and 

infrastructure costs, taking average 

traffic and weighting factors into 

consideration. Based on the financial 

information submitted by the pilots, the 

Director is not establishing any 

alterations to the rates in this step. We 

modify § 401.405(a)(3) and (4) to reflect 

the final rates shown in table 29. 

TABLE 29—FINAL RATES FOR DISTRICT TWO

Area Name Final 2023 

pilotage rate 

Final 2024 

pilotage rate 

District Two: Designated ............................................. Navigable waters from Southeast Shoal to Port 

Huron, MI.

$601 $667 

District Two: Undesignated ......................................... Lake Erie .................................................................... 704 597 

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 2021 expenses and 

revenues.44 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. 

In the 2021 expenses used as the basis 

for this final rule, districts used the term 

‘‘applicant’’ to describe applicant 

trainees and persons who will be called 

apprentices (applicant pilots), under the 

definition of ‘‘apprentice pilot’’, which 

was introduced in the 2022 final rule. 

Therefore, when describing past 

expenses, the term ‘‘applicant’’ is used 

to match what was reported in 2021, 

which includes both applicant and 

apprentice pilots. The term 

‘‘apprentice’’ is used to distinguish 

apprentice pilot wages and to describe 

the impacts of the ratemaking going 

forward. 

The Coast Guard continues to include 

apprentice salaries as an allowable 

expense in the 2024 ratemaking, as this 

final rule is based on 2021 operating 

expenses, when salaries were still an 

allowable expense. Beginning with the 

2025 ratemaking, apprentice pilot 

salaries will no longer be included as a 

2022 operating expense, because 

apprentice pilot wages will have already 

been factored into the ratemaking Steps 

3 and 4 in calculation of the 2022 rates. 

Beginning in 2025, the applicant 

salaries’ operating expenses for 2022 

will consist of only applicant trainees 

(those who are not yet apprentice 

pilots). The recognized operating 

expenses for District Three are shown in 

table 30. 

TABLE 30—2021 RECOGNIZED EXPENSES FOR DISTRICT THREE

Reported operating expenses for 2021 

Undesignated Designated Undesignated 

Total Lakes Huron 

and Michigan 

St. Mary’s 

River 

Lake 

Superior 

Applicant Cost 

Applicant Salaries ............................................................................................ $336,149 $140,111 $176,330 $652,590 

Applicant Benefits ............................................................................................ 58,306 24,303 30,585 113,194 

Total Applicant Cost ................................................................................. 394,455 164,414 206,915 765,784 

Other Pilotage Costs 

Pilot subsistence/travel .................................................................................... 149,993 62,519 78,680 291,192 

Hotel/Lodging Cost .......................................................................................... 136,769 57,007 71,744 265,520 

Hotel/Lodging Cost (D3–21–03) ...................................................................... (18,162) (7,570) (9,527) (35,260) 

Travel ............................................................................................................... 55,936 23,315 29,342 108,592 


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45The CPI is defined as ‘‘All Urban Consumers 

(CPI–U), All Items, 1982–84=100.’’ Series 

CUUR0200SA0 (Downloaded March 21, 2023). 

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. 

46The 2022 and 2023 inflation rates are available 

at https://www.federalreserve.gov/monetarypolicy/ 

files/fomcprojtabl20230920.pdf. We used the 

Median Core PCE June Projection found in table 1. 

(Downloaded September 2023). 

TABLE 30—2021 RECOGNIZED EXPENSES FOR DISTRICT THREE—Continued 

Reported operating expenses for 2021 

Undesignated Designated Undesignated 

Total Lakes Huron 

and Michigan 

St. Mary’s 

River 

Lake 

Superior 

License Insurance—Pilots ............................................................................... 881 367 462 1,710 

Payroll taxes .................................................................................................... ........................ ........................ ........................ ........................

Payroll Tax (D3–21–04) ................................................................................... 155,779 64,931 81,715 302,425 

License Insurance ............................................................................................ 15,328 6,389 8,040 29,757 

Total Other Pilotage Costs ....................................................................... 496,524 206,958 260,456 963,938 

Pilot Boat and Dispatch Costs 

Pilot boat costs ................................................................................................ 445,549 185,710 233,716 864,975 

Pilot Boat Coast (D2–21–02) ........................................................................... (10,901) (4,544) (5,718) (21,163) 

Dispatch costs ................................................................................................. 38,156 15,904 20,015 74,074 

Employee Benefits ........................................................................................... 1,748 729 917 3,394

Insurance ......................................................................................................... 20,141 8,395 10,565 39,101 

Insurance (D3–21–05, D3–21–09) .................................................................. 1,735 723 910 3,369 

Salaries ............................................................................................................ 140,294 58,476 73,592 272,363 

Payroll taxes .................................................................................................... 123 51 64 238 

Total Pilot boat and dispatch costs .......................................................... 636,845 265,444 334,061 1,236,350 

Administrative Cost 

Legal—general counsel ................................................................................... 9,560 3,985 5,015 18,560 

Legal—shared counsel (K&L Gates) ............................................................... 6,227 2,595 3,266 12,088 

Legal—shared counsel (K&L Gates) (D3–21–07) ........................................... (1,307) (545) (686) (2,538) 

Travel ............................................................................................................... 58,104 24,219 30,479 112,802 

Travel (D3–21–03) ........................................................................................... (14,093) (5,874) (7,393) (27,360) 

Insurance ......................................................................................................... 29,480 12,288 15,464 57,232 

Insurance (D3–21–05, D3–21–09) .................................................................. (5,112) (2,131) (2,681) (9,924)

Employee benefits ........................................................................................... 126,390 52,681 66,299 245,369 

Payroll Tax ....................................................................................................... 54,544 22,735 28,611 105,890 

