100810 Federal Register / Vol. 89, No. 240 / Friday, December 13, 2024 / Rules and Regulations 

1 46 U.S.C. 9301–9308. 

2 46 U.S.C. 9302(a)(1). 

3 Department of Homeland Security Delegation 

No. 00170.1 (II)(92)(f), Revision No. 01.4. The 

Secretary retains the authority under Section 9307 

to establish, and appoint members to, a Great Lakes 

Pilotage Advisory Committee. 

(5) Employment and training services 

activities in accordance with 

§§ 309.65(b) and 309.121. 

* * * * * 

■ 12. Amend § 309.155 by: 

■ a. Removing the word ‘‘and’’ at the 

end of paragraph (e); 

■ b. Redesignating paragraph (f) as 

paragraph (g); and 

■ c. Adding a new paragraph (f). 

The addition reads as follows: 

§ 309.155 What uses of Tribal IV–D 

program funds are not allowable? 

* * * * * 

(f) Any expenditures under § 309.121 

for subsidized employment or payment 

of cash, checks, reimbursements, or any 

other form of payment that can be 

legally converted to currency provided 

to the noncustodial parent; and 

* * * * * 

[FR Doc. 2024–29081 Filed 12–11–24; 8:45 am] 

BILLING CODE 4184–41–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

46 CFR Part 401 

[Docket No. USCG–2024–0406] 

RIN 1625–AC94 

Great Lakes Pilotage Rates—2025 

Annual Review 

AGENCY: Coast Guard, DHS. 

ACTION: Final rule. 

SUMMARY: In accordance with the 

statutory provisions enacted by the 

Great Lakes Pilotage Act of 1960, the 

Coast Guard is issuing new pilotage 

rates for 2025. This rule adjusts the 

pilotage rates to account for changes in 

district operating expenses, an increase 

in the number of pilots, and anticipated 

inflation. These changes, when 

combined, result in a 7-percent net 

increase in pilotage costs compared to 

the 2024 season. 

DATES: This final rule is effective 

January 13, 2025. 

ADDRESSES: To view documents 

mentioned in this preamble as being 

available in the docket, go to 

www.regulations.gov, type USCG–2024– 

0406 in the search box and click 

‘‘Search.’’ Next, in the Document Type 

column, select ‘‘Supporting & Related 

Material.’’ 

FOR FURTHER INFORMATION CONTACT: For 

information about this document, call or 

email Mr. Brian Rogers, Commandant, 

Office of Waterways and Ocean Policy— 

Great Lakes Pilotage Division (CG– 

WWM–2), Coast Guard; telephone 410– 

360–9260, email Brian.Rogers@uscg.mil. 

SUPPLEMENTARY INFORMATION: 

Table of Contents for Preamble 

I. Abbreviations 

II. Basis and Purpose, and Regulatory History 

III. Background 

IV. Final Pilotage Rates for 2025 

V. Discussion of Comments and Changes 

VI. Summary of the Ratemaking Methodology 

VII. Discussion of the Rate Adjustments 

District One 

A. Step 1: Recognize Previous Operating 

Expenses 

B. Step 2: Project Operating Expenses, 

Adjusting for Inflation or Deflation 

C. Step 3: Estimate Number of Registered 

Pilots and Apprentice Pilots 

D. Step 4: Determine Target Pilot 

Compensation Benchmark and 

Apprentice Pilot Wage Benchmark 

E. Step 5: Project Working Capital Fund 

F. Step 6: Project Needed Revenue 

G. Step 7: Calculate Initial Base Rates 

H. Step 8: Calculate Average Weighting 

Factors by Area 

I. Step 9: Calculate Revised Base Rates 

J. Step 10: Review and Finalize Rates 

District Two 

A. Step 1: Recognize Previous Operating 

Expenses 

B. Step 2: Project Operating Expenses, 

Adjusting for Inflation or Deflation 

C. Step 3: Estimate Number of Registered 

Pilots and Apprentice Pilots 

D. Step 4: Determine Target Pilot 

Compensation Benchmark and 

Apprentice Pilot Wage Benchmark 

E. Step 5: Project Working Capital Fund 

F. Step 6: Project Needed Revenue 

G. Step 7: Calculate Initial Base Rates 

H. Step 8: Calculate Average Weighting 

Factors by Area 

I. Step 9: Calculate Revised Base Rates 

J. Step 10: Review and Finalize Rates 

District Three 

A. Step 1: Recognize Previous Operating 

Expenses 

B. Step 2: Project Operating Expenses, 

Adjusting for Inflation or Deflation 

C. Step 3: Estimate Number of Registered 

Pilots and Apprentice Pilots 

D. Step 4: Determine Target Pilot 

Compensation Benchmark and 

Apprentice Pilot Wage Benchmark 

E. Step 5: Project Working Capital Fund 

F. Step 6: Project Needed Revenue 

G. Step 7: Calculate Initial Base Rates 

H. Step 8: Calculate Average Weighting 

Factors by Area 

I. Step 9: Calculate Revised Base Rates 

J. Step 10: Review and Finalize Rates 

VIII. Regulatory Analyses 

A. Regulatory Planning and Review 

B. Small Entities 

C. Assistance for Small Entities 

D. Collection of Information 

E. Federalism 

F. Unfunded Mandates 

G. Taking of Private Property 

H. Civil Justice Reform 

I. Protection of Children 

J. Indian Tribal Governments 

K. Energy Effects 

L. Technical Standards 

M. Environment 

I. Abbreviations 

2023 final rule Great Lakes Pilotage Rates— 

2023 Annual Ratemaking and Review of 

Methodology 

2024 final rule Great Lakes Pilotage Rates— 

2024 Annual Review 

2025 Ratemaking NPRM Great Lakes 

Pilotage Rates—2025 Annual Review 

notice of proposed rulemaking 

APA American Pilots’ Association 

BLS Bureau of Labor Statistics 

CFR Code of Federal Regulations 

CPI Consumer Price Index 

DHS Department of Homeland Security 

Director U.S. Coast Guard’s Director of the 

Great Lakes Pilotage 

ECI Employment Cost Index 

FOMC Federal Open Market Committee 

FR Federal Register 

GLPAC Great Lakes Pilotage Advisory 

Committee 

LPA Lakes Pilots Association 

MOU Memorandum of Understanding 

NAICS North American Industry 

Classification System 

NPRM Notice of proposed rulemaking 

OMB Office of Management and Budget 

PCE Personal Consumption Expenditures 

§ Section 

SBA Small Business Administration 

SLSPA Saint Lawrence Seaway Pilots 

Association 

U.S.C. United States Code 

WGLPA Western Great Lakes Pilots 

Association 

II. Basis and Purpose, and Regulatory 

History 

The legal basis of this rulemaking is 

46 U.S.C. Chapter 93,1 which requires 

foreign merchant vessels and United 

States vessels operating ‘‘on register’’— 

meaning United States vessels engaged 

in foreign trade—to use United States or 

Canadian pilots while transiting the 

United States waters of the St. Lawrence 

Seaway and the Great Lakes system.2

For U.S. Great Lakes Pilots, the statute 

requires the Secretary to ‘‘prescribe by 

regulation rates and charges for pilotage 

services, giving consideration to the 

public interest and the costs of 

providing the services.’’ Title 46 of the 

U.S.C. 9303(f) also requires that rates be 

established or reviewed and adjusted 

each year, no later than March 1. The 

Secretary’s duties and authority under 

46 U.S.C. Chapter 93 have generally 

been delegated to the Coast Guard.3

The purpose of this final rule is to 

issue new pilotage rates for 2025 by 

revising a base rate established in 2023. 


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4The Saint Lawrence Seaway Pilots Association 

provides pilotage services in District One, which 

includes all U.S. waters of the St. Lawrence River 

and Lake Ontario. The Lakes Pilots Association 

provides pilotage services in District Two, which 

includes all U.S. waters of Lake Erie, the Detroit 

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

the Western Great Lakes Pilots Association provides 

pilotage services in District Three, which includes 

all U.S. waters of the St. Marys River; Sault Ste. 

Marie Locks; and Lakes Huron, Michigan, and 

Superior. 5Presidential Proclamation 3385, Designation of 

restricted waters under the Great Lakes Pilotage Act 

of 1960, December 22, 1960, https://

www.archives.gov/federal-register/codification/ 

proclamations/03385.html; accessed 10/25/2024. 

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

7Apprentice Pilots and Applicant Pilots are 

compensated by the pilot association they are 

training with, which is funded through the pilotage 

rates. The ratemaking methodology accounts for an 

Apprentice Pilot wage benchmark in Step 4, per 46 

CFR 404.104(d). The Applicant Pilot salaries are 

included in the pilot associations’ operating 

expenses used in Step 1, per 46 CFR 404.101. 

The Coast Guard believes that the new 

rates will continue to promote our goal, 

as outlined in 46 CFR 404.1(a), to 

promote safe, efficient, and reliable 

pilotage service in the Great Lakes by 

generating sufficient revenue for each 

pilot association, to reimburse its 

necessary and reasonable operating 

expenses, fairly compensate trained and 

rested Pilots, and provide appropriate 

funds to use for improvements. 

III. Background 

Rates are the foundation for safe, 

efficient, and reliable pilotage service to 

facilitate maritime commerce, protect 

the marine environment, and comply 

with National Transportation Safety 

Board recommendations regarding 

staffing and pilot fatigue. The pilotage 

rates for the 2025 season range from 

$440 to $986 per pilot hour, depending 

on which of the specific six areas 

pilotage service is provided, and are 

paid by shippers to the pilot 

associations. 

There are three American pilotage 

districts on the Great Lakes, each 

represented by a pilot association.4 Each 

pilotage district is further divided into 

‘‘designated’’ and ‘‘undesignated’’ areas. 

Designated areas, classified as such by 

Presidential Proclamation, are waters in 

which pilots must direct the navigation 

of vessels at all times.5 Undesignated 

areas are open bodies of water where 

pilots must only ‘‘be on board and 

available to direct the navigation of the 

vessel’’ at the discretion of the vessel 

master.6 For these reasons, pilotage rates 

in designated areas can be significantly 

higher than those in undesignated areas. 

The three pilot associations, which 

are the exclusive U.S. source of 

Registered Pilots on the Great Lakes, use 

the revenue from the shippers to cover 

operating expenses, maintain 

infrastructure, compensate Apprentice 

and Registered Pilots, acquire and 

implement technological advances, train 

new personnel, and provide for 

continuing professional development. 

Each pilot association is an independent 

business and is the sole provider of 

pilotage services in its district of 

operation. Each pilot association is 

responsible for funding its own 

operating expenses, infrastructure 

maintenance, and compensation for 

Pilots and Apprentice Pilots.7

The actual demand for service 

dictates the compensation amount for 

United States Registered Pilots. We 

divide that amount by the historic 10- 

year average for pilotage demand. We 

recognize that in years where demand 

for pilotage services exceeds the 10-year 

average, pilot associations will accrue 

more revenue than projected, while in 

years where demand is below average, 

they will take in less. We believe over 

the long term, however, this scheme 

ensures that infrastructure will be 

maintained, and that Pilots will receive 

adequate compensation and work a 

reasonable number of hours, with 

adequate rest between assignments, to 

ensure retention of highly trained 

personnel. 

For this final rule, we conducted our 

annual review and interim adjustment 

to the base pilotage rates for 2025. The 

Coast Guard last conducted a full 

ratemaking in 2023, with the ‘‘Great 

Lakes Pilotage Rates—2023 Annual 

Ratemaking and Review of 

Methodology’’ final rule (hereafter the 

2023 final rule) (88 FR 12226, published 

February 27, 2023). This final rule is an 

interim ratemaking under 46 CFR 

404.100(b). 

IV. Final Pilotage Rates for 2025 

In this final rule, we set new pilotage 

rates for 2025. We conducted this 2025 

ratemaking as an interim ratemaking, as 

we did with the ‘‘Great Lakes Pilotage 

Rates—2024 Annual Review’’ final rule 

(hereafter the 2024 final rule) (89 FR 

9038, published February 9, 2024). 

Thus, the Coast Guard adjusts the 

compensation benchmark following the 

interim ratemaking procedures under 

§ 404.100(b), rather than following the 

procedures for a full ratemaking under 

§ 404.100(a). 

The Coast Guard is setting the rates 

shown in table 1. 

TABLE 1—CURRENT AND 2025 PILOTAGE RATES ON THE GREAT LAKES

Area Name Final 2024 

pilotage rate 

Final 2025 

pilotage rate 

District One: Designated ......................................... St. Lawrence River ................................................. $927 $986 

District One: Undesignated ..................................... Lake Ontario ........................................................... 608 643 

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

Huron, MI.

667 753 

District Two: Undesignated ..................................... Lake Erie ................................................................ 597 576 

District Three: Designated ...................................... St. Marys River ...................................................... 836 825 

District Three: Undesignated .................................. Lakes Huron, Michigan, and Superior ................... 430 440 

This final rule affects 61 U.S. Great 

Lakes Pilots, 3 Apprentice Pilots, 3 pilot 

associations, and the owners and 

operators of an average of 280 

oceangoing vessels that transit the Great 

Lakes annually. This final rule will not 

affect the Coast Guard’s budget or 

increase Federal spending because 

foreign shippers, foreign cruise ships, 

and vessels requesting voluntary 

pilotage pay these rates directly to the 

respective pilot association The 

estimated overall annual regulatory 

economic impact of this rate change will 

be a net increase of $2,879,028 in 

payments made by the foreign shippers, 

foreign cruise ships, and vessels 

requesting voluntary pilotage service, 

which is a 7-percent increase from 

operating costs in the 2024 shipping 

season. This represents an increase in 

revenue needed for target Pilot 

compensation, a decrease in revenue 

needed for the total Apprentice Pilot 

wage benchmark, an increase in the 

revenue needed for adjusted operating 

expenses, and an increase in the 

revenue needed for the working capital 

fund. 


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8 443 F. Supp. 3d 44 (D.D.C. 2020). 

9This commenter also submitted an earlier 

comment requesting an extension for the comment 

period. 

This final rule establishes the 2025 

yearly target compensation for Pilots on 

the Great Lakes at $464,317 per Pilot (a 

$23,659, or 5.37 percent, increase over 

their 2024 target compensation). 

Because the Coast Guard must review, 

and, if necessary, adjust rates each year, 

we analyze these as single-year costs 

and do not annualize them over 10 

years. Section VIII., Regulatory 

Analyses, in this preamble, provides the 

regulatory impact analyses of this final 

rule. 

V. Discussion of Comments and 

Changes 

We received three comments in 

response to the notice of proposed 

rulemaking (NPRM) for this this final 

rule, titled ‘‘Great Lakes Pilotage Rates— 

2025 Annual Review’’ (hereafter 2025 

Ratemaking NPRM) (89 FR 63334, 

published August 5, 2024). We made no 

changes to the rates in response to those 

comments. 

One anonymous commenter was 

concerned that the ratemaking 

methodology was not accurately 

capturing trends in demand, citing this 

year’s rate increase in District One as 

surprising, given that transits and time 

on task have gone down over the past 

couple of seasons. While the ratemaking 

methodology itself is not included in 

the scope of this rule, we note that the 

10-year rolling average is designed to 

minimize volatility in the ratemaking. 

This decision has been confirmed by the 

courts as a ‘‘rational choice.’’ Am. Great 

Lake Ports Assn. v. United States Coast 

Guard.8

Another commenter, representing 

three trade associations, suggested that 

the Coast Guard should use Federal 

Open Market Committee (FOMC) 

Projections for the inflation numbers 

used in Step 2 of the methodology. 

Modifying the ratemaking methodology 

is outside the scope of this rule—since 

this is an interim ratemaking—but we 

will consider this suggestion in the next 

full ratemaking.9

The same commenter supported the 

elimination of the Working Capital 

Fund in Step 5 of the ratemaking 

process. We appreciate the commenter’s 

support, but elimination of the Working 

Capital Fund is outside the scope of this 

rule and will be addressed in next year’s 

full ratemaking. 

This commenter also supported 

District One’s efforts to improve their 

dispatch operations and suggested that 

Districts Two and Three make similar 

efforts. Pilotage association dispatch 

operations are outside the scope of this 

rulemaking, but we will take the 

comment under advisement for 

potential future rulemakings. 

This commenter suggested that the 

Coast Guard should update the 

Memorandum of Understanding (MOU) 

between the U.S. Coast Guard and the 

Canadian Great Lakes Pilotage Authority 

because that ‘‘document provides for the 

coordination of services, including the 

division of dispatch activity and the 

sharing of work assignments.’’ The 

MOU is outside the scope of this 

rulemaking, but we will take this 

comment under advisement and 

communicate it to the relevant parties. 

The commenter urged the Coast 

Guard to make individual pilot 

compensation publicly available. The 

Coast Guard will not accommodate this 

request. Compensation of individual 

pilots is not included in the expense 

base or methodology, and, therefore, we 

decline to add a regulatory requirement 

for pilot associations to publicly report 

the compensation of individual pilots. 

