18488 Federal Register / Vol. 87, No. 61 / Wednesday, March 30, 2022 / Rules and Regulations 

1Title 46 of the United States Code (U.S.C.), 

Sections 9301–9308. 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

46 CFR Parts 401 and 404 

[Docket No. USCG–2021–0431] 

RIN 1625–AC70 

Great Lakes Pilotage Rates—2022 

Annual Review and Revisions to 

Methodology 

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 base pilotage 

rates for the 2022 shipping season. This 

rule will adjust the pilotage rates to 

account for changes in district operating 

expenses, an increase in the number of 

pilots, and anticipated inflation. In 

addition, this rule will make a policy 

change to round up in the staffing 

model. The Coast Guard is also making 

methodology changes to factor in an 

apprentice pilot’s compensation 

benchmark for the estimated number of 

apprentice pilots. The Coast Guard 

estimates that this rule will result in a 

7-percent increase in pilotage operating 

costs compared to the 2021 season. 

DATES: This final rule is effective April 

29, 2022. 

ADDRESSES: To view documents 

mentioned in this preamble as being 

available in the docket, go to https://

www.regulations.gov, type USCG–2021– 

0431 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 202– 

372–1535, email Brian.Rogers@uscg.mil, 

or fax 202–372–1914. 

SUPPLEMENTARY INFORMATION: 

Table of Contents for Preamble 

I. Abbreviations 

II. Executive Summary 

III Basis and Purpose 

IV. Discussion of Comments and Changes 

A. Staffing Model 

B. Apprentice Pilot Wage Benchmark and 

Applicant Trainee Compensation 

C. Timing of Annual Audit 

D. Exclusion of Legal Expenses From 

Operating Expenses 

E. Correction of Recognized Expenses for 

District Two 

F. Changes to the NPRM’s Estimate for 

District Two Pilot Numbers 

G. Changes to the NPRM’s Estimate for 

District Three Pilot Numbers 

H. Request for Cost-Effectiveness Study 

I. Public Disclosure of Pilot Compensation 

V. Discussion of Methodological and Other 

Changes 

A. Changes to the Staffing Model 

B. Apprentice Pilot Wage Benchmark for 

Conducting Pilotage While Using a 

Limited Registration 

C. Apprentice Pilots’ Expenses and 

Benefits as Approved Operating 

Expenses 

VI. 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 

VII. 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 

APA American Pilots’ Association 

BLS Bureau of Labor Statistics 

CFR Code of Federal Regulations 

Coalition Shipping Federation of Canada, 

American Great Lakes Ports Association, 

and United States Great Lakes Shipping 

Association 

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 

GAO United States Government 

Accountability Office 

GLPA Great Lakes Pilotage Authority 

(Canadian) 

GLPAC Great Lakes Pilotage Advisory 

Committee 

GLPMS Great Lakes Pilotage Management 

System 

Great Lakes Pilots’ comment The 

comment filed jointly by the Lakes Pilots 

Association, Saint Lawrence Seaway 

Pilotage Association, and Western Great 

Lakes Pilots Association 

IRS Internal Revenue Service 

LPA Lakes Pilots Association 

NAICS North American Industry 

Classification System 

NPRM Notice of proposed rulemaking 

NTSB National Transportation Safety Board 

OMB Office of Management and Budget 

PCE Personal Consumption Expenditures 

Q4 Fourth quarter 

§ Section 

SBA Small Business Administration 

SLSDC St. Lawrence Seaway Development 

Corporation 

SLSMC St. Lawrence Seaway Management 

Corporation 

SLSPA Saint Lawrence Seaway Pilotage 

Association 

U.S.C. United States Code 

WGLPA Western Great Lakes Pilots 

Association 

II. Executive Summary 

Pursuant to 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 


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2 81 FR 11907, March 7, 2016. 

3The increase of two pilots from rounding is an 

increase of 36 percent, and the decrease of five 

pilots from retirements and attrition is ¥90 percent, 

for a net effect of a decrease of 54 percent. 

4 46 U.S.C. 9301–9308. 

waterway conditions but is generally in 

March or April. The rates for the 2022 

season, which range from $342 to $834 

per pilot hour (depending on which of 

the specific six areas pilotage service is 

provided), are paid by shippers to the 

pilot associations. The three pilot 

associations, which are the exclusive 

source of United States Registered Pilots 

on the Great Lakes, use this revenue to 

cover operating expenses, maintain 

infrastructure, compensate apprentice 

pilots (previously referred to as 

applicants) and registered pilots, 

acquire and implement technological 

advances, train new personnel, and 

allow pilots to participate in 

professional development. 

In accordance with statutory and 

regulatory requirements, we employed a 

ratemaking methodology that was 

introduced originally in 2016.2 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. We currently use a 10-step 

methodology to calculate rates that we 

explain in detail in the Discussion of 

Methodological and Other Changes, in 

section V of the preamble to this rule. 

As part of our annual review, in this 

rule we are establishing new pilotage 

rates for 2022 based on the existing 

methodology. The Coast Guard 

estimates that this rule will result in a 

7-percent increase in pilotage operating 

costs compared to the 2021 season. 

There will be an increase in rates for all 

areas of District One and District Three, 

and for the undesignated area of District 

Two. The rate for the designated area of 

District Two will decrease. 

These changes are largely due to a 

combination of three factors: (1) The 

addition of apprentice pilots to Step 3, 

‘‘Estimate Number of Registered Pilots 

and Apprentice Pilots,’’ with a target 

wage of 36 percent of pilot target 

compensation (60 percent of the 

increase in revenue needed), (2) 

adjusting target pilot compensation for 

both the difference in past predicted 

and actual inflation and predicted 

future inflation (48 percent of the 

increase in revenue needed), and (3) a 

net reduction of 3 registered pilots at the 

beginning of the 2022 shipping season, 

representing the addition of 1 pilot for 

the undesignated area of District One 

due to rounding, the reduction of 2 

pilots, and the addition of 1 pilot for the 

undesignated area due to rounding in 

District Two, and 3 retirements in 

District Three (an offsetting decrease 

representing ¥54 percent of the 

increase in revenue needed).3 The other 

46 percent of the increase in revenue 

needed results from differences in traffic 

levels between the 2018, 2019, and 2020 

shipping seasons. The Coast Guard uses 

a 10-year average when calculating 

traffic to smooth out variations caused 

by global economic conditions, such as 

those caused by the COVID–19 

pandemic. 

The Coast Guard is also making one 

policy change and one change to the 

ratemaking methodology. First, in the 

staffing model (Volume 82 of the 

Federal Register (FR) at Page 41466, and 

table 6 at Page 41480, August 31, 2017), 

the Coast Guard will change the way we 

determine the maximum number of 

pilots needed for the upcoming season 

by always rounding up the final number 

to the nearest whole number. Second, 

we will also include in the methodology 

a calculation for a wage benchmark for 

apprentice pilots. Although it is not a 

change to existing ratemaking policy, 

we are listing apprentice pilot operating 

expenses within the approved operating 

expenses in title 46 of the Code of 

Federal Regulations (CFR), section 

404.2, ‘‘Procedure and criteria for 

recognizing association expenses,’’ used 

in Step 1 of the ratemaking. These 

operating expenses have been included 

in past ratemakings, and this is a 

codification of existing policy in order 

to distinguish apprentice pilot expenses 

from apprentice pilot wage benchmark. 

Based on the ratemaking model 

discussed in this rule, we are 

establishing the rates shown in table 1. 

TABLE 1—EXISTING AND NEW PILOTAGE RATES ON THE GREAT LAKES

Area Name 

Final 

2021 

pilotage 

rate 

Final 

2022 

pilotage 

rate 

District One: Designated ....................................... St. Lawrence River ............................................................... $800 $834 

District One: Undesignated ................................... Lake Ontario ......................................................................... 498 568 

District Two: Designated ....................................... Navigable waters from Southeast Shoal to Port Huron, MI 580 536 

District Two: Undesignated ................................... Lake Erie .............................................................................. 566 610 

District Three: Designated .................................... St. Marys River .................................................................... 586 662 

District Three: Undesignated ................................ Lakes Huron, Michigan, and Superior ................................. 337 342 

This rule will affect 51 United States 

Great Lakes pilots, 9 apprentice pilots, 

3 pilot associations, and the owners and 

operators of an average of 293 

oceangoing vessels that transit the Great 

Lakes annually. This rule is not 

economically significant under 

Executive Order 12866 and 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 $2,154,342 in estimated 

payments made by shippers during the 

2022 shipping season. This rule 

establishes the 2022 yearly 

compensation for pilots on the Great 

Lakes at $399,266 per pilot (a 5.37 

percent increase over their 2021 

compensation), adjusted for changes in 

inflation since the September 14, 2021 

notice of proposed rulemaking (NPRM) 

for this final rule (see, 86 FR 51047). 

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 VII of 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 93,4 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 


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5 46 U.S.C. 9302(a)(1). 

6 46 U.S.C. 9303(f). 

7 Id. 

8 Id. 

9 Department of Homeland Security (DHS) 

Delegation 00170.1, Revision No. 01.2, paragraph 

(II)(92)(f). 

10For a detailed calculation of the staffing model, 

see 82 FR 41466, table 6 at 41480 (August 31, 2017). 

United States waters of the St. Lawrence 

Seaway and the Great Lakes system.5

For United States Great Lakes pilots, the 

statute requires the Secretary to 

‘‘prescribe by regulation rates and 

charges for pilotage services, giving 

consideration to the public interest and 

the costs of providing the services.’’ 6

The statute requires that rates be 

established or reviewed and adjusted 

each year, no later than March 1.7 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.8

The Secretary’s duties and authority 

under 46 U.S.C. Chapter 93 have been 

delegated to the Coast Guard.9

The purpose of this rule is to issue 

new pilotage rates for the 2022 shipping 

season. The Coast Guard believes that 

the new rates will continue to promote 

our goals, as outlined in 46 CFR 404.1, 

of promoting safe, efficient, and reliable 

pilotage service; facilitating commerce 

throughout the Great Lakes and St. 

Lawrence Seaway; protecting the marine 

environment; and generating sufficient 

revenue for each pilotage association to 

reimburse its necessary and reasonable 

operating expenses, recruit qualified 

mariners, retain experienced United 

States Registered Pilots, support staffing 

model goals in accordance with 

National Transportation Safety Board 

(NTSB) recommendations regarding 

pilot fatigue, and provide appropriate 

revenue to use for improvements. 

IV. Discussion of Comments and 

Changes 

In response to the NPRM for this 

ratemaking, the Coast Guard received 

six comment submissions. These 

submissions include one comment filed 

jointly by the Lakes Pilots Association, 

the Saint Lawrence Seaway Pilotage 

Association, and the Western Great 

Lakes Pilots Association (the Great 

Lakes Pilots’ comment); 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 St. Lawrence 

Seaway Pilots’ Association (SLSPA); 

one from the president of the Lakes 

Pilots Association (LPA); one from the 

president of the Western Great Lakes 

Pilot Association (WGLPA); and one 

from a retired United States Registered 

Pilot who provided pilotage service in 

District Three. As each of these 

commenters touched on numerous 

issues, for each response below we note 

which commenter raised the specific 

points addressed. In situations where 

multiple commenters raised similar 

issues, we provide one response to those 

issues. 

A. Staffing Model 

The retired United States Registered 

Pilot in District Three commented that, 

while it is necessary to have enough 

staffing for association presidents to 

perform administrative duties without 

impairing pilotage service, he believes 

that doing so by always rounding up in 

the staffing model lacks a rational basis. 

He characterized the adjustment as 

essentially a random adjustment from 

+0.01 to +0.99 pilots, and while figures 

at the higher end of that range may 

result in enough additional staffing 

being available, figures at the lower end 

of that range would not. 

The SLSPA commented that it 

believes the Coast Guard’s decision to 

always round up the pilot numbers in 

the staffing model is a good step toward 

mitigating the impact of non-piloting 

duties on association presidents’ 

workload. The WGLPA also supported 

the decision to always round up in the 

staffing model. They characterized the 

practice of always rounding up as 

providing some relief for the non-pilot 

responsibilities of presidents and 

providing a cushion for adequate 

staffing when unexpected injuries or 

illnesses occur, while rounding down 

would always leave the associations 

short-staffed. In support of rounding up, 

the WGLPA characterized it as 

‘‘ridiculous’’ to acknowledge that a 

district has more demand for pilotage 

services than can be met by a specific 

number of pilots, and then round down 

to authorize that same inadequate 

number. The LPA also supported 

rounding up the number of pilots in the 

staffing model. The LPA were of the 

opinion that this approach still 

undercounts the need for staff, 

especially when the rounding is a small 

fraction, but does assist in addressing 

the need. 

The Great Lakes Pilots’ comment 

similarly noted that always rounding up 

the number of pilots in the staffing 

formula helps address the associations’ 

staffing needs, but undercounts the 

need, especially when the rounding is a 

small fraction. It suggested that a 

dedicated position, in addition to 

rounding up, would be a better solution. 

We disagree that rounding up the 

staffing model’s final number to the 

nearest integer leads to an inadequate 

result or is a random adjustment. We 

also considered and rejected the 

alternative request to add a dedicated 

position. The Coast Guard’s reasoning 

for always rounding up in the staffing 

model is as follows. 

The staffing model focuses on the 

opening and closing of the shipping 

season. Weather conditions, ice 

coverage and formation, and the lack of 

aids to navigation have historically 

made it necessary to require double 

pilotage. Pilot association presidents do 

conduct a significant amount of piloting 

assignments and will continue to do so 

in the future, but during the opening 

and closing of the shipping season the 

pilot association presidents must 

coordinate with United States and 

Canadian agencies and numerous other 

stakeholders to facilitate commerce. 

Rounding up the pilot numbers in the 

staffing model is essential to provide 

some relief to accommodate the 

important non-piloting duties of the 

presidents. 

Rounding up ensures that the Great 

Lakes and St. Lawrence Seaway have 

sufficient pilotage strength to safely and 

efficiently facilitate commerce at the 

opening and closing of the season. 

When a pilot president is not able to 

pilot full-time because of their 

facilitative role, they are essentially 

acting as a pilot on a less than full-time 

basis. However, the associations do not 

staff part-time pilots. In addition, when 

we round down the staffing model final 

number decimal as much as 0.49, we 

undercount the piloting needs for half a 

pilot. The part-time pilotage of the 

presidents, combined with the 

undercounted need of half a pilot from 

rounding down in the staffing model, 

could result in understaffing equivalent 

to the need for a full pilot. Rounding up 

to a whole pilot also provides added 

capacity when the association is shortstaffed for unexpected reasons, such as 

a pilot’s illness. It also ensures that the 

partial pilot indicated by the staffing 

model is actually provided to the 

district to satisfy the traffic demand. 

The result of rounding up to the 

nearest integer is not random, as one 

commenter suggested, because the 

staffing model already shows a need for 

a partial pilot. Rounding up in the 

staffing model already occurs when the 

result for the number of pilots needed 

for the district has a decimal of 0.5 or 

greater, as with District Three’s result of 

21.55, which would round up to 22 

pilots in any event.10 Always rounding 

up to the nearest integer only creates a 


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11For a detailed calculation of the staffing model, 

see 82 FR 41466, table 6 at 41480 (August 31, 2017). 

change from current practice when the 

result of a district is greater than 0.00 

and less than 0.50, not between 0.01 and 

0.99, as the commenter suggested. 

Therefore, we believe that rounding 

up to a whole integer should sufficiently 

cover the need presented by the staffing 

model and pilot association presidents. 

In the staffing model calculations that 

we were already using, the demand for 

half of a pilot or more (0.50+) is 

rounded up to a whole integer. 

Rounding up the decimals incorporates 

some margin to account for the 

president who serves as pilot less than 

full-time due to their other oversight 

responsibilities. 

We disagree that a dedicated position 

in addition to rounding up, as proposed, 

would be a better solution. Allowing an 

additional dedicated position for a pilot, 

in addition to rounding up, would 

surpass the need presented. The cost of 

adding an additional pilot slot for each 

of the three pilot associations, in 

addition to rounding up, would add 

three additional target pilot 

compensations (one in each district) to 

the operating expense base. We do not 

believe always allowing an additional 

pilot for each of the three pilotage 

associations is a reasonable expense, 

because we have determined that the 

need presented is satisfied by rounding 

up. Adding three permanent additional 

pilots to the ratemaking annually, in 

addition to rounding up, would 

overcount the need presented by the 

staffing model and the less than fulltime pilotage provided by presidents. 

Therefore, we have determined that 

adding an additional slot for a pilot is 

not a necessary and reasonable cost to 

include in the ratemaking. We expect to 

include this topic and the staffing model 

as agenda items for a future Great Lakes 

Pilotage Advisory Committee (GLPAC) 

meeting. 

The Coalition commented that it 

believes the decision to always round 

up in the staffing model is arbitrary and 

unsupported by evidence, as there is no 

data regarding the extent of the 

administrative burden on association 

presidents. It commented that the Coast 

Guard put off a decision on always 

rounding up in the 2021 final rule, 

pending additional research, but has not 

presented the results of that research. 

The Coalition suggested that the Coast 

Guard evaluate the real demand for 

administrative services, both in terms of 

the total hours required and the skills 

required to perform those tasks (so that 

a highly skilled pilot is not wasted on 

administrative work not requiring 

pilotage experience), and do so by 

district, in case the need is not 

consistent from district to district. The 

Coalition also asserted that, by always 

rounding up, the Coast Guard will 

effectively always provide one 

additional pilot in each of the three 

Great Lakes pilotage districts. 

We disagree with the Coalition’s 

comment. In the 2021 final rule, the 

Coast Guard did not adopt the proposed 

change to round up in the staffing 

model, noting we would ‘‘gather more 

information on the best way to address 

this issue, based on concerns raised by 

the commenters.’’ (86 FR 14190). The 

Coast Guard considered the concerns, 

information, and constraints discussed 

in the comments, as well as discussions 

with the interested parties, and believes 

the best way to address the pilot 

president being ‘‘off the roles’’ part of 

the time is by rounding up in the 

staffing model, based on the following 

facts and information. 

The Coast Guard acknowledges that 

pilot presidents are still performing 

pilotage duties, as well as their 

nondelegable administrative oversight, 

and are essentially providing pilotage 

services on a less than full-time basis. 

During the annual GLPAC meeting on 

September 1, 2021, the association 

presidents discussed in detail their nonpiloting duties and their piloting 

schedules. Attendees of the GLPAC 

meeting included the three association 

presidents, a representative for the 

shipping industry, a representative for 

the port operators, the Director of Great 

Lakes Pilotage, and several other 

members of the public, including pilots, 

industry representatives, and Coast 

Guard employees. The agenda topics for 

this meeting included stakeholder 

outreach and the staffing model used in 

the ratemaking methodology. The 

association presidents responded to 

inquiries regarding their stakeholder 

engagements over the last couple of 

years. 

On pages 174–177 of the GLPAC 

transcript (available in the docket where 

indicated under the ADDRESSES section 

of the preamble), the presidents’ 

discussion validates our assertion that 

they are often pulled away for 

nondelegable meetings and 

responsibilities that require the 

president’s knowledge, authority, and 

piloting expertise, which results in them 

not being able to pilot full-time. The 

GLPAC transcript indicates the 

presidents’ piloting time competes with 

attending conferences and meetings, 

outreach, serving on other advisory 

committees, and assisting with special 

projects and issues. These tasks require 

an experienced pilot to provide advice 

and solutions for issues facing pilotage 

in the Great Lakes. A non-pilot manager 

would not have the necessary piloting 

expertise to advise agencies and 

stakeholders in lieu of the association 

president. For these reasons, the Coast 

Guard determined that a reasonable 

approach to covering time spent 

performing tasks other than piloting was 

to round up, where we would have 

otherwise rounded down, rather than 

allow expenses for an additional 

administrative position. 

Rounding up avoids the very real 

issue of understaffing where the staffing 

model already indicates that there is 

traffic demand and a need for pilots 

above the rounded-down integer. 

Adequate staffing is especially critical 

during the double-pilotage requirements 

that often occur during the opening and 

closing of the shipping season, when 

navigation is particularly challenging. 

During double pilotage, association 

presidents may be tasked with 

coordinating with agencies to facilitate 

commerce rather than providing 

pilotage. Because the staffing model 

focuses on the opening and closing 

season shipping demands, it could be 

detrimental to the Great Lakes shipping 

industry to provide fewer pilots than the 

number indicated by the staffing model. 

In further response to the Coalition’s 

comment, rounding up does not allocate 

pilot compensation costs toward the 

work of an administrative role. It is 

intended to cover the need for a partial 

pilot already demonstrated by the 

staffing model and the need presented 

by the president being off the rolls part 

of the time in order to perform tasks that 

cannot be delegated to a non-pilot. The 

Coast Guard may review the staffing 

model in a future rulemaking, and we 

would consider the factors suggested by 

the Coalition. By rounding down (up to 

.49 of a pilot), combined with the parttime service provided by the presidents, 

there is a clear discrepancy in how 

many pilots the staffing model says are 

needed and what is actually available to 

assist the shipping industry. Further, 

when compared with the prior staffing 

model, always rounding up to a whole 

integer only adds two additional pilots 

in this ratemaking, one in District One 

and one in District Two. In District 

Three, there is no additional pilot as a 

consequence of our change to the 

staffing model, because the prior staffing 

model would also have rounded up to 

a whole integer.11

The general concerns raised by the 

Coalition in response to the previous 

2021 NPRM were that an additional 

pilot was not necessary and could be 

filled by a lower-cost administrative 

assistant. We considered that 


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alternative. In evaluating the duties 

described in the GLPAC transcript, 

pages 174–177, we determined that only 

a pilot could supplement the piloting 

duties of a president only providing part 

time pilotage. Therefore, we determined 

that rounding up to allow for an 

additional pilot was necessary, versus 

hiring administrative staff. 

