Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Proposed Rules 51047 

individual’s rights or obligations. 

Deletion of a site from the NPL does not 

in any way alter EPA’s right to take 

enforcement actions, as appropriate. 

The NPL is designed primarily for 

informational purposes and to assist 

EPA management. Section 300.425(e)(3) 

of the NCP states that the deletion of a 

site from the NPL does not preclude 

eligibility for future response actions, 

should future conditions warrant such 

actions. 

IV. Basis for Full Site or Partial Site 

Deletion 

The site to be deleted from the NPL, 

the location of the site, and docket 

number with information including 

reference documents with the rationale 

and data principally relied upon by the 

EPA to determine that the Superfund 

response is complete is specified in 

Table 1. The NCP permits activities to 

occur at a deleted site or that media or 

parcel of a partially deleted site, 

including operation and maintenance of 

the remedy, monitoring, and five-year 

reviews. These activities for the site are 

entered in Table 1, if applicable, under 

Footnote such that; 1 = site has 

continued operation and maintenance of 

the remedy, 2 = site receives continued 

monitoring, and 3 = site five-year 

reviews are conducted. 

TABLE 1 

Site name City/county, state Type Docket no. Footnote 

Beckman Instruments .......................... Porterville, CA ..................................... Full ......... EPA–HQ–SFUND–2021–0485 ............

Table 2 includes information 

concerning whether the full site is 

proposed for deletion from the NPL or 

a description of the area, media or 

Operable Units (OUs) of the NPL site 

proposed for partial deletion from the 

NPL, and an email address to which 

public comments may be submitted if 

the commenter does not comment using 

https://www.regulations.gov. 

TABLE 2 

Site name Full site deletion (full) or media/parcels/ 

description for partial deletion 

Email address for public 

comments 

Beckman Instruments ........................................ Full .................................................................... Hadlock.holly@epa.gov. 

EPA maintains the NPL as the list of 

sites that appear to present a significant 

risk to public health, welfare, or the 

environment. Deletion from the NPL 

does not preclude further remedial 

action. Whenever there is a significant 

release from a site deleted from the NPL, 

the deleted site may be restored to the 

NPL without application of the hazard 

ranking system. Deletion of a site from 

the NPL does not affect responsible 

party liability in the unlikely event that 

future conditions warrant further 

actions. 

List of Subjects in 40 CFR Part 300 

Environmental protection, Air 

pollution control, Chemicals, Hazardous 

substances, Hazardous waste, 

Intergovernmental relations, Natural 

resources, Oil pollution, Penalties, 

Reporting and recordkeeping 

requirements, Superfund, Water 

pollution control, Water supply. 

Authority: 33 U.S.C. 1251 et seq.; 42 U.S.C. 

9601–9657; E.O. 13626, 77 FR 56749, 3 CFR, 

2013 Comp., p. 306; E.O. 12777, 56 FR 54757, 

3 CFR, 1991 Comp., p. 351; E.O. 12580, 52 

FR 2923, 3 CFR, 1987 Comp., p. 193. 

Dated: September 2, 2021. 

Larry Douchand, 

Office Director, Office of Superfund 

Remediation and Technology Innovation. 

[FR Doc. 2021–19449 Filed 9–13–21; 8:45 am] 

BILLING CODE 6560–50–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

46 CFR Parts 401 and 404 

[USCG–2021–0431] 

RIN 1625–AC70 

Great Lakes Pilotage Rates—2022 

Annual Review and Revisions to 

Methodology 

AGENCY: Coast Guard, DHS. 

ACTION: Notice of proposed rulemaking; 

request for comments. 

SUMMARY: In accordance with the 

statutory provisions enacted by the 

Great Lakes Pilotage Act of 1960, the 

Coast Guard is proposing new base 

pilotage rates for the 2022 shipping 

season. This proposed rule would adjust 

the pilotage rates to account for changes 

in district operating expenses, an 

increase in the number of pilots, and 

anticipated inflation. In addition, this 

proposed rule would make a policy 

change to always round up in the 

staffing model. The Coast Guard is also 

proposing methodology changes to 

factor in an apprentice pilot’s 

compensation benchmark for the 

estimated number of apprentice pilots 

with a limited registration. The Coast 

Guard estimates that this proposed rule 

would result in a 12-percent increase in 

pilotage operating costs compared to the 

2021 season. 

DATES: Comments and related material 

must be received by the Coast Guard on 

or before October 14, 2021. 

ADDRESSES: You may submit comments 

identified by docket number USCG– 

2021–0431 using the Federal Decision 

Making Portal at https://

www.regulations.gov. See the ‘‘Public 

Participation and Request for 

Comments’’ portion of the 

SUPPLEMENTARY INFORMATION section for 

further instructions on submitting 

comments. 

FOR FURTHER INFORMATION CONTACT: For 

information about this document, call or 

email Mr. Brian Rogers, Commandant 

(CG–WWM–2), Coast Guard; telephone 

202–372–1535, email Brian.Rogers@

uscg.mil, or fax 202–372–1914. 