The Coast Guard does not use actual 

earnings or average earnings; instead, 

we use target pilot compensation 

(described in Step 4 of the existing 

methodology), which the Coast Guard 

has determined to be reasonable and 

necessary. Because actual individual 

salary values are not used in the 

ratemaking, the Coast Guard believes 

that a requirement to report pilot 

compensation is not in the public 

interest or necessary to provide for the 

costs of services. Concerns about equity 

among the pilots are outside the scope 

of this rulemaking. 

The commenter’s last suggestion was 

that the Coast Guard should conduct a 

line-by-line inspection of pilot 

association expenses to determine if 

they meet the ‘‘necessary and 

reasonable’’ standard. This is a 

suggested change to the methodology, 

which is outside the scope of this rule. 

We will consider this comment for the 

next full ratemaking. 

The last comment, from the Western 

Great Lakes Pilots Association 

(WGLPA), contained three requests for 

the Coast Guard. First, WGLPA 

requested an upward adjustment of 

$47,924 based on legal expenses related 

to negotiations of the collective 

bargaining agreement between the 

WGLPA and the International 

Longshoremen’s Association. However, 

the only evidence of these charges was 

a letter from WGLPA’s outside counsel. 

In order to make a change to the 

expenses, the Coast Guard would need 

to see verifiable and detailed evidence 

that explains those charges. For legal 

work, a detailed record of an attorney’s 

billable hours would be sufficient. Even 

with this information, we may not be 

able to recognize this expense as the 

other pilot associations perform this 

function without incurring substantial 

legal expenses. We would also need 

additional justification to determine if 

this was a necessary expense, and if so, 

whether all or some portion of the 

expense is a reasonable amount to 

include in the association’s expense 

base. 

Second, WGLPA requested an upward 

adjustment of $45,296 based on a 2023 

arbitration ruling that found that wages 

were owed for work performed by their 

dispatch team. These are 2023 expenses 

and, therefore, cannot be added to this 

year’s ratemaking. If properly submitted 

next year to CohnReznick (the thirdparty firm under contract to create 

revenue and expense reports for the 

three pilot association expenses), the 

expenses will be evaluated in next 

year’s ratemaking. 

Last, WGLPA alleged that they did not 

have sufficient opportunity to engage 

with the Coast Guard and CohnReznick 

to adequately provide explanation or 

documentation for certain expenses. 

The Coast Guard disagrees with this 

assertion. According to our records, the 

opportunity to provide documentation 

and information to CohnReznick 

commenced on August 10, 2023, and 

concluded on January 24, 2024, a day 

before the draft report was generated. 

We believe WGLPA had sufficient time 

to organize and segregate records to 

comply with the Coast Guard contract to 

perform this work. Additionally, the 

Director confirmed with CohnReznick 

personnel that they verbally 

communicated the project timeline to 

WGLPA personnel during the initial 

‘‘prepared by client’’ phone call on 

August 10, 2023, and, on the same day, 

emailed the WGLPA with a list of 

documents and information the WGLPA 

would need to provide in order to 

successfully produce the report. 

The only change from the NPRM 

results from updated inflation data 

becoming available since the 

publication of the proposed rule. Table 

2 summarizes the changes between the 

2025 Ratemaking NPRM and this final 

rule. This table includes changes from 

the proposed rule that are not based on 

comments from the NPRM. 


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10Transcript of United States Coast Guard GLPAC 

Meeting at 97 (Sept. 7, 2023), https://

www.regulations.gov/document/USCG-2023-0438- 

0009; accessed 10/25/2024. 

TABLE 2—CHANGES BETWEEN THE NPRM AND FINAL RULE

Change Reasoning 

Updates 2023 Employment Cost Index (ECI) inflation from 5.1%, listed 

in the NPRM, to 5.6%.

More recent figures were published since the Coast Guard conducted 

the analysis for the NPRM. 

Updates 2024 Personal Consumption Expenditures (PCE) inflation from 

2.4%, listed in the NPRM, to 2.8%.

Updates 2025 PCE inflation from 2.2%, listed in the NPRM, to 2.3%.

VI. Summary of the Ratemaking 

Methodology 

The ratemaking methodology, 

outlined in 46 CFR 404.101 through 

404.110, consists of 10 steps that are 

designed to account for the revenues 

needed and total traffic expected in each 

district. The first several steps of the 

methodology establish base pilotage 

rates. Additional steps to incorporate 

the weighting factors are necessary to 

establish the final pilotage rates. The 

result is an hourly rate, determined 

separately for each of the areas 

administered by the Coast Guard. 

In Step 1, ‘‘Recognize previous 

operating expenses,’’ (§ 404.101), the 

U.S. Coast Guard’s Director of the Great 

Lakes Pilotage (Director) uses an 

independent third party to review each 

pilot association’s audited operating 

expenses from each of the three pilot 

associations. Operating expenses 

include all allowable expenses, minus 

Pilot and Apprentice Pilot wages and 

benefits. This number forms the 

baseline amount that each association is 

budgeted. Because of the time delay 

between when the association submits 

raw numbers and when the Coast Guard 

receives audited numbers, this number 

is 3 years behind the projected year of 

expenses. Therefore, in calculating the 

2025 rates in this final rule, we began 

with the audited expenses from the 

shipping activity in 2022. 

While each pilot association operates 

in an entire district, including both 

designated and undesignated areas, the 

Coast Guard determines costs by area. 

We allocate certain operating expenses 

to designated areas and certain 

operating expenses to undesignated 

areas. In some cases, we can allocate the 

costs based on where they are accrued. 

For example, we can allocate the costs 

of insurance for Apprentice Pilots who 

operate in undesignated areas only. In 

other situations, such as general legal 

expenses, expenses are distributed 

between designated and undesignated 

waters on a pro rata basis based upon 

the proportion of income forecasted 

from the respective portions of the 

district. 

In Step 2, ‘‘Project operating 

expenses, adjusting for inflation or 

deflation,’’ (§ 404.102), the Director 

develops the 2025 projected operating 

expenses. To do this, we apply inflation 

adjustors for 3 years to the operating 

expense baseline received in Step 1. The 

inflation factors are from the Bureau of 

Labor Statistics’ (BLS) Consumer Price 

Index (CPI) for the Midwest Region, or, 

if not available, the FOMC median 

economic projections for Personal 

Consumption Expenditures (PCE) 

inflation. This step produces the total 

operating expenses for each area and 

district. 

In Step 3, ‘‘Estimate number of 

registered pilots and apprentice pilots,’’ 

(§ 404.103), the Director calculates how 

many Registered and Apprentice Pilots 

are needed for each district. To do this, 

we employ a ‘‘staffing model,’’ 

described in § 401.220, paragraphs (a)(1) 

through (3), to estimate how many Pilots 

would be needed to handle shipping 

during the beginning and close of the 

season. This number provides guidance 

to the Director in approving an 

appropriate number of Pilots. 

At the September 7, 2023 Great Lakes 

Pilotage Advisory Committee (GLPAC) 

meeting, there was a unanimous 

recommendation for an August 1 cutoff 

date to allow an Apprentice Pilot, who 

has completed all their training, to be 

recognized as a fully registered Pilot in 

the rate.10 The Coast Guard agrees that 

this change is both necessary and 

reasonable, as it provides the proper 

compensation based on the most 

accurate data. If an Apprentice Pilot is 

scheduled to complete training and 

becomes a fully registered Pilot before 

August 1, they will be counted as a fully 

registered Pilot in the rate; if they do not 

meet the August 1 deadline, those funds 

may be adjusted in the proceeding rate 

for up to the full amount. In addition, 

if a fully registered Pilot retires, or an 

Apprentice Pilot resigns, and has been 

counted in the rate, the proceeding rate 

may be adjusted accordingly for up to 

the full amount. 

In Step 4 of the ratemaking 

calculation, we determine the number of 

Pilots provided by the pilot associations 

(see § 404.103) and use that figure to 

determine how many Pilots need to be 

compensated via the pilotage fees 

collected. In the first part of Step 4, 

‘‘Determine target pilot compensation 

benchmark and apprentice pilot wage 

benchmark,’’ (§ 404.104(b)(1)), the 

Director adjusts the previous year’s 

individual target Pilot compensation by 

the difference between the previous 

year’s BLS ECI for the Transportation 

and Materials sector and the FOMC 

median economic projections for PCE 

inflation value used to inflate the 

previous year’s target Pilot 

compensation. 

In the second part of Step 4, 

(§ 404.104(b)(2)), the Director then 

adjusts that value by the FOMC median 

economic projections for PCE inflation 

for the upcoming year. 

In the final part of Step 4, § 404.104(c) 

and (d), the Director determines the 

total target compensation figure for each 

district. To do this, the Director 

multiplies the compensation benchmark 

by the number of Pilots for each area 

and district (from Step 3), producing a 

figure for total Pilot compensation. 

Based on the total Pilot compensation, 

the Director determines the individual 

Apprentice Pilot wage benchmark at the 

rate of 36 percent of the individual 

target Pilot compensation, as calculated 

according to paragraphs (a) or (b) of this 

section. 

In Step 5, ‘‘Project working capital 

fund,’’ (§ 404.105), the Director 

calculates an added value to pay for 

needed capital improvements and other 

non-recurring expenses, such as 

technology investments and 

infrastructure maintenance. This value 

is calculated by adding the total 

operating expenses (derived in Step 2) 

to the total target Pilot compensation 

and the total target Apprentice Pilot 

wage (derived in Step 4), then by 

multiplying that figure by the preceding 

year’s average annual rate of return for 

new issues of high-grade corporate 

securities. This figure constitutes the 

‘‘working capital fund’’ for each area 

and district. 

In Step 6, ‘‘Project needed revenue,’’ 

(§ 404.106), the Director simply adds the 

totals produced by the preceding steps. 

The projected operating expenses for 

each area and district (from Step 2) is 


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added to the total target Pilot 

compensation, including Apprentice 

Pilot wage benchmarks (from Step 4), 

and the working capital fund 

contribution (from Step 5). The total 

figure, calculated separately for each 

area and district, is the ‘‘needed 

revenue.’’ 

In Step 7, ‘‘Calculate initial base 

rates,’’ (§ 404.107), the Director 

calculates an hourly pilotage rate to 

cover the needed revenue, as calculated 

in Step 6. This step consists of first 

calculating the 10-year average of traffic 

hours for each area. Next, we divide the 

revenue needed in each area (calculated 

in Step 6) by the 10-year average of 

traffic hours to produce an initial base 

rate. 

An additional element, the 

‘‘weighting factor,’’ is required under 

§ 401.400. Pursuant to that section, 

ships pay a multiple of the ‘‘base rate,’’ 

as calculated in Step 7, by a number 

ranging from 1.0 (for the smallest ships, 

or ‘‘Class I’’ vessels) to 1.45 (for the 

largest ships, or ‘‘Class IV’’ vessels). 

This significantly increases the revenue 

collected, and we need to account for 

the added revenue produced by the 

weighting factors to ensure that shippers 

are not overpaying for pilotage services. 

We do this in the next step. 

In Step 8, ‘‘Calculate average 

weighting factors by Area,’’ (§ 404.108), 

the Director calculates how much extra 

revenue, as a percentage of total 

revenue, has historically been produced 

by the weighting factors in each area. 

We do this by using a historical average 

of the applied weighting factors for each 

year since 2014 (the first year the 

current weighting factors were applied). 

In Step 9, ‘‘Calculate revised base 

rates,’’ (§ 404.109), the Director modifies 

the base rates by accounting for the 

extra revenue generated by the 

weighting factors. We do this by 

dividing the initial pilotage rate for each 

area (from Step 7) by the corresponding 

average weighting factor (from Step 8), 

to produce a revised rate. 

In Step 10, ‘‘Review and finalize 

rates,’’ (§ 404.110), often referred to 

informally as ‘‘Director’s discretion,’’ 

the Director reviews the revised base 

rates (from Step 9) to ensure that they 

meet the goals set forth in 46 U.S.C. 

9303(f) and 46 CFR 404.1(a), which 

include promoting efficient, safe, and 

reliable pilotage service on the Great 

Lakes; generating sufficient revenue for 

each pilot association to reimburse 

necessary and reasonable operating 

expenses; compensating trained and 

rested pilots fairly; and providing 

appropriate revenue for improvements. 

VII. Discussion of the Rate Adjustments 

District One 

A. Step 1: Recognize Previous Operating 

Expenses 

Step 1 in the ratemaking methodology 

requires that the Coast Guard review 

and recognize the operating expenses 

for the last full year for which figures 

are available (§ 404.101). To do so, we 

begin by reviewing the independent 

accountant’s financial reports for each 

association’s 2022 expenses and 

revenues. For accounting purposes, the 

financial reports divide expenses into 

designated and undesignated areas. For 

costs accrued by the pilot associations 

generally, such as employee benefits, 

the cost is divided between the 

designated and undesignated areas on a 

pro rata basis. Adjustments have been 

made by the auditors and are explained 

in the auditor’s reports, which are 

available in the docket for this 

rulemaking, where indicated under the 

ADDRESSES portion of this preamble. 

The recognized operating expenses for 

District One are shown in table 3. 

TABLE 3—2022 RECOGNIZED EXPENSES FOR DISTRICT ONE

Reported operating expenses for 2022 

District One 

Designated Undesignated 

Total St. Lawrence 

River Lake Ontario 

Applicant Pilot Compensation: 

Salaries ............................................................................................................... $35,411 $23,608 $59,019 

Employee benefits .............................................................................................. 11,628 7,752 19,380 

Total Applicant Pilot Compensation ............................................................ 47,039 31,360 78,399 

Other Pilotage Cost: 

Pilot Subsistence ................................................................................................ 148,350 98,900 247,250 

Hotel/Lodging Costs ........................................................................................... 31,222 20,815 52,037 

Travel .................................................................................................................. 535,016 356,678 891,694 

Payroll Taxes ...................................................................................................... 228,222 152,148 380,370 

Total Other Pilotage Costs .......................................................................... 942,810 628,541 1,571,351 

Pilot Boat and Dispatch Costs: 

Pilot boat costs ................................................................................................... 178,691 119,127 297,818 

Dispatch costs .................................................................................................... 232,196 154,798 386,994 

Salaries ............................................................................................................... 253,761 169,174 422,935 

Total Pilot and Dispatch Costs .................................................................... 664,648 443,099 1,107,747 

Administrative Expenses: 

Legal ................................................................................................................... 301 201 502 

Legal—shared counsel (K&L Gates) .................................................................. 6,178 4,119 10,297 

Legal—USCG Litigation ..................................................................................... 61,625 41,083 102,708

Insurance ............................................................................................................ 44,603 29,735 74,338 

Employee benefits .............................................................................................. 47,517 31,678 79,195 

Payroll Taxes ...................................................................................................... 48,433 32,288 80,721 

Other taxes ......................................................................................................... 81,576 54,384 135,960 

Real Estate taxes ............................................................................................... 23,000 15,333 38,333 

Travel .................................................................................................................. 23,098 15,399 38,497 

Depreciation/Auto leasing/Other ......................................................................... 108,836 72,558 181,394 

Interest ................................................................................................................ 20,257 13,504 33,761 


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11The CPI is defined as ‘‘All Urban Consumers 

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

CUUR0200SA0 (Downloaded February 22, 2024). 

Available at https://www.bls.gov/cpi/data.htm., All 

Urban Consumers (Current Series), multiscreen 

data, not seasonally adjusted, 0200 Midwest, 

Current, All Items, Monthly, 12-month Percent 

Change and Annual Data; accessed 10/25/2024. 

12The 2024 and 2025 inflation rates are available 

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

files/fomcprojtabl20240918.pdf. We used the Core 

PCE June Projection found in table 1; accessed 10/ 

02/2024. 

13Transcript, supra note 8, at 89–90. 

14 Id. at 57–58. 

TABLE 3—2022 RECOGNIZED EXPENSES FOR DISTRICT ONE—Continued 

Reported operating expenses for 2022 

District One 

Designated Undesignated 

Total St. Lawrence 

River Lake Ontario 

American Pilots’ Association (APA) Dues .......................................................... 32,927 21,951 54,878 

Dues and subscriptions ...................................................................................... 4,560 3,040 7,600 

Utilities ................................................................................................................ 40,478 26,986 67,464 

Salaries ............................................................................................................... 223,539 149,026 372,565 

Accounting/Professional fees ............................................................................. 9,900 6,600 16,500 

Applicant Pilot Training .............................................................................................. 69,383 46,255 115,638 

Other expenses ......................................................................................................... 19,083 12,722 31,805 

Total Administrative Expenses .................................................................... 865,294 576,862 1,442,156 

Total Expenses (OPEX + Applicant + Pilot Boats + Admin + Capital) ..................... 2,519,791 1,679,862 4,199,653 

B. Step 2: Project Operating Expenses, 

Adjusting for Inflation or Deflation 

In accordance with the text in 

§ 404.102, having identified the 

recognized 2022 operating expenses in 

Step 1, the next step is to estimate the 

current year’s operating expenses by 

adjusting for inflation over the 3-year 

period. We calculate inflation using the 

BLS data from the CPI for the Midwest 

Region of the United States for the 2023 

inflation rate.11 Because the BLS does 

not provide forecasted inflation data, we 

use economic projections from the 

Federal Reserve for the 2024 and 2025 

inflation modification.12 Based on that 

information, the calculations for Step 2 

are as presented in table 4. 