In addition, the Coast Guard took into 

consideration additional cost factors, 

such as where any additional pilots 

would be factored into the ratemaking if 

an extra pilot was authorized. The Coast 

Guard reviewed the options of placing 

that pilot in either the designated waters 

or undesignated waters for ratemaking 

purposes. Where the pilot would be 

allocated was not a consideration 

proposed in the 2021 ratemaking NPRM 

proposal for rounding up in the staffing 

model. In the interest of maintaining 

rate stability, while also considering the 

shipping industry’s projections for 

pilotage demands, the 2022 ratemaking 

NPRM proposed placing the additional 

pilot in undesignated waters. Based on 

the alternatives considered, information 

provided to us by the commenters, and 

the information presented at the GLPAC 

meeting, the Coast Guard believes this is 

the best solution to ensuring there are 

enough pilots allocated to the districts 

at this time. 

B. Apprentice Pilot Wage Benchmark 

and Applicant Trainee Compensation 

In past ratemakings, we have 

historically used the term ‘‘applicant 

pilots’’ as a collective way of referring 

to both applicant trainees and 

apprentice pilots. In each districts’ 

operating expenses, the line item for 

applicant pilot salaries includes salaries 

for both apprentice pilots and applicant 

trainees. Beginning with the year 2022, 

we are adopting an apprentice pilot 

wage benchmark for funding all 

apprentices’ salaries and will leave 

applicant trainees’ salaries in the 

operating expenses. To help clarify this 

distinction, this rule adds definitions for 

the terms ‘‘apprentice pilot’’ and 

‘‘limited registration’’ to the definition 

section in § 401.110. 

An apprentice pilot is defined as a 

person, approved and certified by the 

Director, who is participating in an 

approved United States Great Lakes 

pilot training and qualification program 

and meets all the minimum 

requirements listed in 46 CFR 401.211. 

The apprentice pilot definition will not 

include applicant trainees, who are 

pilots in training who have not acquired 

the minimum service requirements in 

§ 401.210(a)(1). Under this rule, salaries 

for applicant trainees will continue to 

be included in the district’s operating 

expenses for the year they are incurred. 

The ‘‘apprentice pilot’’ definition will 

only be applicable in determining 

which pilots may be included in the 

apprentice pilot estimates, wage 

benchmark, and operating expenses 

discussed in new §§ 404.2(b)(7), 

404.103(b), and 404.104(d) and (e) of 

this rule. 

A limited registration is currently 

used in the apprentice pilot training 

process in the districts, but it is not 

defined in the Great Lakes pilotage 

regulations. We are adding a definition 

for ‘‘limited registration’’ that will align 

with the current use of the term in the 

industry. A limited registration is 

defined as an authorization given by the 

Director, upon the request of the 

respective pilot association, to an 

apprentice pilot to provide pilotage 

service without direct supervision from 

a fully registered pilot in a specific area 

or waterway. 

The SLSPA commented that it 

believed that apprentice pilot 

compensation should not be restricted 

to apprentices with limited registration, 

because this creates a gap in 

compensation until the apprentices 

receive limited registration. The SLSPA 

suggested that this compensation should 

be given to ‘‘trainees’’ as soon as they 

enter training, for the purpose of 

attracting experienced mariners. 

The Coast Guard agrees that 

apprentice pilots should be included in 

the compensation wage benchmark as 

soon as they achieve apprentice pilot 

status, which is as soon as they enter 

apprentice pilot training. In the initial 

proposal to apply this wage benchmark 

to apprentice pilots with limited 

registrations, we assumed that all 

apprentice pilots would have a limited 

registration. But the comments and 

additional information we received 

indicate that there is a potential for a 

few months to pass before the 

apprentice pilot actually receives the 

limited registration. We do not intend 

for there to be a gap before the wage 

benchmark becomes applicable. This 

wage benchmark was always intended 

to apply to all apprentice pilots, as 

applicants who progress through the 

training program will typically receive a 

limited registration. As a result, for 

ratemaking purposes, apprentice pilots 

with and without limited registrations 

will be considered equivalent. In this 

final rule, apprentice pilots with or 

without limited registration are 

included in Step 3 of the methodology, 

with a compensation of 36 percent of 

pilot target compensation. The projected 

number of apprentices needed for each 

district estimated in Step 3 of the 

methodology will not change. We 

estimated these numbers under the 

assumption that the apprentices would 

receive their limited registrations within 

the season. 

The districts will continue to be 

reimbursed for all necessary and 

reasonable costs associated with 

applicant pilots (‘‘trainees’’ as the 

commenter refers to them), via the 

operating expenses portion of the 

methodology, 3 years after the costs 

have been incurred. The Coast Guard 

intends to keep costs associated with 

applicant pilots under the heading of 

recognized expenses in recognition of 

the fact that it is harder to accurately 

predict the number of applicants newly 

joining a program as opposed to 

apprentices, who must have already 

applied, been accepted, and started their 

training. To ensure the accuracy of this 

estimate going forward, the Coast Guard 

will continue to track the progress of 

applicants as they are accepted into 

programs and shift into apprentice roles, 

as well as the progress of apprentices 

toward becoming fully registered pilots. 

A retired U.S. Registered Pilot in 

District Three commented that the Coast 

Guard made an incorrect statement 

when it said that the previous use of the 

36-percent benchmark for apprentice 

pilots compensation was not opposed in 

the 2019 ratemaking. He also 

commented that he believed the 

administrative record does not support 

the decision to only allow 36 percent of 

target compensation. The LPA also 

disagreed with the 36-percent 

benchmark for apprentice pilots with 

limited registration, characterizing it as 

inadequate. The LPA’s comment further 

stated that they consistently pay 75 

percent of target pilot compensation for 

first-year apprentice pilots, 85 percent 

for second-year apprentice pilots, and 

95 percent for third-year apprentice 

pilots; that this amount allows them 

attract and retain the most qualified 

mariners; and that they have operated 

this way for over 30 years. 

We disagree with the retired pilot 

commenter and the LPA and respond to 

these comments with a recount of the 

2019 administrative record and a 

discussion of why we determined that 

the 36-percent figure is reasonable. 

In years prior to the 2019 ratemaking, 

we authorized a $150,000 surcharge to 

cover apprentice pilot compensation. 

The surcharge included both apprentice 

pilot wage benchmarks and expenses. In 

the 2019 ratemaking final rule, we 

explained that there was no cap on the 

apprentice pilot surcharges allowed to 

be collected in the operation expense 

year for 2016, and that the amounts 

actually collected totaled more than the 

2016 surcharge percentage was 


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12 86 FR at 51056. 

anticipated to collect (84 FR 20551, 

20557, May 10, 2019). Therefore, in the 

2019 final rule, the Coast Guard used a 

Director’s adjustment to bring the 2016 

surcharge expense for apprentice pilot 

compensation for District Two to a 

reasonable level in comparison to other 

districts. District Two has historically 

reported higher expenses for apprentice 

pilots, in comparison to the other 

districts, which they recently confirmed 

in a comment on the NPRM for this final 

rule. 

When determining what is a 

necessary and reasonable apprentice 

pilot wage benchmark, the Director 

considers many factors, including past 

practices and a comparison of the 

expenses incurred by other districts for 

similar services. In developing the 2019 

ratemaking, the Coast Guard reduced 

District Two’s expenses to align with 

those of the other districts, which also 

closely aligned with the amount of the 

surcharges authorized in the years 2016 

through 2018. Although we previously 

authorized $150,000 per apprentice 

pilot, two of the districts did not have 

actual apprentice pilot wage expenses 

above $128,000. Setting the apprentice 

pilot wage benchmark at 36 percent is 

both consistent with what we have 

authorized in the past 4 years and 

reasonable in consideration of what the 

districts actually paid. 

Although the average compensation 

per apprentice for District Two 

exceeded the apprentice pilot salaries in 

the other districts, we have never 

allowed a district to claim more in 

apprentice pilot salaries simply because 

they have paid more than other districts. 

The Coast Guard will continue this 

practice of allowing up to a certain 

amount, using the 36-percent target for 

all districts. In any case, we believe it 

would be unfair to allow each district to 

claim a different amount of apprentice 

pilot salaries in the ratemaking. 

Similarly, we do not set different target 

pilot compensation amounts for each 

district. Doing so could 

disproportionately affect the 

ratemaking, lead to significant changes 

in the rates, and set a precedent that is 

unpredictable for all parties. It is 

consistent with past ratemakings to 

authorize the same apprentice pilot 

compensation in each district, because 

the $150,000 per apprentice previously 

authorized with the surcharge was the 

same for all districts, which is one 

reason why we adjusted District Two’s 

apprentice pilot salaries in 2019 to the 

36 percentage mark. Since then, we 

have determined that 36 percent is 

reasonable, based on actual expenses 

and the predictability it provides. 

In addition, the Director also 

considers the associations’ success with 

pilot retention and recruitment of 

qualified mariners. As noted above, the 

36 percent apprentice pilot wage 

benchmark is consistent with what we 

have authorized in expenses in the past 

several ratemakings. The comments 

from the pilot associations did not 

present any actual inability to recruit 

and retain qualified apprentice pilots 

based on the past 4 years of allowable 

expenses. This is why we believe 

continuing this rate would be sufficient 

to ensure adequate apprentice pilot 

recruitment and retention, as long as the 

associations are able to recruit and 

retain apprentices. 

The Great Lakes Pilots’ comment 

noted that apprentice pilots and 

applicant trainees are highly trained 

mariners and, however their 

compensation is accounted for, they 

cannot be expected to work for 

significant periods of time without 

adequate compensation. The Great 

Lakes Pilots’ comment supported 

establishing a clear understanding 

ahead of time as to what amounts the 

Coast Guard will approve for pilotage 

services, and requested that the 

approved amounts be accurate and not 

subject to after-the-fact adjustments. 

The Great Lakes Pilots’ comment 

suggested that the proposed apprentice 

pilot wage benchmark would be a better 

model for funding salaries for applicant 

trainee pilots than currently provided, 

and that the apprentice pilot wage 

benchmark should be structured in a 

manner more akin to the fully registered 

pilot target compensation. It further 

suggested that the wage benchmark 

should reflect the difference between an 

applicant trainee accumulating time and 

training trips and an apprentice pilot 

who is actually moving the vessel and 

generating revenue as the pilot of 

record. 

As indicated above, we have 

determined that the 36-percent figure is 

a reasonable wage benchmark for 

apprentice pilots, based on actual 

expenses, historic data that indicates 

adequate apprentice pilot recruitment 

and retention, and the predictability it 

provides all parties involved. This wage 

benchmark is meant to cover wage 

expenses for apprentices that cannot 

otherwise be recouped. In instances 

where the apprentice pilot is operating 

as the pilot of record, shippers are being 

charged the rate of a registered pilot 

and, therefore, the district is able to 

recoup earnings to compensate the 

apprentice over the wage benchmark. By 

building the target apprentice pilot wage 

benchmark into the rate, the Coast 

Guard ensures that apprentice pilot 

wage benchmark will be appropriate 

and predictable moving forward and 

eliminates the need to adjust past 

expenses (once expenses are based on 

years where apprentices are built into 

the rate). The Coast Guard will only 

adjust past recognized apprentice pilot 

expenses for years that preceded the 

implementation of including apprentice 

pilots in Step 3 of the methodology. 

Adjustments will continue to be made 

through the 2025 ratemaking, which 

will use 2021 operating expenses as the 

basis. 

The Coast Guard will continue to 

classify the necessary and reasonable 

applicant trainee salaries and benefits as 

recognized operating expenses going 

forward. The Coast Guard has opted not 

to use a wage benchmark approach for 

funding applicant trainee salaries 

because it could result in inaccurate 

compensation to the districts. Applicant 

trainees may only be training for part of 

a shipping season, because they can be 

brought on at any point or they may be 

promoted to apprentice pilots. 

Continuing to rely on the districts’ 

actual operating expenses for applicant 

trainee salaries will ensure the Coast 

Guard allows a necessary and 

reasonable amount to be included in the 

ratemakings. 

The WGLPA indicated that it 

supported the compensation methods 

for applicant and apprentice pilots 

proposed in the NPRM, noting that it is 

unreasonable to expect applicant and 

apprentice pilots to endure financial 

and personal hardship to join the pilot 

associations, and that these 

compensation methods are required to 

ensure that the best mariners continue 

to join the piloting ranks. The WGLPA 

requested that the applicant trainee 

compensation methods be implemented 

beginning with the 2022 rates, and 

criticized the 3-year lag in recouping 

those apprentice pilot wage operating 

expenses under the previous method. 

The Coast Guard confirms that the 

apprentice pilot wage benchmark 

process in Steps 3 and 4 will start with 

this 2022 ratemaking. This was our 

intent when we proposed the change in 

the NPRM. As we stated in the NPRM, 

necessary and reasonable apprentice 

pilot salaries incurred in years 2019 

through 2021 will also be reimbursed in 

the operating expenses included in 

ratemakings 2022 through 2024, because 

they have not yet been reimbursed in 

any way in the ratemakings.12

The Coalition’s comment requested 

that we set the apprentice pilot wage 

benchmark at a flat $150,000 surcharge 

for wages, benefits, and expenses, rather 


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than 36 percent of target compensation, 

for a simple and transparent approach. 

We disagree. Under the surcharge 

scheme, during periods of high traffic 

and pilotage demand, the apprentice 

would receive less money for wages 

because the costs associated with 

transportation, lodging, and other per 

diem expenses would increase. 

Conversely, during slow periods, the 

opposite would occur. The surcharge 

wage scheme would likely have a 

negative impact on apprentice retention 

because wages would be lowest during 

the highest demand periods. 

The Coast Guard believes that the 36- 

percent wage benchmark for apprentice 

pilots is equally transparent because the 

calculations will be included in every 

ratemaking, and the percentage will not 

change year to year. Furthermore, in 

past years, the districts have collected 

more surcharge proceeds than intended, 

requiring subsequent Director’s 

adjustments. The apprentice pilot 

benefits and expenses will continue to 

be line items in the expense reports, 

which are made available in the docket 

for this rulemaking. We also believe that 

setting the wage benchmark as a 

percentage of target pilot compensation 

is a better approach, because it captures 

the inflation adjustment that is 

performed on the target pilot salaries. A 

set surcharge would not take inflation 

into account as easily and would need 

adjusting year to year. 

C. Timing of Annual Audit 

The Great Lakes Pilots’ comment 

requested that the Coast Guard conduct 

the third-party expense and revenue 

review earlier in the year, because 

holding the audit in October and 

November results in it being scheduled 

during their busiest shipping months, 

which is also when comments are 

generally due on the annual ratemaking 

NPRM. The SLSPA and LPA both made 

similar requests individually. 

The annual audit is performed to 

ensure the Coast Guard can obtain 

accurate operating expenses and 

revenues for ratemakings. The timing of 

the audit is not specified in the 

regulatory text of the ratemaking 

methodology. Although shipping is 

cyclical, and no one can be certain 

which months will be busy due to the 

dynamic nature of commodity demand, 

the Coast Guard will work with the 

association presidents to find a 

timeframe to conduct the third-party 

reviews that best suits all parties 

involved. 

D. Exclusion of Legal Expenses From 

Operating Expenses 

The Great Lakes Pilots’ comment 

argued that disallowing legal expenses 

for claims against the federal 

government arbitrarily and capriciously 

excludes expenses that are regularly 

allowed to all businesses under Internal 

Revenue Service (IRS) regulations. 

The Coast Guard did not propose any 

changes to the treatment of legal 

expenses as operating expenses in the 

NPRM. The 2021 ratemaking final rule 

excluded legal fees against the Coast 

Guard related to our ratemaking 

responsibilities, and our response in 

that rule (46 FR at 14193, March 12, 

2021) still applies here. We 

distinguished the IRS regulation from 

the pilotage associations’ expenses, as 

the Equal Access to Justice Act and 

settlement terms often provide for 

reimbursement of the pilots’ legal fees 

when the pilots prevail. In those cases, 

a court can determine a reasonable 

amount of legal fees to reimburse the 

pilot association. When a pilot 

association does not prevail on the 

merits, the legal fees associated with 

that lawsuit are, arguably, per the 

court’s determination, not necessary for 

the safeguarding or production of its 

income. If allowed, those legal fees 

would inflate the pilot associations’ 

operating expenses and, subsequently, 

the shipper’s rates. Unlike other 

businesses and jurisdictions, shippers 

on the Great Lakes do not have the 

option to purchase service from another 

firm if they disagree with a firm’s 

business practices, and may not have 

the choice to not purchase the service, 

because pilotage service is required for 

all foreign vessels and domestic vessels 

operating on register. 

On the other hand, the Coalition’s 

comment asserted that all pilot 

association legal fees related to rate 

setting should be excluded, including 

cases where the pilots intervene on 

behalf of the Coast Guard. The Coalition 

asserted that including the intervener 

legal fees means industry may have to 

pay the pilots’ legal fees if the pilots 

challenge a Coast Guard decision, no 

matter how the challenge turns out, 

which discourages legal challenges from 

industry and unfairly favors the Coast 

Guard. 

As we mentioned above, we did not 

propose any changes to the treatment of 

legal fees in determining pilot 

association operating expenses in the 

NPRM to this final rule. Necessary and 

reasonable legal fees that are not 

incurred in cases against the Coast 

Guard are still permitted as operating 

expenses, because we did not have the 

same basis to remove them from the 

operating expenses. As we stated in the 

2021 final rule (86 FR 14193), pilots 

often have a legitimate interest in the 

outcome of lawsuits initiated by the 

shippers against the Coast Guard. Thus, 

the court may allow the pilots to 

intervene in the case to protect their 

own interests. The Coast Guard does not 

have the same justification to exclude 

these intervener legal expenses, because 

these expenses are not eligible for 

reimbursement under the Equal Access 

to Justice Act or via settlement with the 

Coast Guard. These legal fees incurred 

by pilot associations are not otherwise 

reimbursed by a more responsible party, 

so we must consider these costs of 

providing services in the rates per our 

statutory mandate. The exclusion of 

legal fees for pilots’ cases against the 

Coast Guard is effectively a small 

benefit to the shippers, because it 

removes that financial responsibility 

from the ratemaking and places it on the 

responsible regulatory agency. We do 

not intend or predict that exclusion of 

legal fees will incentivize pilots to 

intervene in the Coast Guard’s defense. 

E. Correction of Recognized Expenses 

for District Two 

The LPA commented that they did not 

agree with the 2019 license insurance 

total ($1,825) included in Other Pilotage 

Costs or the applicant health insurance 

total ($200) included in Applicant 

Pilotage Costs. These totals were 

included in table 16—2019 Recognized 

Expenses for District Two in the NPRM 

(86 FR at 51061). In its comment (and 

in an attached letter from its certified 

public accountant), LPA said these 

numbers should be $21,267 for license 

insurance total and $31,763.96 for 

applicant health insurance total. 

CohnReznick, an independent 

accounting firm, reviewed the letter 

LPA’s accountant provided with the 

comment and the association’s expense 

reports provided in 2019. 

CohnReznick’s official conclusion is 

available in the docket for this 

rulemaking. With that independent 

accountant review, the Coast Guard 

determines that the license insurance 

total of $1,825 is correct but was labeled 

incorrectly, so that the additional 

amount claimed in the comment was 

included in another line item. LPA is 

aware of this conclusion and concurs 

with it. After review of the applicant 

health insurance total, the Coast Guard 

determines that the figure of $200 for 

applicant health insurance in the NPRM 

was incorrect. We have updated the 

recognized expenses to reflect $31,764 

for applicant health insurance, in 


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13Email from Anthony Brandano, Lakes Pilots 

Association, to Vincent F. Berg, Marine 

Transportation Specialist, United States Coast 

Guard, January 25, 2022. 

accordance with CohnReznick’s 

conclusion. 

F. Changes to the NPRM’s Estimate for 

District Two Pilot Numbers 

The Coast Guard estimated in the 

2022 NPRM that District Two would 

have 16 fully working pilots based on 

the information we had at that time. The 

staffing model allows for a maximum of 

16 working pilots after rounding up. In 

this final rule, we now estimate the 

number of fully working pilots in 

District Two to be 14. As a result, we are 

reducing the number of estimated fully 

working pilots in Step 3. Section 

404.103 requires the Director to project 

the number of pilots expected to be fully 

working and compensated, based on the 

number of persons applying to become 

United States Registered Pilots and on 

information provided by the district’s 

pilotage association. Only pilots who 

are expected to be fully working and 

compensated are permitted to be 

included in this estimate. Our 

justifications for removing two pilots 

from District Two’s NPRM’s projected 

numbers are as follows. 

One of the pilots serving under a 

temporary registration performed parttime pilotage for the year of 2021. One 

pilot performed substantially less than 

the average assignments per pilot 

projected in the 2017 staffing model (82 

FR 41466, table 5) for District Two, 

according to the official piloting trip 

records used by the pilotage association 

and the Coast Guard. Based on the 

information available to the Coast Guard 

at the time of this final rule, and 

information provided by the association, 

there is no indication that the pilot will 

perform pilotage on a full-time basis in 

the 2022 shipping season. Therefore, 

based on the information available to us 

now, we cannot authorize this pilotage 

position because we do not expect the 

pilot to be fully working and 

compensated in 2022. 