Other taxes ...................................................................................................... 25,489 10,624 13,370 49,483 

Other taxes (D3–21–02) .................................................................................. (25,006) (10,423) (13,117) (48,545) 

Real Estate Taxes ........................................................................................... 1,396 582 732 2,710

Depreciation/Auto leasing/Other ...................................................................... 112,215 46,772 58,863 217,850 

Depreciation/Auto leasing/Other (D3–21–02) .................................................. (4,465) (1,861) (2,342) (8,668) 

Interest ............................................................................................................. 3,432 1,431 1,800 6,663 

APA Dues ........................................................................................................ 25,946 10,814 13,610 50,370 

APA Dues (D3–21–08) .................................................................................... (1,297) (541) (680) (2,519) 

Dues and subscriptions ................................................................................... 4,044 1,685 2,121 7,850 

Salaries ............................................................................................................ 63,591 26,506 33,357 123,454 

Utilities ............................................................................................................. 41,681 17,373 21,864 80,919 

Utilities (D3–21–03) ......................................................................................... (34,248) (14,275) (17,965) (66,488) 

Accounting/Professional fees .......................................................................... 22,765 9,489 11,941 44,195 

Pilot Training .................................................................................................... 44,259 18,448 23,216 85,923 

Other expenses ............................................................................................... 24,741 10,312 12,978 48,032 

Total Administrative Expenses ................................................................. 568,336 236,889 298,122 1,103,347

Total Operating Expenses (OpEx) ........................................................... 2,096,160 873,705 1,099,554 4,069,419

B. Step 2: Project Operating Expenses, 

Adjusting for Inflation or Deflation 

In accordance with the text in 

§ 404.102, having identified the 2021 

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 2022 

inflation rate.45 Because the BLS does 

not provide forecasted inflation data, we 

use economic projections from the 

Federal Reserve for the 2023 and 2024 

inflation modification.46 Based on that 

information, the calculations for Step 2 

are as presented in table 31. 


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47Employment Cost Index, Total Compensation 

for Private Industry workers in Transportation and 

Material Moving, Annual Average, Series ID: 

CIU2010000520000A. https://beta.bls.gov/ 

dataViewer/view/timeseries/CIU2010000520000A. 

(Last accessed 11/01/23.) 

48Table 1 Summary of Economic Projections, 

Median PCE Inflation. https://

www.federalreserve.gov/monetarypolicy/files/ 

fomcprojtabl20220316.pdf. (Last accessed 05/17/ 

23.) 

49Table 1 Summary of Economic Projections, 

Median Core PCE Inflation June Projection. https:// 

www.federalreserve.gov/monetarypolicy/files/ 

fomcprojtabl20230920.pdf (Last accessed 12/4/ 

2023). 

TABLE 31—ADJUSTED OPERATING EXPENSES FOR DISTRICT THREE

District Three 

Undesignated Designated Total 

Total Operating Expenses (Step 1) ............................................................................................. $3,195,714 $873,705 $4,069,419 

2022 Inflation Modification (@8%) .............................................................................................. 255,657 69,896 325,553 

2023 Inflation Modification (@3.9%) ........................................................................................... 134,603 36,800 171,403 

2024 Inflation Modification (@2.6%) ........................................................................................... 93,235 25,490 118,725 

Adjusted 2024 Operating Expenses ..................................................................................... 3,679,209 1,005,891 4,685,100 

* Figures are rounded to the nearest dollar and may not sum to totals. 

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 registered pilots in each 

district. We determine the number of 

registered pilots based on data provided 

by the WGLPA. Using these numbers, 

we estimate that there will be 23 

registered pilots in 2024 in District 

Three, including the additional pilot 

granted by the Director. We determine 

the number of apprentice pilots based 

on input from the district on anticipated 

retirements and staffing needs. Using 

these numbers, the Coast Guard 

estimates that there will be two 

apprentice pilots in 2024 in District 

Three. Based on the seasonal staffing 

model discussed in the 2017 ratemaking 

(82 FR 41466) and rounding introduced 

in the 2022 ratemaking (87 FR 18488), 

a certain number of pilots are assigned 

to designated waters, and a certain 

number of pilots are assigned to 

undesignated waters, as shown in table 

32. These numbers are used to 

determine the amount of revenue 

needed in their respective areas. 

TABLE 32—AUTHORIZED PILOTS FOR DISTRICT THREE

Item District Three 

Maximum Number of Pilots (per § 401.220(a)) * ................................................................................................................................. 22 

2024 Authorized Pilots (total) .............................................................................................................................................................. 23 

Pilots Assigned to Designated Areas .................................................................................................................................................. 5 

Pilots Assigned to Undesignated Areas .............................................................................................................................................. 18 

2024 Apprentice Pilots ......................................................................................................................................................................... 2 

* For a detailed calculation, refer to the Great Lakes Pilotage Rates—2017 Annual Review final rule, which contains the staffing model. See 82 

FR 41466, table 6 at 41480 (August 31, 2017). 

D. Step 4: Determine Target Pilot 

Compensation Benchmark and 

Apprentice Pilot Wage Benchmark 

In this step, we determine the total 

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 2023 target 

compensation benchmark of $424,398 

by 1.2 percent for a value of $429,491. 

This accounts for the difference in 

actual third quarter 2023 ECI inflation, 

which is 3.9 percent, and the 2023 PCE 

estimate of 2.7 percent.47 48 The second 

step accounts for projected inflation 

from 2023 to 2024, which is 2.6 

percent.49 Based on the projected 2024 

inflation estimate, the target 

compensation benchmark for 2024 is 

$440,658 per pilot. The apprentice pilot 

wage benchmark is 36 percent of the 

target pilot compensation, or $158,637 

($440,658 × 0.36). 