TABLE 4—ADJUSTED OPERATING EXPENSES FOR DISTRICT ONE

District One 

Designated Undesignated Total 

Total Operating Expenses (Step 1) ........................................................................... $2,519,791 $1,679,862 $4,199,653 

2023 Inflation Modification (@3.8%) ......................................................................... 95,752 63,835 159,587 

2024 Inflation Modification (@2.8%) ......................................................................... 73,235 48,824 122,059 

2025 Inflation Modification (@2.3%) ......................................................................... 61,842 41,228 103,070 

Adjusted 2025 Operating Expenses ................................................................... 2,750,620 1,833,749 4,584,369 

C. Step 3: Estimate Number of 

Registered Pilots and Apprentice Pilots 

In accordance with the text in 

§ 404.103, the Coast Guard estimates the 

number of fully registered Pilots in each 

district. In the past, this was done using 

the staffing model and the process 

described in § 404.103. During the 2023 

GLPAC meeting, there was a unanimous 

recommendation by the GLPAC that, 

after 2024, the Director be given 

discretion to increase the staffing model 

plus three Pilots per District, based on 

industry demand and to ensure 

shipping reliability.13 Additionally, the 

previous staffing model’s maximum is 

now considered the minimum in regard 

to the number of Pilots needed in each 

district.14

We determine the number of fully 

registered Pilots based on data provided 

by the St. Lawrence Seaway Pilots 

Association (SLSPA) as well as the 

previously mentioned recommendation. 

We determine the number of Apprentice 

Pilots based on input from the district 

on anticipated retirements and staffing 

needs. These numbers can be found in 

table 5. 

TABLE 5—AUTHORIZED PILOTS FOR DISTRICT ONE

Item District One 

2025 Authorized Pilots (total) ........................................................................................................................................................ 20 

2025 Pilots Assigned to Designated Areas ................................................................................................................................... 11 

2025 Pilots Assigned to Undesignated Areas ............................................................................................................................... 9 

2025 Apprentice Pilots ................................................................................................................................................................... 1 


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100816 Federal Register / Vol. 89, No. 240 / Friday, December 13, 2024 / Rules and Regulations 

15Employment Cost Index, Total Compensation 

for Private Industry workers in Transportation and 

Material Moving, Annual Average, Series ID: 

CIU2010000520000A. https://www.bls.gov/ 

news.release/eci.t05.htm; accessed 10/31/2024. 

16 2.6 percent was the latest figure available for 

the 2024 final rule. Table 1, Summary of Economic 

Projections, Median Core PCE Inflation June 

Projection. https://www.federalreserve.gov/ 

monetarypolicy/files/fomcproj

tabl20230920.pdf;.accessed05/31/2024. 

17Table 1, Summary of Economic Projections, 

Median Core PCE Inflation June Projection. https:// 

www.federalreserve.gov/monetarypolicy/files/ 

fomcprojtabl20240918.pdf; accessed 10/02/2024. 

18Moody’s Seasoned Aaa Corporate Bond Yield, 

average of 2023 monthly data. The Coast Guard uses 

the most recent year of complete data. Moody’s is 

taken from Moody’s Investors Service, which is a 

bond credit rating business of Moody’s Corporation. 

Bond ratings are based on creditworthiness and 

risk. The rating of ‘‘Aaa’’ is the highest bond rating 

assigned with the lowest credit risk. See https://

fred.stlouisfed.org/series/AAA; accessed 10/25/ 

2024. 

D. Step 4: Determine Target Pilot 

Compensation Benchmark and 

Apprentice Pilot Wage Benchmark 

In this step, we determine the total 

target Pilot compensation for each area. 

Because we are issuing an interim 

ratemaking this year, we follow the 

procedure outlined in paragraph (b) of 

§ 404.104, which adjusts the existing 

compensation benchmark by inflation. 

First, we adjust the 2024 target 

compensation benchmark of $440,658 

by 3.0 percent for a value of $453,878. 

This accounts for the difference in 

actual third quarter 2024 ECI inflation, 

which is 5.6 percent, and the 2024 PCE 

estimate of 2.6 percent.15 16

The second step accounts for 

projected inflation from 2024 to 2025, 

which is 2.3 percent.17 Based on the 

projected 2025 inflation estimate, the 

target compensation benchmark for 

2025 is $464,317 per pilot. The 

Apprentice Pilot wage benchmark is 36 

percent of the target Pilot compensation, 

or $167,154 ($464,317 × 0.36). 

In accordance with § 404.104(c), we 

use the revised target individual 

compensation level to derive the total 

target Pilot compensation by 

multiplying the individual target 

compensation by the estimated number 

of Registered Pilots for District One, as 

shown in table 6. We estimate that the 

number of Apprentice Pilots needed 

will be one for District One in the 2025 

rulemaking. The total target wages for 

Apprentice Pilots are allocated with 60 

percent for the designated area and 40 

percent for the undesignated area, in 

accordance with the allocation for 

operating expenses. 

TABLE 6—TARGET COMPENSATION FOR DISTRICT ONE

District One 

Designated Undesignated Total 

Target Pilot Compensation ........................................................................................ $464,317 $464,317 $464,317 

Number of Pilots ........................................................................................................ 11 9 20

Total Target Pilot Compensation ........................................................................ 5,107,487 4,178,853 9,286,340 

Target Apprentice Pilot Compensation ...................................................................... 167,154 167,154 167,154 

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

Total Target Apprentice Pilot Compensation ..................................................... 100,292 66,862 167,154 

E. Step 5: Project Working Capital Fund 

Next, the Coast Guard calculates the 

working capital fund revenues needed 

for each area. We first add the figures for 

projected operating expenses, total 

target Pilot compensation, and total 

target Apprentice Pilot wage for each 

area. Then we find the preceding year’s 

average annual rate of return for new 

issues of high-grade corporate securities. 

Using Moody’s data, the number is 

4.8100 percent, rounded.18 By 

multiplying the two figures, we obtain 

the working capital fund contribution 

for each area, as shown in table 7. 

TABLE 7—WORKING CAPITAL FUND CALCULATION FOR DISTRICT ONE

District One 

Designated Undesignated Total 

Adjusted Operating Expenses (Step 2) ..................................................................... $2,750,620 $1,833,749 $4,584,369 

Total Target Pilot Compensation (Step 4) ................................................................. 5,107,487 4,178,853 9,286,340 

Total Target Apprentice Pilot Compensation (Step 4) .............................................. 100,292 66,862 167,154 

Total 2025 Expenses .......................................................................................... 7,958,399 6,079,464 14,037,863 

Working Capital Fund (4.8100%) .............................................................................. 382,799 292,422 675,221 

F. Step 6: Project Needed Revenue 

In this step, we add the expenses 

accrued to derive the total revenue 

needed for each area. These expenses 

include the projected operating 

expenses (from Step 2), the total target 

Pilot compensation (from Step 4), total 

target Apprentice Pilot wage (from Step 

4), and the working capital fund 

contribution (from Step 5). We show 

these calculations in table 8. 


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TABLE 8—REVENUE NEEDED FOR DISTRICT ONE

District One 

Designated Undesignated Total 

Adjusted Operating Expenses (Step 2) ..................................................................... $2,750,620 $1,833,749 $4,584,369 

Total Target Pilot Compensation (Step 4) ................................................................. 5,107,487 4,178,853 9,286,340 

Total Target Apprentice Pilot Compensation (Step 4) .............................................. 100,292 66,862 167,154 

Working Capital Fund (Step 5) .................................................................................. 382,799 292,422 675,221 

Total Revenue Needed ...................................................................................... 8,341,198 6,371,886 14,713,084 

G. Step 7: Calculate Initial Base Rates 

Having determined the revenue 

needed for each area in the previous six 

steps, we divide that number by the 

expected number of traffic hours to 

develop an hourly rate. 

Step 7 is a two-part process. The first 

part entails calculating the 10-year 

traffic average in District One, using the 

total time on task or Pilot bridge hours. 

To calculate the time on task for each 

district, the Coast Guard used billing 

data from SeaPro. Because we calculate 

separate figures for designated and 

undesignated waters, there are two parts 

for each calculation. We show these 

values in table 9. 

TABLE 9—TIME ON TASK FOR DISTRICT ONE

[Hours] 

Year 

District One 

Designated Undesignated 

2023 ............................................................................................................................................................. 5,810 7,650 

2022 ............................................................................................................................................................. 6,577 8,356 

2021 ............................................................................................................................................................. 6,166 7,893 

2020 ............................................................................................................................................................. 6,265 7,560 

2019 ............................................................................................................................................................. 8,232 8,405 

2018 ............................................................................................................................................................. 6,943 8,445 

2017 ............................................................................................................................................................. 7,605 8,679 

2016 ............................................................................................................................................................. 5,434 6,217 

2015 ............................................................................................................................................................. 5,743 6,667 

2014 ............................................................................................................................................................. 6,810 6,853 

Average ................................................................................................................................................ 6,559 7,673 

Next, we derive the initial hourly rate 

by dividing the revenue needed by the 

average number of hours for each area. 

This produces an initial rate, which is 

necessary to produce the revenue 

needed for each area, assuming the 

amount of traffic is as expected. We 

present the calculations for District One 

in table 10. 

TABLE 10—INITIAL RATE CALCULATIONS FOR DISTRICT ONE

Designated Undesignated 

Revenue needed (Step 6) ........................................................................................................................... $8,341,198 $6,371,886 

Average time on task (hours) ...................................................................................................................... 6,559 7,673 

Initial rate ..................................................................................................................................................... $1,272 $830 

H. Step 8: Calculate Average Weighting 

Factors by Area 

In this step, the Coast Guard 

calculates the average weighting factor 

for each designated and undesignated 

area by first collecting the weighting 

factors, set forth in 46 CFR 401.400, for 

each vessel trip. Using the weight factor 

report from SeaPro, we calculate the 

average weighting factor for each area 

using the data from each vessel transit 

from 2014 onward, as shown in tables 

11 and 12. 

TABLE 11—AVERAGE WEIGHTING FACTOR FOR DISTRICT ONE, DESIGNATED AREAS

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits * 

Class 1 (2014) ........................................................................................................... 31 1 31 

Class 1 (2015) ........................................................................................................... 41 1 41 

Class 1 (2016) ........................................................................................................... 31 1 31 

Class 1 (2017) ........................................................................................................... 28 1 28 

Class 1 (2018) ........................................................................................................... 54 1 54 

Class 1 (2019) ........................................................................................................... 72 1 72 


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TABLE 11—AVERAGE WEIGHTING FACTOR FOR DISTRICT ONE, DESIGNATED AREAS—Continued 

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits * 

Class 1 (2020) ........................................................................................................... 8 1 8 

Class 1 (2021) ........................................................................................................... 10 1 10 

Class 1 (2022) ........................................................................................................... 39 1 39 

Class 1 (2023) ........................................................................................................... 19 1 19 

Class 2 (2014) ........................................................................................................... 285 1.15 328 

Class 2 (2015) ........................................................................................................... 295 1.15 339 

Class 2 (2016) ........................................................................................................... 185 1.15 213 

Class 2 (2017) ........................................................................................................... 352 1.15 405 

Class 2 (2018) ........................................................................................................... 559 1.15 643 

Class 2 (2019) ........................................................................................................... 378 1.15 435 

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

Class 2 (2021) ........................................................................................................... 315 1.15 362 

Class 2 (2022) ........................................................................................................... 462 1.15 531 

Class 2 (2023) ........................................................................................................... 481 1.15 553 

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

Class 3 (2015) ........................................................................................................... 28 1.3 36 

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

Class 3 (2017) ........................................................................................................... 67 1.3 87 

Class 3 (2018) ........................................................................................................... 86 1.3 112 

Class 3 (2019) ........................................................................................................... 122 1.3 159 

Class 3 (2020) ........................................................................................................... 67 1.3 87 

Class 3 (2021) ........................................................................................................... 52 1.3 68 

Class 3 (2022) ........................................................................................................... 103 1.3 134 

Class 3 (2023) ........................................................................................................... 34 1.3 44 

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

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

Class 4 (2016) ........................................................................................................... 214 1.45 310 

Class 4 (2017) ........................................................................................................... 285 1.45 413 

Class 4 (2018) ........................................................................................................... 393 1.45 570 

Class 4 (2019) ........................................................................................................... 730 1.45 1059 

Class 4 (2020) ........................................................................................................... 427 1.45 619 

Class 4 (2021) ........................................................................................................... 407 1.45 590 

Class 4 (2022) ........................................................................................................... 446 1.45 647 

Class 4 (2023) ........................................................................................................... 420 1.45 609 

Total .................................................................................................................... 8,708 .............................. 11,216 

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

* Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses unrounded figures. 

TABLE 12—AVERAGE WEIGHTING FACTOR FOR DISTRICT ONE, UNDESIGNATED AREAS

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits * 

Class 1 (2014) ........................................................................................................... 25 1 25 

Class 1 (2015) ........................................................................................................... 28 1 28 

Class 1 (2016) ........................................................................................................... 18 1 18 

Class 1 (2017) ........................................................................................................... 19 1 19 

Class 1 (2018) ........................................................................................................... 22 1 22 

Class 1 (2019) ........................................................................................................... 30 1 30 

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

Class 1 (2021) ........................................................................................................... 19 1 19 

Class 1 (2022) ........................................................................................................... 27 1 27 

Class 1 (2023) ........................................................................................................... 31 1 31 

Class 2 (2014) ........................................................................................................... 238 1.15 274 

Class 2 (2015) ........................................................................................................... 263 1.15 302 

Class 2 (2016) ........................................................................................................... 169 1.15 194 

Class 2 (2017) ........................................................................................................... 290 1.15 334 

Class 2 (2018) ........................................................................................................... 352 1.15 405 

Class 2 (2019) ........................................................................................................... 366 1.15 421 

Class 2 (2020) ........................................................................................................... 358 1.15 412 

Class 2 (2021) ........................................................................................................... 463 1.15 532 

Class 2 (2022) ........................................................................................................... 349 1.15 401 

Class 2 (2023) ........................................................................................................... 346 1.15 398 

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

Class 3 (2015) ........................................................................................................... 42 1.3 55 

Class 3 (2016) ........................................................................................................... 28 1.3 36 

Class 3 (2017) ........................................................................................................... 45 1.3 59 

Class 3 (2018) ........................................................................................................... 63 1.3 82 


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

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits * 

Class 3 (2019) ........................................................................................................... 58 1.3 75 

Class 3 (2020) ........................................................................................................... 35 1.3 46 

Class 3 (2021) ........................................................................................................... 71 1.3 92 

Class 3 (2022) ........................................................................................................... 65 1.3 85 

Class 3 (2023) ........................................................................................................... 44 1.3 57 

Class 4 (2014) ........................................................................................................... 289 1.45 419 

Class 4 (2015) ........................................................................................................... 269 1.45 390 

Class 4 (2016) ........................................................................................................... 222 1.45 322 

Class 4 (2017) ........................................................................................................... 285 1.45 413 

Class 4 (2018) ........................................................................................................... 382 1.45 554 

Class 4 (2019) ........................................................................................................... 326 1.45 473 

Class 4 (2020) ........................................................................................................... 334 1.45 484 

Class 4 (2021) ........................................................................................................... 466 1.45 676 

Class 4 (2022) ........................................................................................................... 386 1.45 560 

Class 4 (2023) ........................................................................................................... 328 1.45 476 

Total .................................................................................................................... 7,214 .............................. 9,326 

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

* Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses unrounded figures. 

I. Step 9: Calculate Revised Base Rates 

After considering the impact of the 

weighting factors, we revise the base 

rates in this step so that the total costs 

of pilotage will be equal to the revenue 

needed. To do this, we divide the initial 

base rates calculated in Step 7 by the 

average weighting factors calculated in 

Step 8, as shown in table 13. 