Additionally, based on a statement 

from District Two that one apprentice 

pilot would be brought on as a fully 

registered pilot at the end of 2021, we 

estimated in the NPRM that there would 

be a 16th pilot in District Two for the 

2022 shipping season. However, after 

the NPRM was published, the Director 

was made aware that the apprentice 

pilot will not be brought on as a 

registered pilot.13 Therefore, the 

Director does not expect this position to 

be filled by a working pilot. While the 

staffing model allows for 16 pilots in 

District Two, the total estimates in Step 

3 should only fund the amount of pilots 

that are expected to be fully working. 

We cannot justify funding positions that 

are not expected to be filled at this time. 

Based on the information discussed 

above, the Coast Guard estimates there 

will be 14 registered pilots fully 

working and compensated in District 

Two for the 2022 season. This is a net 

decrease of one pilot from the 2021 final 

rule, which authorized 15 working 

pilots in District Two for the 2021 

shipping season. 

G. Changes to the NPRM’s Estimate for 

District Three Pilot Numbers 

The WGLPA commented that, in 

2019, they had 6 pilots assigned to 

designated waters, 13 pilots assigned to 

undesignated waters, 5 applicant pilots 

for the entire season, and another 

applicant pilot beginning September 23, 

2019. They expressed concern that the 

expenses for the five applicant pilots do 

not flow through the ratemaking 

process. Further, the WGLPA 

questioned the Director’s adjustment of 

$746,802 (surcharge collected in 2019 

for applicant pilots), stating that they 

were unsure where that number came 

from and if it was correct. 

After review, the Coast Guard has 

determined that, although District Three 

was allowed four applicant pilots for the 

2019 season, it actually had five. This 

fifth applicant was approved by the 

Director. This additional pilot removes 

the need for the Director’s adjustment of 

$1,921 for excess applicant salaries 

paid. District Three reported $520,158 

in expenses for the salary of five 

applicant pilots, meaning the district 

paid an average of $104,032 per 

applicant, which is below the $129,559 

target for 2019. 

Additionally, the WGLPA commented 

that the Coast Guard should work with 

WGLPA to determine the need for 

additional pilots in the fiscal year 2022 

rate because of an expected increase in 

the number of cruise ships (possibly in 

excess of 6,000 bridge hours in District 

Three) that may or may not materialize 

due to COVID–19 impacts on the cruise 

industry, the retirement of three pilots, 

and the unexpected retirement of 

another three pilots due to COVID–19. 

While we were developing the NPRM, 

WGLPA stated that they would have a 

need for 22 pilots in 2022. This is the 

same number of pilots they had in the 

2021 ratemaking. However, our current 

records, and pages 154 and 155 of the 

transcript of the September 1, 2021 

GLPAC meeting (available in the docket 

for this rulemaking), indicate that 

District Three will not have 22 pilots for 

the beginning of the 2022 shipping 

season. Based on our numbers, which 

we track routinely, and the statements 

made by the WGLPA president during 

the GLPAC meeting, this group will 

have 19 pilots and 5 apprentice pilots at 

the beginning of the 2022 shipping 

season. If the district plans to hire 

additional pilots, we expect that these 

additional pilots will start as applicants, 

and their salaries will be reimbursable 

as operating expenses 3 years from the 

time of hire. The Coast Guard will 

continue to monitor pilotage demands 

and consult with WGLPA during the 

2022 shipping season. 

H. Request for Cost-Effectiveness Study 

The Coalition’s comment requested 

the Coast Guard begin a safety and 

efficiency study of pilotage on the Great 

Lakes to identify measures to improve 

cost-effectiveness. The Coalition 

observed that, during five of the last 

seven years, the Coast Guard has 

proposed a double-digit percentage 

increase for pilot services, and the costper-pilot has gone from $352,777 to 

$543,615. 

We disagree with the Coalition’s 

suggestion regarding the study. The 

United States Government 

Accountability Office (GAO) completed 

a comprehensive review of the United 

States Coast Guard Great Lakes Pilotage 

Program in 2019. The GAO’s final 

report, ‘‘Stakeholders’ Views on Issues 

and Options for Managing the Great 

Lakes Pilotage Program,’’ is available in 

the docket for this rulemaking. 

We plan to evaluate the staffing model 

in a future rulemaking, per GLPAC’s 

recommendation at its September 1, 

2021 annual meeting. We are currently 

reviewing the regulations in 46 CFR part 

400 to make necessary updates and 

enhance efficiency. The Coast Guard 

will consider measures to improve cost 

effectiveness within those future 

actions. We welcome information that 

could improve the regulations, 

ratemaking, and staffing model via 

comments or GLPAC meetings. 

With regard to the substantial 

increases noted by the Coalition over 

the past 7 years, these increases have 

been due to the reimbursement of 

operating expenses, the need to account 

for inflation, the hiring of additional 

pilots, the need to address the problem 

of pilot retention, and deficiencies 

resulting from the past methodology. 

The deficiencies in the older 

methodology created issues with 

retaining pilots; unnecessary delays to 

vessel traffic; significant revenue 

shortfalls for necessary improvements to 

property, pilot boats, and assets; and 

reduced maritime safety. In recent years, 

the Coast Guard has increased the 


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14See Section 2.4, ‘‘Fatigue,’’ in ‘‘Marine 

Accident Report: Collision of Tankship Eagle 

Otome with Cargo Vessel Gull Arrow and 

Subsequent Collision with the Dixie Vengeance 

Tow, Sabine-Neeches Canal, Port Arthur, Texas, 

January 23, 2010’’ (adopted by the NTSB on 

September 27, 2011), www.ntsb.gov/investigations/ 

AccidentReports/Reports/MAR1104.pdf. 

number of United States Registered 

Pilots, so that the pilot associations have 

sufficient personnel available to provide 

needed pilotage services while also 

being able to implement scientificallybased hours of service programs, in 

accordance with NTSB 

recommendations regarding pilot fatigue 

and Hours of Service Rules.14 The 

methodology and staffing model take 

into account the NTSB recommendation 

for Hours of Service Rules, including 

limits on hours of service, providing 

predictable work and rest schedules, 

and human sleep and rest requirements. 

The NTSB report generally concluded, 

on page 58 of the report, that at the time 

of the accident, the first pilot was 

subject to the fatiguing effects of 

insufficient sleep from extended 

wakefulness, which adversely effected 

his ability to prevent the vessel from 

sheering. The methodology ensures 

funding for a sufficient number of 

registered pilots in consideration of 

preventing pilot fatigue and promoting 

maritime safety. We have also increased 

staffing to correct work-life balances to 

recruit and retain United States 

Registered Pilots. In addition, recent 

ratemakings have allowed for structural 

improvements to associations’ docks 

and the purchase of newer pilot boats 

and property with on-site 

accommodations for pilots to rest 

between piloting. These allowances in 

the ratemaking improve the efficiencies 

and safety of the pilotage program and 

help reduce delays to vessel traffic. 

In recent years, demand for pilotage 

service has increased and diversified. 

Historically, international dry-bulk 

commodity shippers accounted for 

nearly 95 percent of pilotage demand. 

More recently, the Canadian domestic 

fleet has voluntarily employed United 

States Registered Pilots, including 

during the winter months when the 

locks are closed. Additionally, 

petroleum tankers and cruise ships have 

consumed significant pilotage service. 

At least one foreign trade vessel has 

remained in the Great Lakes and 

required pilotage service throughout the 

year. This increase in pilotage demand 

has increased operating expenses and 

required the Coast Guard to increase 

staffing. These staffing levels are 

necessary to promote safe, efficient, and 

reliable pilotage service in order to 

facilitate commerce and protect the 

marine environment. 

I. Public Disclosure of Pilot 

Compensation 

The Coalition submitted a comment 

asserting that, in the interest of 

transparency and good governance, the 

Coast Guard should require pilot 

associations to make compensation 

levels of individual pilots public. The 

Coalition noted that one district 

voluntarily released this information 

prior to 2016, suggesting there is no 

reason why this information could not 

be released. The Coalition further 

suggested that public disclosure of 

individual pilot compensation is 

necessary to determine whether the 

Coast Guard’s changes to the 

methodology in 2016 to address 

recruitment and retention concerns 

were successful. 

The Coast Guard disagrees with the 

Coalition’s recommendation to make 

compensation levels of individual pilots 

available to the public. The Coast Guard 

does not include the compensation of 

individual pilots in the expense base or 

methodology and, therefore, declines 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 even average earnings; we 

use a target pilot compensation, 

described in Step 3 of the existing 

methodology, which we have 

determined to be reasonable and 

necessary. Because actual salary values 

are not used in the ratemaking, we 

believe 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 other 

means, such as pilot turnover and the 

association’s ability to promptly fill 

pilot vacancies for fully registered pilots 

and apprentice pilots. 

The Coast Guard has solved the 

recruitment and retention challenges. 

We believe the Coalition’s proposal 

would unnecessarily discourage 

qualified mariners from applying to, and 

experienced United States Registered 

Pilots from staying with, the United 

States Great Lakes pilot associations. 

The pilots have stated on numerous 

occasions that they do not want this 

personal information shared with the 

public. The Coalition has not identified 

the maritime safety issue their proposal 

would address or improve. 

As the Coalition noted, the release of 

this information prior to 2016 was 

entirely voluntary on the part of one 

association. We do not intend to deviate 

from our precedent and require the 

associations to publish a list of their 

salaries. 

V. Discussion of Methodological and 

Other Changes 

For 2022, the Coast Guard is making 

one policy change to the ratemaking 

model, and a methodological change to 

the ratemaking methodology. First, we 

are instituting a practice of always 

rounding up the pilot totals to the 

nearest whole number in the staffing 

model. We use the staffing model in 

Step 3 to determine how many pilots are 

needed. Second, in Steps 3 and 4 of the 

methodology, we are introducing a wage 

benchmark calculation for apprentice 

pilots conducting pilotage. This rule 

will also codify the current practice of 

allowing pilot associations to include 

necessary and reasonable apprentice 

pilot benefits and expenses as operating 

expenses for the year they are incurred. 

Table 2 summarizes the changes 

between the NPRM and this final rule. 

In the NPRM we proposed to only apply 

the wage benchmark to apprentice pilots 

with limited registration, but in this 

final rule will apply it to all apprentice 

pilots, with or without limited 

registration. Doing so will avoid a 

potential gap in compensation before an 

apprentice pilot receives a limited 

registration. This will not change the 

projected number of apprentice pilots 

compensated in each district, because, 

in the NPRM rate calculation, we 

assumed that all apprentice pilots 

would receive limited registration 

within the season. 

TABLE 2—CHANGES BETWEEN PROPOSED RULE AND FINAL RULE

Change Reasoning 

Remove Director’s adjustment for excess applicant salaries paid in District Three.Coast Guard confirmed that District Three had five applicants in 2019, 

not four, as stated in the NPRM, meaning the average compensation 

for applicants was under the 36-percent target. 


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15For a detailed calculation of the staffing model, 

see 82 FR 41466, table 6 at 41480 (August 31, 2017). 

TABLE 2—CHANGES BETWEEN PROPOSED RULE AND FINAL RULE—Continued 

Change Reasoning 

Revise number of pilots in District Three from 22 to 19 .......................... District Three reported that they would have three retirements ahead of 

the 2022 season. 

Revise number of pilots in District Two from 16 to 14 ............................ District Two reported that one apprentice pilot would not become fully 

registered as planned, and our records indicate one pilot with a temporary registration was not performing full-time services. 

Revise figure for applicant health insurance for District Two .................. District Two commented on the NPRM that the applicant health insurance figure listed was incorrect. The Coast Guard verified the correct 

figure and includes it in this final rule. 

Add language clarifying that the 36-percent target will apply to apprentice pilots and apprentice pilots with a limited registration.Several commenters noted confusion on the language using ‘‘limited 

registration.’’ 

Update inflation figures .............................................................................

• Updates 2021 Employment Cost Index (ECI) inflation from 3.5% listed in the NPRM to 4.8%.

• Updates 2021 Personal Consumption Expenditures (PCE) inflation 

from 2.4% listed in the NPRM to 5.1% CPI inflation.

• Updates 2022 PCE inflation from 2% listed in the NPRM to 2.2% .....

More recent figures were published since we conducted the analysis 

for the NPRM. 

A. Changes to the Staffing Model 

The Director uses the staffing model 

to estimate how many pilots are needed 

to handle shipping from the opening 

through the closing of the season. The 

Coast Guard is changing the staffing 

model in § 401.220(a)(3) to always 

round up the final number to the nearest 

whole integer, instead of the current 

requirement to round to the nearest 

whole integer. The final number 

provides the maximum number of pilots 

authorized to be included in the 

ratemaking for a district. 

In addition to always rounding up 

from the staffing model, we also specify 

that when the rounding up results in an 

additional pilot that would not have 

been authorized if we rounded to the 

nearest whole integer, that additional 

pilot will be added to the maximum 

number of pilots in the undesignated 

area for that district.15 For example, if 

the total in a district were 17.25, we 

would round up to 18, and the 

additional pilot would be allocated to 

the undesignated area. If the total in a 

district were 17.55, we would authorize 

18 pilots and we would not change 

existing allocations. 

The reason for placing the additional 

pilot in undesignated waters is to 

reduce the impact of the additional pilot 

on the final rates. Allocating additional 

pilots to the undesignated waters in the 

ratemaking methodology will result in 

only incremental changes, which 

promotes rate stability. Rate stability is 

in the public interest, because it 

provides greater predictability to both 

shipping companies and the pilots. 

Undesignated waters have lower rates 

for pilotage services than designated 

waters, because the average number of 

bridge hours (denominator) is greater, 

which allows the operating expenses for 

those areas to be spread out over a 

greater number. Registered pilots in a 

district perform pilotage in both 

designated and undesignated waters. 

For ratemaking purposes, we assign 

pilots to either designated or 

undesignated waters to calculate the 

rates in each area. 

Based on the existing staffing model, 

and the change to always round up the 

final number, the number of pilots 

authorized will not decrease in future 

years, unless the staffing model is 

adjusted by ratemaking. We 

acknowledge that the pilot associations’ 

presidents are not able to serve as pilots 

full-time due to their administrative 

duties, and this continues to be the 

main reason for no longer rounding 

down the final number for some 

districts. The nondelegable 

administrative duties that require 

pilotage expertise include attending 

meetings and conferences with 

stakeholders, overseeing and ensuring 

the integrity of their training program, 

evaluating technology, and coordinating 

with the American Pilots’ Association 

(APA) to implement and share best 

practices. Rounding down to the nearest 

integer in the current staffing model 

could result in too few pilots allocated 

to a district which, when coupled with 

the president’s spending less time 

serving as pilot, may adversely impact 

recuperative rest goals for registered 

pilots that are essential for safe 

navigation. 

The staffing model addresses the 

historic traffic at the opening and 

closing of the season. During this time, 

the Director has historically authorized 

or imposed double pilotage in the 

designated waters because the transits 

are likely to exceed the Coast Guard’s 

tolerance for safety with a single pilot 

due to ice conditions, a lack of aids to 

navigation, and severe winter weather 

conditions. Pilotage demand reaches 

peaks during the opening and close of 

the seasons, which is also when pilot 

presidents are performing many 

nondelegable duties. The pilot 

association president’s participation is 

required during various coordination 

meetings at the opening and closing of 

the shipping season, which reduces 

their availability to provide pilotage 

services. These meetings include 

coordination with the SLSDC in the 

United States and the St. Lawrence 

Seaway Management Corporation 

(SLSMC) in Canada, the Canadian Great 

Lakes Pilotage Authority (GLPA), the 

Shipping Federation of Canada, the 

United States Great Lakes Shipping 

Association, various United States and 

Canadian Great Lakes ports, and other 

stakeholders. Rounding up will ensure 

that the pilot president is free to 

participate in these meetings and the 

associations have sufficient strength to 

handle the burden of double pilotage. 

We cannot continue to round down 

for some districts and undersupply 

pilots where the staffing model 

indicates more pilots are needed. By 

rounding up the staffing model final 

number, we ensure that we are always 

authorizing a sufficient number to cover 

the demand calculated according to the 

staffing model, which has been in place 

for many years. The staffing model takes 

into account the high demands during 

the open and close of the shipping 

season, where weather and ice 

conditions may result in double-pilotage 

requirements and higher demand for 

pilot services. The purpose of always 

rounding up where we otherwise would 

have rounded down is to account for the 

association’s president time spent away 

from pilotage duties, especially during 

the high demand for pilotage during the 

beginning and close of the shipping 


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seasons. We believe this rounding 

change will promote maritime safety by 

ensuring enough pilots are allocated to 

each district to cover the shipping 

demands and promote recuperative rest. 

B. Apprentice Pilot Wage Benchmark for 

Conducting Pilotage 

In this rule, the Coast Guard will 

factor in the apprentice pilots wage 

benchmark in the ratemaking 

methodology, at Steps 3 and 4. The 

wage benchmark will be applicable to 

apprentice pilots and apprentice pilots 

operating under a limited registration. 

In Step 3, § 404.103, the Director will 

project the number of apprentice pilots 

and apprentice pilots with limited 

registrations expected to be in training 

and compensated. The Director will 

consider the number of persons 

applying under 46 CFR part 401 to 

become apprentice pilots, as well as 

traffic projections, information provided 

by the pilotage association regarding 

upcoming retirements, and any other 

relevant data. 

In Step 4, § 404.104, the Director will 

determine the individual apprentice 

pilot wage benchmark at the rate of 36 

percent of the individual target pilot 

compensation, as calculated according 

to Step 4. The Director will determine 

each pilot association’s total apprentice 

pilot wage benchmark by multiplying 

the apprentice pilot wage benchmark by 

the number of apprentice pilots and 

apprentice pilots with limited 

registrations projected under § 404.103. 

For example, if the projected number of 

apprentice pilots is 4, we first take 36 

percent of individual target pilot 

compensation (example: $359,887 × 

0.36 = $129,559) and multiply that by 4 

(example: $129,559 × 4 = $518,237) to 

obtain the total apprentice pilot wage 

benchmark for the district. This process 

is based on the way we factor the fully 

registered pilot compensation into the 

ratemaking in existing Step 3 (§ 404.103) 

and Step 4 (§ 404.104). 

The Coast Guard will set the 

apprentice pilot wage benchmark at a 

percentage of the target pilot 

compensation, rather than a specific 

dollar amount, to allow for inflation 

each year. We factor inflation into the 

target pilot compensation calculation 

during Step 4. We take 36 percent of the 

inflated target pilot compensation to 

obtain the apprentice pilot wage 

benchmark value. 

In ratemaking years 2016 through 

2019, the Coast Guard authorized 

surcharges to cover the districts’ 

apprentice pilot compensation. The 

Coast Guard never intended to use such 

surcharges as a permanent solution for 

compensating apprentice pilots, because 

the surcharge amounts were not derived 

from a formula that could take into 

consideration inflation and other 

reasonableness factors. 

The purpose of the surcharges was to 

provide reimbursement to the 

associations so that they could 

immediately hire additional apprentice 

pilots, rather than waiting 3 years to be 

reimbursed in the rates. The Coast 

Guard used surcharges as a temporary 

method to help the districts with pilot 

hiring and retention issues. In those 

ratemaking years, the Coast Guard made 

many Director’s adjustments to the 

authorized surcharges, in order to 

ensure that the ratemaking reflected a 

reasonable amount in compensation. 

In the 2020 and 2021 ratemakings, the 

Coast Guard acknowledged that the 

pilot associations were able to hire a 

sufficient number of apprentice pilots 

and fully registered pilots, and 

authorized apprentice pilot salaries to 

be included in the association’s 

operating expenses for 2017 and 2018, 

respectively. We allowed the apprentice 

pilot wage expenses to be included in 

the operating expenses after the 

districts’ operating expenses were fully 

audited. In the 2021 ratemaking final 

rule, the Coast Guard reduced the 2018 

apprentice pilot salary operating 

expense (referred to as applicant pilot in 

the 2021 ratemaking) for District One 

and District Two to $132,151 per 

apprentice pilot because they paid in 

excess of that amount (86 FR 14184, 

14197, 14202, March 12, 2021). As 

District Three reported paying their 

apprentice pilots less than $132,151 per 

apprentice pilot each, no Director’s 

adjustment was made. 

The Coast Guard set the apprentice 

pilot wage benchmark at 36 percent of 

individual target pilot compensation 

based on reasonable amounts previously 

allowed in past ratemakings. In the 2019 

rulemaking, we adjusted apprentice 

pilot salaries to approximately 36 

percent of target pilot compensation. In 

the 2019 NPRM, the Coast Guard 

proposed to make an adjustment to 

District Two’s request for 

reimbursement of $571,248 for two 

applicant pilots ($285,624 per 

applicant). Instead of permitting 

$571,248 for two applicant pilots, we 

proposed allowing $257,566, or 

$128,783 per applicant pilot, based 

upon discussions with other pilot 

associations at the time. This standard 

went into effect in the final rule for 

2019. In the development of the 2021 

proposed rule, we reached out to several 

pilot associations throughout the United 

States to see what percentage they pay 

their apprentice pilots. We factored in 

the sea time and experience required to 

become an apprentice pilot on the Great 

Lakes and discussed the percentage 

with each association to determine if it 

was fair and reasonable. For 2019, this 

was approximately 36 percent ($128,783 

÷ $359,887 = 35.78 percent). In the 2021 

NPRM and final rule, the Coast Guard 

used the 36-percent benchmark for 

calculating each district’s apprentice 

pilot wage benchmark in its operating 

expenses. 