In accordance with § 404.104(c), we 

use the revised target individual 

compensation level to derive the total 

pilot compensation by multiplying the 

individual target compensation by the 

estimated number of registered pilots for 

District Three, as shown in table 33. We 

estimate that the number of apprentice 

pilots with limited registration needed 

for District Three in the 2024 season 

will be two. The total target wages for 

apprentices are allocated with 21 

percent for the designated area and 79 

percent (52 percent + 27 percent) for the 

undesignated area, in accordance with 

the allocation for operating expenses. 

TABLE 33—TARGET COMPENSATION FOR DISTRICT THREE

District Three 

Undesignated Designated Total 

Target Pilot Compensation .......................................................................................................... $440,658 $440,658 $440,658 

Number of Pilots .......................................................................................................................... 18 5 23 

Total Target Pilot Compensation .......................................................................................... $7,931,844 $2,203,290 $10,135,134 

Target Apprentice Pilot Compensation ........................................................................................ $158,637 $158,637 $158,637 


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50Moody’s Seasoned Aaa Corporate Bond Yield, 

average of 2022 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. (Last accessed 

03/21/2023.) 

TABLE 33—TARGET COMPENSATION FOR DISTRICT THREE—Continued 

District Three 

Undesignated Designated Total 

Number of Apprentice Pilots ........................................................................................................ ........................ ........................ 2 

Total Target Apprentice Pilot Compensation ....................................................................... $250,646 $66,628 $317,274 

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 4.0742 percent, rounded.50

By multiplying the two figures, we 

obtain the working capital fund 

contribution for each area, as shown in 

table 34. 

TABLE 34—WORKING CAPITAL FUND CALCULATION FOR DISTRICT THREE

District Three 

Undesignated Designated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $3,679,209 $1,005,891 $4,685,100 

Total Target Pilot Compensation (Step 4) ................................................................................... 7,931,844 2,203,290 10,135,134 

Total Target Apprentice Pilot Compensation (Step 4) ................................................................ 250,646 66,628 317,274 

Total 2024 Expenses ................................................................................................................... 11,861,699 3,275,809 15,137,508 

Working Capital Fund (4.0742%) ................................................................................................ 483,269 133,463 616,732 

F. Step 6: Project Needed Revenue 

In this step, we add 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 35. 

TABLE 35—REVENUE NEEDED FOR DISTRICT THREE

District Three 

Undesignated Designated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $3,679,209 $1,005,891 $4,685,100 

Total Target Pilot Compensation (Step 4) ................................................................................... 7,931,844 2,203,290 10,135,134 

Total Target Apprentice Pilot Compensation (Step 4) ................................................................ 250,646 66,628 317,274 

Working Capital Fund (Step 5) .................................................................................................... 483,269 133,463 616,732 

Total Revenue Needed ................................................................................................................ 12,344,968 3,409,272 15,754,240 

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. In the 

first part, the 10-year traffic average in 

District Three is calculated using the 

total time on task or pilot bridge hours. 

To calculate the time on task for each 

district from 2013–2020, the Coast 

Guard used billing data from SeaPro. 

The data is pulled from the system 

filtering by district, year, job status 

(including only processed jobs), and 

flagging code (including only U.S. jobs). 

Because we calculate separate figures 

for designated and undesignated waters, 

there are two parts for each calculation. 

For 2021–2022, the Coast Guard used 

figures provided by the associations 

through SeaPro monthly reports. Where 

bridge hour figures did not match 

between the monthly reports and the 

weighted factor reports, the Coast Guard 

opted to use the figures from the 

monthly report for Step 7. We show 

these values in table 36. 


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TABLE 36—TIME ON TASK FOR DISTRICT THREE

[Hours] 

Year 

District Three 

Undesignated Designated 

2022 ......................................................................................................................................................................... 23,914 3,345 

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 

2013 ......................................................................................................................................................................... 17,115 2,631 

Average .................................................................................................................................................................... 22,071 3,113 

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. The 

calculations for District Three are set 

forth in table 37. 

TABLE 37—INITIAL RATE CALCULATIONS FOR DISTRICT THREE

Undesignated Designated 

Revenue needed (Step 6) ....................................................................................................................................... $12,344,968 $3,409,272 

Average time on task (hours) .................................................................................................................................. 22,071 3,113 

Initial rate ................................................................................................................................................................. $559 $1,095 

H. Step 8: Calculate Average Weighting 

Factors by Area 

In this step, we calculate the average 

weighting factor for each designated and 

undesignated area. We collect the 

weighting factors, set forth in 46 CFR 

401.400, for each vessel trip. Using this 

data, we calculate the average weighting 

factor for each area using the data from 

each vessel transit from 2014 to 2021, as 

shown in tables 38 and 39. Data for 2022 

was provided by the associations in a 

weighting factor report. 

TABLE 38—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) ............................................................................................................................. 162 1 162 

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) ............................................................................................................................. 452 1.15 520 

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 4 (2014) ............................................................................................................................. 394 1.45 571 


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TABLE 38—AVERAGE WEIGHTING FACTOR FOR DISTRICT THREE, UNDESIGNATED AREAS—Continued 

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

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) ............................................................................................................................. 482 1.45 699 

Total for Area 6 .................................................................................................................... 6,719 ........................ 8,609 

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) ............................................................................................................................. 12 1 12 

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) ............................................................................................................................. 95 1.15 109 

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) ............................................................................................................................. 5 1.3 7 

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) ............................................................................................................................. 306 1.45 444 

Total for Area 8 .................................................................................................................... 3,670 ........................ 4,914 

Combined total ..................................................................................................................... 10,389 ........................ 13,522 

Average weighting factor (weighted transits/number of transits) ......................................... ........................ 1.30 ........................