TABLE 13—REVISED BASE RATES FOR DISTRICT ONE

Area Initial rate 

(Step 7) 

Average 

weighting factor 

(Step 8) 

Revised rate 

(initial rate ÷ 

average 

weighting factor) 

District One: Designated ............................................................................................ $1,272 1.29 $986 

District One: Undesignated ........................................................................................ 830 1.29 643 

J. Step 10: Review and Finalize Rates 

In this step, the Director reviews the 

base pilotage rates calculated in 

§ 404.109 of this part to ensure it meets 

the goal of ensuring safe, efficient, and 

reliable pilotage service. To establish 

this, the Director considers whether the 

rates incorporate appropriate 

compensation for Pilots to handle heavy 

traffic periods and whether there are 

enough Pilots to handle those heavy 

traffic periods. The Director also 

considers whether the rates will cover 

operating expenses and infrastructure 

costs, including average traffic and 

weighting factors. Based on these 

considerations, the Director did not 

propose any alterations to the rates in 

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

and (2) to reflect the final rates shown 

in table 14. 

TABLE 14—FINAL RATES FOR DISTRICT ONE

Area Name Final 2024 

pilotage rate 

Final 2025 

pilotage rate 

District One: Designated ......................................... St. Lawrence River ................................................. $927 $986 

District One: Undesignated ..................................... Lake Ontario ........................................................... 608 643 

District Two 

A. Step 1: Recognize Previous Operating 

Expenses 

Step 1 in our ratemaking methodology 

requires that the Coast Guard review 

and recognize the previous year’s 

operating expenses (§ 404.101). To do 

so, we begin by reviewing the 

independent accountant’s financial 

reports for each association’s 2022 

expenses and revenues. For accounting 

purposes, the financial reports divide 

expenses into designated and 

undesignated areas. For costs generally 

accrued by the pilot associations, such 

as employee benefits, the cost is divided 

between the designated and 

undesignated areas on a pro rata basis. 

Adjustments have been made by the 

auditors and are explained in the 

auditor’s reports, which are available in 

the docket for this rulemaking, where 

indicated under the ADDRESSES portion 

of the preamble. 

The recognized operating expenses for 

District Two are shown in table 15. 


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100820 Federal Register / Vol. 89, No. 240 / Friday, December 13, 2024 / Rules and Regulations 

19CPI, supra note 10. 20Core PCE June Projection, supra note 11. 

TABLE 15—2022 RECOGNIZED EXPENSES FOR DISTRICT TWO

Reported operating expenses for 2022 

District Two 

Undesignated Designated 

Total Lake 

Erie 

Southeast Shoal 

to Port Huron 

Applicant Pilot Compensation .................................................................................... $236,674 $355,011 $591,685 

Employee benefits ..................................................................................................... 60 90 150

Total Other Applicant Cost .......................................................................... 236,734 355,101 591,835 

Other Pilotage Cost: 

Pilot Subsistence ................................................................................................ 93,840 140,760 234,600 

Hotel/Lodging Costs ........................................................................................... 70,468 105,703 176,171 

Hotel/Lodging (D2–22–01) ................................................................................. (70,080) (105,120) (175,200) 

Travel .................................................................................................................. 57,324 85,985 143,309 

License renewal .................................................................................................. 396 594 990 

Payroll Taxes ...................................................................................................... 20,068 30,101 50,169 

License Insurance .............................................................................................. 10,362 15,543 25,905 

Total Other Pilotage Costs .......................................................................... 182,378 273,566 455,944 

Pilot Boat and Dispatch Costs: 

Pilot boat expense costs .................................................................................... 100,642 150,963 251,605 

Employee Benefits .............................................................................................. 40,409 60,613 101,022 

Employee Benefits (D2–22–02) ......................................................................... 46,599 69,899 116,498 

Insurance ............................................................................................................ 9,257 13,886 23,143 

Salaries ............................................................................................................... 171,763 257,645 429,408 

Total Pilot and Dispatch Costs .................................................................... 368,670 553,006 921,676 

Administrative Expenses: 

Legal ................................................................................................................... 18 27 45 

Legal—shared counsel (K&L Gates) .................................................................. 3,210 4,816 8,026 

Insurance ............................................................................................................ 15,698 23,547 39,245 

Employee benefits .............................................................................................. 19,884 29,827 49,711 

Employee benefits (D2–22–02) .......................................................................... 14,208 21,312 35,520 

Payroll Taxes ...................................................................................................... 134,123 201,184 335,307 

Other taxes ......................................................................................................... 8,862 13,294 22,156 

Real Estate taxes ............................................................................................... 8,754 13,130 21,884 

Travel .................................................................................................................. 24,482 36,723 61,205 

Depreciation/Auto leasing/Other ......................................................................... 19,136 28,703 47,839 

APA Dues ........................................................................................................... 14,843 22,264 37,107 

Dues and subscriptions ...................................................................................... 470 704 1,174 

Utilities ................................................................................................................ 27,009 40,513 67,522 

Salaries ............................................................................................................... 78,662 117,994 196,656 

Accounting/Professional fees ............................................................................. 15,850 23,775 39,625 

Pilot Training ....................................................................................................... 17,661 26,491 44,152 

Other expenses .................................................................................................. 10,306 15,458 25,764 

Total Administrative Expenses .................................................................... 413,176 619,762 1,032,938 

Total Expenses (OPEX + Applicant + Pilot Boats + Admin + Capital) ..................... 1,200,958 1,801,435 3,002,393 

B. Step 2: Project Operating Expenses, 

Adjusting for Inflation or Deflation 

In accordance with the text in 

§ 404.102, having identified the 

recognized 2022 operating expenses in 

Step 1, the next step is to estimate the 

current year’s operating expenses by 

adjusting for inflation over the 3-year 

period. We calculate inflation using the 

BLS data from the CPI for the Midwest 

Region of the United States for the 2023 

inflation rate.19 Because the BLS does 

not provide forecasted inflation data, we 

use economic projections from the 

Federal Reserve for the 2024 and 2025 

inflation modification.20 Based on that 

information, the calculations for Step 2 

are presented in table 16. 

TABLE 16—ADJUSTED OPERATING EXPENSES FOR DISTRICT TWO

District Two 

Undesignated Designated Total 

Total Operating Expenses (Step 1) ........................................................................... $1,200,958 $1,801,435 $3,002,393 

2023 Inflation Modification (@3.8%) ......................................................................... 45,636 68,455 114,091 

2024 Inflation Modification (@2.8%) ......................................................................... 34,905 52,357 87,262 

2025 Inflation Modification (@2.3%) ......................................................................... 29,474 44,212 73,686 


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21Transcript, supra note 8 at 89–90. 

22 Id. at 57–58. 

23ECI, supra note 14. 

24Median Core PCE Inflation June Projection, 

supra note 15. 

25Median Core PCE Inflation June Projection, 

supra note 16. 

26Moody’s Seasoned Aaa Corporate Bond Yield, 

supra note 17. 

TABLE 16—ADJUSTED OPERATING EXPENSES FOR DISTRICT TWO—Continued 

District Two 

Undesignated Designated Total 

Adjusted 2025 Operating Expenses ................................................................... 1,310,973 1,966,459 3,277,432 

C. Step 3: Estimate Number of 

Registered Pilots and Apprentice Pilots 

In accordance with the text in 

§ 404.103, the Coast Guard estimates the 

number of fully registered Pilots in each 

district. In the past, this was done using 

the staffing model and the process 

described in § 404.103. During the 2023 

GLPAC meeting, there was a unanimous 

recommendation by the GLPAC that, 

after 2024, the Director be given 

discretion to increase the staffing model 

plus three Pilots per District, based on 

industry demand and to ensure 

shipping reliability.21 Additionally, the 

previous staffing model’s maximum is 

now considered the minimum in regard 

to the number of Pilots needed in each 

district.22

We determine the number of fully 

registered Pilots based on data provided 

by the Lakes Pilots Association (LPA) as 

well as the previous mentioned 

recommendation. We determine the 

number of Apprentice Pilots based on 

input from the district on anticipated 

retirements and staffing needs. These 

numbers can be found in table 17. 

TABLE 17—AUTHORIZED PILOTS FOR DISTRICT TWO

Item District Two 

2025 Authorized Pilots (total) ........................................................................................................................................................ 17 

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

Pilots Assigned to Undesignated Areas ........................................................................................................................................ 7 

2025 Apprentice Pilots ................................................................................................................................................................... 1 

D. Step 4: Determine Target Pilot 

Compensation Benchmark and 

Apprentice Pilot Wage Benchmark 

In this step, we determine the total 

target Pilot compensation for each area. 

Because we are issuing an interim 

ratemaking this year, we follow the 

procedure outlined in paragraph (b) of 

§ 404.104, which adjusts the existing 

compensation benchmark by inflation. 

First, we adjust the 2024 target 

compensation benchmark of $440,658 

by 3.0 percent for a value of $453,878. 

This accounts for the difference in 

actual third quarter 2024 ECI inflation, 

which is 5.6 percent, and the 2024 PCE 

estimate of 2.6 percent.23 24 The second 

step accounts for projected inflation 

from 2024 to 2025, which is 2.3 

percent.25 Based on the projected 2025 

inflation estimate, the target 

compensation benchmark for 2025 is 

$464,317 per Pilot. The Apprentice Pilot 

wage benchmark is 36 percent of the 

target Pilot compensation, or $167,154 

($464,317 × 0.36). 

In accordance with § 404.104(c), we 

used the revised target individual 

compensation level to derive the total 

target Pilot compensation by 

multiplying the individual target 

compensation by the estimated number 

of Registered Pilots for District Two, as 

shown in table 18. The total target 

wages for Apprentice Pilots are 

allocated with 60 percent for the 

designated area and 40 percent for the 

undesignated area, in accordance with 

the allocation for operating expenses. 

TABLE 18—TARGET COMPENSATION FOR DISTRICT TWO

District Two 

Undesignated Designated Total 

Target Pilot Compensation ........................................................................................ $464,317 $464,317 $464,317 

Number of Pilots ........................................................................................................ 7 10 17

Total Target Pilot Compensation ........................................................................ $3,250,219 $4,643,170 $7,893,389 

Target Apprentice Pilot Compensation ...................................................................... $167,154 $167,154 $167,154 

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

Total Target Apprentice Pilot Compensation ..................................................... $66,862 $100,292 $167,154 

E. Step 5: Project Working Capital Fund 

Next, the Coast Guard calculates the 

working capital fund revenues needed 

for each area. We first add the figures for 

projected operating expenses, total 

target Pilot compensation, and total 

target Apprentice Pilot wage for each 

area. Then we find the preceding year’s 

average annual rate of return for new 

issues of high-grade corporate securities. 

Using Moody’s data, the number is 

4.8100 percent, rounded.26 By 

multiplying the two figures, we obtain 

the working capital fund contribution 

for each area, as shown in table 19. 


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TABLE 19—WORKING CAPITAL FUND CALCULATION FOR DISTRICT TWO

District Two 

Undesignated Designated Total 

Adjusted Operating Expenses (Step 2) ..................................................................... $1,310,973 $1,966,459 $3,277,432 

Total Target Pilot Compensation (Step 4) ................................................................. 3,250,219 4,643,170 7,893,389 

Total Target Apprentice Pilot Compensation (Step 4) .............................................. 66,862 100,292 167,154 

Total 2025 Expenses .......................................................................................... 4,628,054 6,709,921 11,337,975 

Working Capital Fund (4.8100%) .............................................................................. 222,609 322,747 545,356 

F. Step 6: Project Needed Revenue 

In this step, the Coast Guard adds all 

the expenses accrued to derive the total 

revenue needed for each area. These 

expenses include the projected 

operating expenses (from Step 2), the 

total target Pilot compensation (from 

Step 4), total target Apprentice Pilot 

wage (from Step 4), and the working 

capital fund contribution (from Step 5). 

We show these calculations in table 20. 

TABLE 20—REVENUE NEEDED FOR DISTRICT TWO

District Two 

Undesignated Designated Total 

Adjusted Operating Expenses (Step 2) ..................................................................... $1,310,973 $1,966,459 $3,277,432 

Total Target Pilot Compensation (Step 4) ................................................................. 3,250,219 4,643,170 7,893,389 

Total Target Apprentice Pilot Compensation (Step 4) .............................................. 66,862 100,292 167,154 

Working Capital Fund (Step 5) .................................................................................. 222,609 322,747 545,356 

Total Revenue Needed ...................................................................................... 4,850,663 7,032,668 11,883,331 

G. Step 7: Calculate Initial Base Rates 

Having determined the revenue 

needed for each area in the previous six 

steps, we divide that number by the 

expected number of traffic hours to 

develop an hourly rate. 

Step 7 is a two-part process. The first 

part entails calculating the 10-year 

traffic average in District Two, using the 

total time on task or Pilot bridge hours. 

To calculate the time on task for each 

district, the Coast Guard used billing 

data from SeaPro. Because we calculate 

separate figures for designated and 

undesignated waters, there are two parts 

for each calculation. We show these 

values in table 21. 

TABLE 21—TIME ON TASK FOR

DISTRICT TWO

[Hours] 

Year 

District Two 

Undesignated Designated 

2023 .......... 6,424 8,092 

2022 .......... 7,695 9,044 

2021 .......... 5,290 6,762 

2020 .......... 6,232 8,401 

2019 .......... 6,512 7,715 

2018 .......... 6,150 6,655 

2017 .......... 5,139 6,074 

2016 .......... 6,425 5,615 

2015 .......... 6,535 5,967 

2014 .......... 7,856 7,001 

TABLE 21—TIME ON TASK FOR

DISTRICT TWO—Continued 

[Hours] 

Year 

District Two 

Undesignated Designated 

Average 6,426 7,133 

Next, we derive the initial hourly rate 

by dividing the revenue needed by the 

average number of hours for each area. 

This produces an initial rate, which is 

necessary to produce the revenue 

needed for each area, assuming the 

amount of traffic is as expected. We 

present the calculations for District Two 

in table 22. 

TABLE 22—INITIAL RATE CALCULATIONS FOR DISTRICT TWO

Undesignated Designated 

Revenue needed (Step 6) ........................................................................................................................... $4,850,663 $7,032,668 

Average time on task (hours) ...................................................................................................................... 6,426 7,133 

Initial rate ..................................................................................................................................................... $755 $986 

H. Step 8: Calculate Average Weighting 

Factors by Area 

In this step, the Coast Guard 

calculates the average weighting factor 

for each designated and undesignated 

area by first collecting the weighting 

factors, set forth in 46 CFR 401.400, for 

each vessel trip. Using the weight factor 

report from SeaPro, we calculate the 

average weighting factor for each area 

using the data from each vessel transit 

from 2014 onward, as shown in tables 

23 and 24. 


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TABLE 23—AVERAGE WEIGHTING FACTOR FOR DISTRICT TWO, UNDESIGNATED AREAS

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits * 

Class 1 (2014) ............................................................................................................................. 31 1 31 

Class 1 (2015) ............................................................................................................................. 35 1 35 

Class 1 (2016) ............................................................................................................................. 32 1 32 

Class 1 (2017) ............................................................................................................................. 21 1 21 

Class 1 (2018) ............................................................................................................................. 37 1 37 

Class 1 (2019) ............................................................................................................................. 54 1 54 

Class 1 (2020) ............................................................................................................................. 1 1 1 

Class 1 (2021) ............................................................................................................................. 7 1 7 

Class 1 (2022) ............................................................................................................................. 57 1 57 

Class 1 (2023) ............................................................................................................................. 54 1 54 

Class 2 (2014) ............................................................................................................................. 356 1.15 409 

Class 2 (2015) ............................................................................................................................. 354 1.15 407 

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

Class 2 (2017) ............................................................................................................................. 222 1.15 255 

Class 2 (2018) ............................................................................................................................. 123 1.15 141 

Class 2 (2019) ............................................................................................................................. 127 1.15 146 

Class 2 (2020) ............................................................................................................................. 165 1.15 190 

Class 2 (2021) ............................................................................................................................. 206 1.15 237 

Class 2 (2022) ............................................................................................................................. 202 1.15 232 

Class 2 (2023) ............................................................................................................................. 152 1.15 175 

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

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

Class 3 (2016) ............................................................................................................................. 9 1.3 12 

Class 3 (2017) ............................................................................................................................. 12 1.3 16 

Class 3 (2018) ............................................................................................................................. 3 1.3 4 

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

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

Class 3 (2021) ............................................................................................................................. 5 1.3 7 

Class 3 (2022) ............................................................................................................................. 2 1.3 3 

Class 3 (2023) ............................................................................................................................. 2 1.3 3 

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

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

Class 4 (2016) ............................................................................................................................. 468 1.45 679 

Class 4 (2017) ............................................................................................................................. 319 1.45 463 

Class 4 (2018) ............................................................................................................................. 196 1.45 284 

Class 4 (2019) ............................................................................................................................. 210 1.45 305 

Class 4 (2020) ............................................................................................................................. 201 1.45 291 

Class 4 (2021) ............................................................................................................................. 227 1.45 329 

Class 4 (2022) ............................................................................................................................. 208 1.45 302 

Class 4 (2023) ............................................................................................................................. 169 1.45 245 

Total ...................................................................................................................................... 5,865 ........................ 7,662 

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

* Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses unrounded figures. 