SUPPLEMENTARY INFORMATION: 

Table of Contents for Preamble 

I. Public Participation and Request for 

Comments 

II. Abbreviations 

III. Executive Summary 

IV. Basis and Purpose 

V. Background 

VI. Discussion of Proposed Methodological 

and Other Changes 

A. Proposed Changes to the Staffing Model 


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

Sections 9301–9308. 

B. Apprentice Pilots’ Wage Benchmark for 

Conducting Pilotage While Using a 

Limited Registration 

C. Apprentice Pilots’ Expenses and 

Benefits as Approved Operating 

Expenses 

VII. Discussion of Proposed 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. Public Participation and Request for 

Comments 

The Coast Guard views public 

participation as essential to effective 

rulemaking, and will consider all 

comments and material received during 

the comment period. Your comment can 

help shape the outcome of this 

rulemaking. If you submit a comment, 

please include the docket number for 

this rulemaking, indicate the specific 

section of this document to which each 

comment applies, and provide a reason 

for each suggestion or recommendation. 

Submitting comments. We encourage 

you to submit comments through the 

Federal Decision Making Portal at 

https://www.regulations.gov. To do so, 

go to https://www.regulations.gov, type 

USCG–2021–0431 in the search box and 

click ‘‘Search.’’ Next, look for this 

document in the Search Results column, 

and click on it. Then click on the 

Comment option. If you cannot submit 

your material by using https://

www.regulations.gov, call or email the 

person in the FOR FURTHER INFORMATION

CONTACT section of this proposed rule 

for alternate instructions. 

Viewing material in docket. To view 

documents mentioned in this proposed 

rule as being available in the docket, 

find the docket as described in the 

previous paragraph, and then select 

‘‘Supporting & Related Material’’ in the 

Document Type column. Public 

comments will also be placed in our 

online docket and can be viewed by 

following instructions on the https://

www.regulations.gov Frequently Asked 

Questions web page. We review all 

comments received, but we will only 

post comments that address the topic of 

the proposed rule. We may choose not 

to post off-topic, inappropriate, or 

duplicate comments that we receive. 

Personal information. We accept 

anonymous comments. Comments we 

post to https://www.regulations.gov will 

include any personal information you 

have provided. For more about privacy 

and submissions in response to this 

document, see the Department of 

Homeland Security’s eRulemaking 

System of Records notice (85 Federal 

Register (FR) 14226, March 11, 2020). 

Public meeting. We do not plan to 

hold a public meeting, but we will 

consider doing so if we determine from 

public comments that a meeting would 

be helpful. We would issue a separate 

Federal Register notice to announce the 

date, time, and location of such a 

meeting. 

II. Abbreviations 

APA American Pilots’ Association 

BLS Bureau of Labor Statistics 

CFR Code of Federal Regulations 

CPA Certified public accountant 

CPI Consumer Price Index 

DHS Department of Homeland Security 

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

Great Lakes Pilotage 

ECI Employment Cost Index 

FOMC Federal Open Market Committee 

FR Federal Register 

GLPA Great Lakes Pilotage Authority 

(Canadian) 

GLPMS Great Lakes Pilotage Management 

System 

LPA Lakes Pilots Association 

NAICS North American Industry 

Classification System 

NPRM Notice of proposed rulemaking 

OMB Office of Management and Budget 

PCE Personal Consumption Expenditures 

Q4 Fourth quarter 

§ Section 

SBA Small Business Administration 

SLSPA Saint Lawrence Seaway Pilotage 

Association 

U.S.C. United States Code 

WGLPA Western Great Lakes Pilots 

Association 

III. Executive Summary 

Pursuant to 46 U.S.C. Chapter 93,1 the 

Coast Guard regulates pilotage for 

oceangoing vessels on the Great Lakes 

and St. Lawrence Seaway—including 

setting the rates for pilotage services and 

adjusting them on an annual basis for 

the upcoming shipping season. The 

shipping season begins when the locks 

open in the St. Lawrence Seaway, which 

allows traffic access to and from the 

Atlantic Ocean. The opening of the 

locks varies annually depending on 

waterway conditions but is generally in 

March or April. The rates, which for the 

2021 season range from $337 to $800 

per pilot hour (depending on which of 

the specific six areas pilotage service is 

provided), are paid by shippers to the 

pilot associations. The three pilot 

associations, which are the exclusive 

U.S. source of registered pilots on the 

Great Lakes, use this revenue to cover 

operating expenses, maintain 

infrastructure, compensate apprentice 

pilots (previously referred to as 

applicants) and registered pilots, 

acquire and implement technological 

advances, train new personnel, and 

allow partners to participate in 

professional development. 

In accordance with statutory and 

regulatory requirements, we have 

employed a ratemaking methodology 

which was introduced originally in 

2016. Our ratemaking methodology 

calculates the revenue needed for each 

pilotage association (operating 

expenses, compensation for the number 

of pilots, and anticipated inflation), and 

then divides that amount by the 


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2 84 FR 20551, 20573 (May 10, 2019), https://

www.regulations.gov/document/USCG-2018-0665- 

0012. 

3 83 FR 26162, 26189 (June 5, 2018), https://

www.regulations.gov/document/USCG-2017-0903- 

0011. 