* Figures may not sum due to rounding. 

TABLE 39—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) ............................................................................................................................. 104 1 104 

Class 2 (2014) ............................................................................................................................. 221 1.15 254 

Class 2 (2015) ............................................................................................................................. 145 1.15 167 


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TABLE 39—AVERAGE WEIGHTING FACTOR FOR DISTRICT THREE, DESIGNATED AREAS—Continued 

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

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) ............................................................................................................................. 198 1.15 228 

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 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) ............................................................................................................................. 392 1.45 568 

Total ...................................................................................................................................... 4,500 ........................ 5,877 

Average weighting factor (weighted transits/number of transits) ......................................... ........................ 1.31 ........................

* Figures may not sum due to rounding. 

I. Step 9: Calculate Revised Base Rates 

In this step, we revise the base rates, 

so that the total cost of pilotage will be 

equal to the revenue needed after 

considering the impact of the weighting 

factors. 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 40. 

TABLE 40—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 ..................................................................................... $559 1.30 $430

District Three: Designated ......................................................................................... 1,095 1.31 836 

J. Step 10: Review and Finalize Rates 

In this step, the Director reviews the 

rates set forth by the staffing model and 

ensures that they meet the goal of 

ensuring safe, efficient, and reliable 

pilotage. 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 cover operating expenses and 

infrastructure costs, taking average 

traffic and weighting factors into 

consideration. Based on this 

information, the Director is not 

establishing any alterations to the rates 

in this step. We modified § 401.405(a)(5) 

and (6) to reflect the rates shown in 

table 41. 

TABLE 41—FINAL RATES FOR DISTRICT THREE

Area Name Final 2023 

pilotage rate 

Final 2024 

pilotage rate 

District Three: Designated .......................................... St. Mary’s River .......................................................... $834 $836 

District Three: Undesignated ...................................... Lakes Huron, Michigan, and Superior ....................... 410 430 

X. Regulatory Analyses 

We developed this rule after 

considering numerous statutes and 

Executive orders related to rulemaking. 

Below we summarize our analyses 

based on these statutes or Executive 

orders. 

A. Regulatory Planning and Review 

Executive Orders 12866 (Regulatory 

Planning and Review), as amended by 


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51 Great Lakes Pilotage Rates—2023 Annual 

Ratemaking and Review of Methodology (88 FR 

12226), published February 27, 2023. 

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 both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. 

The Office of Management and Budget 

(OMB) has not designated this 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 2023.51

For this final rule, the Coast Guard 

estimates an increase in cost of 

approximately $2.62 million to industry 

from 2023 to 2024. This is 

approximately a 7-percent increase 

because of the change in revenue 

needed in 2024 compared to the 

revenue needed in 2023. See table 42. 

TABLE 42—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 296 

vessels transiting the Great 

Lakes system annually, 58 

United States Great Lakes 

pilots, 6 apprentice pilots, 

and 3 pilotage associations.

Increase of $2,621,471 due 

to change in revenue 

needed for 2024 

($40,280,666) from revenue needed for 2023 

($37,659,195) as shown in 

table 43.

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 III., Basis 

and Purpose, 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 for the 2024 shipping 

season to generate sufficient revenues 

for each district to reimburse its 

necessary and reasonable operating 

expenses, fairly compensate properly 

trained and rested pilots, and 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 both areas in District 

Three. There is a decrease in rates for 

the undesignated area in District Two. 

These changes also 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 296 oceangoing vessels 

that transit the Great Lakes annually on 

average from 2020 to 2022. The Coast 

Guard estimates that there will be 58 

registered pilots and 6 apprentice pilots 

during the 2024 shipping season, an 

increase of 2 pilots and decrease of 1 

apprentice pilot from the proposed 

numbers in the NPRM. 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 2020 through 

2022 from the 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. The 

associations did not provide updated 

trip-level billing data for 2022, as they 

did for 2021, to use to update the 

number of vessels or customers in this 

final rule, so we used what was 

provided in the NPRM. We believe that 

using 3 years of billing data is a better 

representation of the vessel population 


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52Some 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. 

53 88 FR 12226. See table 42. https://

www.govinfo.gov/content/pkg/FR-2023-02-27/pdf/ 

2023-03212.pdf. (Last accessed 5/17/23.) 

54Moody’s Seasoned Aaa Corporate Bond Yield, 

average of 2022 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. (Last accessed 03/ 

21/2023.) 

currently using pilotage services and 

impacted by this final rule. 

We found that 437 unique vessels 

used pilotage services during the years 

2020 through 2022. That is, these 

vessels had a pilot dispatched to the 

vessel, and billing information was 

recorded in SeaPro. Of these vessels, 

407 were foreign-flagged vessels, and 30 

were U.S.-flagged vessels. As stated 

previously, U.S.-flagged vessels not 

operating on register are not required to 

have a registered pilot per 46 U.S.C. 

9302, but they 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 2020 through 2022 as the 

best representation of vessels estimated 

to be affected by the rates in this final 

rule. From 2020 through 2022, an 

average of 296 vessels used pilotage 

services annually.52 On average, 280 of 

these vessels were foreign-flagged and 

16 were U.S.-flagged vessels that 

voluntarily opted into the pilotage 

service (these figures are rounded 

averages). 

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 perunit cost to each individual shipper is 

dependent 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 2023 with the 

total projected revenues to cover costs 

in 2024. We set pilotage rates so 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 final rule. 

The impacts of the rate changes on 

shippers are estimated from the district 

pilotage projected revenues (shown in 

tables 11, 23, and 35 of this preamble). 