TABLE 24—AVERAGE WEIGHTING FACTOR FOR DISTRICT TWO, DESIGNATED AREAS

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits * 

Class 1 (2014) ............................................................................................................................. 20 1 20 

Class 1 (2015) ............................................................................................................................. 15 1 15 

Class 1 (2016) ............................................................................................................................. 28 1 28 

Class 1 (2017) ............................................................................................................................. 15 1 15 

Class 1 (2018) ............................................................................................................................. 42 1 42 

Class 1 (2019) ............................................................................................................................. 48 1 48 

Class 1 (2020) ............................................................................................................................. 7 1 7 

Class 1 (2021) ............................................................................................................................. 12 1 12 

Class 1 (2022) ............................................................................................................................. 53 1 53 

Class 1 (2023) ............................................................................................................................. 56 1 56 

Class 2 (2014) ............................................................................................................................. 237 1.15 273 

Class 2 (2015) ............................................................................................................................. 217 1.15 250 

Class 2 (2016) ............................................................................................................................. 224 1.15 258 

Class 2 (2017) ............................................................................................................................. 127 1.15 146 

Class 2 (2018) ............................................................................................................................. 153 1.15 176 

Class 2 (2019) ............................................................................................................................. 281 1.15 323 

Class 2 (2020) ............................................................................................................................. 342 1.15 393 

Class 2 (2021) ............................................................................................................................. 240 1.15 276 

Class 2 (2022) ............................................................................................................................. 327 1.15 376 


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

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits * 

Class 2 (2023) ............................................................................................................................. 312 1.15 359 

Class 3 (2014) ............................................................................................................................. 8 1.3 10 

Class 3 (2015) ............................................................................................................................. 8 1.3 10 

Class 3 (2016) ............................................................................................................................. 4 1.3 5 

Class 3 (2017) ............................................................................................................................. 4 1.3 5 

Class 3 (2018) ............................................................................................................................. 14 1.3 18 

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

Class 3 (2020) ............................................................................................................................. 5 1.3 7 

Class 3 (2021) ............................................................................................................................. 2 1.3 3 

Class 3 (2022) ............................................................................................................................. 4 1.3 5 

Class 3 (2023) ............................................................................................................................. 5 1.3 7 

Class 4 (2014) ............................................................................................................................. 359 1.45 521 

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

Class 4 (2016) ............................................................................................................................. 281 1.45 407 

Class 4 (2017) ............................................................................................................................. 185 1.45 268 

Class 4 (2018) ............................................................................................................................. 379 1.45 550 

Class 4 (2019) ............................................................................................................................. 403 1.45 584 

Class 4 (2020) ............................................................................................................................. 405 1.45 587 

Class 4 (2021) ............................................................................................................................. 268 1.45 389 

Class 4 (2022) ............................................................................................................................. 391 1.45 567 

Class 4 (2023) ............................................................................................................................. 349 1.45 506 

Total ...................................................................................................................................... 6,171 ........................ 8,069 

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

* Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses unrounded figures. 

I. Step 9: Calculate Revised Base Rates 

After considering the impact of the 

weighting factors, we revise the base 

rates in this step so that the total costs 

of pilotage will be equal to the revenue 

needed. To do this, we divide the initial 

base rates calculated in Step 7 by the 

average weighting factors calculated in 

Step 8, as shown in table 25. 

TABLE 25—REVISED BASE RATES FOR DISTRICT TWO

Area Initial rate 

(Step 7) 

Average weighting 

factor 

(Step 8) 

Revised rate 

(initial rate ÷ average weighting factor) 

District Two: Undesignated ........................................................................................ $755 1.31 $576 

District Two: Designated ............................................................................................ 986 1.31 753 

J. Step 10: Review and Finalize Rates 

In this step, the Director reviews the 

base pilotage rates calculated in 

§ 404.109 of this part to ensure it meets 

the goal of ensuring safe, efficient, and 

reliable pilotage service. To establish 

this, the Director considers whether the 

rates incorporate appropriate 

compensation for Pilots to handle heavy 

traffic periods and whether there are 

enough Pilots to handle those heavy 

traffic periods. The Director also 

considers whether the rates will cover 

operating expenses and infrastructure 

costs, including average traffic and 

weighting factors. Based on these 

considerations, the Director did not 

propose any alterations to the rates in 

this step. We modified § 401.405(a)(3) 

and (4) to reflect the final rates shown 

in table 26. 

TABLE 26—FINAL RATES FOR DISTRICT TWO

Area Name Final 2024 

pilotage rate 

Final 2025 

pilotage rate 

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

Huron, MI.

$667 $753 

District Two: Undesignated .......................................... Lake Erie ...................................................................... 597 576 

District Three 

A. Step 1: Recognize Previous Operating 

Expenses 

Step 1 in our ratemaking methodology 

requires that the Coast Guard review 

and recognize the previous year’s 

operating expenses (§ 404.101). To do 

so, we review the independent 

accountant’s financial reports for each 

association’s 2022 expenses and 

revenues. For accounting purposes, the 

financial reports divide expenses into 

designated and undesignated areas. For 

costs generally accrued by the pilot 

associations, such as employee benefits, 


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27CPI, supra note 10. 

the cost is divided between the 

designated and undesignated areas on a 

pro rata basis. Adjustments have been 

made by the auditors and are explained 

in the auditor’s reports, which are 

available in the docket for this 

rulemaking, where indicated in the 

ADDRESSES portion of the preamble. 

The recognized operating expenses for 

District Three are shown in table 27. 

TABLE 27—2022 RECOGNIZED EXPENSES FOR DISTRICT THREE

Reported Operating Expenses for 2022 

District Three 

Undesignated Designated Undesignated 

Total Lakes Huron and 

Michigan 

St. Marys 

River 

Lake 

Superior 

Applicant Cost: 

Salaries ............................................................................. $417,221 $154,305 $177,126 $748,652 

Salaries (D3–22–04) ......................................................... (173,587) (64,199) (73,694) (311,480) 

Applicant Benefits ............................................................. 54,874 20,295 23,296 98,465 

Total Applicant Cost .................................................. 298,508 110,401 126,728 535,637 

Other Pilotage Costs: 

Pilot subsistence ............................................................... 168,607 62,357 71,580 302,544 

Pilot subsistence (D3–22–06) .......................................... 7,664 2,834 3,254 13,752 

Hotel/Lodging Cost ........................................................... 163,971 60,643 69,612 294,225 

Hotel/Lodging Cost (D3–22–01) ....................................... (22,392) (8,282) (9,506) (40,180) 

Travel ................................................................................ 233,386 86,315 99,081 418,783 

Travel (D3–22–01), (D3–22–03) ...................................... (54,224) (20,054) (23,020) (97,298) 

License Renewal .............................................................. 315 117 134 566 

Payroll taxes (D3–22–04) ................................................. 192,009 71,013 81,515 344,537 

License Insurance ............................................................ 17,757 6,567 7,539 31,863 

Total Other Pilotage Costs ........................................ 707,093 261,510 300,189 1,268,792 

Pilot Boat and Dispatch Costs: 

Pilot boat costs ................................................................. 536,327 198,355 227,691 962,373 

Pilot Boat Costs (D3–22–03) ............................................ (9,518) (3,520) (4,041) (17,079) 

Dispatch costs .................................................................. 162,843 60,226 69,133 292,201 

Dispatch costs .................................................................. (25,243) (9,336) (10,717) (45,296) 

Insurance .......................................................................... 26,193 9,687 11,120 47,000 

Total Pilot Boat and Dispatch Costs ......................... 690,602 255,412 293,186 1,239,200 

Administrative Cost: 

Legal ................................................................................. 58,159 21,510 24,691 104,360 

Legal (D3–22–05) ............................................................. (48,792) (18,045) (20,714) (87,551) 

Legal—shared counsel (K&L Gates) ................................ 4,473 1,654 1,899 8,026 

Insurance .......................................................................... 22,952 8,489 9,744 41,185 

Employee benefits ............................................................ 137,044 50,684 58,180 245,908 

Employee benefits (D3–22–03) ........................................ (6,129) (2,267) (2,602) (10,998) 

Payroll Tax ........................................................................ 50,962 18,848 21,635 91,445 

Payroll Tax (D3–22–05) ................................................... (13,015) (4,813) (5,525) (23,354) 

Other taxes ....................................................................... 4,924 1,821 2,090 8,835 

Real Estate Taxes ............................................................ 1,524 564 647 2,735 

Depreciation/Auto leasing/Other ....................................... 163,196 60,356 69,283 292,835 

APA Dues ......................................................................... 24,610 9,102 10,448 44,160 

APA Dues (D3–22–02) ..................................................... (1,231) (455) (522) (2,208) 

Dues and subscriptions .................................................... 15,716 5,812 6,672 28,200 

Utilities .............................................................................. 45,613 16,869 19,364 81,846 

Utilities (D3–22–03) .......................................................... (5,449) (2,015) (2,313) (9,778) 

Salaries ............................................................................. 47,719 17,648 20,259 85,626 

Accounting/Professional fees ........................................... 28,079 10,385 11,921 50,385 

Pilot Training ..................................................................... 45,010 16,646 19,108 80,764 

Other expenses ................................................................ 23,172 8,570 9,837 41,579 

Other expenses (D3–22–07) ............................................ (1,250) (462) (531) (2,243) 

Total Administrative Expenses .................................. 597,287 220,901 253,571 1,071,759 

Total Operating Expenses (Other Costs + Applicant Cost + 

Pilot Boats + Admin) ............................................................ 2,293,490 848,224 973,674 4,115,388 

B. Step 2: Project Operating Expenses, 

Adjusting for Inflation or Deflation 

In accordance with the text in 

§ 404.102, having identified the 

recognized 2022 operating expenses in 

Step 1, the next step is to estimate the 

current year’s operating expenses by 

adjusting those expenses for inflation 

over the 3-year period. We calculate 

inflation using the BLS data from the 

CPI for the Midwest Region of the 

United States for the 2023 inflation 

rate.27 Because the BLS does not 

provide forecasted inflation data, we use 

economic projections from the Federal 


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28Core PCE June Projection, supra note 11. 

29Transcript, supra note 8, at 89–90. 

30 Id. at 57–58. 

31ECI, supra note 14. 

32Median Core PCE Inflation June Projection, 

supra note 15. 

33Median Core PCE Inflation June Projection, 

supra note 16. 

Reserve for the 2024 and 2025 inflation 

modification.28 Based on that 

information, the calculations for Step 2 

are as presented in table 28. 

TABLE 28—ADJUSTED OPERATING EXPENSES FOR DISTRICT THREE

District Three 

Undesignated Designated Total 

Total Operating Expenses (Step 1) ........................................................................... $3,267,164 $848,224 $4,115,388 

2023 Inflation Modification (@3.8%) ......................................................................... 124,152 32,233 156,385 

2024 Inflation Modification (@2.8%) ......................................................................... 94,957 24,653 119,610 

2025 Inflation Modification (@2.3%) ......................................................................... 80,184 20,818 101,002 

Adjusted 2025 Operating Expenses ................................................................... 3,566,457 925,928 4,492,385 

C. Step 3: Estimate Number of 

Registered Pilots and Apprentice Pilots 

In accordance with the text in 

§ 404.103, the Coast Guard estimates the 

number of fully registered Pilots in each 

district. In the past, this was done using 

the staffing model and the process 

described in § 404.103. During the 2023 

GLPAC meeting, there was a unanimous 

recommendation by the GLPAC that, 

after 2024, the Director be given 

discretion to increase the staffing model 

plus three Pilots per District, based on 

industry demand and to ensure 

shipping reliability. 29 Additionally, the 

previous staffing model’s maximum are 

now considered the minimum regarding 

the number of Pilots needed in each 

district.30

We determine the number of fully 

registered Pilots based on data provided 

by the WGLPA, as well as the previous 

mentioned recommendation. We 

determine the number of Apprentice 

Pilots based on input from the district 

on anticipated retirements and staffing 

needs. These numbers can be found in 

table 29. 

TABLE 29—AUTHORIZED PILOTS FOR DISTRICT THREE

Item District Three 

2025 Authorized Pilots (total) ........................................................................................................................................................ 24 

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

Pilots Assigned to Undesignated Areas ........................................................................................................................................ 19 

2025 Apprentice Pilots ................................................................................................................................................................... 1 

D. Step 4: Determine Target Pilot 

Compensation Benchmark and 

Apprentice Pilot Wage Benchmark 

In this step, we determine the total 

target Pilot compensation for each area. 

Because we are issuing an interim 

ratemaking this year, we follow the 

procedure outlined in paragraph (b) of 

§ 404.104, which adjusts the existing 

compensation benchmark by inflation. 

First, we adjust the 2024 target 

compensation benchmark of $440,658 

by 3.0 percent for a value of $453,878. 

This accounts for the difference in 

actual third quarter 2024 ECI inflation, 

which is 5.6 percent, and the 2024 PCE 

estimate of 2.6 percent. 31 32 The second 

step accounts for projected inflation 

from 2024 to 2025, which is 2.3 

percent.33 Based on the projected 2025 

inflation estimate, the target 

compensation benchmark for 2025 is 

$464,317 per pilot. The apprentice pilot 

wage benchmark is 36 percent of the 

target Pilot compensation, or $167,154 

($464,317 × 0.36). 

In accordance with § 404.104(c), we 

use the revised target individual 

compensation level to derive the total 

target Pilot compensation by 

multiplying the individual target 

compensation by the estimated number 

of Registered Pilots for District Three, as 

shown in table 30. We estimate that the 

number of Apprentice Pilots needed for 

District Three in the 2024 season will be 

one. The total target wages for 

Apprentice Pilots are allocated with 21 

percent for the designated area, and 79 

percent for the undesignated areas, in 

accordance with the allocation for 

operating expenses. 

TABLE 30—TARGET COMPENSATION FOR DISTRICT THREE

District Three 

Undesignated Designated Total 

Target Pilot Compensation ........................................................................................ $464,317 $464,317 $464,317 

Number of Pilots ........................................................................................................ 19 5 24

Total Target Pilot Compensation ........................................................................ $8,822,023 $2,321,585 $11,143,608 

Target Apprentice Pilot Compensation ...................................................................... $167,154 $167,154 $167,154 

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

Total Target Apprentice Pilot Compensation ..................................................... $132,052 $35,102 $167,154 


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34Moody’s Seasoned Aaa Corporate Bond Yield, 

supra note 17. 

E. Step 5: Project Working Capital Fund 

Next, the Coast Guard calculates the 

working capital fund revenues needed 

for each area. We first add the figures for 

projected operating expenses, total 

target Pilot compensation, and total 

target Apprentice Pilot wage for each 

area, and then we find the preceding 

year’s average annual rate of return for 

new issues of high-grade corporate 

securities. Using Moody’s data, the 

number is 4.8100 percent, rounded.34

By multiplying the two figures, we 

obtain the working capital fund 

contribution for each area, as shown in 

table 31. 

TABLE 31—WORKING CAPITAL FUND CALCULATION FOR DISTRICT THREE

District Three 

Undesignated Designated Total 

Adjusted Operating Expenses (Step 2) ..................................................................... $3,566,457 $925,928 $4,492,385 

Total Target Pilot Compensation (Step 4) ................................................................. 8,822,023 2,321,585 11,143,608 

Total Target Apprentice Pilot Compensation (Step 4) .............................................. 132,052 35,102 167,154 

Total 2025 Expenses .......................................................................................... 12,520,532 3,282,615 15,803,147 

Working Capital Fund (4.8100%) .............................................................................. 602,238 157,894 760,132 

F. Step 6: Project needed revenue 

In this step, the Coast Guard adds all 

the expenses accrued to derive the total 

revenue needed for each area. These 

expenses include the projected 

operating expenses (from Step 2), the 

total target Pilot compensation (from 

Step 4), and the working capital fund 

contribution (from Step 5). The 

calculations are shown in table 32. 

TABLE 32—REVENUE NEEDED FOR DISTRICT THREE

District Three 

Undesignated Designated Total 

Adjusted Operating Expenses (Step 2) ..................................................................... $3,566,457 $925,928 $4,492,385 

Total Target Pilot Compensation (Step 4) ................................................................. 8,822,023 2,321,585 11,143,608 

Total Target Apprentice Pilot Compensation (Step 4) .............................................. 132,052 35,102 167,154 

Working Capital Fund (Step 5) .................................................................................. 602,238 157,894 760,132 

Total Revenue Needed ...................................................................................... 13,122,770 3,440,509 16,563,279 

G. Step 7: Calculate Initial Base Rates 

Having determined the revenue 

needed for each area in the previous six 

steps, we divide that number by the 

expected number of traffic hours to 

develop an hourly rate. 

Step 7 is a two-part process. The first 

part is calculating the 10-year traffic 

average in District Three using the total 

time on task or Pilot bridge hours. To 

calculate the time on task for each 

district, the Coast Guard used billing 

data from SeaPro. Because we calculate 

separate figures for designated and 

undesignated waters, there are two parts 

for each calculation. We show these 

values in table 33. 