4 46 U.S.C. 9301–9308. 

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

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

7 Id. 

8 Id. 

9 DHS Delegation 00170.1, Revision No. 01.2, 

paragraph (II)(92)(f). 

expected demand for pilotage services 

over the course of the coming year, to 

produce an hourly rate. We currently 

use a 10-step methodology to calculate 

rates. We explain in detail in the 

Discussion of Proposed Methodological 

and Other Changes in section VI of the 

preamble to this notice of proposed 

rulemaking (NPRM). 

As part of our annual review, in this 

NPRM we are proposing new pilotage 

rates for 2022 based on the existing 

methodology. The Coast Guard 

estimates that this proposed rule would 

result in a 12-percent increase in 

pilotage operating costs compared to the 

2021 season. The result would be an 

increase in rates for all areas in District 

One, District Three, and the 

undesignated area of District Two. The 

rate for the designated area of District 

Two would decrease. These proposed 

changes are largely due to a 

combination of three factors: (1) The 

addition of apprentice pilots to step 3 

with a target wage of 36 percent of pilot 

target compensation (36 percent of the 

increase), (2) adjusting target pilot 

compensation for both the difference in 

past predicted and actual inflation and 

predicted future inflation (23 percent of 

the increase), and (3) the net addition of 

two registered pilots at the beginning of 

the 2022 shipping season (22 percent of 

the increase), one for the undesignated 

area of District One and one for the 

undesignated area of District Two. The 

other 19 percent of the increase results 

from differences in traffic levels 

between the 2018, 2019, and 2020 

shipping seasons. The Coast Guard uses 

a 10-year average when calculating 

traffic to smooth out variations in traffic 

caused by global economic conditions, 

such as those caused by the COVID–19 

pandemic. The overall 12-percent 

increase in revenue needed is consistent 

with the increases from the 2019 2 and 

2018 3 rules, which increased rates by 

11 percent and 13 percent respectively, 

though greater than the increases in the 

last 2 years. 

The Coast Guard is also proposing one 

policy change and one change to the 

ratemaking methodology. First, the 

Coast Guard proposes to change the way 

we determine how many pilots are 

needed for the upcoming season in the 

staffing model (Volume 82 of the 

Federal Register (FR) at Page 41466, and 

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

by always rounding up the final number 

to the nearest whole number. Second, 

we also propose to include in the 

methodology a calculation for a wage 

benchmark for apprentice pilots 

conducting pilotage on a limited 

registration issued by the Director. 

Although it is not a change to existing 

ratemaking policy, we are proposing to 

list apprentice pilot operating expenses 

within the approved operating expenses 

in § 404.2 ‘‘Procedure and criteria for 

recognizing association expenses,’’ used 

in step 1 of the rulemaking. These 

operating expenses have been included 

in past ratemakings and this is a 

codification of existing policy in order 

to distinguish apprentice pilot expenses 

from apprentice pilot wages. 

Based on the ratemaking model 

discussed in this NPRM, we are 

proposing the rates shown in table 1. 

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

Area Name 

Final 2021 

pilotage 

rate 

Proposed 

2022 pilotage 

rate 

District One: Designated .............................................. St. Lawrence River ....................................................... $800 $818 

District One: Undesignated .......................................... Lake Ontario ................................................................. 498 557 

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

Huron, MI.

580 574 

District Two: Undesignated .......................................... Lake Erie ...................................................................... 566 651 

District Three: Designated ............................................ St. Marys River ............................................................. 586 685 

District Three: Undesignated ........................................ Lakes Huron, Michigan, and Superior .......................... 337 375 

This proposed rule would affect 56 

U.S. Great Lakes pilots, 3 pilot 

associations, and the owners and 

operators of an average of 293 

oceangoing vessels that transit the Great 

Lakes annually. This proposed rule is 

not economically significant under 

Executive Order 12866 and would not 

affect the Coast Guard’s budget or 

increase Federal spending. The 

estimated overall annual regulatory 

economic impact of this rate change is 

a net increase of $3,527,425 in estimated 

payments made by shippers during the 

2022 shipping season. This NPRM 

establishes the 2022 yearly 

compensation for pilots on the Great 

Lakes at $393,461 per pilot (a 3.8 

percent increase over their 2021 

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 of this 

preamble provides the regulatory impact 

analyses of this proposed rule. 

IV. Basis and Purpose 

The legal basis of this rulemaking is 

46 U.S.C. Chapter 93,4 which requires 

foreign merchant vessels and U.S. 

vessels operating ‘‘on register’’ (meaning 

U.S. vessels engaged in foreign trade) to 

use U.S. or Canadian pilots while 

transiting the U.S. waters of the St. 

Lawrence Seaway and the Great Lakes 

system.5 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.’’ 6

The statute requires that rates be 

established or reviewed and adjusted 

each year, not later than March 1.7 The 

statute also requires that base rates be 

established by a full ratemaking at least 

once every 5 years, and, in years when 

base rates are not established, they must 

be reviewed and, if necessary, adjusted.8

The Secretary’s duties and authority 

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

delegated to the Coast Guard.9

The purpose of this NPRM is to 

propose new pilotage rates for the 2022 

shipping season. The Coast Guard 

believes that the proposed new rates 

will continue to promote our goal as 

outlined in title 46 of the Code of 

Federal Regulations (CFR), section 404.1 


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10See 46 CFR part 401. 