Going forward, we will authorize an 

apprentice pilot wage benchmark in the 

ratemaking to support hiring and 

retention in a way that is better 

calibrated to generate the specific 

amount of revenue needed than by 

assessing a surcharge. The associations 

will be funded for apprentice pilot wage 

benchmarks in the same year they are 

incurred, and the amount will be 

adjusted for inflation along with the 

target pilot compensation. We are also 

interested in building the apprentice 

pilot wage benchmark into the 

ratemaking for predictability and 

stability purposes. We previously 

authorized $150,000 per apprentice 

pilot when we used surcharges, but, in 

practice, that amount was reduced by 

Director’s adjustments to reasonable and 

necessary amounts when compared to 

what others paid in the maritime 

industry per § 404.2(a). The apprentice 

pilot wage benchmark in the ratemaking 

will not be adjusted by Director’s 

adjustments. 

Some comments urged the Coast 

Guard to consider setting the apprentice 

pilot wage benchmark at a higher 

percentage than 36 percent of the fully 

registered pilot compensation, or 

implementing a gradual percentage 

increase for additional years served. 

This 36 percent equation creates a 

number consistent with what some 

districts paid and were reimbursed for 

apprentice pilots in previous ratemaking 

years. It is also reasonable in amount 

because it will cover only a wage 

benchmark and will not include 

apprentice pilot benefits and travel 

reimbursements. Those additional 

benefits will be reimbursed in full as 

allowable operating expenses for the 

districts. In the 2021 ratemaking, 

District Three reported paying 

apprentice pilot wages at an amount of 

$132,151 per apprentice pilot. At a wage 

benchmark of 36 percent of registered 

pilot target compensation, the 

apprentice pilots will be authorized 

wages in the amount of $129,559, which 

is reasonable in consideration of the 

time in training, services provided, and 

past ratemakings. This number will be 

subject to inflation annually. 

Additionally, setting the apprentice 

pilot wage benchmark at one amount, 


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irrespective of years in training, is 

consistent with our past practices and 

will help promote rate stability and 

predictability for all parties. We earlier 

explained that, on some trips, 

apprentice pilots will be the pilot and, 

therefore, generating revenue from 

which they can be compensated. This 

36-percent figure ensures they can 

receive compensation for trips where 

they are strictly in a training mode and 

another pilot has to be assigned to the 

trip. 

Compensating the apprentice pilots 

for performing pilotage services has 

historically been considered a 

reasonable and necessary cost included 

in the ratemakings as either surcharges 

or operating expenses. Instead of 

evaluating the apprentice pilot salaries 

annually for reasonableness in the 

operating expenses, the Coast Guard 

will include a specific and predictable 

apprentice pilot wage benchmark 

calculation into the ratemaking. 

C. Apprentice Pilots’ Expenses and 

Benefits as Approved Operating 

Expenses 

In § 404.2, ‘‘Procedure and criteria for 

recognizing association expenses,’’ we 

insert the pilot association’s expenses 

for apprentice pilots and apprentice 

pilots operating with limited 

registrations as approved operating 

expenses. These expenses have 

historically been allowed in previous 

ratemakings’ operating expenses. With 

this final rule, we specifically list 

apprentice pilots’ and apprentice pilots’ 

with limited registrations expenses in 

the regulations to codify current 

practices and distinguish these expenses 

from the apprentice pilot wage 

benchmark that we include in Step 4 of 

the ratemaking methodology. 

The associations will continue to 

include necessary and reasonable health 

care, travel expenses, training, and other 

expenses incurred on behalf of 

apprentice pilots and apprentice pilots 

with limited registrations, when 

determined to be necessary and 

reasonable by the Director. Associations 

currently fund travel and employment 

benefits for apprentice pilots in order to 

train pilots and provide pilotage 

services to the shipping industry. 

Apprentice pilots are expected to travel 

and be away from home while 

performing these duties. It is reasonable 

and consistent with industry practice 

for the association to cover their travel 

expenses. These travel costs are also 

allowed for fully registered pilots 

operating on the Great Lakes performing 

substantially similar services. 

The approved operating expenses 

could include health care and other 

necessary and reasonable employment 

benefits as well. Apprentice pilots are 

often offered benefits to help with 

retention and recruitment. Allowing 

associations to include necessary and 

reasonable expenses for apprentice 

pilots and apprentice pilots with limited 

registrations as operating expenses in 

the ratemaking will continue to promote 

adequate funding for apprentice pilot 

training and provision of pilotage 

services in the Great Lakes. 

VI. Discussion of Rate Adjustments 

In this final rule, based on the policy 

changes described in the previous 

section, we will implement new 

pilotage rates for 2022. We will conduct 

the 2022 ratemaking as an ‘‘interim 

year,’’ as was done in 2021, rather than 

a full ratemaking, as was conducted in 

2018. Thus, the Coast Guard will adjust 

the compensation benchmark following 

the procedures for an interim 

ratemaking year in § 404.100(b), rather 

than the full ratemaking year procedures 

in § 404.100(a). 

This section discusses the rate 

changes using the ratemaking steps 

provided in 46 CFR part 404, 

incorporating the changes discussed in 

section V of this preamble. We will 

detail all 10 steps of the ratemaking 

procedure for each of the 3 districts to 

show how we arrived at the new rates. 

District One 

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 2019 

expenses and revenues, which are 

available in the docket for this 

rulemaking. 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, for example, 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 3. 

Adjustments have been made by the 

auditors and are explained in the 

auditor’s reports, which are available in 

the docket for this rulemaking. 

In the 2019 expenses used as the basis 

for this rulemaking, districts used the 

term ‘‘applicant’’ to describe applicant 

trainees and persons who are called 

apprentices (applicant pilots) under the 

new definition in this rulemaking. 

Therefore, when describing past 

expenses, we use the term ‘‘applicant’’ 

to match what was reported from 2019, 

which includes both applicant trainees 

and apprentice pilots. We use 

‘‘apprentice’’ to distinguish the 

apprentice pilot wage benchmark and 

describe the impacts of the ratemaking 

going forward. 

There was one Director’s adjustment 

for District One, a deduction for 

$282,015, the amount of surcharge 

collected in 2019. As this amount 

exceeds the reported 2019 applicant 

salaries of $227,893, there is no further 

Director’s adjustment. We continue to 

include applicant salaries as an 

allowable expense in the 2022 

ratemaking, as it is based on 2019 

operating expenses, when salaries were 

still an allowable expense. The 

apprentice salaries paid in the years 

2019, 2020, and 2021 have not been 

reimbursed in the ratemaking as of 

publication of this rule. Applicant 

salaries (including applicant trainees 

and apprentice pilots) will continue to 

be an allowable operating expense 

through the 2024 ratemaking, which 

will use operating expenses from 2021, 

when the salaries for apprentice pilots 

were still authorized as operating 

expenses. Starting in the 2025 

ratemaking, apprentice pilot salaries 

will no longer be included as a 2022 

operating expense, because the 

apprentice pilot wage benchmark will 

have already been factored into the 

ratemaking Steps 3 and 4 in calculation 

of the 2022 rates. Starting in 2025, the 

applicant salaries’ operating expenses 

for 2022 will consist of only applicant 

trainees (those who are not yet 

apprentice pilots). 


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16The 2020 and 2021 inflation rates are available 

at https://beta.bls.gov/dataViewer/view/timeseries/ 

CUUR0200SA0. Specifically, the CPI is defined as 

‘‘All items in Midwest urban, all urban consumers, 

not seasonally adjusted (Series ID CUUR0200SA0)

(CPI–U), All Items, 1982–4=100’’ (downloaded 

March 2022). In the NPRM we used the PCE 

estimate of 4.3 percent for 2021, but now use the 

available interim CPI figure of 5.1 percent. 

17For the 2022 inflation rate, we used the PCE 

median inflation value found in table 1 at https:// 

www.federalreserve.gov/monetarypolicy/files/ 

fomcprojtabl20211215.pdf (Federal Reserve Board, 

Summary of Economic Projections, dated December 

15, 2021, downloaded March 2022). This figure is 

updated to 2.2 percent from 2 percent in the NPRM. 

TABLE 3—2019 RECOGNIZED EXPENSES FOR DISTRICT ONE

Reported Operating Expenses for 2019 

Designated Undesignated 

Total St. Lawrence 

River Lake Ontario 

Applicant Pilot Salaries: 

Salaries ................................................................................................................................. $136,736 $91,157 $227,893 

Employee Benefits ................................................................................................................ 12,506 8,337 20,843 

Applicant Subsistence/Travel ............................................................................................... 30,685 20,567 51,252 

Applicant Payroll Tax ............................................................................................................ 7,943 5,295 13,238 

Total Applicant Pilot Salaries ........................................................................................ 187,870 125,356 313,226 

Other Pilot Costs: 

Subsistence/Travel—Pilots ................................................................................................... 667,071 444,714 1,111,785 

License Insurance—Pilots .................................................................................................... 43,162 28,774 71,936 

Payroll Taxes—Pilots ........................................................................................................... 184,884 123,256 308,140 

Other ..................................................................................................................................... 136,178 90,784 226,962 

Total other pilotage costs .............................................................................................. 1,031,295 687,528 1,718,823 

Pilot Boat and Dispatch Costs: 

Pilot Boat Expense (Operating) ............................................................................................ 360,276 240,184 600,460 

Certified Public Accountant (CPA) Deduction (D1–19–01), (D1–19–02) ............................ 138,093 92,062 230,155 

Dispatch Expense ................................................................................................................. 82,722 55,148 137,870 

Payroll Taxes ........................................................................................................................ 22,412 14,941 37,353 

Total Pilot and Dispatch Costs ...................................................................................... 603,503 402,335 1,005,838 

Administrative Expenses: 

Legal—General Counsel ...................................................................................................... 34,558 23,038 57,596 

Legal—Shared Counsel (K&L Gates) .................................................................................. 55,318 36,879 92,197 

Legal—USCG Intervener Litigation ...................................................................................... 28,765 19,177 47,942 

Office Rent ............................................................................................................................ ........................ ........................ 0 

Insurance .............................................................................................................................. 27,753 18,502 46,255 

Employee Benefits ................................................................................................................ 7,056 4,704 11,760 

Payroll Taxes ........................................................................................................................ 5,236 3,491 8,727 

Other Taxes .......................................................................................................................... 61,822 41,215 103,037 

Real Estate Taxes ................................................................................................................ 22,787 15,191 37,978 

Travel .................................................................................................................................... 34,617 23,078 57,695 

Depreciation/Auto Leasing/Other ......................................................................................... 107,584 71,723 179,307 

CPA Deduction (D1–19–01) ................................................................................................. (52,291) (34,861) (87,152) 

Interest .................................................................................................................................. 24,339 16,226 40,565 

CPA Deduction (D1–19–01) ................................................................................................. (24,339) (16,226) (40,565) 

APA Dues ............................................................................................................................. 25,838 17,225 43,063 

Dues and Subscriptions ....................................................................................................... 4,080 2,720 6,800 

Utilities .................................................................................................................................. 19,221 12,814 32,035 

Salaries ................................................................................................................................. 164,453 109,636 274,089 

Accounting/Professional Fees .............................................................................................. 7,980 5,320 13,300 

Other ..................................................................................................................................... 21,908 14,605 36,513 

Total Administrative Expenses ...................................................................................... 576,685 384,457 961,142 

Total Expenses (OpEx + Applicant + Pilot Boats + Admin + Capital) ........................................ 2,399,353 1,599,676 3,999,029 

Surcharge Collected ............................................................................................................. (169,209) (112,806) (282,015) 

Total Directors Adjustments .......................................................................................... (169,209) (112,806) (282,015) 

Total Operating Expenses (OpEx + Adjustments) ................................................. 2,230,144 1,486,870 3,717,014 

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

B. Step 2: Project Operating Expenses, 

Adjusting for Inflation or Deflation 

Having identified the recognized 2019 

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 

Bureau of Labor Statistics (BLS) data 

from the Consumer Price Index (CPI) for 

the Midwest Region of the United States 

for the 2020 and 2021 inflation rates.16

Because the BLS does not provide 

forecasted inflation data, we use 

economic projections from the Federal 

Reserve for the 2022 inflation 

modification.17 Based on that 

information, the calculations for Step 2 

are as shown in table 4. 


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18 In the NPRM we used a figure of 3.5 percent, 

the most recently available at the time. Employment 

Cost Index, Total Compensation for Private Industry 

workers in Transportation and Material Moving, 

Series ID: CIU2010000520000A. 

19CPI for All Urban Consumers, Series ID 

CUUR0200SA0. 

20Table 1, 2022 PCE Inflation, https://

www.federalreserve.gov/monetarypolicy/fomcproj

tabl20210922.htm. 

TABLE 4—ADJUSTED OPERATING EXPENSES FOR DISTRICT ONE

District one 

Designated Undesignated Total 

Total Operating Expenses (Step 1) ............................................................................................. $2,230,144 $1,486,870 $3,717,014 

2020 Inflation Modification (@1%) .............................................................................................. 22,301 14,869 37,170 

2021 Inflation Modification (@5.1%) ........................................................................................... 114,875 76,589 191,464 

2022 Inflation Modification (@2.2%) ........................................................................................... 52,081 34,723 86,804 

Adjusted 2022 Operating Expenses ..................................................................................... 2,419,401 1,613,051 4,032,452 

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

C. Step 3: Estimate Number of 

Registered Pilots and Apprentice Pilots 

In accordance with the text in 

§ 404.103, we estimate the number of 

fully registered pilots in each district. 

With rounding, the maximum number 

of pilots increases to 18 (17.25 rounding 

up to 18), with the additional pilot 

allocated to the maximum for the 

undesignated area of District One, for a 

maximum of 8 pilots in the 

undesignated area and a maximum of 10 

pilots in the designated area. 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 2022 in District One, meeting 

the increased maximum proposed in the 

NPRM. 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 

two apprentice pilots in 2022 in District 

One. Based on the seasonal staffing 

model discussed in the 2017 ratemaking 

(see 82 FR 41466), and our changes to 

that staffing model, we assign a certain 

number of pilots to designated waters 

and a certain number to undesignated 

waters, as shown in table 5. These 

numbers are used to determine the 

amount of revenue needed in their 

respective areas. 

TABLE 5—AUTHORIZED PILOTS

Item District One 

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

2022 Authorized Pilots (total) .............................................................................................................................................................. 18 

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

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

2022 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 

target pilot compensation for each area. 

As 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 for inflation. 

As stated in section V.A of the 

preamble, we are using a two-step 

process to adjust target pilot 

compensation for inflation. First, we 

adjust the 2021 target compensation 

benchmark of $378,925 by 3.1 percent 

for an adjusted value of $390,672. The 

adjustment accounts for the difference 

in actual fourth quarter (Q4) 2021 ECI 

inflation, which is 4.8 percent, and the 

2021 PCE estimate of 1.7 percent.18 19

The second step accounts for projected 

inflation from 2021 to 2022, 2.2 

percent.20 Based on the projected 2022 

inflation estimate, the target 

compensation benchmark for 2022 is 

$399,266 per pilot. The apprentice pilot 

wage benchmark is 36 percent of the 

target pilot compensation, or $143,736 

($399,266× 0.36). 

TABLE 6—TARGET PILOT COMPENSATION

2021 Target Compensation from Final Rule ....................................................................................................................................... $378,925 

Difference between Actual 2021 ECI inflation (4.8%) and 2021 PCE Estimate (1.7%) ..................................................................... 3.10% 

Adjusted 2021 Compensation ............................................................................................................................................................. $390,672 

2021 to 2022 Inflation Factor .............................................................................................................................................................. 2.20% 

2022 Target Compensation ................................................................................................................................................................. $399,266 

2022 Apprentice Pilot Wage Benchmark ............................................................................................................................................ $143,736 

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

Next, we certify that the number of 

pilots estimated for 2022 is less than or 

equal to the number permitted under 

the changes to the staffing model in 

§ 401.220(a). The changes to the staffing 

model suggest that the number of pilots 

needed is 18 pilots for District One, 

which is less than or equal to 18, the 

number of registered pilots provided by 


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21See table 6 of the Great Lakes Pilotage Rates— 

2017 Annual Review final rule, 82 FR 41466 at 

41480 (August 31, 2017). The methodology of the 

staffing model is discussed at length in the final 

rule (see pages 41476–41480 for a detailed analysis 

of the calculations). 

22Moody’s Seasoned Aaa Corporate Bond Yield, 

average of 2020 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. (Downloaded March 

26, 2021.) 

the pilot associations.21 In accordance 

with the changes to § 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 7. We 

estimate that two apprentice pilots will 

be needed for District One in the 2022 

season. The apprentice pilots will work 

under a fully registered pilot and 

receive training in both the designated 

and undesignated waters, but their 

target compensation will not differ 

depending on which area they are 

training in. The total wages of $287,472 

for two apprentice pilots are allocated as 

60 percent for the designated area 

($172,483) and 40 percent for the 

undesignated area ($114,989), in 

accordance with the way operating 

expenses are allocated in Step 1, and 

later in Step 6. 

TABLE 7—TARGET COMPENSATION FOR DISTRICT ONE

District One 

Designated Undesignated Total 

Target Pilot Compensation .......................................................................................................... $399,266 $399,266 $399,266 

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

Total Target Pilot Compensation .......................................................................................... $3,992,660 $3,194,128 $7,186,788 

Apprentice Pilot Wage Benchmark .............................................................................................. $143,736 $143,736 $143,736 

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

Total Apprentice Pilot Wages ............................................................................................... $172,483 $114,989 $287,472 

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

E. Step 5: Project Working Capital Fund 

Next, we calculate the working capital 

fund revenues needed for each area. 

First, we add the figures for projected 

operating expenses, total pilot 

compensation, and total apprentice pilot 

wage benchmark for each area. Next, we 

find the preceding year’s average annual 

rate of return for new issues of highgrade corporate securities. Using 

Moody’s data, the number is 2.4767 

percent.22 By multiplying the two 

figures, we obtain the working capital 

fund contribution for each area, as 

shown in table 8. 

TABLE 8—WORKING CAPITAL FUND CALCULATION FOR DISTRICT ONE

District One 

Designated Undesignated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $2,419,401 $1,613,051 $4,032,452 

Total Target Pilot Compensation (Step 4) ................................................................................... 3,992,660 3,194,128 7,186,788 

Total Apprentice Pilot Wage Benchmark (Step 4) ...................................................................... 172,483 114,989 287,472 

Total 2022 Expenses ............................................................................................................ 6,584,544 4,922,168 11,506,712 

Working Capital Fund (2.48%) .................................................................................................... 163,077 121,906 284,983 

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

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 pilot 

compensation (from Step 4), total 

apprentice pilot wage benchmark (from 

Step 4), and the working capital fund 

contribution (from Step 5). We show 

these calculations in table 9. 

TABLE 9—REVENUE NEEDED FOR DISTRICT ONE

District One 

Designated Undesignated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $2,419,401 $1,613,051 $4,032,452 

Total Target Pilot Compensation (Step 4) ................................................................................... 3,992,660 3,194,128 7,186,788 

Total Apprentice Pilot Wage Benchmark (Step 4) ...................................................................... 172,483 114,989 287,472 

Working Capital Fund (Step 5) .................................................................................................... 163,077 121,906 284,983 

Total Revenue Needed ........................................................................................................ 6,747,621 5,044,074 11,791,695 

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


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23SeaPro, used by all three pilot districts, is the 

approved dispatch and invoicing system that tracks 

pilot and vessel transits in place of the GLPMS. 

G. Step 7: Calculate Initial Base Rates 

Having determined the revenue 

needed for each area in the previous six 

steps, to develop an hourly rate we 

divide that number by the expected 

number of hours of traffic. Step 7 is a 

two-part process. In the first part, we 

calculate the 10-year average of traffic in 

District One, using the total time on task 

or pilot bridge hours. To calculate the 

time on task for each district, the Coast 

Guard uses billing data from the Great 

Lakes Pilotage Management System 

(GLPMS) and SeaPro.23 We pull data 

from the system, filtering by district, 

year, job status (we only include closed 

jobs), and flagging code (we only 

include U.S. jobs). After downloading 

the data, we remove any overland 

transfers from the dataset, if necessary, 

and sum the total bridge hours, by area. 

We then subtract any non-billable delay 

hours from the total. Because we 

calculate separate figures for designated 

and undesignated waters, there are two 

parts for each calculation. We show 

these values in table 10. 

TABLE 10—TIME ON TASK FOR

DISTRICT ONE

[Hours] 

Year 

District One 

Designated Undesignated 

2020 .......... 6265 7560 

2019 .......... 8232 8405 

2018 .......... 6943 8445 

2017 .......... 7605 8679 

2016 .......... 5434 6217 

2015 .......... 5743 6667 

2014 .......... 6810 6853 

2013 .......... 5864 5529 

TABLE 10—TIME ON TASK FOR

DISTRICT ONE—Continued 

[Hours] 

Year 

District One 

Designated Undesignated 

2012 .......... 4771 5121 

2011 .......... 5045 5377 

Average 6271 6885 

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 each area in 

table 11. 

TABLE 11—INITIAL RATE CALCULATIONS FOR DISTRICT ONE

Designated Undesignated 

Revenue Needed (Step 6) ....................................................................................................................................... $6,747,621 $5,044,074 

Average Time on Task (Hours) ............................................................................................................................... 6,271 6,885 

Initial Rate ................................................................................................................................................................ $1,076 $733 

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

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 

database, we calculate the average 

weighting factor for each area using the 

data from each vessel transit from 2014 

onward, as shown in tables 12 and 13. 