TABLE 33—TIME ON TASK FOR DISTRICT THREE

[Hours] 

Year 

District Three 

Undesignated Designated 

2023 ............................................................................................................................................................. 25,690 3,501 

2022 ............................................................................................................................................................. 24,148 3,426 

2021 ............................................................................................................................................................. 18,149 2,484 

2020 ............................................................................................................................................................. 23,678 3,520 

2019 ............................................................................................................................................................. 24,851 3,395 

2018 ............................................................................................................................................................. 19,967 3,455 

2017 ............................................................................................................................................................. 20,955 2,997 

2016 ............................................................................................................................................................. 23,421 2,769 

2015 ............................................................................................................................................................. 22,824 2,696 

2014 ............................................................................................................................................................. 25,833 3,835 

Average ................................................................................................................................................ 22,952 3,208 


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Next, we derive the initial hourly rate 

by dividing the revenue needed by the 

average number of hours for each area. 

This produces an initial rate, which is 

necessary to produce the revenue 

needed for each area, assuming the 

amount of traffic is as expected. We 

present the calculations for District 

Three in table 34. 

TABLE 34—INITIAL RATE CALCULATIONS FOR DISTRICT THREE

Undesignated Designated 

Revenue needed (Step 6) ........................................................................................................................... $13,122,770 $3,440,509 

Average time on task (hours) ...................................................................................................................... 22,952 3,208 

Initial rate ..................................................................................................................................................... $572 $1,073 

H. Step 8: Calculate Average Weighting 

Factors by Area 

In this step, the Coast Guard 

calculates the average weighting factor 

for each designated and undesignated 

area by first collecting the weighting 

factors, set forth in 46 CFR 401.400, for 

each vessel trip. Using the weight factor 

report from SeaPro, we calculate the 

average weighting factor for each area 

using the data from each vessel transit 

from 2014 onward, as shown in tables 

35 and 36. Transits are listed in both the 

bridge hour report and the weight factor 

report. For this step, the Coast Guard 

uses the transits from the weight factor 

report. 

TABLE 35—AVERAGE WEIGHTING FACTOR FOR DISTRICT THREE, UNDESIGNATED AREAS

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits * 

Area 6 

Class 1 (2014) ........................................................................................................... 45 1 45 

Class 1 (2015) ........................................................................................................... 56 1 56 

Class 1 (2016) ........................................................................................................... 136 1 136 

Class 1 (2017) ........................................................................................................... 148 1 148 

Class 1 (2018) ........................................................................................................... 103 1 103 

Class 1 (2019) ........................................................................................................... 173 1 173 

Class 1 (2020) ........................................................................................................... 4 1 4 

Class 1 (2021) ........................................................................................................... 8 1 8 

Class 1 (2022) ........................................................................................................... 116 1 116 

Class 1 (2023) ........................................................................................................... 155 1 155 

Class 2 (2014) ........................................................................................................... 274 1.15 315 

Class 2 (2015) ........................................................................................................... 207 1.15 238 

Class 2 (2016) ........................................................................................................... 236 1.15 271 

Class 2 (2017) ........................................................................................................... 264 1.15 304 

Class 2 (2018) ........................................................................................................... 169 1.15 194 

Class 2 (2019) ........................................................................................................... 279 1.15 321 

Class 2 (2020) ........................................................................................................... 332 1.15 382 

Class 2 (2021) ........................................................................................................... 273 1.15 314 

Class 2 (2022) ........................................................................................................... 276 1.15 317 

Class 2 (2023) ........................................................................................................... 295 1.15 339 

Class 3 (2014) ........................................................................................................... 15 1.3 20 

Class 3 (2015) ........................................................................................................... 8 1.3 10 

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

Class 3 (2017) ........................................................................................................... 19 1.3 25 

Class 3 (2018) ........................................................................................................... 9 1.3 12 

Class 3 (2019) ........................................................................................................... 9 1.3 12 

Class 3 (2020) ........................................................................................................... 4 1.3 5 

Class 3 (2021) ........................................................................................................... 5 1.3 7 

Class 3 (2022) ........................................................................................................... 3 1.3 4 

Class 3 (2023) ........................................................................................................... 5 1.3 7 

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

Class 4 (2015) ........................................................................................................... 375 1.45 544 

Class 4 (2016) ........................................................................................................... 332 1.45 481 

Class 4 (2017) ........................................................................................................... 367 1.45 532 

Class 4 (2018) ........................................................................................................... 337 1.45 489 

Class 4 (2019) ........................................................................................................... 334 1.45 484 

Class 4 (2020) ........................................................................................................... 339 1.45 492 

Class 4 (2021) ........................................................................................................... 356 1.45 516 

Class 4 (2022) ........................................................................................................... 363 1.45 526 

Class 4 (2023) ........................................................................................................... 356 1.45 516 

Total for Area 6 .................................................................................................. 7,189 .............................. 9,205 

Area 8 

Class 1 (2014) ........................................................................................................... 3 1 3 

Class 1 (2015) ........................................................................................................... 0 1 0 

Class 1 (2016) ........................................................................................................... 4 1 4 


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TABLE 35—AVERAGE WEIGHTING FACTOR FOR DISTRICT THREE, UNDESIGNATED AREAS—Continued 

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits * 

Class 1 (2017) ........................................................................................................... 4 1 4 

Class 1 (2018) ........................................................................................................... 0 1 0 

Class 1 (2019) ........................................................................................................... 0 1 0 

Class 1 (2020) ........................................................................................................... 1 1 1 

Class 1 (2021) ........................................................................................................... 5 1 5 

Class 1 (2022) ........................................................................................................... 10 1 10 

Class 1 (2023) ........................................................................................................... 5 1 5 

Class 2 (2014) ........................................................................................................... 177 1.15 204 

Class 2 (2015) ........................................................................................................... 169 1.15 194 

Class 2 (2016) ........................................................................................................... 174 1.15 200 

Class 2 (2017) ........................................................................................................... 151 1.15 174 

Class 2 (2018) ........................................................................................................... 102 1.15 117 

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

Class 2 (2020) ........................................................................................................... 180 1.15 207 

Class 2 (2021) ........................................................................................................... 124 1.15 143 

Class 2 (2022) ........................................................................................................... 89 1.15 102 

Class 2 (2023) ........................................................................................................... 118 1.15 136 

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

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

Class 3 (2016) ........................................................................................................... 7 1.3 9 

Class 3 (2017) ........................................................................................................... 18 1.3 23 

Class 3 (2018) ........................................................................................................... 7 1.3 9 

Class 3 (2019) ........................................................................................................... 6 1.3 8 

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

Class 3 (2021) ........................................................................................................... 1 1.3 1 

Class 3 (2022) ........................................................................................................... 6 1.3 8 

Class 3 (2023) ........................................................................................................... 0 1.3 0 

Class 4 (2014) ........................................................................................................... 243 1.45 352 

Class 4 (2015) ........................................................................................................... 253 1.45 367 

Class 4 (2016) ........................................................................................................... 204 1.45 296 

Class 4 (2017) ........................................................................................................... 269 1.45 390 

Class 4 (2018) ........................................................................................................... 188 1.45 273 

Class 4 (2019) ........................................................................................................... 254 1.45 368 

Class 4 (2020) ........................................................................................................... 265 1.45 384 

Class 4 (2021) ........................................................................................................... 319 1.45 463 

Class 4 (2022) ........................................................................................................... 243 1.45 352 

Class 4 (2023) ........................................................................................................... 268 1.45 389 

Total for Area 8 .................................................................................................. 3,991 .............................. 5,344 

Combined total ............................................................................................ 11,180 .............................. 14,549 

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

* Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses unrounded figures. 

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

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits * 

Class 1 (2014) ........................................................................................................... 27 1 27 

Class 1 (2015) ........................................................................................................... 23 1 23 

Class 1 (2016) ........................................................................................................... 55 1 55 

Class 1 (2017) ........................................................................................................... 62 1 62 

Class 1 (2018) ........................................................................................................... 47 1 47 

Class 1 (2019) ........................................................................................................... 45 1 45 

Class 1 (2020) ........................................................................................................... 15 1 15 

Class 1 (2021) ........................................................................................................... 15 1 15 

Class 1 (2022) ........................................................................................................... 74 1 74 

Class 1 (2023) ........................................................................................................... 68 1 68 

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

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

Class 2 (2016) ........................................................................................................... 174 1.15 200 

Class 2 (2017) ........................................................................................................... 170 1.15 196 

Class 2 (2018) ........................................................................................................... 126 1.15 145 

Class 2 (2019) ........................................................................................................... 162 1.15 186 

Class 2 (2020) ........................................................................................................... 218 1.15 251 

Class 2 (2021) ........................................................................................................... 131 1.15 151 

Class 2 (2022) ........................................................................................................... 162 1.15 186 

Class 2 (2023) ........................................................................................................... 142 1.15 163 


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

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits * 

Class 3 (2014) ........................................................................................................... 15 1.3 20 

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

Class 3 (2016) ........................................................................................................... 6 1.3 8 

Class 3 (2017) ........................................................................................................... 14 1.3 18 

Class 3 (2018) ........................................................................................................... 6 1.3 8 

Class 3 (2019) ........................................................................................................... 3 1.3 4 

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

Class 3 (2021) ........................................................................................................... 2 1.3 3 

Class 3 (2022) ........................................................................................................... 5 1.3 7 

Class 3 (2023) ........................................................................................................... 0 1.3 0 

Class 4 (2014) ........................................................................................................... 321 1.45 465 

Class 4 (2015) ........................................................................................................... 245 1.45 355 

Class 4 (2016) ........................................................................................................... 191 1.45 277 

Class 4 (2017) ........................................................................................................... 234 1.45 339 

Class 4 (2018) ........................................................................................................... 225 1.45 326 

Class 4 (2019) ........................................................................................................... 308 1.45 447 

Class 4 (2020) ........................................................................................................... 336 1.45 487 

Class 4 (2021) ........................................................................................................... 258 1.45 374 

Class 4 (2022) ........................................................................................................... 249 1.45 361 

Class 4 (2023) ........................................................................................................... 300 1.45 435 

Total .................................................................................................................... 4,801 .............................. 6,264 

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

* Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses unrounded figures. 

I. Step 9: Calculate Revised Base Rates 

After considering the impact of the 

weighting factors, we revise the base 

rates in this step so that the total costs 

of pilotage will be equal to the revenue 

needed. To do this, we divide the initial 

base rates calculated in Step 7 by the 

average weighting factors calculated in 

Step 8, as shown in table 37. 

TABLE 37—REVISED BASE RATES FOR DISTRICT THREE

Area Initial rate 

(Step 7) 

Average weighting 

factor 

(Step 8) 

Revised rate 

(initial rate ÷ 

average weighting 

factor) 

District Three: Undesignated ..................................................................................... $572 1.30 $440

District Three: Designated ......................................................................................... 1,073 1.30 825 

J. Step 10: Review and Finalize Rates 

In this step, the Director reviews the 

base pilotage rates calculated in 

§ 404.109 of this part to ensure it meets 

the goal of ensuring safe, efficient, and 

reliable pilotage service. To establish 

this, the Director considers whether the 

rates incorporate appropriate 

compensation for Pilots to handle heavy 

traffic periods and whether there are 

enough Pilots to handle those heavy 

traffic periods. The Director also 

considers whether the rates will cover 

operating expenses and infrastructure 

costs, including average traffic and 

weighting factors. Based on these 

considerations, the Director did not 

propose any alterations to the rates in 

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

and (6) to reflect the rates shown in 

table 38. 

TABLE 38—FINAL RATES FOR DISTRICT THREE

Area Name Final 2024 

pilotage rate 

Final 2025 

pilotage rate 

District Three: Designated ...................................... St. Marys River ...................................................... $836 $825 

District Three: Undesignated .................................. Lakes Huron, Michigan, and Superior ................... 430 440 

VIII. Regulatory Analyses 

We developed this final rule after 

considering numerous statutes and 

Executive orders related to rulemaking. 

A summary of our analyses based on 

these statutes or Executive orders 

follows. 

A. Regulatory Planning and Review 

Executive Orders 12866 (Regulatory 

Planning and Review), as amended by 

Executive Order 14094 (Modernizing 

Regulatory Review), and 13563 

(Improving Regulation and Regulatory 

Review) direct agencies to assess the 

costs and benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits— 

including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and equity. 


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35 88 FR 12226. 36Some vessels entered the Great Lakes multiple 

times in a single year, affecting the average number 

of unique vessels using pilotage services in any 

given year. 

Executive Order 13563 emphasizes the 

importance of quantifying costs and 

benefits, reducing costs, harmonizing 

rules, and promoting flexibility. 

The Office of Management and Budget 

(OMB) has not designated this final rule 

a significant regulatory action under 

section 3(f) of Executive Order 12866, as 

amended by Executive Order 14094. 

Accordingly, OMB has not reviewed 

this regulatory action. The purpose of 

this final rule is to establish new 

pilotage rates, as 46 U.S.C. 9303(f) 

requires that rates be established or 

reviewed and adjusted each year. The 

statute also requires that base rates be 

established by a full ratemaking at least 

once every 5 years, and, in years when 

base rates are not established, they must 

be reviewed and, if necessary, adjusted. 

The Coast Guard concluded the last full 

ratemaking in February of 2023.35 For 

this final rule, the Coast Guard estimates 

an increase in cost of approximately 

$2.88 million to industry. This is 

approximately a 7-percent increase 

because of the change in revenue 

needed in 2025 compared to the 

revenue needed in 2024. Primarily 

driving this 7-percent increase is the 

addition of 3 pilots compared to the 

2024 season, as well as general increases 

in inflation and the rate of return used 

for the working capital fund. See table 

39. 

TABLE 39—ECONOMIC IMPACTS DUE TO RATE CHANGES

Change Description Affected population Costs Benefits 

Rate changes .......... In accordance with 46 U.S.C. 

Chapter 93, the Coast Guard is 

required to review and adjust 

pilotage rates annually.

Owners and operators of 280 

vessels transiting the Great 

Lakes system annually, 61 

United States Great Lakes Pilots, 3 Apprentice Pilots, and 3 

pilot associations.

Increase of $2,879,028 due to 

change in revenue needed for 

2025 ($43,159,694) from revenue needed for 2024 

($40,280,666) as shown in 

table 41.

New rates cover an association’s 

necessary and reasonable operating expenses. Promotes 

safe, efficient, and reliable pilotage service on the Great 

Lakes. Provides fair compensation, adequate training, and 

sufficient rest periods for Pilots. 

Ensures the association receives sufficient revenues to 

fund future improvements. 

The Coast Guard is required to review 

and adjust pilotage rates on the Great 

Lakes annually. See Section II., Basis 

and Purpose, and Regulatory History, of 

this preamble for detailed discussions of 

the legal basis and purpose for this 

rulemaking. Based on our annual review 

for this rulemaking, we are adjusting the 

pilotage rates in 2025 to generate 

sufficient revenues for each district to 

reimburse its necessary and reasonable 

operating expenses, to fairly compensate 

properly trained and rested Pilots, and 

to provide an appropriate working 

capital fund to use for improvements. 

The result is an increase in rates for 

both areas in District One, the 

designated area for District Two, and the 

undesignated area in District Three. 

There is also a decrease in rates for the 

undesignated area for District Two and 

the designated area for District Three. 

These changes lead to a net increase in 

the cost of service to shippers. The 

change in per-unit cost to each 

individual shipper depends on their 

area of operation. 

A detailed discussion of our economic 

impact analysis follows. 

Affected Population 

This final rule affects United States 

Great Lakes Pilots and Apprentice 

Pilots, the 3 pilot associations, and the 

owners and operators of 280 oceangoing 

vessels that transit the Great Lakes 

annually, on average, from 2021 to 2023. 

The Coast Guard estimates that there 

will be 61 Registered Pilots and 3 

Apprentice Pilots during 2025, an 

increase of three Pilots from the 2024 

season. The shippers affected by these 

rate changes are those owners and 

operators of domestic vessels operating 

‘‘on register’’ (engaged in foreign trade) 

and the owners and operators of nonCanadian foreign vessels on routes 

within the Great Lakes system. These 

owners and operators must have Pilots 

or pilotage service as required by 46 

U.S.C. 9302. There is no minimum 

tonnage limit or exemption for these 

vessels. The statute applies only to 

commercial vessels, not to recreational 

vessels. United States-flagged vessels 

not operating on register, and Canadian 

‘‘lakers,’’ which account for most 

commercial shipping on the Great 

Lakes, are not required by 46 U.S.C. 

9302 to have pilots. However, these 

United States- and Canadian-flagged 

lakers may voluntarily choose to engage 

a Great Lakes Registered Pilot. Vessels 

that are U.S.-flagged may opt to have a 

Pilot for varying reasons, such as 

unfamiliarity with designated waters 

and ports, or for insurance purposes. 