The Coast Guard estimates that, for the 

2024 shipping season, the projected 

revenue needed for all three districts is 

$40,280,666. 

To estimate the change in cost to 

shippers from this final rule, the Coast 

Guard compared the 2024 total 

projected revenues to the 2023 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 2023 final 

rule, we estimated the total projected 

revenue needed for 2023 as 

37,659,195.53 This is the best 

approximation of 2023 revenues, as, at 

the time of publication of this final rule, 

the Coast Guard does not have enough 

audited data available for the 2023 

shipping season to revise these 

projections. Table 43 shows the revenue 

projections for 2023 and 2024 and 

details the additional cost increases to 

shippers by district as a result of the rate 

changes in traffic in Districts One, Two, 

and Three. 

TABLE 43—EFFECT OF THE FINAL RULE BY DISTRICT

[U.S. Dollars; Non-discounted] 

Area Revenue 

needed in 2023 

Revenue 

needed in 2024 

Additional 

costs 

of this rule 

Total, District One ...................................................................................................... $12,609,601 $13,695,935 $1,086,334 

Total, District Two ...................................................................................................... 10,392,542 10,830,491 437,949 

Total, District Three ................................................................................................... 14,657,052 15,754,240 1,097,188 

System Total ....................................................................................................... 37,659,195 40,280,666 2,621,471 

* All figures are rounded to the nearest dollar and may not sum. 

The resulting difference between the 

projected revenue in 2023 and the 

projected revenue in 2024 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 lead to 

affected shippers operating in District 

One experiencing an increase in 

payments of $1,086,334 over the 

previous year. Affected shippers 

operating in District Two and District 

Three experienced an increase in 

payments of $437,949 and $1,097,188, 

respectively, when compared with 2023. 

The overall adjustment in payments 

increased payments by shippers to 

$2,621,471 across all three districts (a 

7-percent increase when compared with 

2023). 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 44 shows the difference in 

revenue by revenue-component from 

2023 to 2024 and presents each revenuecomponent as a percentage of the total 

revenue needed. In both 2023 and 2024, 

the largest revenue-component was 

target pilotage compensation (63 percent 

of total revenue needed in 2023 and 63 

percent of total revenue needed in 

2024), followed by operating expenses 

(32 percent of total revenue needed in 

2023 and 30 percent of total revenue 

needed in 2024). The large increase in 

the working capital fund, 59 percent 

from 2023 to 2024, is driven by a large 

increase in the target rate of return on 

investment from 2.7033 percent in 2021 

to 4.0742 percent in 2022.54


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55Employment Cost Index, Total Compensation 

for Private Industry workers in Transportation and 

Material Moving, Annual Average, Series ID: 

CIU2010000520000A. https://beta.bls.gov/ 

dataViewer/view/timeseries/CIU2010000520000A. 

(Last accessed 08/28/23.) 56Table 1 Summary of Economic Projections, 

Median PCE Inflation. https://

www.federalreserve.gov/monetarypolicy/files/ 

fomcprojtabl20220316.pdf. (Last accessed 5/17/23.) 

TABLE 44—DIFFERENCE IN REVENUE BY REVENUE-COMPONENT

Revenue component 

Revenue 

needed in 

2023 

Percentage 

of total 

revenue 

needed in 

2023 

(%) 

Revenue 

needed in 

2024 

Percentage 

of total 

revenue 

needed in 

2024 

Difference 

(2024 revenue– 

2023 revenue) 

Percentage 

change from 

previous year 

(%) 

Adjusted Operating Expenses ............. $11,984,950 32 $12,193,810 30 $208,860 2 

Total Target Pilot Compensation ......... 23,766,288 63 25,558,164 63 1,791,876 8 

Total Target Apprentice Pilot Compensation .......................................... 916,700 2 951,822 2 35,122 4 

Working Capital Fund .......................... 991,257 3 1,576,870 4 585,613 59 

Total Revenue Needed ........................ 37,659,195 100 40,280,666 100 2,621,471 7 

* All figures are rounded to the nearest dollar and may not sum. 

As stated above, we estimate a total 

increase in revenue needed by the pilot 

associations of $2,621,471. This 

represents an increase in revenue 

needed for target pilot compensation of 

$1,791,876, for the total apprentice pilot 

wage benchmark of $35,122, $208,860 

for adjusted operating expenses, and 

$585,613 for an increase in the revenue 

needed for the working capital fund. 

The change in revenue needed for 

pilot compensation, $1,791,876, is due 

to two factors: (1) The changes to adjust 

2023 pilotage compensation to account 

for the difference between actual ECI 

inflation 55 (3.9 percent) and predicted 

PCE inflation 56 (2.7 percent) for 2023; 

and (2) projected inflation of pilotage 

compensation in Step 2 of the 

methodology, using predicted inflation 

through 2024. 

The target compensation is $440,658 

per pilot in 2024, compared to $424,398 

in 2023. The changes to modify the 2023 

pilot compensation to account for the 

difference between predicted and actual 

inflation increase the 2023 target 

compensation value by 1.2 percent. As 

shown in table 45, this inflation 

adjustment increases total compensation 

by $5,093 per pilot, and the total 

revenue needed by $295,381, when 

accounting for all 58 pilots. 

TABLE 45—CHANGE IN REVENUE RESULTING FROM THE CHANGE TO INFLATION OF PILOT COMPENSATION CALCULATION

IN STEP 4 

2023 Target Pilot Compensation ......................................................................................................................................................... $424,398 

Adjusted 2023 Compensation ($424,398 × 1.012) ............................................................................................................................. $429,491 

Difference between Adjusted Target 2023 Compensation and Target 2023 Compensation ($429,491¥$424,398) ........................ $5,093 

Increase in total Revenue for 58 Pilots ($5,093 × 58) ........................................................................................................................ $295,381 

* All figures are rounded to the nearest dollar and may not sum. 