TABLE 12—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 2 (2014) ............................................................................................................................. 285 1.15 327.75 

Class 2 (2015) ............................................................................................................................. 295 1.15 339.25 

Class 2 (2016) ............................................................................................................................. 185 1.15 212.75 

Class 2 (2017) ............................................................................................................................. 352 1.15 404.8 

Class 2 (2018) ............................................................................................................................. 559 1.15 642.85 

Class 2 (2019) ............................................................................................................................. 378 1.15 434.7 

Class 2 (2020) ............................................................................................................................. 560 1.15 644 

Class 3 (2014) ............................................................................................................................. 50 1.3 65 

Class 3 (2015) ............................................................................................................................. 28 1.3 36.4 

Class 3 (2016) ............................................................................................................................. 50 1.3 65 

Class 3 (2017) ............................................................................................................................. 67 1.3 87.1 

Class 3 (2018) ............................................................................................................................. 86 1.3 111.8 

Class 3 (2019) ............................................................................................................................. 122 1.3 158.6 

Class 3 (2020) ............................................................................................................................. 67 1.3 87.1 

Class 4 (2014) ............................................................................................................................. 271 1.45 392.95 

Class 4 (2015) ............................................................................................................................. 251 1.45 363.95 

Class 4 (2016) ............................................................................................................................. 214 1.45 310.3 

Class 4 (2017) ............................................................................................................................. 285 1.45 413.25 

Class 4 (2018) ............................................................................................................................. 393 1.45 569.85 


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TABLE 12—AVERAGE WEIGHTING FACTOR FOR DISTRICT ONE, DESIGNATED AREAS—Continued 

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

Class 4 (2019) ............................................................................................................................. 730 1.45 1058.5 

Class 4 (2020) ............................................................................................................................. 427 1.45 619.15 

Total ...................................................................................................................................... 5,920 ........................ 7,610 

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

TABLE 13—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 2 (2014) ............................................................................................................................. 238 1.15 273.7 

Class 2 (2015) ............................................................................................................................. 263 1.15 302.45 

Class 2 (2016) ............................................................................................................................. 169 1.15 194.35 

Class 2 (2017) ............................................................................................................................. 290 1.15 333.5 

Class 2 (2018) ............................................................................................................................. 352 1.15 404.8 

Class 2 (2019) ............................................................................................................................. 366 1.15 420.9 

Class 2 (2020) ............................................................................................................................. 358 1.15 411.7 

Class 3 (2014) ............................................................................................................................. 60 1.3 78 

Class 3 (2015) ............................................................................................................................. 42 1.3 54.6 

Class 3 (2016) ............................................................................................................................. 28 1.3 36.4 

Class 3 (2017) ............................................................................................................................. 45 1.3 58.5 

Class 3 (2018) ............................................................................................................................. 63 1.3 81.9 

Class 3 (2019) ............................................................................................................................. 58 1.3 75.4 

Class 3 (2020) ............................................................................................................................. 35 1.3 45.5 

Class 4 (2014) ............................................................................................................................. 289 1.45 419.05 

Class 4 (2015) ............................................................................................................................. 269 1.45 390.05 

Class 4 (2016) ............................................................................................................................. 222 1.45 321.9 

Class 4 (2017) ............................................................................................................................. 285 1.45 413.25 

Class 4 (2018) ............................................................................................................................. 382 1.45 553.9 

Class 4 (2019) ............................................................................................................................. 326 1.45 472.7 

Class 4 (2020) ............................................................................................................................. 334 1.45 484.3 

Total ...................................................................................................................................... 4,619 ........................ 5,972 

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

I. Step 9: Calculate Revised Base Rates 

In this step, we revise the base rates 

so that, once the impact of the weighting 

factors is considered, the total cost of 

pilotage will be equal to the revenue 

needed. To do this, we divide the initial 

base rates calculated in Step 7 by the 

average weighting factors calculated in 

Step 8, as shown in table 14. 

TABLE 14—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 .............................................................................................................. $1,076 1.29 $834 

District One: Undesignated .......................................................................................................... 733 1.29 568 

* All figures are rounded to the nearest dollar. 

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 is a sufficient number of 

pilots to handle those heavy traffic 

periods. The Director also considers 

whether the rates will cover operating 

expenses and infrastructure costs, 


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including average traffic and weighting 

factions. Based on the financial 

information submitted by the pilots, the 

Director is not making any alterations to 

the rates in this step. We will modify 

§ 401.405(a)(1) and (2) to reflect the final 

rates shown in table 15. 

TABLE 15—FINAL RATES FOR DISTRICT ONE

Area Name Final 2021 

pilotage rate 

2022 Pilotage 

rate 

District One: Designated .............................................. St. Lawrence River ....................................................... $800 $834 

District One: Undesignated .......................................... Lake Ontario ................................................................. $498 $568 

* All figures are rounded to the nearest dollar. 

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 2019 

expenses and revenues, which are 

available in the docket for this 

rulemaking. For accounting purposes, 

the financial reports divide expenses 

into designated (60 percent) and 

undesignated areas (40 percent). For 

costs accrued by the pilot associations 

generally, such as employee benefits, for 

example, the cost is divided between 

the designated and undesignated areas 

on a pro rata basis. The recognized 

operating expenses for District Two are 

shown in table 16. 

Adjustments made by the auditors are 

explained in the auditors’ reports, 

which are available in the docket for 

this rulemaking. 

In the 2019 expenses used as the basis 

for this rulemaking, districts used the 

term ‘‘applicant’’ to describe applicant 

trainees and persons who are called 

apprentices (applicant pilots) under the 

new definition in this rulemaking. 

Therefore, when describing past 

expenses, we use the term ‘‘applicant’’ 

to match what was reported from 2019, 

which includes both applicant trainees 

and apprentice pilots. We use 

‘‘apprentice’’ to distinguish the 

apprentice pilot wage benchmark and 

describe the impacts of the ratemaking 

going forward. 

There are two Director’s adjustments 

for District Two. The first deduction is 

$173,818, the amount of surcharge 

collected in 2019 to recoup expenses of 

one applicant pilot, which is greater 

than the allowable surcharge of 

$150,000 per applicant pilot. The 

second deduction of $287,836 reduces 

the allowable expenses for applicant 

pilot salaries to 36 percent of target pilot 

compensation. District Two reported 

$417,395 in expenses for the salary of a 

single applicant pilot, more than the 

salary of a fully registered pilot. Using 

the 36-percent target, the allowable 

applicant salary would have been 

$129,559, meaning the district paid an 

excess of $287,836 in applicant salaries 

($417,395¥$129,559 = $287,836). We 

continue to include applicant salaries as 

an allowable expense in the 2022 

ratemaking, as it is based on 2019 

operating expenses, when salaries for 

both apprentices and applicant trainees 

were still an allowable expense. The 

apprentice salaries paid in the years 

2019, 2020, and 2021 have not been 

reimbursed in the ratemaking as of 

publication of this rule. Applicant 

salaries (including applicant trainees 

and apprentice pilots) will continue to 

be an allowable operating expense 

through the 2024 ratemaking, which 

will use operating expenses from 2021, 

when the salaries for apprentice pilots 

were still authorized as operating 

expenses. Starting in 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. 

Starting in 2025, the applicant salaries’ 

operating expenses for 2022 will consist 

of only applicant trainees (those who 

are not yet apprentice pilots). 

As discussed above, in a public 

comment on the NPRM for this 

rulemaking, the LPA commented that 

the expenses listed in the NPRM for 

license insurance and applicant health 

insurance were incorrect. An 

independent accounting firm reviewed 

the expenses LPA claimed as the correct 

figures and determined that the license 

insurance expense figure of $1,825 

originally proposed in the NPRM was 

correct, and that the amount the LPA 

claimed was missing was accounted for 

in another line item. The independent 

accountant further determined that the 

applicant health insurance expense of 

$200 originally proposed was incorrect. 

In this final rule, Coast Guard corrects 

the applicant health insurance to a total 

of $31,764, with $12,706 allocated to the 

undesignated area and $19,058 allocated 

to the designated area. 

TABLE 16—2019 RECOGNIZED EXPENSES FOR DISTRICT TWO

Reported operating expenses for 2019 

District Two 

Undesignated 

Designated 

Total 

Lake Erie 

Southeast 

Shoal to Port 

Huron 

Total Other Pilotage Costs: 

Subsistence/Travel—Pilots ................................................................................................... $140,909 $211,363 $352,272 

Hotel/Lodging Cost ............................................................................................................... 49,800 74,700 124,500 

License Insurance ................................................................................................................ 730 1,095 1,825 

Payroll Taxes ........................................................................................................................ 90,091 135,137 225,228 

Insurance .............................................................................................................................. 95,470 143,206 238,676 

Training ................................................................................................................................. 6,428 9,642 16,070 

Other ..................................................................................................................................... 221 331 552 


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24The 2020 and 2021 inflation rates are available 

at https://beta.bls.gov/dataViewer/view/timeseries/ 

CUUR0200SA0. Specifically, the CPI is defined as 

‘‘All items in Midwest urban, all urban consumers, 

not seasonally adjusted (Series ID 

CUUR0200SA0)(CPI–U), All Items, 1982–4=100’’ 

(downloaded March 2022). In the NPRM we used 

the PCE estimate of 4.3 percent for 2021, but now 

use the available interim CPI figure of 5.1 percent. 

25For the 2022 inflation rates, we used the PCE 

median inflation value found in table 1 at https:// 

www.federalreserve.gov/monetarypolicy/files/ 

fomcprojtabl20211215.pdf (Federal Reserve Board, 

Summary of Economic Projections, dated December 

15, 2021, downloaded March 2022). This figure is 

updated to 2.2 percent from 2 percent in the NPRM. 

TABLE 16—2019 RECOGNIZED EXPENSES FOR DISTRICT TWO—Continued 

Reported operating expenses for 2019 

District Two 

Undesignated 

Designated 

Total 

Lake Erie 

Southeast 

Shoal to Port 

Huron 

Total Other Pilotage Costs ............................................................................................ 383,649 575,474 959,123 

Total Applicant Pilotage Costs: 

Applicant Salaries ................................................................................................................. 166,958 250,437 417,395 

Applicant Health Insurance .................................................................................................. 12,706 19,058 31,764 

Applicant Subsistence/Travel ............................................................................................... 5,729 8,593 14,322 

Applicant Hotel/Lodging Cost ............................................................................................... 3,984 5,976 9,960 

Applicant Payroll Tax ............................................................................................................ 5,717 8,576 14,293 

Total Applicant Costs .................................................................................................... 195,094 292,640 487,734 

Pilot Boat and Dispatch Costs: 

Pilot Boat Cost ...................................................................................................................... 210,948 316,422 527,370 

Employee Benefits ................................................................................................................ 96,959 145,438 242,397 

Payroll Taxes ........................................................................................................................ 13,178 19,767 32,945 

Total Pilot Boat and Dispatch Costs ............................................................................. 321,085 481,627 802,712 

Administrative Expense: 

Legal—General Counsel ...................................................................................................... 4,430 6,645 11,075 

Legal—Shared Counsel (K&L Gates) .................................................................................. 22,696 34,045 56,741 

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

Insurance .............................................................................................................................. 11,085 16,627 27,712 

Employee Benefits ................................................................................................................ 34,093 51,139 85,232 

Payroll Taxes ........................................................................................................................ 5,259 7,888 13,147 

Other Taxes .......................................................................................................................... 36,484 54,726 91,210 

Real Estate Taxes ................................................................................................................ 7,905 11,858 19,763 

Depreciation/Auto Lease/Other ............................................................................................ 12,248 18,371 30,619 

Interest .................................................................................................................................. 320 481 801 

APA Dues ............................................................................................................................. 14,698 22,048 36,746 

Dues and Subscriptions ....................................................................................................... 1,912 2,868 4,780 

Utilities .................................................................................................................................. 18,910 28,366 47,276 

Salaries—Admin Employees ................................................................................................ 49,924 74,885 124,809 

Accounting ............................................................................................................................ 13,452 20,178 33,630 

Other ..................................................................................................................................... 18,322 27,483 45,805 

Total Administrative Expenses ...................................................................................... 279,365 419,048 698,413 

Total OpEx (Pilot Costs + Applicant Cost + Pilot Boats + Admin) ............................................. 1,179,193 1,768,789 2,947,982 

Directors Adjustments¥Applicant Surcharge Collected ............................................................. (69,527) (104,291) (173,818) 

Directors Adjustments¥Excess Applicant Salary Paid ............................................................... (115,134) (172,701) (287,836) 

Total Director’s Adjustments ......................................................................................... (184,661) (276,992) (461,654) 

Total Operating Expenses (OpEx + Adjustments) ................................................. 994,531 1,491,797 2,486,328 

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

B. Step 2: Project Operating Expenses, 

Adjusting for Inflation or Deflation 

Having identified the recognized 2019 

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 2020 

and 2021 inflation rates.24 Because the 

BLS does not provide forecasted 

inflation data, we use economic 

projections from the Federal Reserve for 

the 2022 inflation modification.25 Based 

on that information, the calculations for 

Step 2 are as shown in table 17. 


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26Employment Cost Index, Total Compensation 

for Private Industry workers in Transportation and 

Material Moving, Series ID: CIU2010000520000A. 27CPI for All Urban Consumers, Series ID 

CUUR0200SA0. 

28For the 2022 inflation rates, we used the PCE 

median inflation value found in table 1 at https:// 

www.federalreserve.gov/monetarypolicy/files/ 

fomcprojtabl20211215.pdf (Federal Reserve Bank, 

Summary of Economic Projections, dated December 

15, 2021, downloaded March 2022). This figure is 

updated to 2.2 percent from 2 percent in the NPRM. 

29See table 6 of the Great Lakes Pilotage Rates— 

2017 Annual Review final rule, 82 FR 41466 at 

41480 (August 31, 2017). The methodology of the 

staffing model is discussed at length in the final 

rule (see pages 41476–41480 for a detailed analysis 

of the calculations). 

TABLE 17—ADJUSTED OPERATING EXPENSES FOR DISTRICT TWO

District Two 

Undesignated Designated Total 

Total Operating Expenses (Step 1) ............................................................................................. $994,531 $1,491,797 $2,486,328 

2020 Inflation Modification (@1%) .............................................................................................. 9,945 14,918 24,863 

2021 Inflation Modification (@5.1%) ........................................................................................... 51,228 76,842 128,070 

2022 Inflation Modification (@2.2%) ........................................................................................... 23,225 34,838 58,063 

Adjusted 2022 Operating Expenses ..................................................................................... $1,078,929 $1,618,395 $2,697,324 

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

C. Step 3: Estimate Number of 

Registered Pilots and Apprentice Pilots 

In accordance with the text in 

§ 404.103, we estimate the number of 

registered pilots in each district. We 

determine the number of registered 

pilots based on data provided by the 

LPA. With rounding, the maximum 

number of pilots for District Two 

increases to 16 pilots (15.41 rounding 

up to 16), with the additional pilot 

allocated to the maximum for the 

undesignated area of District Two, 

resulting in a maximum of 7 pilots for 

the designated area and a maximum of 

9 pilots for the undesignated area. In the 

NPRM, the Coast Guard estimated that 

District Two would fill the new 

maximum of 16 registered pilots, but 

has since been made aware that a 

temporary pilot performed substantially 

fewer trips than the average number of 

assignments per pilot projected in the 

staffing model, and that an apprentice 

pilot previously projected to join as a 

registered pilot will not do so, as noted 

in section IV. F. of the discussion of 

public comments and changes. 

Therefore, in this final rule, we estimate 

that there will be 14 registered pilots in 

2022 in District Two. 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 two apprentice pilots in 2022 in 

District Two. Furthermore, based on the 

seasonal staffing model discussed in the 

2017 ratemaking (see 82 FR 41466), and 

our changes to that staffing model, we 

assign a certain number of pilots to 

designated waters and a certain number 

to undesignated waters, as shown in 

table 18. These numbers are used to 

determine the amount of revenue 

needed in their respective areas. 

TABLE 18—AUTHORIZED PILOTS

Item District Two 

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

2022 Authorized Pilots (total) .............................................................................................................................................................. 14 

Pilots Assigned to Designated Areas .................................................................................................................................................. 6 

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

2022 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. As 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. As stated in 

section V.A of the preamble, we using 

a two-step process to adjust target pilot 

compensation for inflation. First, we 

adjust the 2021 target compensation 

benchmark of $378,925 by multiplying 

by 3.1 percent for an adjusted value of 

$390,672. The adjustment accounts for 

the difference in actual Q4 2021 ECI 

inflation, 4.8 percent, and the 2020 PCE 

estimate of 1.7 percent.26 27 The second 

step accounts for projected inflation 

from 2021 to 2022, which is 2.2 

percent.28 The compensation 

benchmark for 2022 is $399,266 per 

pilot, as calculated in table 6. The 

apprentice pilot wage benchmark is 36 

percent of the target pilot compensation, 

or $143,736 ($399,266 × 0.36). 

Next, we certify that the number of 

pilots estimated for 2022 is less than or 

equal to the number permitted under 

the changes to the staffing model in 

§ 401.220(a). The changes to the staffing 

model suggest that the number of pilots 

needed is 14 pilots for District Two, 

which is less than or equal to 16, the 

maximum number of registered pilots 

provided by staffing model.29 We 

estimate that two apprentice pilots will 

be needed for District Two in the 2022 

season. The apprentice pilots will work 

under a fully registered pilot and 

receive training in both the designated 

and undesignated waters, but their 

target compensation will not differ 

depending on which area they are 

training in. The $287,472 in total wages 

for two apprentice pilots is allocated 60 

percent for the designated area 

($172,483) and 40 percent for the 

undesignated area ($114,989), in 

accordance with the way operating 

expenses are allocated in Step 1 and 

later in Step 6. 

Thus, in accordance with 

§ 404.104(c), we use the revised target 


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30Moody’s Seasoned Aaa Corporate Bond Yield, 

average of 2020 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. (March 26, 2021) 

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 19. 

TABLE 19—TARGET COMPENSATION FOR DISTRICT TWO

District Two 

Undesignated Designated Total 

Target Pilot Compensation .......................................................................................................... $399,266 $399,266 $399,266 

Number of Pilots .......................................................................................................................... 8 6 14 

Total Target Pilot Compensation .......................................................................................... $3,194,128 $2,395,596 $5,589,724 

Apprentice Pilot Wage Benchmark .............................................................................................. $143,736 $143,736 $143,736 

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

Total Apprentice Pilot Wage Benchmark ............................................................................. $172,483 $114,989 $287,472 

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

E. Step 5: Project Working Capital Fund 

Next, we calculate the working capital 

fund revenues needed for each area. 

First, we add the figures for projected 

operating expenses, total pilot 

compensation, and total apprentice pilot 

wage benchmarks for each area. Next, 

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 2.4767 

percent.30 By multiplying the two 

figures, we obtain the working capital 

fund contribution for each area, as 

shown in table 20. 

TABLE 20—WORKING CAPITAL FUND CALCULATION FOR DISTRICT TWO

District Two 

Undesignated Designated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $1,078,929 $1,618,395 $2,697,324 

Total Target Pilot Compensation (Step 4) ................................................................................... 3,194,128 2,395,596 5,589,724 

Total Apprentice Pilot Wage Benchmark (Step 4) ...................................................................... 172,483 114,989 287,472 

Total 2022 Expenses ............................................................................................................ 4,445,540 4,128,980 8,574,520 

Working Capital Fund (2.48%) .................................................................................................... 110,101 102,261 212,362 

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

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 pilot 

compensation (from Step 4), total 

apprentice pilot wage benchmarks, and 

the working capital fund contribution 

(from Step 5). We show these 

calculations in table 21. 

TABLE 21—REVENUE NEEDED FOR DISTRICT TWO

District Two 

Undesignated Designated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $1,078,929 $1,618,395 $2,697,324 

Total Target Pilot Compensation (Step 4) ................................................................................... 3,194,128 2,395,596 5,589,724 

Total Apprentice Pilot Wage Benchmark (Step 4) ...................................................................... 172,483 114,989 287,472 

Working Capital Fund (Step 5) .................................................................................................... 110,101 102,261 212,362 

Total Revenue Needed ........................................................................................................ 4,555,641 4,231,241 8,786,882 

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

G. Step 7: Calculate Initial Base Rates 

Having determined the revenue 

needed for each area in the previous six 

steps, to develop an hourly rate we 

divide that number by the expected 

number of hours of traffic. Step 7 is a 

two-part process. In the first part, we 

calculate the 10-year average of traffic in 

District Two, using the total time on 

task or pilot bridge hours. To calculate 

the time on task for each district, the 

Coast Guard uses billing data from the 

GLPMS and SeaPro. We pull the data 

from the system, filtering by district, 

year, job status (we only include closed 

jobs), and flagging code (we only 

include U.S. jobs). After downloading 

the data, we remove any overland 


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transfers from the dataset, if necessary, 

and sum the total bridge hours, by area. 

We then subtract any non-billable delay 

hours from the total. Because we 

calculate separate figures for designated 

and undesignated waters, there are two 

parts for each calculation. We show 

these values in table 22. 