The Coast Guard used billing 

information from the years 2021 through 

2023 from SeaPro to estimate the 

average annual number of vessels 

affected by the rate adjustment. SeaPro 

tracks data related to managing and 

coordinating the dispatch of Pilots on 

the Great Lakes and billing in 

accordance with the services. As 

described in Step 7 of the ratemaking 

methodology, we use a 10-year average 

to estimate the traffic. We used 3 years 

of the most recent billing data to 

estimate the affected population. We 

believe that using 3 years of billing data 

is a better representation of the vessel 

population currently using pilotage 

services and impacted by this rule. 

We found that 484 unique vessels 

used pilotage services during the years 

2021 through 2023. That is, these 

vessels had a Pilot dispatched to the 

vessel and billing information was 

recorded in SeaPro. Of these vessels, 

451 were foreign-flagged vessels, and 33 

were U.S.-flagged vessels. U.S.-flagged 

vessels not operating on register are not 

required to have a Registered Pilot, per 

46 U.S.C. 9302, but can voluntarily 

choose to have one. 

Numerous factors affect vessel traffic, 

which varies from year to year. 

Therefore, rather than using the total 

number of vessels over the time period, 

the Coast Guard took an average of the 

unique vessels using pilotage services 

from the years 2021 through 2023 as the 

best representation of vessels estimated 

to be affected by the rates in this final 

rule. From 2021 through 2023, an 

average of 280 vessels used pilotage 

services annually.36 On average, 268 of 

these vessels were foreign-flagged, and 

13 were U.S.-flagged vessels that 

voluntarily opted into the pilotage 

service (these figures are rounded 

averages). 


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37 2024 final rule (89 FR 9066), Table 43. 38Moody’s Seasoned Aaa Corporate Bond Yield, 

supra note 17. 

Total Cost to Shippers 

The rate changes resulting from this 

adjustment to the rates result in a net 

increase in the cost of service to 

shippers. However, the change in perunit cost to each individual shipper 

depends on their area of operation. 

The Coast Guard estimates the effect 

of the rate changes on shippers by 

comparing the total projected revenues 

needed to cover costs in 2024 with the 

total projected revenues to cover costs 

in 2025. We set pilotage rates so that 

pilot associations receive enough 

revenue to cover their necessary and 

reasonable expenses. Shippers pay these 

rates when they engage a Pilot, as 

required by 46 U.S.C. 9302. Therefore, 

the aggregate payments of shippers to 

pilot associations are equal to the 

projected necessary revenues for pilot 

associations. The revenues each year 

represent the total costs that shippers 

must pay for pilotage services. The 

change in revenue from the previous 

year is the additional cost to shippers 

discussed in this rule. 

The impacts of the rate changes on 

shippers are estimated from the district 

pilotage projected revenues (shown in 

tables 8, 20, and 32 of this preamble). 

The Coast Guard estimates that, for 

2025, the projected revenue needed for 

all three districts is $43,159,694. 

To estimate the change in cost to 

shippers from this final rule, the Coast 

Guard compared the 2025 total 

projected revenues to the 2024 projected 

revenues. Because we review and 

prescribe rates for Great Lakes pilotage 

annually, the effects are estimated as a 

single-year cost rather than annualized 

over a 10-year period. In the 2024 final 

rule, we estimated the total projected 

revenue needed for 2024 as 

$40,280,666.37 This is the best 

approximation of 2024 revenues, as, at 

the time of publication of this final rule, 

the Coast Guard does not have enough 

audited data available for 2024 to revise 

these projections. Table 40 shows the 

revenue projections for 2024 and 2025 

and details the additional cost increases 

to shippers by area and district as a 

result of the rate changes on traffic in 

Districts One, Two, and Three. 

TABLE 40—EFFECT OF THE FINAL RULE BY AREA AND DISTRICT

[U.S. Dollars; non-discounted] 

Area Revenue needed 

in 2024 

Revenue needed 

in 2025 

Additional costs 

of this rule 

Total, District One ...................................................................................................... $13,695,935 $14,713,084 $1,017,149 

Total, District Two ...................................................................................................... 10,830,491 11,883,331 1,052,840 

Total, District Three ................................................................................................... 15,754,240 16,563,279 809,039 

System Total ....................................................................................................... 40,280,666 43,159,694 2,879,028 

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

The resulting difference between the 

projected revenue in 2024 and the 

projected revenue in 2025 is the annual 

change in payments from shippers to 

pilots as a result of the rate changes in 

this final rule. The effect of the rate 

changes to shippers varies by area and 

district. After considering the change in 

pilotage rates, the rate changes will lead 

to affected shippers operating in District 

One experiencing an increase in 

payments of $1,017,149 over the 

previous year. Affected shippers 

operating in District Two and District 

Three will experience an increase in 

payments of $1,052,840 and $809,039, 

respectively, when compared with 2024. 

The overall adjustment in payments will 

increase payments by shippers of 

$2,879,028 across all three districts (a 7- 

percent increase when compared with 

2024). Again, because the Coast Guard 

reviews and sets rates for Great Lakes 

pilotage annually, we estimate the 

impacts as single-year costs, rather than 

annualizing them over a 10-year period. 

Table 41 shows the difference in 

revenue by revenue-component from 

2024 to 2025 and presents each revenuecomponent as a percentage of the total 

revenue needed. In both 2024 and 2025, 

the largest revenue component was 

target pilotage compensation (63 percent 

of total revenue needed in 2024, and 66 

percent of total revenue needed in 

2025), followed by operating expenses 

(30 percent of total revenue needed in 

2024, and 29 percent of total revenue 

needed in 2025). The large increase in 

the working capital fund, 26 percent 

from 2024 to 2025, is driven by an 

increase in the Target Rate of Return on 

Investment, from 4.0742 percent in 2022 

to 4.8100 percent in 2023.38

TABLE 41—DIFFERENCE IN REVENUE BY REVENUE-COMPONENT

Revenue component 

Revenue 

needed in 

2024 

Percentage 

of total 

revenue 

needed in 

2024 

Revenue 

needed in 

2025 

Percentage 

of total 

revenue 

needed in 

2025 

Difference 

(2025 revenue— 

2024 revenue) 

Percentage 

change 

from 

previous 

year 

Adjusted Operating Expenses .......................................................... $12,193,810 30 $12,354,186 29 $160,376 1 

Total Target Pilot Compensation ...................................................... 25,558,164 63 28,323,337 66 2,765,173 11 

Total Target Apprentice Pilot Compensation .................................... 951,822 2 501,462 1 (450,360) (47) 

Working Capital Fund ....................................................................... 1,576,870 4 1,980,709 5 403,839 26 

Total Revenue Needed .............................................................. 40,280,666 100 43,159,694 100 2,879,028 7 

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

As stated previously, we estimate that 

there will be a total increase of 

$2,879,028 in revenue needed by the 

pilot associations. This represents an 

increase in revenue needed for target 

Pilot compensation of $2,765,173; a 


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39ECI, supra note 14. 40Median Core PCE Inflation June Projection, 

supra note 15. 

41Median Core PCE Inflation June Projection, 

supra note 16. 

decrease in revenue needed for the total 

target Apprentice Pilot wage benchmark 

of ($450,360); an increase in the revenue 

needed for adjusted operating expenses 

of $160,376; and an increase in the 

revenue needed for the working capital 

fund of $403,839. 

The change in revenue needed for 

Pilot compensation, $2,765,173, is due 

to three factors: (1) The changes to 

adjust 2024 pilotage compensation to 

account for the difference between 

actual ECI inflation 39 (5.6 percent) and 

predicted PCE inflation 40 (2.6 percent) 

for 2024; (2) projected inflation of 

pilotage compensation in Step 2 of the 

methodology, using predicted inflation 

through 2025; 41 and (3) an increase of 

three authorized Pilots. 

The target compensation is $464,317 

per Pilot in 2025, compared to $440,658 

in 2024. The changes modify the 2024 

Pilot compensation to account for the 

difference between predicted and actual 

inflation and will increase the 2024 

target compensation value by 3.0 

percent. As shown in table 42, this 

inflation adjustment increases total 

compensation by $13,220 per Pilot, and 

the total revenue needed by $806,404, 

when accounting for all 61 Pilots. 

TABLE 42—CHANGE IN REVENUE RESULTING FROM THE CHANGE TO INFLATION OF PILOT COMPENSATION CALCULATION

IN STEP 4 

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

Adjusted 2024 Compensation ($440,658 × 1.03) ......................................................................................................................... 453,878 

Difference between Adjusted Target 2024 Compensation and Target 2024 Compensation ($453,878¥$440,658) .................. 13,220 

Increase in total Revenue for 61 Pilots ($13,220 × 61) ................................................................................................................ 806,404 

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

Similarly, table 43 shows the impact 

of the difference between predicted and 

actual inflation on the target Apprentice 

Pilot compensation benchmark. The 

inflation adjustment increases the 

compensation benchmark by $4,759 per 

Apprentice Pilot, and the total revenue 

needed by $14,277 when accounting for 

all three Apprentice Pilots. 

TABLE 43—CHANGE IN REVENUE RESULTING FROM THE CHANGE TO INFLATION OF APPRENTICE PILOT COMPENSATION

CALCULATION IN STEP 4 

2024 Target Apprentice Pilot Compensation ................................................................................................................................ $158,637 

Adjusted 2024 Compensation ($158,637 × 1.03) ......................................................................................................................... 163,396 

Difference between Adjusted Target 2024 Compensation and Target Compensation ($163,396¥$158,637) ........................... 4,759 

Increase in total Revenue for Apprentices ($4,759 × 3) ............................................................................................................... 14,277 

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

The Coast Guard predicts that 61 

Pilots will be needed for the 2025 

season. This is an increase of three 

Pilots from the 2024 season. Table 44 

shows the increase of $1,353,292 in 

revenue needed for Pilot compensation. 

To avoid double counting, this value 

excludes the change in revenue 

resulting from the change to adjust 2024 

Pilot compensation to account for the 

difference between actual and predicted 

inflation. 

TABLE 44—CHANGE IN REVENUE RESULTING FROM INCREASE OF THREE PILOTS

2025 Target Compensation ........................................................................................................................................................... $464,317 

Total Number of New Pilots .......................................................................................................................................................... 3 

Total Cost of new Pilots (464,317 × 3) ......................................................................................................................................... $1,392,951 

Difference between Adjusted Target 2024 Compensation and Target 2024 Compensation (453,878¥440,658) ...................... $13,220 

Increase in total Revenue for 3 Pilots (13,220 × 3) ...................................................................................................................... $39,659 

Net Increase in total Revenue for 3 Pilots (1,392,951¥39,659) .................................................................................................. $1,353,292 

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


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42The 2024 projected revenues are from the 2024 

final rule (89 FR 9038), tables 11, 23, and 35. The 

2025 projected revenues are from tables 8, 20, and 

32 of this final rule. 

Similarly, the Coast Guard predicts 

that three Apprentice Pilots will be 

needed for the 2025 season. This will be 

a decrease of three Apprentice Pilots 

from the 2024 season. Table 45 shows 

the decrease of ($487,185) in revenue 

needed solely for Apprentice Pilot 

compensation. To avoid double 

counting, this value excludes the change 

in revenue resulting from the change to 

adjust 2024 Apprentice Pilot 

compensation to account for the 

difference between actual and predicted 

inflation. 

TABLE 45—CHANGE IN REVENUE RESULTING FROM DECREASE OF THREE APPRENTICE PILOTS

2025 Apprentice Target Compensation ......................................................................................................................................... $167,154 

Total Number of New Apprentices ................................................................................................................................................ ¥3 

Total Cost of new Apprentices ($167,154 × ¥3) .......................................................................................................................... ($501,462) 

Difference between Adjusted Target 2024 Compensation and Target 2024 Compensation ($163,396¥$158,637) .................. $4,759 

Increase in total Revenue for –3 Apprentices ($4,759 × ¥3) ...................................................................................................... ($14,277) 

Net Increase in total Revenue for –3 Apprentices (¥$501,462¥¥$14,277) .............................................................................. ($487,185) 

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

Another $605,477 increase is the 

result of increasing compensation for 

the 61 Pilots, to account for future 

inflation of 2.3 percent in 2025. This 

increases total compensation by $10,439 

per Pilot, as shown in table 46. 

TABLE 46—CHANGE IN REVENUE RESULTING FROM INFLATING 2024 COMPENSATION TO 2025 

Adjusted 2024 Compensation ....................................................................................................................................................... $453,878 

2025 Target Compensation ($453,878 × 1.023) ........................................................................................................................... 464,317 

Difference between Adjusted 2024 Compensation and Target 2025 Compensation ($464,317¥$453,878) ............................. 10,439 

Increase in total Revenue for 58 Pilots ($10,439 × 58) ................................................................................................................ 605,477 

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

Similarly, a $22,548 increase is the 

result of increasing compensation for 

the three Apprentice Pilots, to account 

for future inflation of 2.3 percent in 

2025. This increases total compensation 

by $3,758 per Apprentice Pilot, as 

shown in table 47. 

TABLE 47—CHANGE IN REVENUE RESULTING FROM INFLATING 2024 APPRENTICE PILOT COMPENSATION TO 2025 

Adjusted 2024 Compensation ....................................................................................................................................................... $163,396 

2025 Target Compensation ($464,317 × 36%) ............................................................................................................................. 167,154 

Difference between Adjusted Compensation and Target Compensation ($167,154¥$163,396) ................................................ 3,758 

Increase in total Revenue for 6 Apprentices ($3,758 × 6) ............................................................................................................ 22,548 

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

Table 48 presents the percentage 

change in revenue by area and revenuecomponent, excluding surcharges, as they are applied at the district level.42


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TABLE 48—DIFFERENCE IN

REVENUE BY

REVENUE-COMPONENT AND

AREA

Adjusted operating 

expenses 

Total target pilot 

compensation 

Total target apprentice pilot 

compensation 

Working capital 

fund 

Total revenue 

needed 

2024 2025 

Percentage 

change 

2024 2025 

Percentage 

change 

2024 2025 

Percentage 

change 

2024 2025 

Percentage 

change 

2024 2025 

Percentage 

change 

District One: Designated ................ $2,851,215 $2,750,620 (4) $4,406,580 $5,107,487 16 $285,547 $100,292 (65) $307,331 $382,799 25 $7,850,673 $8,341,198 6.2 District One: Undesignated ............ 1,900,809 1,833,749 (4) 3,525,264 4,178,853 19 190,364 66,862 (65) 228,825 292,422 28 5,845,262 6,371,886 9.0 District Two: Undesignated ............ 1,102,673 1,310,973 19 3,525,264 3,250,219 (8) 63,455 66,862 5 191,137 222,609 16 4,882,529 4,850,663 (0.7) District Two: Designated ................ 1,654,014 1,966,459 19 3,965,922 4,643,170 17 95,182 100,292 5 232,845 322,747 39 5,947,963 7,032,668 18.2 District Three: Undesignated ............ 3,679,209 3,566,457 (3) 7,931,844 8,822,023 11 250,646 132,052 (47) 483,269 602,238 25 12,344,968 13,122,770 6.3 District Three: Designated ................ 1,005,891 925,928 (8) 2,203,290 2,321,585 5 66,628 35,102 (47) 133,463 157,894 18 3,409,272 3,440,509 0.9 

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


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43See Resources for Reference Solutions Users, 

ReferenceUSA, https://resource.referenceusa.com; 

accessed 04/22/2024. 

44See Table of Size Standards, https://

www.sba.gov/document/support--table-sizestandards; accessed 05/01/24. SBA has established 

a ‘‘Table of Size Standards’’ for small businesses 

that sets small business size standards by NAICS 

code. A size standard, which is usually stated in 

number of employees or average annual receipts 

(‘‘revenues’’), represents the largest size that a 

business (including its subsidiaries and affiliates) 

may be in order to remain classified as a small 

business for SBA and Federal contracting programs. 

Benefits 

This final rule allows the Coast Guard 

to meet the requirements in 46 U.S.C. 

9303 to review the rates for pilotage 

services on the Great Lakes. The rate 

changes promote safe, efficient, and 

reliable pilotage service on the Great 

Lakes by (1) ensuring that rates cover an 

association’s operating expenses; (2) 

providing fair Pilot compensation, 

adequate training, and sufficient rest 

periods for Pilots; and (3) ensuring that 

pilot associations produce enough 

revenue to fund future improvements. 

The rate changes also help recruit and 

retain Pilots, which ensures enough 

Pilots to meet peak shipping demand, 

helping to reduce delays caused by Pilot 

shortages. 

B. Small Entities 

Under the Regulatory Flexibility Act, 

5 U.S.C. 601–612, we considered 

whether this final rule will have a 

significant economic impact on a 

substantial number of small entities. 