Similarly, table 46 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 $1,833 per 

apprentice pilot, and the total revenue 

needed by $11,000 when accounting for 

all six apprentice pilots. 

TABLE 46—CHANGE IN REVENUE RESULTING FROM THE CHANGE TO INFLATION OF APPRENTICE PILOT COMPENSATION

CALCULATION IN STEP 4 

Target Apprentice Pilot Compensation ................................................................................................................................................ $152,783 

Adjusted Compensation ($152,783 × 1.012) ....................................................................................................................................... $154,617 

Difference between Adjusted Target Compensation and Target Compensation ($154,617¥$152,783) .......................................... $1,833 

Increase in total Revenue for Apprentices ($1,833 × 6) ..................................................................................................................... $11,000 

* All figures are rounded to the nearest dollar and may not sum. 

As noted earlier, the Coast Guard 

predicts that 58 pilots will be needed for 

the 2024 season. This is two more pilots 

than in the 2023 final rule, which leads 

to an estimated $871,130 increase in 

revenue needed for pilot compensation, 

as shown in table 47. 

TABLE 47—CHANGE IN REVENUE RESULTING FROM INCREASE OF TWO PILOTS

2024 Target Compensation ................................................................................................................................................................. $440,658 

Total Number of New Pilots ................................................................................................................................................................ 2 

Total Cost of new Pilots ($440,658 × 2) ............................................................................................................................................. $881,316 

Difference between Adjusted Target 2023 Compensation and Target 2023 Compensation ($429,491¥$424,398) ........................ $5,093 

Increase in Revenue for 2 Pilots ($5,093 × 2) .................................................................................................................................... $10,186 


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57The 2023 projected revenues are from the Great 

Lakes Pilotage Rate—2023 Annual Review and 

Revisions to Methodology final rule (88 FR 12226), 

tables 10, 22, and 34. The 2024 projected revenues 

are from tables 11, 23, and 35 of this rule. 

TABLE 47—CHANGE IN REVENUE RESULTING FROM INCREASE OF TWO PILOTS—Continued 

Net Increase in total Revenue for 2 Pilots ($881,316¥$10,186) ....................................................................................................... $871,130 

* All figures are rounded to the nearest dollar and may not sum. 

Similarly, the Coast Guard predicts 

that six apprentice pilots will be needed 

for the 2024 season. This is the same as 

in the 2023 season, so there is no 

estimated change in revenue needed for 

pilot compensation, apart from the 

change in inflation accounted for in 

table 48. 

Another increase, $647,699, is the 

result of increasing compensation for 

the 58 pilots to account for future 

inflation of 2.6 percent in 2024. This 

increased total compensation by 

$11,167 per pilot, as shown in table 48. 

TABLE 48—CHANGE IN REVENUE RESULTING FROM INFLATING 2023 COMPENSATION TO 2024 

Adjusted 2023 Compensation ............................................................................................................................................................. $429,491 

2024 Target Compensation ($429,491 × 1.026) ................................................................................................................................. $440,658 

Difference between Adjusted 2023 Compensation and Target 2024 Compensation ($440,658¥$429,491) ................................... $11,167 

Increase in total Revenue for 58 Pilots ($11,167 × 58) ...................................................................................................................... $647,699 

* All figures are rounded to the nearest dollar and may not sum. 

Similarly, an increase of $24,122 is 

the result of increasing compensation 

for the 6 apprentice pilots to account for 

future inflation of 2.6 percent in 2024. 

This increased total compensation by 

$4,020 per apprentice pilot, as shown in 

table 49. 

TABLE 49—CHANGE IN REVENUE RESULTING FROM INFLATING 2023 APPRENTICE PILOT COMPENSATION TO 2024 

Adjusted 2023 Compensation ............................................................................................................................................................. $154,617 

2024 Target Compensation ($440,658 × 36%) ................................................................................................................................... $158,637 

Difference between Adjusted Compensation and Target Compensation ($158,637¥$154,617) ...................................................... $4,020 

Increase in total Revenue for 6 Apprentices ($4,020 × 6) .................................................................................................................. $24,122 

* All figures are rounded to the nearest dollar and may not sum. 

Table 50 presents the percentage 

change in revenue by area and revenuecomponent, excluding surcharges, as 

they are applied at the district level.57


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TABLE 50—DIFFERENCE IN

REVENUE BY

REVENUE-COMPONENT AND

AREA

Adjusted operating expenses Total target pilot 

compensation 

Total target apprentice pilot 

compensation 

Working capital fund Total revenue needed 

2023 2024 

Percentage 

change 2023 2024 

Percentage 

change 

2023 2024 

Percentage 

change 

2023 2024 

Percentage 

change 

2023 2024 

Percentage 

change 

District One: 

Designated .......... $2,599,777 $2,851,215 10 $4,243,980 $4,406,580 4 $183,340 $285,547 56 $189,966 $307,331 62 $7,217,063 $7,850,673 8.8 Undesignated ...... 1,733,186 1,900,809 10 3,395,184 3,525,264 4 122,227 190,364 56 141,941 228,825 61 5,392,538 5,845,262 8.4 

District Two: 

Undesignated ...... 1,270,338 1,102,673 (13) 4,243,980 3,525,264 (17) 61,113 63,455 4 150,722 191,137 27 5,726,153 4,882,529 (14.7) Designated .......... 1,905,503 1,654,014 (13) 2,546,388 3,965,922 56 91,670 95,182 4 122,828 232,845 90 4,666,389 5,947,963 27.5

District Three: 

Undesignated ...... 3,515,118 3,679,209 5 7,214,766 7,931,844 10 359,942 250,646 (30) 299,795 483,269 61 11,389,621 12,344,968 8.4 Designated .......... 961,028 1,005,891 5 2,121,990 2,203,290 4 98,408 66,628 (32) 86,005 133,463 55 3,267,430 3,409,272 4.3 

* All figures are rounded to the nearest dollar and may not sum. 