11 46 U.S.C. 9302(f). A ‘‘laker’’ is a commercial 

cargo vessel especially designed for and generally 

limited to use on the Great Lakes. 

12Presidential Proclamation 3385, Designation of 

restricted waters under the Great Lakes Pilotage Act 

of 1960, December 22, 1960. 13 46 U.S.C. 9302(a)(1)(B). 14Area 3 is the Welland Canal, which is serviced 

exclusively by the Canadian GLPA and, 

accordingly, is not included in the U.S. pilotage rate 

structure. 

15The areas are listed by name at 46 CFR 401.405. 

16 46 CFR part 404. 

of promoting safe, efficient, and reliable 

pilotage service in the Great Lakes by 

generating for each pilotage association 

sufficient revenue to reimburse its 

necessary and reasonable operating 

expenses, fairly compensate trained and 

rested pilots, and provide appropriate 

profit to use for improvements. 

V. Background 

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

Guard, in conjunction with the 

Canadian Great Lakes Pilotage Authority 

(GLPA), regulates shipping practices 

and rates on the Great Lakes. Under 

Coast Guard regulations, all vessels 

engaged in foreign trade (often referred 

to as ‘‘salties’’) are required to engage 

U.S. or Canadian pilots during their 

transit through the regulated waters.10

U.S. and Canadian ‘‘lakers,’’ which 

account for most commercial shipping 

on the Great Lakes, are not affected.11

Generally, vessels are assigned a U.S. or 

Canadian pilot depending on the order 

in which they transit a particular area of 

the Great Lakes and do not choose the 

pilot they receive. If a vessel is assigned 

a U.S. pilot, that pilot will be assigned 

by the pilotage association responsible 

for the particular district in which the 

vessel is operating, and the vessel 

operator will pay the pilotage 

association for the pilotage services. The 

GLPA establishes the rates for Canadian 

registered pilots. 

The U.S. waters of the Great Lakes 

and the St. Lawrence Seaway are 

divided into three pilotage districts. 

Pilotage in each district is provided by 

an association certified by the Coast 

Guard’s Director of the Great Lakes 

Pilotage (‘‘the Director’’) to operate a 

pilotage pool. The Saint Lawrence 

Seaway Pilotage Association (SLSPA) 

provides pilotage services in District 

One, which includes all U.S. waters of 

the St. Lawrence River and Lake 

Ontario. The Lakes Pilots Association 

(LPA) 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 (WGLPA) 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. 

Each pilotage district is further 

divided into ‘‘designated’’ and 

‘‘undesignated’’ areas, depicted in table 

2 below. Designated areas, classified as 

such by Presidential Proclamation, are 

waters in which pilots must be fully 

engaged in the navigation of vessels in 

their charge at all times.12 Undesignated 

areas, on the other hand, are open 

bodies of water not subject to the same 

pilotage requirements. While working in 

undesignated areas, pilots must ‘‘be on 

board and available to direct the 

navigation of the vessel at the discretion 

of and subject to the customary 

authority of the master.’’ 13 For these 

reasons, pilotage rates in designated 

areas can be significantly higher than 

those in undesignated areas. 

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

District Pilotage association Designation Area No.14 Area name 15

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

Undesignated ...

1 

2 

St. Lawrence River. 

Lake Ontario. 

Two ................... Lakes Pilots Association ............................... Designated .......

Undesignated ...

5 

4 

Navigable waters from Southeast Shoal to 

Port Huron, MI. 

Lake Erie. 

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

Undesignated ...

Undesignated ...

7 

6 

8 

St. Marys River. 

Lakes Huron and Michigan. 

Lake Superior. 

Each pilot association is an 

independent business and is the sole 

provider of pilotage services in the 

district in which it operates. Each pilot 

association is responsible for funding its 

own operating expenses, maintaining 

infrastructure, compensating pilots and 

apprentice pilots, acquiring and 

implementing technological advances, 

and training personnel and partners. 

The Coast Guard developed a 10-step 

ratemaking methodology to derive a 

pilotage rate, based on the estimated 

amount of traffic, which covers these 

expenses.16 The methodology is 

designed to measure how much revenue 

each pilotage association would need to 

cover expenses and provide competitive 

compensation goals to registered pilots. 

Since the Coast Guard cannot guarantee 

demand for pilotage services, target 

pilot compensation for registered pilots 

is a goal. The actual demand for service 

dictates the actual compensation for the 

registered pilots. We then divide that 

amount by the historic 10-year average 

for pilotage demand. We recognize that 

in years where traffic is above average, 

pilot associations will accrue more 

revenue than projected, while in years 

where traffic is below average, they will 

take in less. We believe that over the 

long term, however, this system ensures 

that infrastructure will be maintained 

and that pilots will receive adequate 

compensation and work a reasonable 

number of hours, with adequate rest 

between assignments, to ensure 

retention of highly trained personnel. 