TABLE 22—TIME ON TASK FOR DISTRICT TWO

[Hours] 

Year 

District Two 

Undesignated Designated 

2020 ......................................................................................................................................................................... 6232 8401 

2019 ......................................................................................................................................................................... 6512 7715 

2018 ......................................................................................................................................................................... 6150 6655 

2017 ......................................................................................................................................................................... 5139 6074 

2016 ......................................................................................................................................................................... 6425 5615 

2015 ......................................................................................................................................................................... 6535 5967 

2014 ......................................................................................................................................................................... 7856 7001 

2013 ......................................................................................................................................................................... 4603 4750 

2012 ......................................................................................................................................................................... 3848 3922 

2011 ......................................................................................................................................................................... 3708 3680 

Average ............................................................................................................................................................ 5701 5978 

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 each area are set forth 

in table 23. 

TABLE 23—INITIAL RATE CALCULATIONS FOR DISTRICT TWO

Item Undesignated Designated 

Revenue Needed (Step 6) ....................................................................................................................................... $4,555,641 $4,231,241 

Average Time on Task (Hours) ............................................................................................................................... 5,701 5,978 

Initial Rate ................................................................................................................................................................ $799 $708 

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

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 

database, we calculate the average 

weighting factor for each area using the 

data from each vessel transit from 2014 

onward, as shown in tables 24 and 25. 

TABLE 24—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 2 (2014) ............................................................................................................................. 356 1.15 409.4 

Class 2 (2015) ............................................................................................................................. 354 1.15 407.1 

Class 2 (2016) ............................................................................................................................. 380 1.15 437 

Class 2 (2017) ............................................................................................................................. 222 1.15 255.3 

Class 2 (2018) ............................................................................................................................. 123 1.15 141.45 

Class 2 (2019) ............................................................................................................................. 127 1.15 146.05 

Class 2 (2020) ............................................................................................................................. 165 1.15 189.75 

Class 3 (2014) ............................................................................................................................. 20 1.3 26 

Class 3 (2015) ............................................................................................................................. 0 1.3 0 

Class 3 (2016) ............................................................................................................................. 9 1.3 11.7 

Class 3 (2017) ............................................................................................................................. 12 1.3 15.6 

Class 3 (2018) ............................................................................................................................. 3 1.3 3.9 

Class 3 (2019) ............................................................................................................................. 1 1.3 1.3 

Class 3 (2020) ............................................................................................................................. 1 1.3 1.3 

Class 4 (2014) ............................................................................................................................. 636 1.45 922.2 

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

Class 4 (2016) ............................................................................................................................. 468 1.45 678.6 


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TABLE 24—AVERAGE WEIGHTING FACTOR FOR DISTRICT TWO, UNDESIGNATED AREAS—Continued 

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

Class 4 (2017) ............................................................................................................................. 319 1.45 462.55 

Class 4 (2018) ............................................................................................................................. 196 1.45 284.20 

Class 4 (2019) ............................................................................................................................. 210 1.45 304.50 

Class 4 (2020) ............................................................................................................................. 201 1.45 291.45 

Total ...................................................................................................................................... 4,574 ........................ 6,012 

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

TABLE 25—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 2 (2014) ............................................................................................................................. 237 1.15 272.55 

Class 2 (2015) ............................................................................................................................. 217 1.15 249.55 

Class 2 (2016) ............................................................................................................................. 224 1.15 257.6 

Class 2 (2017) ............................................................................................................................. 127 1.15 146.05 

Class 2 (2018) ............................................................................................................................. 153 1.15 175.95 

Class 2 (2019) ............................................................................................................................. 281 1.15 323.15 

Class 2 (2020) ............................................................................................................................. 342 1.15 393.3 

Class 3 (2014) ............................................................................................................................. 8 1.3 10.4 

Class 3 (2015) ............................................................................................................................. 8 1.3 10.4 

Class 3 (2016) ............................................................................................................................. 4 1.3 5.2 

Class 3 (2017) ............................................................................................................................. 4 1.3 5.2 

Class 3 (2018) ............................................................................................................................. 14 1.3 18.2 

Class 3 (2019) ............................................................................................................................. 1 1.3 1.3 

Class 3 (2020) ............................................................................................................................. 5 1.3 6.5 

Class 4 (2014) ............................................................................................................................. 359 1.45 520.55 

Class 4 (2015) ............................................................................................................................. 340 1.45 493 

Class 4 (2016) ............................................................................................................................. 281 1.45 407.45 

Class 4 (2017) ............................................................................................................................. 185 1.45 268.25 

Class 4 (2018) ............................................................................................................................. 379 1.45 549.55 

Class 4 (2019) ............................................................................................................................. 403 1.45 584.35 

Class 4 (2020) ............................................................................................................................. 405 1.45 587.25 

Total ...................................................................................................................................... 4,152 ........................ 5,461 

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

I. Step 9: Calculate Revised Base Rates 

In this step, we revise the base rates 

so that, once the impact of the weighting 

factors is considered, the total cost of 

pilotage will be equal to the revenue 

needed. To do this, we divide the initial 

base rates calculated in Step 7 by the 

average weighting factors calculated in 

Step 8, as shown in table 26. 

TABLE 26—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: Designated .............................................................................................................. $708 1.32 $536 

District Two: Undesignated .......................................................................................................... 799 1.31 610 

* All figures are rounded to the nearest dollar. 


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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 is a sufficient number of 

pilots to handle those heavy traffic 

periods. The Director also considers 

whether the rates will cover operating 

expenses and infrastructure costs, and 

takes average traffic and weighting 

factors into consideration. Based on this 

information, the Director is not making 

any alterations to the rates in this step. 

The 2022 rate for the designated area of 

District Two is higher than the 2021 

final rate, despite the increased traffic 

shown in Step 7, because of increased 

inflation. We modify § 401.405(a)(3) and 

(4) to reflect the final rates shown in 

table 27. 

TABLE 27—FINAL RATES FOR DISTRICT TWO

Area Name Final 2021 

pilotage rate 

2022 Pilotage 

rate 

District Two: Designated ....................................... Navigable waters from Southeast Shoal to Port Huron, MI $580 $536 

District Two: Undesignated ................................... Lake Erie .............................................................................. 566 610 

* All figures are rounded to the nearest dollar. 

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 begin by reviewing the 

independent accountant’s financial 

reports for each association’s 2019 

expenses and revenues, which are 

available in the docket for this 

rulemaking. For accounting purposes, 

the financial reports divide expenses 

into a designated area (21 percent) and 

two undesignated areas (52 and 27 

percent). For costs accrued by the pilot 

associations generally, such as 

employee benefits, for example, the cost 

is divided between the designated and 

undesignated areas on a pro rata basis. 

The recognized operating expenses for 

District Three are shown in table 28. 

Adjustments made by the auditors are 

explained in the auditors’ reports, 

which are available in the docket for 

this rulemaking. 

In the 2019 expenses used as the basis 

for this rulemaking, districts used the 

term ‘‘applicant’’ to describe applicant 

trainees and persons who are called 

apprentices (applicant pilots) under the 

new definition in this rulemaking. 

Therefore, when describing past 

expenses, we use the term ‘‘applicant’’ 

to match what was reported from 2019, 

which includes both applicant trainees 

and apprentice pilots. We use 

‘‘apprentice’’ to distinguish the 

apprentice pilot wage benchmark and 

describe the impacts of the ratemaking 

going forward. 

There are two Director’s adjustments 

for District Three. The first deduction is 

$746,802, the amount of surcharge 

collected in 2019 to recoup expenses of 

five applicant pilots. In the NPRM, the 

Coast Guard proposed a second 

deduction of $1,921 to reduce the 

allowable expenses for applicant pilots 

to 36 percent of target pilot 

compensation. In this final rule, Coast 

Guard removes this deduction because 

we confirmed that the fifth apprentice 

reported was approved by the Director, 

meaning that the average per-apprentice 

compensation was below the 36-percent 

benchmark. District Three reported 

$520,158 in expenses for the salary of 

five applicant pilots. Using the 36- 

percent target, the allowable applicant 

salary would have been $129,559 per 

applicant, for a total of $647,797 for five 

applicant pilots, meaning the district 

paid an average of $104,032 per 

applicant, which is below the $129,559 

target. Applicant salaries (including 

applicant trainees and apprentice pilots) 

will continue to be an allowable 

operating expense through the 2024 

ratemaking, which will use operating 

expenses from 2021, when the wages for 

apprentice pilots were still authorized 

as operating expenses. Starting in the 

2025 ratemaking, apprentice pilot 

salaries will no longer be included as a 

2022 operating expense, because 

apprentice pilot wage benchmark will 

have already been factored into the 

ratemaking Steps 3 and 4 in calculation 

of the 2022 rates. Starting in 2025, the 

applicant salaries operating expenses for 

2022 will consist of only applicant 

trainees (those who are not apprentice 

pilots). 

TABLE 28—2019 RECOGNIZED EXPENSES FOR DISTRICT THREE

Reported Operating Expenses for 2019 

District Three 

Undesignated Designated Undesignated 

Total Lakes Huron 

and Michigan 

St. Marys 

River 

Lake 

Superior 

Other Pilotage Costs: 

Pilot Subsistence/Travel ........................................................................... $274,911 $114,586 $144,207 $533,704 

Hotel/Lodging Cost ................................................................................... 118,533 49,406 62,178 230,117 

License Insurance—Pilots ........................................................................ 16,171 6,740 8,483 31,394 

Payroll Tax (D3–19–01) ............................................................................ 146,545 61,082 76,871 284,498

Pilot Training ............................................................................................. 40,017 16,680 20,991 77,688 

Other ......................................................................................................... 12,551 5,232 6,584 24,367 

Total Other Pilotage Costs ................................................................ 608,728 253,726 319,314 1,181,768 

Applicant Costs: 

Applicant Salaries ..................................................................................... 267,933 111,678 140,547 520,158 

Applicant Benefits ..................................................................................... 77,627 32,356 40,720 150,703 


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31The 2020 and 2021 inflation rates are available 

at https://beta.bls.gov/dataViewer/view/timeseries/ 

CUUR0200SA0. Specifically, the CPI is defined as 

‘‘All items in Midwest urban, all urban consumers, 

not seasonally adjusted (Series ID 

CUUR0200SA0)(CPI–U), All Items, 1982–4=100’’ 

(downloaded March 2022). In the NPRM we used 

the PCE estimate of 4.3 percent for 2021, but now 

use the available interim CPI figure of 5.1 percent. 

32For the 2022 inflation rates, we used the PCE 

median inflation value found in table 1 at https:// 

www.federalreserve.gov/monetarypolicy/files/ 

fomcprojtabl20211215.pdf (Federal Reserve Bank, 

Summary of Economic Projections, dated December 

16, 2021, downloaded March 2022). This figure is 

updated to 2.2 percent from 2 percent in the NPRM. 

TABLE 28—2019 RECOGNIZED EXPENSES FOR DISTRICT THREE—Continued 

Reported Operating Expenses for 2019 

District Three 

Undesignated Designated Undesignated 

Total Lakes Huron 

and Michigan 

St. Marys 

River 

Lake 

Superior 

Applicant Payroll Tax ................................................................................ 21,713 9,050 11,390 42,153

Total Applicant Costs ........................................................................ 367,273 153,084 192,657 713,014 

Pilot Boat and Dispatch Costs: 

Pilot Boat Costs ........................................................................................ 415,908 173,356 218,168 807,432 

Dispatch Costs ......................................................................................... 126,807 52,855 66,518 246,180 

Employee Benefits .................................................................................... 7,550 3,147 3,960 14,657 

Payroll Taxes ............................................................................................ 10,534 4,391 5,526 20,451 

Total Pilot Boat and Dispatch Costs ................................................. 560,799 233,749 294,172 1,088,720 

Administrative Costs: 

Legal—General Counsel .......................................................................... 9,453 3,940 4,958 18,351 

Legal—Shared Counsel (K&L Gates) ...................................................... 26,858 11,195 14,089 52,142 

Legal—USCG Intervener Litigation .......................................................... 19,050 7,940 9,993 36,983 

Office Rent ................................................................................................ 3,369 1,404 1,767 6,540 

Insurance .................................................................................................. 27,622 11,513 14,489 53,624 

Employee Benefits .................................................................................... 77,435 32,276 40,619 150,330 

Payroll Tax ................................................................................................ 18,984 7,913 9,958 36,855 

Other Taxes .............................................................................................. 480 200 252 932 

Depreciation/Auto Leasing/Other ............................................................. 51,287 21,377 26,903 99,567 

Interest ...................................................................................................... 5,754 2,398 3,018 11,170 

APA Dues ................................................................................................. 24,311 10,133 12,752 47,196 

Dues and Subscriptions ........................................................................... 4,198 1,750 2,202 8,150 

Utilities ...................................................................................................... 38,585 16,083 20,240 74,908 

Salaries ..................................................................................................... 75,200 31,344 39,447 145,991 

Accounting/Professional Fees .................................................................. 19,865 8,280 10,420 38,565 

Other Expenses ........................................................................................ 23,945 9,981 12,561 46,487 

CPA Deduction (D3–18–01) ..................................................................... (4,117) (1,716) (2,160) (7,993) 

Total Administrative Expenses .......................................................... 422,279 176,011 221,508 819,798 

Total Operating Expenses (Other Costs + Applicant Cost + Pilot Boats + 

Admin) .......................................................................................................... 1,959,079 816,570 1,027,651 3,803,300 

Directors Adjustments¥Applicant Surcharge Collected .......................... (384,678) (160,339) (201,786) (746,802) 

Total Directors Adjustments .............................................................. (384,678) (160,339) (201,786) (746,802) 

Total Operating Expenses (OpEx + Adjustments) ..................... 1,574,401 656,231 825,865 3,056,498 

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

B. Step 2: Project Operating Expenses, 

Adjusting for Inflation or Deflation 

Having identified the recognized 2019 

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 2020 

and 2021 inflation rates.31 Because the 

BLS does not provide forecasted 

inflation data, we use economic 

projections from the Federal Reserve for 

the 2022 inflation modification.32 Based 

on that information, the calculations for 

Step 2 are as shown in table 29. 

TABLE 29—ADJUSTED OPERATING EXPENSES FOR DISTRICT THREE

District Three 

Undesignated Designated Total 

Total Operating Expenses (Step 1) ............................................................................................. $2,400,266 $656,231 $3,056,498 

2020 Inflation Modification (@1%) .............................................................................................. 24,003 6,562 30,565 

2021 Inflation Modification (@5.1%) ........................................................................................... 123,638 33,802 157,440 

2022 Inflation Modification (@2.2%) ........................................................................................... 56,054 15,325 71,379 

Adjusted 2022 Operating Expenses ..................................................................................... 2,603,961 711,920 3,315,882 

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


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33Employment Cost Index, Total Compensation 

for Private Industry workers in Transportation and 

Material Moving, Series ID: CIU2010000520000A 

34CPI for All Urban Consumers, Series ID 

CUUR0200SA0. 

35For the 2022 inflation rates, we used the PCE 

median inflation value found in table 1 at https:// 

www.federalreserve.gov/monetarypolicy/files/ 

fomcprojtabl20211215.pdf (Federal Reserve Bank, 

Summary of Economic Projections, dated December 

16, 2021, downloaded March 2022). This figure is 

updated to 2.2 percent from 2 percent in the NPRM. 

36See Table 6 of the Great Lakes Pilotage Rates— 

2017 Annual Review final rule, 82 FR 41466 at 

41480 (August 31, 2017). The methodology of the 

staffing model is discussed at length in the final 

rule (see pages 41476–41480 for a detailed analysis 

of the calculations). 

C. Step 3: Estimate Number of 

Registered Pilots and Apprentice Pilots 

In accordance with the text in 

§ 404.104(c), we estimate the number of 

registered pilots in each district. 

Rounding in the staffing model does not 

increase the maximum number of pilots 

for District Three because the total 

pilots needed, 21.55, already rounds up 

to 22. We determine the number of 

registered pilots based on data provided 

by the WGLPA. In the NPRM, we 

estimated that there would be 22 

registered pilots in 2022 in District 

Three. However, during the GLPAC 

meeting on September 1, 2021, WGLPA 

reported that they would have three 

retirements before the 2022 season. 

Therefore, we now estimate that there 

will be 19 registered pilots in 2022 in 

District Three, with 4 pilots assigned to 

designated areas and 15 pilots assigned 

to undesignated areas. 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 five apprentice pilots in 2022 in 

District Three. Furthermore, based on 

the seasonal staffing model discussed in 

the 2017 ratemaking (see 82 FR 41466), 

and our changes to that staffing model, 

we assign a certain number of pilots to 

designated waters and a certain number 

to undesignated waters, as shown in 

table 30. These numbers are used to 

determine the amount of revenue 

needed in their respective areas. 

TABLE 30—AUTHORIZED PILOTS

Item District three 

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

2022 Authorized Pilots (total) .............................................................................................................................................................. 19 

Pilots Assigned to Designated Areas .................................................................................................................................................. 4 

Pilots Assigned to Undesignated Areas .............................................................................................................................................. 15 

2022 Apprentice Pilots ......................................................................................................................................................................... 5 

* 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. As 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 2021 target compensation 

benchmark of $378,925 by 3.1 percent 

for an adjusted value of $390,672. The 

adjustment accounts for the difference 

in actual Q4 2021 ECI inflation, 4.8 

percent, and the 2020 PCE estimate of 

1.7 percent.33 34 The second step 

accounts for projected inflation from 

2021 to 2022, 2.2 percent.35 Based on 

the projected 2022 inflation estimate, 

the compensation benchmark for 2022 is 

$399,266 per pilot as shown in table 6. 

The apprentice pilot wage benchmark is 

36 percent of the target pilot 

compensation, or $143,736 ($399,266 × 

0.36). 

Next, we certify that the number of 

pilots estimated for 2022 is less than or 

equal to the number permitted under 

the changes to the staffing model in 

§ 401.220(a). The changes to the staffing 

model suggest that the number of pilots 

needed is 19 pilots for District Three, 

which is less than or equal to 22, the 

number of registered pilots provided by 

the pilot associations.36 We estimate 

that five apprentice pilots will be 

needed for District Three in the 2022 

season. The apprentice pilots will work 

under a fully registered pilot and 

receive training in both the designated 

and undesignated waters, but their 

target compensation will not differ 

depending on which area they are 

training in. The total wages of $718,680 

for five apprentice pilots are allocated at 

21 percent for the designated area 

($150,923) and 79 percent (52 percent + 

27 percent) for the undesignated area 

($567,756), in accordance with the way 

operating expenses are allocated in Step 

1 and later in Step 6. 

Thus, 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 31. 

TABLE 31—TARGET COMPENSATION FOR DISTRICT THREE

District Three 

Undesignated Designated Total 

Target Pilot Compensation .......................................................................................................... $399,266 $399,266 $399,266 

Number of Pilots .......................................................................................................................... 15 4 19 

Total Target Pilot Compensation ................................................................................................. $5,988,990 $1,597,064 $7,586,054 

Apprentice Pilot Wage Benchmark .............................................................................................. $143,736 $143,736 $143,736 

Number of Apprentice Pilots ........................................................................................................ ........................ ........................ 5 

Total Apprentice Pilot Wage Benchmark ............................................................................. $567,756 $150,923 $718,678.80 

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


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37Moody’s Seasoned Aaa Corporate Bond Yield, 

average of 2020 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 (March 26, 2021). 

E. Step 5: Project Working Capital Fund 

Next, we calculate the working capital 

fund revenues needed for each area. 

First, we add the figures for projected 

operating expenses, total pilot 

compensation, and total apprentice pilot 

wage benchmarks for each area. Next, 

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 2.4767 

percent.37 By multiplying the two 

figures, we obtain the working capital 

fund contribution for each area, as 

shown in table 32. 

TABLE 32—WORKING CAPITAL FUND CALCULATION FOR DISTRICT THREE

District Three 

Undesignated Designated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $2,603,961 $711,920 $3,315,882 

Total Target Pilot Compensation (Step 4) ................................................................................... 5,988,990 1,597,064 7,586,054 

Total Apprentice Pilot Wage Benchmark (Step 4) ...................................................................... 567,756 150,923 718,679 

Total 2022 Expenses ............................................................................................................ 9,160,708 2,459,907 11,620,614 

Working Capital Fund (2.48%) .................................................................................................... 226,880 60,924 287,804 

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

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 pilot 

compensation (from Step 4), and the 

working capital fund contribution (from 

Step 5). The calculations are shown in 

table 33. 

TABLE 33—REVENUE NEEDED FOR DISTRICT THREE

District Three 

Undesignated Designated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $2,603,961 $711,920 $3,315,882 

Total Target Pilot Compensation (Step 4) ................................................................................... 5,988,990 1,597,064 7,586,054 

Total Apprentice Pilot Wage Benchmark (Step 4) ...................................................................... 567,756 150,923 718,679 

Working Capital Fund (Step 5) .................................................................................................... 226,880 60,924 287,804 

Total Revenue Needed ........................................................................................................ 9,387,588 2,520,831 11,908,418 

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

G. Step 7: Calculate Initial Base Rates 

Having determined the revenue 

needed for each area in the previous six 

steps, to develop an hourly rate we 

divide that number by the expected 

number of hours of traffic. Step 7 is a 

two-part process. In the first part, we 

calculate the 10-year average of traffic in 

District Three, using the total time on 

task or pilot bridge hours. To calculate 

the time on task for each district, the 

Coast Guard uses billing data from the 

GLPMS and SeaPro. We pull the data 

from the system, filtering by district, 

year, job status (we only include closed 

jobs), and flagging code (we only 

include U.S. jobs). After downloading 

the data, we remove any overland 

transfers from the dataset, if necessary, 

and sum the total bridge hours, by area. 