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58See https://resource.referenceusa.com/. (Last 

accessed 05/18/2023.) 

59See https://www.sba.gov/document/support-- 

table-size-standards. (Last accessed 5/17/23.) 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.’’ 

60 In previous rulemakings, the associations used 

a different NAICS code, 483212 Inland Water 

Passenger Transportation. NAICS code 283212 had 

a size standard of 500 employees as of the latest 

SBA small business size table [published March 17, 

2023] and, therefore, designated the associations as 

small entities. The change in NAICS code comes 

from an update to the association’s ReferenceUSA 

profile in February 2022. 

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 pilot 

associations produce enough revenue to 

fund future improvements. The rate 

changes also help recruit and retain 

pilots, which ensures enough pilots are 

available 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 have considered 

whether this rule would have a 

significant economic impact on a 

substantial number of small entities. 

The term ‘‘small entities’’ comprises 

small businesses, not-for-profit 

organizations that are independently 

owned and operated and are not 

dominant in their fields, and 

governmental jurisdictions with 

populations of less than 50,000. 

For 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.58 As described in 

section II., Executive Summary, and 

section X., Regulatory Analyses, of this 

preamble, we found that 437 unique 

vessels used pilotage services during the 

years 2020 through 2022. These vessels 

are owned by 57 entities, of which 44 

are foreign entities that operate 

primarily outside the United States, and 

the remaining 13 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.59 Table 51 shows the North 

American Industry Classification 

System (NAICS) codes of the U.S. 

entities and the small entity standard 

size established by the SBA, either 

number of employees or annual 

revenue. 

TABLE 51—NAICS CODES AND SMALL ENTITIES SIZE STANDARDS

NAICS Description Small entity size standard 

238910 ............... Site Preparation Contractors ..................................................................................... $19,000,000. 

425120 ............... Wholesale Trade Agents And Brokers ...................................................................... 125 Employees. 

483211 ............... Inland Water Freight Transportation ......................................................................... 1,050 Employees. 

484230 ............... Specialized Freight (Except Used Goods) Trucking, Long-Distance ........................ $34,000,000. 

488330 ............... Navigational Services to Shipping ............................................................................. $47,000,000. 

488390 ............... Other Support Activities for Water Transportation .................................................... $47,000,000. 

523910 ............... Miscellaneous Intermediation 

561510 ............... Travel Agencies ......................................................................................................... $25,000,000. 

561599 ............... All Other Travel Arrangement And Reservation Services ........................................ $32,500,000. 

713930 ............... Marinas ...................................................................................................................... $11,000,000. 

813910 ............... Business Associations ............................................................................................... $15,500,000. 

Of the 13 U.S. entities, 4 exceed the 

SBA’s small business standards for 

small entities, and 1 only provided 

service to a public vessel. To estimate 

the potential impact on the remaining 

eight small entities, the Coast Guard 

used their 2022 invoice data to estimate 

their pilotage costs in 2024. We first 

increase their 2022 costs by 16 percent 

to account for the changes in pilotage 

rates resulting from the 2023 final rule, 

then by 7 percent to account for changes 

resulting from this final rule. Then, we 

estimated the change in cost to these 

entities resulting from this final rule by 

subtracting their estimated 2023 

pilotage costs from their estimated 2024 

pilotage costs, and found the average 

costs to small firms is approximately 

$10,075, with a range of $6,419 to 

$16,255. We then compared the 

estimated change in pilotage costs 

between 2023 and 2024 with each firm’s 

annual revenue. For two entities, the 

impact of the change in estimated 

pilotage expenses is above 1 percent of 

revenues, at 3.27 percent and 4.28 

percent. 

In addition to the owners and 

operators discussed previously, three 

U.S. entities that receive revenue from 

pilotage services are affected by this 

final rule. These are the three pilot 

associations that provide and manage 

pilotage services within the Great Lakes 

districts. These associations are 

designated collectively as the Lake 

Carrier’s Association, as well as 

individually by each separate district 

association, all with the same NAICS 

code, ‘‘Business Association’’ 60 with a 

small-entity size standard of 

$15,500,000 in annual revenue. Based 

on the reported revenues from audit 

reports, the associations individually 

qualify as small entities, but are not 

considered small by the reported 

revenue of the Lake Carrier’s 

Association. 

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 are impacted by this final 

rule. We also did not find any small 

governmental jurisdictions with 

populations of fewer than 50,000 people 

that are impacted by this final rule. 

Based on this analysis, we conclude this 

final rule does not affect a substantial 

number of small entities, nor have a 

significant economic impact on any of 

the affected entities. 

Therefore, the Coast Guard certifies 

under 5 U.S.C. 605(b) that this rule will 

not have a significant economic impact 


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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 offer to assist small entities in 

understanding this rule so that they can 

better evaluate its effects on them and 

participate in the rulemaking. If the 

final rule affects your small business, 

organization, or governmental 

jurisdiction and you have questions 

concerning its provisions or options for 

compliance, please call or email the 

person in the FOR FURTHER INFORMATION

CONTACT section of this final rule. The 

Coast Guard will not retaliate against 

small entities that question or complain 

about this 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 rule calls for no new collection 

of information nor does it impact an 

existing collection of information under 

the Paperwork Reduction Act of 1995, 

44 U.S.C. 3501–3520. 

E. Federalism 

A 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 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.’’ See 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 rule is 

consistent with the fundamental 

federalism principles and preemption 

requirements described in Executive 

Order 13132. 