Over the past 5 years, the Coast Guard 

has adjusted the Great Lakes pilotage 

ratemaking methodology per our 

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

annual reviews of base pilotage rates, 

and make adjustments to such base 

rates, in each intervening year in 

consideration of the public interest and 

the costs of providing the services. In 

2016, we made significant changes to 

the methodology, moving to an hourly 

billing rate for pilotage services and 

changing the compensation benchmark 

to a more transparent model. In 2017, 

we added additional steps to the 

ratemaking methodology, including new 

steps that accurately account for the 

additional revenue produced by the 

application of weighting factors 

(discussed in detail in Steps 7 through 

9 for each district, in section VII of this 

preamble). In 2018, we revised the 

methodology by which we develop the 

compensation benchmark, based upon 

U.S. mariners rather than Canadian 

working pilots. In 2020, we revised the 

methodology to accurately capture all of 


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the costs and revenues associated with 

Great Lakes pilotage requirements and 

produce an hourly rate that adequately 

and accurately compensates pilots and 

covers expenses. The current 

methodology was finalized in the Great 

Lakes Pilotage Rates—2021 Annual 

Review and Revisions to Methodology 

final rule (86 FR 14184, March 12, 

2021). The 2021 ratemaking changed the 

inflation calculation in Step 4, 

§ 404.104(b) for interim ratemakings, so 

that the previous year’s target 

compensation value is first adjusted by 

actual inflation value using the 

Employment Cost Index (ECI). The 2021 

final rule also excluded legal fees 

incurred in lawsuits against the Coast 

Guard related to our ratemaking and 

oversight from pilots associations’ 

approved operating expenses. We 

summarize the proposed methodology 

in the section below. 

Summary of the Ratemaking 

Methodology 

As stated above, 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 result is 

an hourly rate, determined separately 

for each of the areas administered by the 

Coast Guard. 

In Step 1, ‘‘Recognize previous 

operating expenses,’’ (§ 404.101) the 

Director reviews audited operating 

expenses from each of the three pilotage 

associations. Operating expenses 

include all allowable expenses minus 

wages and benefits. This number forms 

the baseline amount that each 

association is budgeted. Because of the 

time delay between when the 

association submits raw numbers and 

the Coast Guard receives audited 

numbers, this number is 3 years behind 

the projected year of expenses. 

Therefore, in calculating the 2022 rates 

in this proposal, we begin with the 

audited expenses from the 2019 

shipping season. 

While each pilotage association 

operates in an entire district (including 

both designated and undesignated 

areas), the Coast Guard tries to 

determine costs by area. With regard to 

operating expenses, 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 actually accrued. For example, 

we can allocate the costs for 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 2022 projected operating 

expenses. To do this, we apply inflation 

adjustors for 3 years to the operating 

expense baseline received in Step 1. The 

inflation factors are from the Bureau of 

Labor Statistics’ (BLS) Consumer Price 

Index (CPI) for the Midwest Region, or, 

if not available, the Federal Open 

Market Committee (FOMC) median 

economic projections for Personal 

Consumption Expenditures (PCE) 

inflation. This step produces the total 

operating expenses for each area and 

district. 

In Step 3, ‘‘Estimate number of 

registered pilots and apprentice pilots,’’ 

(§ 404.103) the Director calculates how 

many pilots are needed for each district. 

To do this, we employ a ‘‘staffing 

model,’’ described in § 401.220, 

paragraphs (a)(1) through (a)(3), to 

estimate how many pilots would be 

needed to handle shipping during the 

beginning and close of the season. This 

number is helpful in providing guidance 

to the Director in approving an 

appropriate number of pilots. 

For the purpose of the ratemaking 

calculation, we determine the number of 

pilots provided by the pilotage 

associations (see § 404.103) and use that 

figure to determine how many pilots 

need to be compensated via the pilotage 

fees collected. 

In Step 3, in this NPRM we propose 

adding an estimate for the number of 

apprentice pilots with limited 

registrations in each district. This 

number of apprentice pilots with 

limited registrations would be used in 

Step 4 to calculate an allowable wage 

benchmark for the districts to claim in 

the ratemaking. The Director would use 

the number of applications for 

apprentice pilots, traffic projections, 

information provided by the pilotage 

association regarding upcoming 

retirements, and any other relevant data 

input in determining the total number of 

apprentice pilots with limited 

registrations. See the Discussion of 

Proposed Methodological and Other 

Changes at section VI of this preamble 

for a detailed description of the changes 

proposed. 

In the first part of Step 4, ‘‘Determine 

target pilot compensation benchmark 

and apprentice pilot wage benchmark,’’ 

(§ 404.104) the Director determines the 

revenue needed for pilot compensation 

in each area and district. In 2020, the 

Coast Guard updated the benchmark 

compensation model in accordance with 

§ 404.104(b), switching from using the 

American Maritime Officers Union’s 

2015 aggregated wage and benefit 

information to the 2019 compensation 

benchmark. Based on experience over 

the past two ratemakings, the Coast 

Guard has determined that the level of 

target pilot compensation for those years 

provides an appropriate level of 

compensation for American Great Lakes 

pilots. Therefore, the Coast Guard will 

not seek alternative benchmarks for 

target compensation for future 

ratemakings at this time, and will 

instead simply adjust the amount of 

target pilot compensation for inflation. 