The term ‘‘small entities’’ comprises 

small businesses, not-for-profit 

organizations that are independently 

owned and operated and are not 

dominant in their fields, and 

governmental jurisdictions with 

populations of less than 50,000. 

For this final rule, the Coast Guard 

reviewed recent company size and 

ownership data for the vessels identified 

in SeaPro, and we reviewed business 

revenue and size data provided by 

publicly available sources such as 

ReferenceUSA.43 As described in 

Section VIII., Regulatory Analyses, of 

this preamble, we found that 484 unique 

vessels used pilotage services during the 

years 2021 through 2023. These vessels 

are owned by 63 entities, of which 49 

are foreign entities that operate 

primarily outside the United States, and 

the remaining 14 entities are U.S. 

entities. We compared the revenue and 

employee data found in the company 

search to the Small Business 

Administration’s (SBA) small business 

threshold, as defined in the SBA’s 

‘‘Table of Size Standards’’ for small 

businesses, to determine how many of 

these companies are considered small 

entities.44 Table 49 shows the North 

American Industry Classification 

System (NAICS) codes of the U.S. 

entities, and the small entity standard 

size established by the SBA. 

TABLE 49—NAICS CODES AND SMALL ENTITIES SIZE STANDARDS

NAICS Description Small entity size 

standard 

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

423860 .................................................... Transportation Equipment and Supplies (except Motor Vehicle) Merchant

Wholesalers.

175 Employees. 

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

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

541611 .................................................... Administrative Management and General Management Consulting Services ...... $24,500,000. 

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

562910 .................................................... Remediation Services ............................................................................................ $25,000,000. 

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

Of the 14 U.S. entities, four exceed 

the SBA’s small business standards for 

small entities. To estimate the potential 

impact on the remaining 10 small 

entities, the Coast Guard used their 2023 

invoice data to estimate their pilotage 

costs in 2025. We increased their 2023 

costs to account for the changes in 

pilotage rates resulting from this final 

rule and the 2024 final rule. We 

estimated the change in cost to these 

entities resulting from this final rule by 

subtracting their estimated 2024 

pilotage costs from their estimated 2025 

pilotage costs and found the average 

costs to small firms are approximately 

$13,643, with a range of $1,411 to 

$42,691. We then compared the 

estimated change in pilotage costs 

between 2024 and 2025 with each firm’s 

annual revenue. In all but one case, the 

impact of the change in estimated 

pilotage expenses will be below 1 

percent of revenues. For one entity, the 

impact will be 6.9 percent of revenues. 

In addition to the owners and 

operators discussed previously, three 

U.S. entities that receive revenue from 

pilotage services will be affected by this 

final rule. These are the three pilot 

associations that provide and manage 

pilotage services within the Great Lakes 

districts. District One, SLSPA, uses the 

NAICS code ‘‘Inland Water Freight 

Transportation’’ with a small-entity size 

standard of 1,050 employees. District 

Two, ‘‘LPA’’ uses the NAICS code, 

‘‘Business Associations’’ with a smallentity size standard of $15,500,000 in 

revenue. District Three, ‘‘WGLPA’’ did 

not have a registered NAICS code 

through ReferenceUSA. All three 

associations are considered small 

entities. 

Finally, the Coast Guard did not find 

any small not-for-profit organizations 

that are independently owned and 

operated and are not dominant in their 

fields that will be impacted by this final 

rule. We also did not find any small 

governmental jurisdictions with 

populations of fewer than 50,000 people 

that will be impacted by this final rule. 

Based on this analysis, we conclude this 

final rule will not have a significant 

economic impact on a substantial 

number of small entities. 

Therefore, the Coast Guard certifies 

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

will not have a significant economic 

impact on a substantial number of small 

entities. 

C. Assistance for Small Entities 

Under section 213(a) of the Small 

Business Regulatory Enforcement 

Fairness Act of 1996, Public Law 104– 

121, we want to assist small entities in 

understanding this final rule so that 

they can better evaluate its effects on 

them and participate in the rulemaking. 

The Coast Guard will not retaliate 

against small entities that question or 

complain about this final rule or any 

policy or action of the Coast Guard. 

Small businesses may send comments 

on the actions of Federal employees 


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Federal Register / Vol. 89, No. 240 / Friday, December 13, 2024 / Rules and Regulations 100837 

who enforce, or otherwise determine 

compliance with, Federal regulations to 

the Small Business and Agriculture 

Regulatory Enforcement Ombudsman 

and the Regional Small Business 

Regulatory Fairness Boards. The 

Ombudsman evaluates these actions 

annually and rates each agency’s 

responsiveness to small business. If you 

wish to comment on actions by 

employees of the Coast Guard, call 1– 

888–REG–FAIR (1–888–734–3247). 

D. Collection of Information 

This final rule calls for no new 

collection of information under the 

Paperwork Reduction Act of 1995, 44 

U.S.C. 3501–3520. 

E. Federalism 

A final rule has implications for 

federalism under Executive Order 13132 

(Federalism) if it has a substantial direct 

effect on States, on the relationship 

between the National Government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of government. We have 

analyzed this final rule under Executive 

Order 13132 and have determined that 

it is consistent with the fundamental 

federalism principles and preemption 

requirements described in Executive 

Order 13132. Our analysis follows. 

Congress directed the Coast Guard to 

establish ‘‘rates and charges for pilotage 

services.’’ 46 U.S.C. 9303(f). This 

regulation is issued pursuant to that 

statute and is preemptive of State law as 

specified in 46 U.S.C. 9306. Under 46 

U.S.C. 9306, a ‘‘State or political 

subdivision of a State may not regulate 

or impose any requirement on pilotage 

on the Great Lakes.’’ As a result, States 

or local governments are expressly 

prohibited from regulating within this 

category. Therefore, this final rule is 

consistent with the fundamental 

federalism principles and preemption 

requirements described in Executive 

Order 13132. 

F. Unfunded Mandates 

The Unfunded Mandates Reform Act 

of 1995, 2 U.S.C. 1531–1538, requires 

Federal agencies to assess the effects of 

their discretionary regulatory actions. In 

particular, the Act addresses actions 

that may result in the expenditure by a 

State, local, or tribal government, in the 

aggregate, or by the private sector of 

$100 million (adjusted for inflation) or 

more in any one year. Although this 

final rule will not result in such an 

expenditure, we do discuss the effects of 

this final rule elsewhere in this 

preamble. 

G. Taking of Private Property 

This final rule will not cause a taking 

of private property or otherwise have 

taking implications under Executive 

Order 12630 (Governmental Actions and 

Interference with Constitutionally 

Protected Property Rights). 

H. Civil Justice Reform 

This final rule meets applicable 

standards in sections 3(a) and 3(b)(2) of 

Executive Order 12988, (Civil Justice 

Reform), to minimize litigation, 

eliminate ambiguity, and reduce 

burden. 

I. Protection of Children 

We have analyzed this final rule 

under Executive Order 13045 

(Protection of Children from 

Environmental Health Risks and Safety 

Risks). This final rule is not an 

economically significant final rule and 

will not create an environmental risk to 

health or risk to safety that might 

disproportionately affect children. 

J. Indian Tribal Governments 

This final rule does not have tribal 

implications under Executive Order 

13175 (Consultation and Coordination 

with Indian Tribal Governments) 

because it will not have a substantial 

direct effect on one or more Indian 

tribes, on the relationship between the 

Federal Government and Indian tribes, 

or on the distribution of power and 

responsibilities between the Federal 

Government and Indian tribes. 

K. Energy Effects 

We have analyzed this final rule 

under Executive Order 13211 (Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use). We have 

determined that it is not a ‘‘significant 

energy action’’ under that order because 

it is not a ‘‘significant regulatory action’’ 

under Executive Order 12866 and is not 

likely to have a significant adverse effect 

on the supply, distribution, or use of 

energy, and the Administrator of OMB’s 

Office of Information and Regulatory 

Affairs has not designated it as a 

significant energy action. 

L. Technical Standards 

The National Technology Transfer 

and Advancement Act, codified as a 

note to 15 U.S.C. 272, directs agencies 

to use voluntary consensus standards in 

their regulatory activities unless the 

agency provides Congress, through 

OMB, with an explanation of why using 

these standards would be inconsistent 

with applicable law or otherwise 

impractical. Voluntary consensus 

standards are technical standards (e.g., 

specifications of materials, performance, 

design, or operation; test methods; 

sampling procedures; and related 

management systems practices) that are 

developed or adopted by voluntary 

consensus standards bodies. 

This final rule does not use technical 

standards. Therefore, we did not 

consider the use of voluntary consensus 

standards. 

M. Environment 

We have analyzed this final rule 

under Department of Homeland 

Security Management Directive 023–01, 

Rev. 1, associated implementing 

instructions, and Environmental 

Planning COMDTINST 5090.1 (series), 

which guide the Coast Guard in 

complying with the National 

Environmental Policy Act of 1969 (42 

U.S.C. 4321–4370f), and have 

determined that this action is one of a 

category of actions that do not 

individually or cumulatively have a 

significant effect on the human 

environment. A Record of 

Environmental Consideration 

supporting this determination is 

available in the docket. For instructions 

on locating the docket, see the 

ADDRESSES section of this preamble. 

This final rule is categorically excluded 

under paragraphs A3 and L54 of 

Appendix A, Table 1 of the Department 

of Homeland Security (DHS) Instruction 

Manual 023–01–001–01, Rev. 1. 

Paragraph A3 pertains to the 

promulgation of rules of the following 

nature: (a) those of a strictly 

administrative or procedural nature; (b) 

those that implement, without 

substantive change, statutory or 

regulatory requirements; (c) those that 

implement, without substantive change, 

procedures, manuals, and other 

guidance documents; (d) those that 

interpret or amend an existing 

regulation without changing its 

environmental effect; (e) those that 

provide technical guidance on safety 

and security matters; and (f) those that 

provide guidance for the preparation of 

security plans. Paragraph L54 pertains 

to regulations which are editorial or 

procedural. 

This final rule involves adjusting the 

pilotage rates for 2025 to account for 

changes in district operating expenses, 

changes in the number of pilots, and 

anticipated inflation. All changes are 

consistent with the Coast Guard’s 

maritime safety missions. 

List of Subjects in 46 CFR Part 401 

Administrative practice and 

procedure, Great Lakes; Navigation 

(water), Penalties, Reporting and 

recordkeeping requirements, Seamen. 


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100838 Federal Register / Vol. 89, No. 240 / Friday, December 13, 2024 / Rules and Regulations 

For the reasons discussed in the 

preamble, the Coast Guard amends 46 

CFR part 401 as follows: 

PART 401—GREAT LAKES PILOTAGE 

REGULATIONS 

■ 1. The authority citation for part 401 

is revised to read as follows: 

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

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

00170.1, Revision No. 01.4, paragraphs 

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

■ 2. Amend § 401.405 by revising 

paragraphs (a)(1) through (6) to read as 

follows: 

§ 401.405 Pilotage rates and charges. 

(a) * * * 

(1) The St. Lawrence River is $986; 

(2) Lake Ontario is $643; 

(3) Lake Erie is $576; 

(4) The navigable waters from 

Southeast Shoal to Port Huron, MI is 

$753; 

(5) Lakes Huron, Michigan, and 

Superior is $440; and 

(6) The St. Marys River is $825. 

* * * * * 

Dated: December 6, 2024. 

A.M. Beach, 

Captain, U.S. Coast Guard, Acting, Assistant 

Commandant for Prevention Policy. 

[FR Doc. 2024–29128 Filed 12–12–24; 8:45 am] 

BILLING CODE 9110–04–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Parts 1, 90, 95, and 97 

[ET Docket No. 19–138; FCC 24–123; FR 

ID 265055] 

Use of the 5.850–5.925 GHz Band 

AGENCY: Federal Communications 

Commission. 

ACTION: Final rule. 

SUMMARY: In this document, the Federal 

Communications Commission 

(Commission) adopts rules and takes 

other steps to further address the 

transition of 5.9 GHz Intelligent 

Transportation System (ITS) operations 

from Dedicated Short Range 

Communications (DSRC)-based 

technology to cellular-vehicle-toeverything (C–V2X)-based technology. 

Specifically, the Commission adopts 

technical and operational rules 

governing devices using C–V2X-based 

technology, eliminates the DSRC 

requirement for communications zone 

designations, finalizes the timeline for 

sunsetting the use of DSRC-based 

technology, addresses the issue of 

additional spectrum allocations for ITS 

use, addresses the issue of reimbursing 

the transition costs of DSRC 

incumbents, and encourages the 

development of industry standards. 

DATES: This final rule is effective 

February 11, 2025. Existing licenses for 

DSRC systems may be renewed as 

necessary following this effective date 

but only for a period not to exceed 

December 14, 2026. 

FOR FURTHER INFORMATION CONTACT: 

Jamie Coleman of the Office of 

Engineering and Technology, at 

Jamie.Coleman@fcc.gov or 202–418– 

2705. 

SUPPLEMENTARY INFORMATION: This is a 

summary of the Commission’s Second 

Report and Order, ET Docket No. 19– 

138, FCC 24–123, adopted on November 

20, 2024, and released on November 21, 

2024. The full text of this document is 

available for public inspection and can 

be downloaded at https://docs.fcc.gov/ 

public/attachments/FCC-24-123A1.pdf. 

Alternative formats are available for 

people with disabilities (Braille, large 

print, electronic files, audio format) by 

sending an email to fcc504@fcc.gov or 

calling the Commission’s Consumer and 

Governmental Affairs Bureau at (202) 

418–0530 (voice), (202) 418–0432 

(TTY). 

Procedural Matters 

Regulatory Flexibility Act. The 

Regulatory Flexibility Act of 1980, as 

amended (RFA), requires that an agency 

prepare a regulatory flexibility analysis 

for notice and comment rulemakings, 

unless the agency certifies that ‘‘the rule 

will not, if promulgated, have a 

significant economic impact on a 

substantial number of small entities.’’ 

Accordingly, we have prepared a Final 

Regulatory Flexibility Analysis (FRFA) 

concerning the possible impact of the 

rule changes contained in the Second 

Report and Order on small entities. The 

FRFA is set forth in Appendix B of the 

FCC document, https://docs.fcc.gov/ 

public/attachments/FCC-24-123A1.pdf. 

Congressional Review Act. The 

Commission has determined, and the 

Administrator of the Office of 

Information and Regulatory Affairs, 

Office of Management and Budget 

concurs, that this rule is ‘‘major’’ under 

the Congressional Review Act, 5 U.S.C. 

804(2). The Commission will send a 

copy of this Second Report and Order 

to Congress and the Government 

Accountability Office pursuant to 5 

U.S.C. 801(a)(1)(A). 

Synopsis 

Introduction 

The Intelligent Transportation System 

(ITS) holds promise to improve 

transportation safety and mobility by 

integrating advanced communications 

technologies into vehicles and 

infrastructure. The connected vehicle 

ecosystem of the future will make the 

nation’s transportation system more 

flexible, resilient, and safe. This 

ecosystem requires technical and 

operational rules governing devices 

using C–V2X (cellular-vehicle-toeverything) based technology. In the 

First Report and Order of the Federal 

Communications Commission’s (FCC) 

proceeding, 86 FR 23281 (May 1, 2021), 

the Commission retained the upper 30 

megahertz portion (5.895–5.925 GHz) of 

the 5.850–5.925 GHz (5.9 GHz) band for 

ITS operations. The Commission also 

required the ITS service to transition 

from Dedicated Short Range 

Communications (DSRC)-based 

technology to C–V2X-based technology 

as the connected mobility platform for 

implementing the future of ITS 

communications in the United States. In 

the Second Report and Order, the 

Commission further addresses the 

transition of 5.9 GHz ITS operations 

from DSRC to C–V2X by codifying C– 

V2X technical parameters in the 

Commission’s rules, including band 

usage, message priority, and channel 

bandwidth. The Commission 

promulgates rules governing equivalent 

isotropically radiated power (EIRP) and 

out-of-band emissions (OOBE) limits for 

C–V2X on-board units (OBUs) and 

roadside units (RSUs), and antenna 

height limits for RSUs. In addition, the 

Commission encourages the 

development of industry standards and 

finalizes the timeline for sunsetting the 

use of DSRC-based technology. Finally, 

the Commission addresses the issues of 

additional spectrum allocations for ITS 

use and reimbursing the transition costs 

of DSRC incumbents. 

Background 

The Commission adopted the First 

Report and Order in 2020, wherein it 

concluded that the most efficient use of 

the 75 megahertz of spectrum in the 5.9 

GHz band would be achieved by 

expanding unlicensed operations in the 

lower 45 megahertz of the band (5.850– 

5.895 GHz), and designating the upper 

30 megahertz of the band (5.895–5.925 

GHz) for the ITS service using C–V2X 

technology. Among other 

considerations, the Commission made 

this decision because (1) the DSRC 

services once contemplated for 

operations across the full 5.9 GHz band 


khammond on DSK9W7S144PROD with RULES