It is well settled that States may not 

regulate in categories reserved for 

regulation by the Coast Guard. It is also 

well settled that all of the categories 

covered in 46 U.S.C. 3306, 3703, 7101, 

and 8101 (design, construction, 

alteration, repair, maintenance, 

operation, equipping, personnel 

qualification, and manning of vessels), 

as well as the reporting of casualties and 

any other category in which Congress 

intended the Coast Guard to be the sole 

source of a vessel’s obligations, are 

within the field foreclosed from 

regulation by the States. See the 

Supreme Court’s decision in United 

States v. Locke and Intertanko v. Locke, 

529 U.S. 89, 120 S.Ct. 1135 (2000). 

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 

$100,000,000 (adjusted for inflation) or 

more in any one year. Although this rule 

will not result in such expenditure, we 

do discuss the effects of this rule 

elsewhere in this preamble. 

G. Taking of Private Property 

This 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 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 rule under 

Executive Order 13045 (Protection of 

Children from Environmental Health 

Risks and Safety Risks). This rule is not 

an economically significant rule and 

will not create an environmental risk to 

health or risk to safety that might 

disproportionately affect children. 

J. Indian Tribal Governments 

This 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 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. 

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 rule does not use technical 

standards. Therefore, we did not 

consider the use of voluntary consensus 

standards. 

M. Environment 

We have analyzed this 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 made a determination 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 rule categorically excluded under 

paragraphs A3 and L54 of Appendix A, 


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Table 1 of 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 rule involves adjusting the 

pilotage rates for the 2024 shipping 

season to account for changes in district 

operating expenses, changes in the 

number of pilots, and anticipated 

inflation. This rule is not part of a larger 

action, and it will not result in 

significant impacts to the human 

environment. 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 

continues to read as follows: 

Authority: 46 U.S.C. 2103, 2104(a), 6101, 

7701, 8105, 9303, 9304; DHS Delegation No. 

00170.1, Revision No. 01.3, 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 $927; 

(2) Lake Ontario is $608; 

(3) Lake Erie is $597 

(4) The navigable waters from 

Southeast Shoal to Port Huron, MI is 

$667; 

(5) Lakes Huron, Michigan, and 

Superior is $430; and 

(6) The St. Mary’s River is $836. 

* * * * * 

Dated: January 31, 2024. 

W.R. Arguin, 

Rear Admiral, U.S. Coast Guard, Assistant 

Commandant for Prevention Policy. 

[FR Doc. 2024–02410 Filed 2–8–24; 8:45 am] 

BILLING CODE 9110–04–P 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

50 CFR Part 648 

[Docket No. 240205–0038; RTID 0648– 

XD564] 

Fisheries of the Northeastern United 

States; Monkfish Fishery; 2024 

Monkfish Specifications 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Final rule. 

SUMMARY: NMFS is implementing 

specifications for the 2024 monkfish 

fishery. This action is necessary to 

ensure allowable monkfish harvest 

levels that will prevent overfishing and 

allow harvesting of optimum yield. This 

action is intended to establish the 

allowable 2024 harvest levels, 

consistent with the Monkfish Fishery 

Management Plan and previously 

announced multi-year specifications. 

DATES: The final specifications for the 

2024 monkfish fishery are effective May 

1, 2024, through April 30, 2025. 

FOR FURTHER INFORMATION CONTACT: 

Spencer Talmage, Fishery Policy 

Analyst, (978) 281–9232. 

SUPPLEMENTARY INFORMATION: The New 

England and Mid-Atlantic Fishery 

Management Councils (together, the 

Councils) jointly manage the monkfish 

fishery. The Monkfish Fishery 

Management Plan includes a 

specifications process that requires the 

Councils to recommend quotas on a 

triennial basis. This action finalizes 

2024 specifications approved by the 

Councils in Framework Adjustment 13 

to the Monkfish Fishery Management 

Plan, which included specifications for 

fishing years 2023–2025. 

On August 11, 2023, NMFS published 

a final rule approving Framework 13 

measures for the 2023 fishing year (88 

FR 54495), based on a recent stock 

assessment update and consistent with 

the New England Council’s Scientific 

and Statistical Committee 

recommendations. At that time, NMFS 

also projected a continuation of those 

same specifications for 2024 and 2025. 

The final total allowable landings in 

both the Northern and Southern Fishery 

Management Areas for 2024 are 

summarized in table 1. The 2024 

measures are the same as those 

implemented in 2023. 

TABLE 1—MONKFISH SPECIFICATIONS FOR FISHING YEAR 2024 

[in metric tons] 

Catch limits Northern 

area 

Southern 

area 

Acceptable Biological Catch ............................................................................................................................................ 6,224 5,861 

Annual Catch Limit .......................................................................................................................................................... 6,224 5,861 

Management Uncertainty (3 percent) .............................................................................................................................. 187 176 

Annual Catch Target (Total Allowable Landings + discards) .......................................................................................... 6,038 5,685 

Expected Discards ........................................................................................................................................................... 729 2,205 

Total Allowable Landings ......................................................................................................................................... 5,309 3,481 

NMFS has reviewed the available 

information on fishing years 2022 and 

2023. There have been no annual catch 

limit overages, nor is there any new 

biological information that would 

require altering the projected 2024 

specifications. Based on this, we are 

implementing the fishing year 2024 

specifications announced in the 

Framework 13 final rule. The 2024 

specifications will be effective until 

April 30, 2025. 

This final rule makes no modification 

to other management measures for the 

monkfish fishery (e.g., trip limits, DaysAt-Sea allocations, etc.). 


ddrumheller on DSK120RN23PROD with RULES1