This benchmark has advanced the Coast 

Guard’s goals of safety through rate and 

compensation stability while also 

promoting recruitment and retention of 

qualified U.S. pilots. 

In the 2021 ratemaking, the Coast 

Guard changed the way we calculate 

inflation in Step 4 to account for actual 

inflation instead of predicted inflation. 

In § 404.104(b), the previous year’s 

target compensation value is first 

adjusted by actual inflation using the 

ECI inflation value. If the ECI inflation 

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

and (2) specify the compensation 

inflation process the Director will use 

instead. 

In the second part of Step 4, set forth 

in § 404.104(c), the Director determines 

the total compensation figure for each 

district. To do this, the Director 

multiplies the compensation benchmark 

by the number of pilots for each area 

and district (from Step 3), producing a 

figure for total pilot compensation. 

This proposed rule would add an 

apprentice pilot wage benchmark to 

Step 4. The apprentice pilot wage 

benchmark would be set at 36 percent 

of individual target pilot compensation, 

as calculated in this section. The 

apprentice pilot wage benchmark would 

then be multiplied by the number of 

apprentice pilots with limited 

registrations for each district, producing 

a figure for total apprentice pilot wage. 

See the Discussion of Proposed 

Methodological and Other Changes at 

section VI of this preamble for a detailed 

description of the changes proposed. 

In Step 5, ‘‘Project working capital 

fund,’’ (§ 404.105) the Director 

calculates a value that is added to pay 

for needed capital improvements and 

other non-recurring expenses, such as 

technology investments and 

infrastructure maintenance. This value 

is calculated by adding the total 

operating expenses (derived in Step 2) 

to the total pilot compensation and total 

target apprentice pilot wage (derived in 


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17For a detailed calculation of the staffing model, 

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

Step 4), and 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 up 

the totals produced by the preceding 

steps. The projected operating expense 

for each area and district (from Step 2) 

is added to the total pilot compensation, 

including apprentice pilot wage 

benchmarks, (from Step 4) and the 

working capital fund contribution (from 

Step 5). The total figure, calculated 

separately for each area and district, is 

the ‘‘needed revenue.’’ 

In Step 7, ‘‘Calculate initial base 

rates,’’ (§ 404.107) the Director 

calculates an hourly pilotage rate to 

cover the needed revenue as calculated 

in Step 6. This step consists of first 

calculating the 10-year hours of traffic 

average for each area. Next, we divide 

the revenue needed in each area 

(calculated in Step 6) by the 10-year 

hours of traffic average 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). As 

this significantly increases the revenue 

collected, we need to account for the 

added revenue produced by the 

weighting factors to ensure that shippers 

are not overpaying for pilotage services. 

We do this in the next step. 

In Step 8, ‘‘Calculate average 

weighting factors by Area,’’ (§ 404.108) 

the Director calculates how much extra 

revenue, as a percentage of total 

revenue, has historically been produced 

by the weighting factors in each area. 

We do this by using a historical average 

of the applied weighting factors for each 

year since 2014 (the first year the 

current weighting factors were applied). 

In Step 9, ‘‘Calculate revised base 

rates,’’ (§ 404.109) the Director modifies 

the base rates by accounting for the 

extra revenue generated by the 

weighting factors. We do this by 

dividing the initial pilotage rate for each 

area (from Step 7) by the corresponding 

average weighting factor (from Step 8), 

to produce a revised rate. 

In Step 10, ‘‘Review and finalize 

rates,’’ (§ 404.110) often referred to 

informally as ‘‘Director’s discretion,’’ 

the Director reviews the revised base 

rates (from Step 9) to ensure that they 

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

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

include promoting efficient, safe, and 

reliable pilotage service on the Great 

Lakes; generating sufficient revenue for 

each pilotage association to reimburse 

necessary and reasonable operating 

expenses; compensating trained and 

rested pilots fairly; and providing 

appropriate profit for improvements. 

After the base rates are set, § 401.401 

permits the Coast Guard to apply 

surcharges. In previous ratemakings 

where apprentice pilot wages were not 

built into the rate, the Coast Guard used 

surcharges to cover applicant pilot 

compensation in those years to help 

with recruitment. In 2019, $1,202,635 in 

surcharges were collected by the three 

districts. Consistent with the 2020 and 

2021 rulemakings, we continue to 

believe that the pilot associations are 

now able to plan for the costs associated 

with retirements without relying on the 

Coast Guard to impose surcharges. 

VI. Discussion of Proposed 

Methodological and Other Changes 

For 2022, the Coast Guard is 

proposing one policy change to the 

ratemaking model and a methodological 

change to incorporate apprentice pilot 

wage benchmarks into the ratemaking 

methodology. The first proposed policy 

change is to always round up the pilot 

totals to the nearest whole number in 

the staffing model. We use the staffing 

model to determine how many pilots are 

needed in Step 3. Second, we are 

proposing to introduce a wage 

benchmark calculation for apprentice 

pilots conducting pilotage while using a 

limited registration in Steps 3 and 4 of 

the methodology. While not a change to 

the ratemaking, this proposed rule 

would also codify the current practice of 

allowing pilot associations to include 

necessary and reasonable apprentice 

pilot benefits and expenses as operating 

expenses for the year they are incurred. 