We then subtract any non-billable delay 

hours from the total. Because we 

calculate separate figures for designated 

and undesignated waters, there are two 

parts for each calculation. We show 

these values in table 34. 

TABLE 34—TIME ON TASK FOR DISTRICT THREE

[Hours] 

Year 

District Three 

Undesignated Designated 

2020 ......................................................................................................................................................................... 24,178 3,682 

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 

2012 ......................................................................................................................................................................... 15,906 2,163 

2011 ......................................................................................................................................................................... 16,012 1,678 


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TABLE 34—TIME ON TASK FOR DISTRICT THREE—Continued 

[Hours] 

Year 

District Three 

Undesignated Designated 

Average .................................................................................................................................................................... 21,106 2,930 

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 each area are set forth 

in table 35. 

TABLE 35—INITIAL RATE CALCULATIONS FOR DISTRICT THREE

Undesignated Designated 

Revenue Needed (Step 6) ....................................................................................................................................... $9,387,588 $2,520,831 

Average Time on Task (Hours) ............................................................................................................................... 21,106 2,930 

Initial Rate ................................................................................................................................................................ $445 $860 

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

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 

database, we calculate the average 

weighting factor for each area using the 

data from each vessel transit from 2014 

onward, as shown in tables 36 and 37. 

TABLE 36—AVERAGE WEIGHTING FACTOR FOR DISTRICT THREE, UNDESIGNATED AREAS

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

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 2 (2014) ............................................................................................................................. 274 1.15 315.1 

Class 2 (2015) ............................................................................................................................. 207 1.15 238.05 

Class 2 (2016) ............................................................................................................................. 236 1.15 271.4 

Class 2 (2017) ............................................................................................................................. 264 1.15 303.6 

Class 2 (2018) ............................................................................................................................. 169 1.15 194.35 

Class 2 (2019) ............................................................................................................................. 279 1.15 320.85 

Class 2 (2020) ............................................................................................................................. 395 1.15 454.25 

Class 3 (2014) ............................................................................................................................. 15 1.3 19.5 

Class 3 (2015) ............................................................................................................................. 8 1.3 10.4 

Class 3 (2016) ............................................................................................................................. 10 1.3 13 

Class 3 (2017) ............................................................................................................................. 19 1.3 24.7 

Class 3 (2018) ............................................................................................................................. 9 1.3 11.7 

Class 3 (2019) ............................................................................................................................. 9 1.3 11.7 

Class 3 (2020) ............................................................................................................................. 4 1.3 5.2 

Class 4 (2014) ............................................................................................................................. 394 1.45 571.3 

Class 4 (2015) ............................................................................................................................. 375 1.45 543.75 

Class 4 (2016) ............................................................................................................................. 332 1.45 481.4 

Class 4 (2017) ............................................................................................................................. 367 1.45 532.15 

Class 4 (2018) ............................................................................................................................. 337 1.45 488.65 

Class 4 (2019) ............................................................................................................................. 334 1.45 484.3 

Class 4 (2020) ............................................................................................................................. 413 1.45 598.85 

Total for Area 6 .................................................................................................................... 5,115 ........................ 6,559 

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 2 (2014) ...................................................................................................................... 177 1.15 203.55 


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TABLE 36—AVERAGE WEIGHTING FACTOR FOR DISTRICT THREE, UNDESIGNATED AREAS—Continued 

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

Class 2 (2015) ...................................................................................................................... 169 1.15 194.35 

Class 2 (2016) ...................................................................................................................... 174 1.15 200.1 

Class 2 (2017) ...................................................................................................................... 151 1.15 173.65 

Class 2 (2018) ...................................................................................................................... 102 1.15 117.3 

Class 2 (2019) ...................................................................................................................... 120 1.15 138 

Class 2 (2020) ...................................................................................................................... 239 1.15 274.85 

Class 3 (2014) ...................................................................................................................... 3 1.3 3.9 

Class 3 (2015) ...................................................................................................................... 0 1.3 0 

Class 3 (2016) ...................................................................................................................... 7 1.3 9.1 

Class 3 (2017) ...................................................................................................................... 18 1.3 23.4 

Class 3 (2018) ...................................................................................................................... 7 1.3 9.1 

Class 3 (2019) ...................................................................................................................... 6 1.3 7.8 

Class 3 (2020) ...................................................................................................................... 2 1.3 2.6 

Class 4 (2014) ...................................................................................................................... 243 1.45 352.35 

Class 4 (2015) ...................................................................................................................... 253 1.45 366.85 

Class 4 (2016) ...................................................................................................................... 204 1.45 295.8 

Class 4 (2017) ...................................................................................................................... 269 1.45 390.05 

Class 4 (2018) ...................................................................................................................... 188 1.45 272.6 

Class 4 (2019) ...................................................................................................................... 254 1.45 368.3 

Class 4 (2020) ...................................................................................................................... 456 1.45 661.2 

Total for Area 8 .................................................................................................................... 3,054 ........................ 4,077 

Combined total .............................................................................................................. 8,169 ........................ 10,636.05 

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

TABLE 37—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) ............................................................................................................................. 16 1 16 

Class 2 (2014) ............................................................................................................................. 221 1.15 254.15 

Class 2 (2015) ............................................................................................................................. 145 1.15 166.75 

Class 2 (2016) ............................................................................................................................. 174 1.15 200.1 

Class 2 (2017) ............................................................................................................................. 170 1.15 195.5 

Class 2 (2018) ............................................................................................................................. 126 1.15 144.9 

Class 2 (2019) ............................................................................................................................. 162 1.15 186.3 

Class 2 (2020) ............................................................................................................................. 250 1.15 287.5 

Class 3 (2014) ............................................................................................................................. 4 1.3 5.2 

Class 3 (2015) ............................................................................................................................. 0 1.3 0 

Class 3 (2016) ............................................................................................................................. 6 1.3 7.8 

Class 3 (2017) ............................................................................................................................. 14 1.3 18.2 

Class 3 (2018) ............................................................................................................................. 6 1.3 7.8 

Class 3 (2019) ............................................................................................................................. 3 1.3 3.9 

Class 3 (2020) ............................................................................................................................. 4 1.3 5.2 

Class 4 (2014) ............................................................................................................................. 321 1.45 465.45 

Class 4 (2015) ............................................................................................................................. 245 1.45 355.25 

Class 4 (2016) ............................................................................................................................. 191 1.45 276.95 

Class 4 (2017) ............................................................................................................................. 234 1.45 339.3 

Class 4 (2018) ............................................................................................................................. 225 1.45 326.25 

Class 4 (2019) ............................................................................................................................. 308 1.45 446.6 

Class 4 (2020) ............................................................................................................................. 385 1.45 558.25 

Total ...................................................................................................................................... 3,469 ........................ 4,526 

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


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38 Great Lakes Pilotage Rates—2018 Annual 

Review and Revisions to Methodology (83 FR 

26162), published June 5, 2018. 

I. Step 9: Calculate Revised Base Rates 

In this step, we revise the base rates 

so that once the impact of the weighting 

factors is considered, the total cost of 

pilotage will be equal to the revenue 

needed. To do this, we divide the initial 

base rates calculated in Step 7 by the 

average weighting factors calculated in 

Step 8, as shown in table 38. 

TABLE 38—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: Designated ........................................................................................................... $860 1.30 $662 

District Three: Undesignated ....................................................................................................... 445 1.30 342 

* All figures are rounded to the nearest dollar. 

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 is a sufficient number of 

pilots to handle those heavy traffic 

periods. The Director also considers 

whether the rates will cover operating 

expenses and infrastructure costs, and 

takes average traffic and weighting 

factors into consideration. Based on this 

information, the Director is not making 

any alterations to the rates in this step. 

We will modify § 401.405(a)(5) and (6) 

to reflect the final rates shown in table 

39. 

TABLE 39—FINAL RATES FOR DISTRICT THREE

Area Name Final 2021 

pilotage rate 

2022 

pilotage rate 

District Three: Designated ............................................ St. Marys River ............................................................. $586 $662 

District Three: Undesignated ........................................ Lakes Huron, Michigan, and Superior .......................... 337 342 

* All figures are rounded to the nearest dollar. 

VII. Regulatory Analyses 

We developed this rule after 

considering numerous statutes and 

Executive orders related to rulemaking. 

A summary of our analyses based on 

these statutes or Executive orders 

follows. 

A. Regulatory Planning and Review 

Executive Orders 12866 (Regulatory 

Planning and Review) and 13563 

(Improving Regulation and Regulatory 

Review) direct agencies to assess the 

costs and benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying costs and benefits, reducing 

costs, harmonizing rules, and promoting 

flexibility. 

The Office of Management and Budget 

(OMB) has not designated this rule a 

significant regulatory action under 

section 3(f) of Executive Order 12866. 

Accordingly, OMB has not reviewed it. 

A regulatory analysis follows. 

The purpose of this rule is to establish 

new base 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 last full ratemaking was concluded 

in June of 2018.38 For this ratemaking, 

the Coast Guard estimates an increase in 

cost of approximately $2.15 million to 

industry. This is approximately a 7- 

percent increase because of the change 

in revenue needed in 2022 compared to 

the revenue needed in 2021. 

Table 40 summarizes changes with no 

cost impacts or where the cost impacts 

are captured in the rate change. Table 41 

summarizes the affected population, 

costs, and benefits of the rate change. 


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TABLE 40—CHANGES WITH NO COSTS OR COSTS CAPTURED IN THE RATE CHANGE

Change Description Affected population Basis for no cost or cost 

captured in the rate Benefits 

Add a definition of apprentice 

pilot.

Distinguishes between applicants who have not yet entered training and apprentices, persons approved and 

certified by the Director, who 

are participating in an approved United States Great 

Lakes pilot training and qualification program and meet 

all the minimum requirements listed in 46 CFR 

401.211.

Owners and operators of 293 

vessels transiting the Great 

Lakes system annually, 51 

United States Great Lakes 

pilots, 9 apprentice pilots, 

and 3 pilotage associations.

No cost, strictly a definitional 

change.

Provides clarity by distinguishing apprentice pilots 

from applicant trainees when 

calculating the apprentice 

pilot operating expenses, estimates and wage benchmark. 

Add a definition of limited registration.An authorization given by the 

Director, upon the request of 

the respective pilots association, to an apprentice pilot to 

provide pilotage service without direct supervision from a 

fully registered pilot in a specific area or waterway.

Owners and operators of 293 

vessels transiting the Great 

Lakes system annually, 51 

United States Great Lakes 

pilots, 9 apprentice pilots, 

and 3 pilotage associations.

No cost, strictly a definitional 

change.

Provides clarity by distinguishing when apprentice pilots can operate as the pilot 

of record without being a 

fully registered pilot. 

Adding number of apprentice 

pilots to Step 3 and setting 

apprentice pilot wage benchmark in Step 4.

The Coast Guard will modify 

the staffing model at 46 CFR 

404.103 to predict the number of apprentice pilots each 

district will need for the next 

season. 46 CFR 404.103 will 

establish the apprentice pilot 

wage benchmark at 36% of 

registered pilot compensation for that year.

Owners and operators of 293 

vessels transiting the Great 

Lakes system annually, 51 

United States Great Lakes 

pilots, 9 apprentice pilots, 

and 3 pilotage associations.

Total cost of $1,293,622 for 

the wages of 9 apprentice 

pilots for the 2022 season. 

This amount is incorporated 

into the rate increase.

Setting a target wage of 36% 

of registered pilot compensation better matches changes 

in registered pilot compensation and inflation and more 

evenly distributes the additional cost of apprentice pilots compared to the surcharge method. 

TABLE 41—ECONOMIC IMPACTS DUE TO 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 base pilotage rates annually.

Owners and operators of 293 

vessels transiting the Great 

Lakes system annually, 51 

United States Great Lakes 

pilots, 9 apprentice pilots, 

and 3 pilotage associations.

Increase of $2,154,343 due to 

change in revenue needed 

for 2022 ($32,486,995) from 

revenue needed for 2021 

($30,332,652), as shown in 

table 42.

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. 

Changes to staffing model ....... The Coast Guard will modify 

the staffing model at 46 CFR 

401.220(a)(3) to round up to 

the nearest integer, as opposed to the existing method, which rounds to the 

nearest integer. In total, this 

will increase the maximum 

number of allowable pilots 

by two, adding one pilot to 

each of the undesignated 

areas of District One and 

District Two.

Owners and operators of 293 

vessels transiting the Great 

Lakes system annually, 51 

United States Great Lakes 

pilots, 9 apprentice pilots, 

and 3 pilotage associations.

The total potential impact of 

two additional positions is 

$775,039. Only one district 

has hired up to the new 

maximum so the realized impact is only $387,519.

Rounding up in the staffing 

model accounts for extra 

staff or extra time spent by 

the pilot associations’ presidents not performing pilotage service. Rounding up allows us to account for this 

time and promote safety and 

restorative rest, while minimizing delays in providing pilotage services. 

The Coast Guard is required to review 

and adjust pilotage rates on the Great 

Lakes annually. See section III 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 2022 shipping 

season to generate sufficient revenues 

for each district to reimburse its 

necessary and reasonable operating 

expenses, fairly compensate trained and 

rested pilots, and provide an 

appropriate working capital fund to use 

for improvements. The result will be an 

increase in rates for all areas in District 

One and District Two, and in the 

designated area of District Three. The 

rate for the undesignated area of District 

Three will decrease. These changes will 

lead to a net increase in the cost of 

service to shippers. However, because 

the rates will increase for some areas 

and decrease for others, the change in 

per unit cost to each individual shipper 

will be dependent on their area of 

operation, and if they previously paid a 

surcharge. 

A detailed discussion of our economic 

impact analysis follows. 

Affected Population 

This rule affects United States Great 

Lakes pilots, the 3 pilot associations, 

and the owners and operators of 293 

oceangoing vessels that transit the Great 

Lakes annually. We estimate that there 


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39SeaPro is a data management system developed 

by District One as an alternative to GLPMS. It tracks 

the same traffic and invoice data as the GLPMS. 

Going into the 2022 season, all districts will employ 

SeaPro. 

40Some vessels entered the Great Lakes multiple 

times in a single year, affecting the average number 

of unique vessels utilizing pilotage services in any 

given year. 

41While the Coast Guard implemented a 

surcharge in 2019, we are not implementing any 

surcharges for 2022. 42 85 FR 20088, see table 41. https://

www.regulations.gov/document/USCG-2020-0457- 

0013. 43The rates for 2021 do not account for the 

impacts COVID–19 may have had on shipping 

traffic and, subsequently, pilotage revenue, as we 

do not have complete data for 2020. The rates for 

2022 will take into account for all and any pertinent 

impacts of COVID–19 on shipping traffic, because 

that future ratemaking will include 2020 traffic 

data. However, the Coast Guard uses a 10-year 

average when calculating traffic in order to smooth 

out variations in traffic caused by global economic 

conditions, such as those caused by the COVID–19 

pandemic. 

will be 51 registered pilots and 9 

apprentice pilots during the 2022 

shipping season. The shippers affected 

by these rate changes are those owners 

and operators of domestic vessels 

operating ‘‘on register’’ (engaged in 

foreign trade) and 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 and not to 

recreational vessels. United Statesflagged 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 Canadianflagged 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 2018 through 

2020 from the GLPMS to estimate the 

average annual number of vessels 

affected by the rate adjustment. The 

GLPMS 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. When 

we reviewed 10 years of the most recent 

billing data, we found the data included 

vessels that have not used pilotage 

services in recent years. We believe 

using 3 years of billing data is a better 

representation of the vessel population 

that is currently using pilotage services 

and will be impacted by this 

rulemaking. We found that 514 unique 

vessels used pilotage services during the 

years 2018 through 2020. That is, these 

vessels had a pilot dispatched to the 

vessel, and billing information was 

recorded in the GLPMS or SeaPro.39 Of 

these vessels, 465 were foreign-flagged 

vessels and 49 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, 

we took an average of the unique vessels 

using pilotage services from the years 

2018 through 2020 as the best 

representation of vessels estimated to be 

affected by the rates in this rulemaking. 

From 2018 through 2020, an average of 

293 vessels used pilotage services 

annually.40 On average, 275 of these 

vessels were foreign-flagged vessels and 

19 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 will result in a 

net increase in the cost of service to 

shippers. However, the change in per 

unit cost to each individual shipper will 

be 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 2021 with the 

total projected revenues to cover costs 

in 2022, including any temporary 

surcharges we have authorized.41 We set 

pilotage rates so pilot associations 

receive enough revenue to cover their 

necessary and reasonable expenses. 

Shippers pay these rates when they 

have a pilot as required by 46 U.S.C. 

9302. Therefore, the aggregate payments 

of shippers to pilot associations are 

equal to the projected necessary 

revenues for pilot associations. The 

revenues each year represent the total 

costs that shippers must pay for pilotage 

services. The change in revenue from 

the previous year is the additional cost 

to shippers discussed in this rule. 

The impacts of the rate changes on 

shippers are estimated from the district 

pilotage projected revenues (shown in 

tables 9, 21, and 33 of this preamble). 

The Coast Guard estimates that for the 

2022 shipping season, the projected 

revenue needed for all three districts is 

$32,486,994. 

To estimate the change in cost to 

shippers from this rule, the Coast Guard 

compared the 2022 total projected 

revenues to the 2021 projected 

revenues. Because we review and 

prescribe rates for the Great Lakes 

Pilotage annually, the effects are 

estimated as a single-year cost rather 

than annualized over a 10-year period. 

In the 2021 rulemaking, we estimated 

the total projected revenue needed for 

2021 as $30,332,652.42 This is the best 

approximation of 2021 revenues, as, at 

the time of this publication of this final 

rule, the Coast Guard does not have 

enough audited data available for the 

2021 shipping season to revise these 

projections.43 Table 42 shows the 

revenue projections for 2021 and 2022 

and details the additional cost increases 

to shippers by area and district as a 

result of the rate changes on traffic in 

Districts One, Two, and Three. 

TABLE 42—EFFECT OF THE RULE BY AREA AND DISTRICT

[$U.S.; Non-discounted] 

Area 

Revenue 

needed in 

2021 

Revenue 

needed in 

2022 

Change in 

costs of this 

rule 

Total, District One ........................................................................................................................ $10,620,941 $11,791,695 $1,170,754 

Total, District Two ........................................................................................................................ 8,506,705 8,786,882 280,177 

Total, District Three ..................................................................................................................... 11,205,006 11,908,418 703,412 

System Total ......................................................................................................................... 30,332,652 32,486,995 2,154,343 

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


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44 In the NPRM we used a figure of 3.5 percent, 

the most recently available at the time. Employment 

Cost Index, Total Compensation for Private Industry 

workers in Transportation and Material Moving, 

Series ID: CIU2010000520000A. 

45https://www.federalreserve.gov/monetary

policy/fomcprojtabl20201216.htm. 

The resulting difference between the 

projected revenue in 2021 and the 

projected revenue in 2022 is the annual 

change in payments from shippers to 

pilots as a result of the rate change 

imposed by this rule. The effect of the 

rate change to shippers varies by area 

and district. After taking into account 

the change in pilotage rates, the rate 

changes will lead to affected shippers 

operating in District One experiencing 

an increase in payments of $1,170,754 

over the previous year. District Two and 

District Three will experience an 

increase in payments of $280,177 and 

$703,412, respectively, when compared 

with 2021. The overall adjustment in 

payments will be an increase in 

payments by shippers of $2,154,343 

across all three districts (a 7-percent 

increase when compared with 2021). 

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 43 shows the difference in 

revenue by revenue-component from 

2021 to 2022, and presents each 

revenue-component as a percentage of 

the total revenue needed. In both 2021 

and 2022, the largest revenuecomponent was pilotage compensation 

(67 percent of total revenue needed in 

2021, and 63 percent of total revenue 

needed in 2022), followed by operating 

expenses (29 percent of total revenue 

needed in 2021, and 31 percent of total 

revenue needed in 2022). 

TABLE 43—DIFFERENCE IN REVENUE BY COMPONENT

Revenue-component 

Revenue 

needed in 

2021 

Percentage of 

total revenue 

needed in 

2021 

Revenue 

needed in 

2022 

Percentage of 

total revenue 

needed in 

2022 

Difference 

(2022 revenue¥ 

2021 revenue) 

Percentage 

change from 

previous year 

Adjusted Operating Expenses .............................................. $8,876,850 29 $10,045,658 31 $1,168,808 13 

Total Target Pilot Compensation .......................................... 20,461,950 67 20,362,566 63 (99,384) (0.5) 

Total Apprentice Pilot Wage Benchmark .............................. ........................ ........................ 1,293,622 4 1,293,622 ........................

Working Capital Fund ........................................................... 993,852 3 785,149 2 (208,703) (21) 

Total Revenue Needed .................................................. 30,332,652 100 32,486,995 100 2,154,343 7 

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

As stated above, we estimate that 

there will be a total increase in revenue 

needed by the pilot associations of 

$2,154,343. This represents a decrease 

in revenue needed for target pilot 

compensation of ($99,384), the nowcodified revenue needed for total 

apprentice pilot wage benchmark of 

$1,293,622, an increase in the revenue 

needed for adjusted operating expenses 

of $1,168,808, and a decrease in the 

revenue needed for the working capital 

fund of ($208,703). 

The change in revenue needed for 

pilot compensation, ($99,384), is due to 

four factors: (1) The changes to adjust 

2021 pilotage compensation to account 

for the difference between actual ECI 

inflation (5.1 percent) 44 and predicted 

PCE inflation (1.7 percent) 45 for 2021; 

(2) the increase in the maximum 

number of pilots by two pilots because 

of rounding; (3) an increase of one pilot 

in District One compared to 2021, a 

decrease of one pilot in District Two 

compared to 2021, and a decrease of 

three pilots in District Three compared 

to 2021; and (4) projected inflation of 

pilotage compensation in Step 2 of the 

methodology, using predicted inflation 

through 2023. 

The target compensation is $399,266 

per pilot in 2022, compared to $378,925 

in 2021. The changes to modify the 2021 

pilot compensation to account for the 

difference between predicted and actual 

inflation will increase the 2021 target 

compensation value by 3.1 percent. As 

shown in table 44, this inflation 

adjustment increases total compensation 

by $11,747 per pilot, and the total 

revenue needed by $599,080 when 

accounting for all 51 pilots. 

TABLE 44—CHANGE IN REVENUE RESULTING FROM THE CHANGE TO INFLATION OF PILOT COMPENSATION CALCULATION

IN STEP 4 

2021 Target Compensation ................................................................................................................................................................. $378,925 

Adjusted 2021 Compensation ($378,925 × 1.031%) .......................................................................................................................... 390,672 

Difference between Adjusted Target 2021 Compensation and Target 2021 Compensation ( $390,672¥$378,925) ....................... 11,747 

Increase in total Revenue for 51 Pilots ($11,747 × 51) ...................................................................................................................... 599,080 

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

Adjusting rounding in the staffing 

model to always round up, rather than 

round to the nearest integer, increases 

the maximum number of pilots in 

District One and District Two. The 

potential impact of this change is 

equivalent to an increase in revenue 

needed for two fully registered pilots 

because the districts would have the 

ability to hire two more pilots than they 

would have without rounding. The cost 

of $775,039 is based on target 

compensation for 2022. However, only 

District One will utilize the increased 

maximum number of pilots in the 2022 

season, while District Two will have 

fewer than the maximum number of 

pilots in the 2022 season. For this 

reason, the potential impact of rounding 

in the staffing model is not fully 

realized in the 2022 season. Further, the 

increase in revenue needed from 

rounding is offset by the net decrease in 

pilots needed, such that the cost is not 

represented in the rate for this year. For 

that reason, the Coast Guard breaks out 

the potential and realized costs 

separately and does not show the 

percentage in relation to the increase in 

total revenue needed, as shown in table 

45. To avoid double counting, the Coast 

Guard excludes the change in revenue 

resulting from adjustments for inflation 

to account for the difference between 

actual and predicted inflation. 


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TABLE 45—POTENTIAL AND REALIZED IMPACTS OF ROUNDING IN THE STAFFING MODEL

Potential impact Realized impact 

2022 Target Compensation .......................................... $399,266 2022 Target Compensation .......................................... $399,266 

Total Number of New Pilots ......................................... 2 Total Number of New Pilot ........................................... 1 

Total Cost of New Pilots ($399,266 × 2) ...................... $798,532 Total Cost of New Pilot ($399,266 × 1) ....................... $399,266 

Difference between Adjusted Target 2021 Compensation and Target 2021 Compensation 

($390,672¥$378,925).

$11,747 Difference between Adjusted Target 2021 Compensation and Target 2021 Compensation 

($390,672¥$378,925).

$11,747 

Increase in total Revenue for 2 Pilots ($11,747 × 2) ... $23,493 Increase in total Revenue for 1 Pilot ($11,747 × 1) .... $11,747 

Net Increase in total Revenue for 2 Pilots 

($798,532¥$23,493).

$775,039 Net Increase in total Revenue for 1 Pilot 

($399,266¥$11,747).

$387,519 

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

As noted earlier, the Coast Guard 

revised the total number of pilots 

needed from 56 pilots in the NPRM to 

51 pilots in this final rule because of the 

attrition of one apprentice pilot, the 

removal of one temporary pilot in 

District Two, and three retirements in 

District Three going into the 2022 

season. This change is discussed in 

detail in section IV. F. of the discussion 

of comments and changes. The result is 

a net decrease of three pilots needed 

compared to the 2021 season, which 

projected 54 pilots needed. The 

difference reflects an increase of one 

pilot in District One, a decrease of one 

pilot in District Two, and a decrease of 

three pilots in District Three 

(1¥1¥3 =¥3). Table 46 shows the 

decrease of $1,162,558 in revenue 

needed solely for pilot compensation. 

As above, to avoid double counting, this 

value excludes the change in revenue 

resulting from the change to adjust 2021 

pilotage compensation to account for 

the difference between actual and 

predicted inflation. 

TABLE 46—CHANGE IN REVENUE RESULTING FROM NET DECREASE OF THREE PILOTS

2022 Target Compensation ................................................................................................................................................................. $399,266 

Net Number of New Pilots ................................................................................................................................................................... (3) 

Total Cost of new Pilots ($399,266 ×¥3) ........................................................................................................................................... ($1,197,798) 

Difference between Adjusted Target 2021 Compensation and Target 2021 Compensation ($390,672¥$378,925) ........................ $11,747 

Increase in total Revenue for ¥3 Pilots ($11,747 ×¥3) .................................................................................................................... ($35,240) 

Net Increase in total Revenue for ¥3 Pilots (¥$1,197,798¥¥$35,240) ......................................................................................... ($1,162,558) 

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

Another increase, $438,311, is the 

result of increasing compensation for 

the 51 pilots to account for future 

inflation of 2.2 percent in 2022. This 

will increase total compensation by 

$8,594 per pilot, as shown in table 47. 

TABLE 47—CHANGE IN REVENUE RESULTING FROM INFLATING 2021 COMPENSATION TO 2022 

Adjusted 2021 Compensation ............................................................................................................................................................. $390,672 

2022 Target Compensation ($390,672 × 1.022%) .............................................................................................................................. 399,266 

Difference between Adjusted 2021 Compensation and Target 2022 Compensation ($399,266¥$390,672) ................................... 8,594 

Increase in total Revenue for 51 Pilots ($8,594 × 51) ........................................................................................................................ 438,311 

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

Finally, the largest part of the increase 

in revenue needed is to account for the 

apprentice pilot wage benchmark, now 

incorporated into the rate. First, in Step 

3, we estimate the need for nine 

apprentice pilots for the 2022 shipping 

season. Based on the 2022 target pilot 

compensation of $399,266, the 

apprentice pilot wage benchmark will 

be $143,736 ($399,266 × 0.36 = 

$143,736). Setting the wage benchmark 

in this manner, rather than through a 

surcharge, better allows apprentice pilot 

wage benchmark to match fluctuations 

in the pilot compensation, which 

follows changes in traffic and better 

accounts for changes in inflation than 

the surcharge. Additionally, unlike a 

surcharge, this method will not need to 

be ‘‘turned off’’ once the target amount 

of surcharge is collected, which makes 

rates throughout the season more 

predictable for shippers. The total cost 

of the wage benchmark for the 9 

apprentice pilots will be $1,293,622, as 

shown in table 48. 

TABLE 48—CHANGE IN REVENUE RESULTING FROM APPRENTICE PILOT WAGES

2022 Apprentice Pilot Wage Benchmark ............................................................................................................................................ $143,736 

Total Number of Apprentice Pilots ...................................................................................................................................................... 9 

Total Cost of Apprentice Pilots ($143,736 × 9) ................................................................................................................................... $1,293,622 

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


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46The 2021 projected revenues are from the Great 

Lakes Pilotage Rate-2021 Annual Review and 

Revisions to Methodology final rule (86 FR 14184), 

tables 9, 21, and 33. The 2022 projected revenues 

are from tables 9, 21, and 33 of this final rule. 

47See https://www.manta.com/. 

48See https://resource.referenceusa.com/. 

49See https://www.sba.gov/document/support-- 

table-size-standards. 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. Accessed April 2021. 

50One company had a particularly 

disproportionate impact because its vessel operated 

in all three districts. The impact for that company 

was more than 15 times greater than the next 

smallest company. 

Table 49 presents the percentage 

change in revenue by area and revenuecomponent, excluding surcharges, as they are applied at the district level.46

TABLE 49—DIFFERENCE IN REVENUE BY COMPONENT AND AREA

Adjusted operating expenses Total target pilot compensation Total apprentice 

pilot wage 

benchmark 

Working capital fund Total revenue needed 

2021 2022 % 

change 2021 2022 % change 2021 2022 % change 2021 2022 % change 

District One: Designated ......... $2,328,981 $2,419,401 4 $3,789,250 $4,165,143 10 $172,483 $207,255 $163,077 (21) $6,325,486 $6,747,621 6.7 

District One: Undesignated ..... 1,502,239 1,613,051 7 2,652,475 3,309,117 25 114,989 140,741 121,906 (13) 4,295,455 5,044,074 17.4 

District Two: Undesignated ..... 1,003,961 1,078,929 7 3,031,400 3,366,611 11 172,483 136,698 110,101 (19) 4,172,059 4,555,641 9.2 

District Two: Designated ......... 1,540,146 1,618,395 5 2,652,475 2,510,585 (5) 114,989 142,025 102,261 (28) 4,334,646 4,231,241 (2.4) 

District Three: Undesignated .. 1,947,484 2,603,961 34 6,820,650 6,556,746 (4) 567,756 297,021 226,880 (24) 9,065,155 9,387,588 3.6 

District Three: Designated ...... 554,039 711,920 28 1,515,700 1,747,987 15 150,923 70,112 60,924 (13) 2,139,851 2,520,831 17.8 

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

Benefits 

This 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 ensure a sufficient number 

of pilots to meet peak shipping demand, 

helping to reduce delays caused by pilot 

shortages. 

B. Small Entities 

Under the Regulatory Flexibility Act, 

5 U.S.C. 601–612, we 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 the rule, the Coast Guard 

reviewed recent company size and 

ownership data for the vessels identified 

in the GLPMS, and we reviewed 

business revenue and size data provided 

by publicly available sources such as 

Manta 47 and ReferenceUSA.48 As 

described in section VII.A of this 

preamble, Regulatory Planning and 

Review, we found that 513 unique 

vessels used pilotage services during the 

years 2018 through 2020. These vessels 

are owned by 58 entities, of which 44 

are foreign entities that operate 

primarily outside the United States, and 

the remaining 14 entities are U.S. 

entities. We compared the revenue and 

employee data found in the company 

search to the Small Business 

Administration’s (SBA) small business 

threshold as defined in the SBA’s 

‘‘Table of Size Standards’’ for small 

businesses to determine how many of 

these companies are considered small 

entities.49 Table 50 shows the North 

American Industry Classification 

System (NAICS) codes of the U.S. 

entities and the small entity standard 

size established by the SBA. 

TABLE 50—NAICS CODES AND SMALL ENTITIES SIZE STANDARDS

NAICS Description Small entity 

size standard 

211120 .............. Crude Petroleum Extraction ....................................................................................................... 1,250 employees. 

237990 .............. Other Heavy and Civil Engineering Construction ...................................................................... $39.5 million. 

238910 .............. Site Preparation Contractors ...................................................................................................... $16.5 million. 

483212 .............. Inland Water Passenger Transportation .................................................................................... 500 employees. 

487210 .............. Scenic and Sightseeing Transportation, Water .......................................................................... $8.0 million. 

488330 .............. Navigational Services to Shipping .............................................................................................. $41.5 million. 

523910 .............. Miscellaneous Intermediation ..................................................................................................... $41.5 million. 

561599 .............. All Other Travel Arrangement and Reservation Services .......................................................... $22.0 million. 

982100 .............. National Security ........................................................................................................................ Population of 50,000 People. 

Of the 14 U.S. entities, 7 exceed the 

SBA’s small business standards for 

small entities. To estimate the potential 

impact on the seven small entities, the 

Coast Guard used their 2020 invoice 

data to estimate their pilotage costs in 

2022. Of the seven entities, from 2018 

to 2020, only three used pilotage 

services in 2020. We increased their 

2020 costs to account for the changes in 

pilotage rates resulting from this rule 

and the Great Lakes Pilotage Rates— 

2021 Annual Review and Revisions to 

Methodology final rule (86 FR 14184). 

We estimated the change in cost to these 

entities resulting from this rule by 

subtracting their estimated 2021 

pilotage costs from their estimated 2022 

pilotage costs and found the average 

costs to small firms will be 

approximately $9,375, with a range of 

$354 to $41,331.50 We then compared 

the estimated change in pilotage costs 

between 2021 and 2022 with each firm’s 

annual revenue. In all cases, their 

estimated pilotage expenses were below 

0.35 percent of their annual revenue. 


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In addition to the owners and 

operators discussed above, three U.S. 

entities that receive revenue from 

pilotage services will be affected by this 

rule. These are the three pilot 

associations that provide and manage 

pilotage services within the Great Lakes 

districts. Two of the associations 

operate as partnerships, and one 

operates as a corporation. These 

associations are designated with the 

same NAICS code and small-entity size 

standards described above, but have 

fewer than 500 employees. Combined, 

they have approximately 65 employees 

in total and, therefore, are designated as 

small entities. The Coast Guard expects 

no adverse effect on these entities from 

this rule, because the three pilot 

associations will receive enough 

revenue to balance the projected 

expenses associated with the projected 

number of bridge hours (time on task) 

and pilots. 

Finally, the Coast Guard did not find 

any small not-for-profit organizations 

that are independently owned and 

operated and are not dominant in their 

fields that will be impacted by this rule. 

We also did not find any small 

governmental jurisdictions with 

populations of fewer than 50,000 people 

that will be impacted by this rule. Based 

on this analysis, we conclude this 

rulemaking will not affect a substantial 

number of small entities, nor have a 

significant economic impact on any of 

the affected entities. 

Based on our analysis, this rule will 

have a less than 1 percent annual 

impact on small entities; therefore, the 

Coast Guard certifies under 5 U.S.C. 

605(b) that this rule will not have a 

significant economic impact on a 

substantial number of small entities. 

C. Assistance for Small Entities 

Under section 213(a) of the Small 

Business Regulatory Enforcement 

Fairness Act of 1996, Public Law 104– 

121, we want to assist small entities in 

understanding this rule so that they can 

better evaluate its effects on them and 

participate in the rulemaking. If the rule 

will affect 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 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 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 the States, on the relationship 

between the national government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of government. We have 

analyzed this rule under Executive 

Order 13132 and have determined that 

it is consistent with the fundamental 

federalism principles and preemption 

requirements as 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. 

While it is well settled that States may 

not regulate in categories in which 

Congress intended the Coast Guard to be 

the sole source of a vessel’s obligations, 

the Coast Guard recognizes the key role 

that State and local governments may 

have in making regulatory 

determinations. Additionally, for rules 

with implications and preemptive 

effect, Executive Order 13132 

specifically directs agencies to consult 

with State and local governments during 

the rulemaking process. If you believe 

this rule has implications for federalism 

under Executive Order 13132, please 

contact the person listed in the FOR

FURTHER INFORMATION CONTACT section of 

this preamble. 

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, 46 U.S.C. Chapter 93 

addresses actions that may result in the 

expenditure by a State, local, or tribal 

government, in the aggregate, or by the 

private sector of $100 million (adjusted 

for inflation) or more in any one year. 

Although this rule will not result in 

such an 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. 


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18524 Federal Register / Vol. 87, No. 61 / Wednesday, March 30, 2022 / Rules and Regulations 

51https://www.dhs.gov/sites/default/files/ 

publications/DHS_Instruction%20Manual%20023- 

01-001-01%20Rev%2001_

508%20Admin%20Rev.pdf. 

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 

DHS 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 concluded 

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 final Record 

of Environmental Consideration 

supporting this determination is 

available in the docket for this 

rulemaking. For instructions on locating 

the docket, see the ADDRESSES section of 

this preamble. 

This rule meets the criteria for 

categorical exclusion (CATEX) under 

paragraphs A3 and L54 of Appendix A, 

Table 1 of DHS Instruction Manual 023– 

001–01, Rev. 1.51 Paragraph A3 pertains 

to the promulgation of rules, issuance of 

rulings or interpretations, and the 

development and publication of 

policies, orders, directives, notices, 

procedures, manuals, advisory circulars, 

and other guidance documents 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) Technical 

guidance on safety and security matters; 

or (f) guidance for the preparation of 

security plans. Paragraph L54 pertains 

to regulations which are editorial or 

procedural. 

This rule involves setting or adjusting 

the pilotage rates for the upcoming 

shipping season to account for changes 

in district operating expenses, changes 

in the number of pilots, and anticipated 

inflation. In addition, the Coast Guard is 

(1) changing the way we determine the 

number or pilots that are needed for the 

upcoming season in the staffing model, 

and (2) including in our methodology a 

calculation for a wage benchmark for 

apprentice pilots. All of these changes 

are consistent with the Coast Guard’s 

maritime safety missions. 

List of Subjects 

46 CFR Part 401 

Administrative practice and 

procedure, Great Lakes; Navigation 

(water), Penalties, Reporting and 

recordkeeping requirements, Seamen. 

46 CFR Part 404 

Great Lakes, Navigation (water), 

Seamen. 

For the reasons discussed in the 

preamble, the Coast Guard amends 46 

CFR parts 401 and 404 as follows: 

PART 401—GREAT LAKES PILOTAGE 

REGULATIONS 

■ 1. The authority citation for part 401 

is revised to read as follows: 

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

7701, 8105, 9303, 9304; DHS Delegation 

00170.1, Revision No. 01.2, paragraphs 

(II)(92)(a), (d), (e), (f). 

■ 2. Amend § 401.110 by adding 

paragraphs (a)(18), (19) and (b) to read 

as follows: 

§ 401.110 Definitions. 

(a) * * * 

(18) Apprentice Pilot means a person 

approved and certified by the Director 

who is participating in an approved U.S. 

Great Lakes pilot training and 

qualification program. This individual 

meets all the minimum requirements 

listed in 46 CFR 401.211. This 

definition is only applicable to 

determining which pilots may be 

included in the operating expenses, 

estimates, and wage benchmark in 

§§ 404.2(b)(7), 404.103(b), and 

404.104(d) and (e). 

(19) Limited Registration is an 

authorization issued by the Director, 

upon the request of the respective pilots 

association, to an Apprentice Pilot to 

provide pilotage service without direct 

supervision from a fully registered pilot 

in a specific area or waterway. 

(b) [Reserved] 

■ 3. Amend § 401.220 by revising the 

first sentence of paragraph (a)(3) to read 

as follows: 

§ 401.220 Registration of pilots. 

(a) * * * 

(3) The number of pilots needed in 

each district is calculated by totaling the 

area results by district and rounding 

them up to a whole integer. * * * 

* * * * * 

■ 4. 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 $834; 

(2) Lake Ontario is $568; 

(3) Lake Erie is $610; 

(4) The navigable waters from 

Southeast Shoal to Port Huron, MI is 

$536; 

(5) Lakes Huron, Michigan, and 

Superior is $342; and 

(6) The St. Marys River is $662. 

* * * * * 

PART 404—GREAT LAKES PILOTAGE 

RATEMAKING 

■ 5. The authority citation for part 404 

is revised to read as follows: 

Authority: 46 U.S.C. 2103, 2104(a), 9303, 

9304; DHS Delegation 00170.1, Revision No. 

01.2, paragraphs (II)(92)(a), (f). 

■ 6. Amend § 404.2 by adding paragraph 

(b)(7) to read as follows: 

§ 404.2 Procedure and criteria for 

recognizing association expenses. 

* * * * * 

(b) * * * 

(7) Apprentice Pilot Expenses. The 

association’s expenses for Apprentice 

Pilots and Apprentice Pilots with 

Limited Registrations, such as health 

care, travel expenses, training, and other 

expenses are recognizable when 

determined to be necessary and 

reasonable. 

* * * * * 

■ 7. Amend § 404.103 by: 

■ a. Revising the section heading; 

■ b. Redesignating the introductory text 

as paragraph (a); and 

■ c. Adding paragraph (b). 

The revisions and additions read as 

follows: 

§ 404.103 Ratemaking step 3: Estimate 

number of registered pilots and apprentice 

pilots. 

* * * * * 

(b) The Director projects, based on the 

number of persons applying under 46 


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Federal Register / Vol. 87, No. 61 / Wednesday, March 30, 2022 / Rules and Regulations 18525 

CFR part 401 to become Apprentice 

Pilots, traffic projections, information 

provided by the pilotage association 

regarding upcoming retirements, and 

any other relevant data, the number of 

Apprentice Pilots and Apprentice Pilots 

with Limited Registrations expected to 

be in training and compensated. 

■ 8. Amend § 404.104 by: 

■ a. Revising the section heading; and 

■ b. Adding paragraphs (d) and (e). 

The revision and additions read as 

follows: 

§ 404.104 Ratemaking step 4: Determine 

target pilot compensation benchmark and 

apprentice pilot wage benchmark. 

* * * * * 

(d) The Director determines the 

individual Apprentice Pilot wage 

benchmark at the rate of 36 percent of 

the individual target pilot 

compensation, as calculated according 

to paragraphs (a) or (b) of this section. 

(e) The Director determines each pilot 

association’s total Apprentice Pilot wage 

benchmark by multiplying the 

Apprentice Pilot compensation 

computed in paragraph (d) of this 

section by the number of Apprentice 

Pilots and Apprentice Pilots with 

Limited Registrations projected under 

§ 404.103(b). 

Dated: March 23, 2022. 

J.W. Mauger, 

Rear Admiral, U.S. Coast Guard, Assistant 

Commandant for Prevention Policy. 

[FR Doc. 2022–06394 Filed 3–29–22; 8:45 am] 

BILLING CODE 9110–04–P 


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