A. Proposed Changes to the Staffing 

Model 

The Director uses the staffing model 

to estimate how many pilots would be 

needed to handle shipping from the 

opening through the closing of the 

season. The Coast Guard is proposing to 

always round up the final number in the 

staffing model in § 401.220(a)(2) to the 

nearest whole integer, instead of the 

current requirement to round to the 

nearest whole integer. The final number 

provides the maximum number of pilots 

authorized to be included in the 

ratemaking for a district. 

The Coast Guard proposed a similar 

change to the staffing model in the 2021 

proposed rule titled ‘‘Great Lakes 

Pilotage Rates—2021 Annual Review 

and Revisions to Methodology’’ (85 FR 

68210, October 27, 2020). We opted to 

forgo the proposed change to the 

rounding in the staffing model in the 

2021 ratemaking final rule to more 

closely consider the alternatives and 

staffing issues mentioned by the 

commenters, posted in docket USCG– 

2020–0457. 

After consideration of the comments 

and issues discussed further in this 

section, the Coast Guard has determined 

that rounding up in the staffing model 

is a necessary change, but we are 

proposing an additional modification. In 

addition to always rounding up from the 

staffing model, we also propose that 

when the rounding up results in an 

additional pilot that would not have 

been authorized if we rounded to the 

nearest whole integer, that additional 

pilot would be added to the number of 

pilots in the undesignated area for that 

district.17 For example, if the total in a 

district is 17.25, we would round up to 

18 under the proposed changes, and the 

additional pilot would be allocated to 

the undesignated area. If the total in a 

district is 17.55, we would authorize 18 

pilots and we would not change existing 

allocations. 

The purpose for placing the 

additional pilot in undesignated waters 

is to reduce the impact of the additional 

pilot on the final rates. Allocating 

additional pilots to the undesignated 

waters in the ratemaking methodology 

would result in only incremental 

changes, which promotes rate stability. 

Rate stability is in the public interest, 

because it provides greater 

predictability to both shipping 

companies and the pilots. Undesignated 

waters have lower rates for pilotage 

services than designated waters, because 

the average number of bridge hours is 

greater (denominator), which allows the 

operating expenses for those areas to be 

spread out over a greater number. 

Registered pilots in a district perform 

pilotage in both designated and 

undesignated waters. For ratemaking 

purposes, we assign pilots to either 

designated or undesignated waters to 

calculate the rates in each area. For 

ratemaking purposes, we assign pilots to 

either designated or undesignated 

waters to calculate the rates in each 

area. 

In the 2021 proposed rule, the Coast 

Guard acknowledged that the staffing 

model used in the ratemaking could be 

improved to account for registered 

pilots who are not performing pilotage 

full time. As we noted in the 2021 

proposed rule, pilot associations have 

made assertions that the pilot 


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18https://www.regulations.gov/ 

document?D=USCG-2020-0457-0007. 

associations’ presidents are spending 

more time at meetings, conferences, 

traveling, and facilitating 

communication between the pilots and 

Coast Guard. We continue to 

acknowledge that the pilot associations’ 

presidents are not able to serve as pilots 

full-time due to their administrative 

duties and this continues to be the main 

reason for no longer rounding down the 

final number for some districts. The 

non-delegable administrative duties 

include attending meetings and 

conferences, providing additional 

financial and traffic information to 

increase transparency and 

accountability, overseeing and ensuring 

the integrity of their training program, 

evaluating technology, and coordinating 

with the American Pilots’ Association 

(APA) to implement and share best 

practices. Rounding down to the nearest 

integer in the current staffing model 

could result in too few pilots allocated 

to a district which, when coupled with 

the president’s spending less time 

serving as pilot, may adversely impact 

recuperative rest goals for registered 

pilots that are essential for safe 

navigation. 

The staffing model addresses the 

historic traffic at the opening and 

closing of the season. During this time, 

the Director has historically authorized 

or imposed double pilotage in the 

designated waters due to ice conditions, 

a lack of aids to navigation, and violent 

and volatile weather conditions, 

because the transits are likely to exceed 

the Coast Guard’s tolerance for safety 

with a single pilot. Pilotage demand 

reaches peaks during the opening and 

close of the seasons, which is also when 

pilot presidents are performing many 

nondelegable duties. The pilot 

association president’s participation is 

required during various coordination 

meetings at the opening and closing of 

the shipping season, which reduces 

their availability to provide pilotage 

services. These meetings include 

coordination with the U.S. and 

Canadian Seaways, the GLPA, Shipping 

Federation of Canada, U.S. Great Lakes 

Shipping Association, and various U.S. 

and Canadian Great Lakes ports. 

Rounding up will ensure that the pilot 

president is free to participate in these 

meetings and the associations have 

sufficient strength to handle the burden 

of double pilotage. 

One comment representing the 

shipping industry on the 2021 

ratemaking proposed rule requested that 

we authorize an administrative position 

for each district to account for these 

increased duties. We rejected the 

proposal to add an administrative 

position in the 2021 ratemaking, 

because we thought it was inconsistent 

with industry standards and insufficient 

to address the problems identified by 

the associations. Many of the 

presidential duties are non-delegable to 

administrative staff, and the president 

would still be pulled away from 

providing pilotage services. Authorizing 

an administrative person instead of 

additional pilot would not address the 

recuperative rest impacts and potential 

for lack of pilots when needed. 

The APA comment 18 and other 

commenters affirmed that there is 

always one pilot ‘‘off the roles’’ in each 

association. Similarly, in its comments, 

the SLSPA emphasized it is impossible 

to operate as a president and pilot a 

vessel at the same time and with no 

opportunity to rest. The APA comment 

urged the Coast Guard to consider 

authorizing an additional pilot for each 

district, whose principal duties would 

be to serve as an ‘‘operations pilot.’’ The 

comment said pilots on ships, as well as 

dispatchers and transportation 

coordinators, need operational support 

available in real time from a seasoned 

and experienced piloting professional. 

This professional is currently the 

association president or the suggested 

extra operations pilot. The APA 

comment expressed that piloting 

expertise is necessary to perform these 

duties, and that the associations’ 

president pilot should be replaced with 

a pilot, not administrative staff. The 

president is unable to delegate certain 

administrative duties that keep him 

from piloting a vessel. This comment 

was in alignment with responses we 

received from other pilot industry 

comments. 

The Coast Guard agrees that, where 

the pilot associations’ presidents are 

spending an increased amount of their 

time on administrative issues, the 

staffing model should account for that 

time and allow for additional staff to 

assist by rounding up the final total for 

each district. However, the Coast Guard 

does not agree with some comments on 

the 2021 NPRM that an additional 

operational pilot is necessary in 

addition to rounding up in the staffing 

model. Authorizing an additional 

operational pilot, in addition to 

rounding up, would authorize two 

additional pilots in some cases. Two 

additional pilots would be more pilots 

than necessary to address the need 

presented by the association’s president 

not performing pilotage services fulltime. 

Some comments from the 2021 

ratemaking proposed rule included 

concerns that the staffing model could 

produce lower or fluctuating numbers in 

upcoming years, even with always 

rounding up, taking away previously 

authorized pilots. However, the staffing 

model does not change year-to-year, 

unless we make changes to the staffing 

model in a ratemaking. Based on the 

existing staffing model and the 

proposed change to always round up the 

final number, the number of pilots 

authorized would not decrease in future 

years, unless adjusted by ratemaking. 

The staffing model takes into 

consideration trends in traffic demand, 

ensuring that the number of pilots is 

sufficient to meet demand. The existing 

staffing model is designed to provide 

sufficient pilots for the entire shipping 

season while taking into account the 

amount of traffic anticipated, restorative 

rest periods for the pilots, and 

additional capacity during surges at the 

opening and closing of the shipping 

season. During the opening and closing 

of the season, the weather tends to be 

more severe; ice conditions affect transit 

times; and the aids to navigation are not 

in place. During this time, double 

pilotage occurs in designated waters to 

mitigate external factors and to ensure 

safety. This is also a time that the pilot 

association presidents are performing 

non-delegable duties, coordinating with 

the Coast Guard, the GLPA, U.S. and 

Canadian Seaway, and numerous other 

Great Lakes shipping stakeholders to 

ensure safe, efficient, and reliable 

pilotage service. Always rounding up 

allows us to account for this time and 

promote safety and restorative rest, 

while minimizing delays in providing 

pilotage services, for districts where we 

previously would have rounded the 

final number down. We cannot continue 

to round down for some districts and 

undersupply pilots where the staffing 

model indicates more are needed. By 

rounding up the staffing model final 

number, we ensure that we are always 

authorizing a sufficient number to cover 

the demand calculated according to the 

staffing model, which has been in place 

for many years. The purpose of always 

rounding up where we otherwise would 

have rounded down is to account for the 

association’s president time spent away 

from pilotage duties, especially during 

the high demand for pilotage during the 

beginning and close of the shipping 

seasons. We believe this proposed 

rounding change will promote maritime 

safety by ensuring enough pilots are 

allocated to each district to cover the 

hours the association’s president spends 

engaged in the non-pilot tasks and the 

administrative work discussed above. 


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B. Apprentice Pilots’ Wage Benchmark 

for Conducting Pilotage While Using a 

Limited Registration 

In this NPRM, the Coast Guard is 

proposing to factor in the apprentice 

pilots wage benchmark in the 

ratemaking methodology, Steps 3 and 4. 

The wage benchmark would be 

applicable to apprentice pilots operating 

under a limited registration. 

In Step 3, § 404.103, the Director 

would project the number of apprentice 

pilots with limited registrations 

expected to be in training and 

compensated. The Director would 

consider the number of persons 

applying under 46 CFR part 401 to 

become apprentice pilots, traffic 

projections, information provided by the 

pilotage association regarding upcoming 

retirements, and any other relevant data. 

In Step 4, § 404.104, the Director 

would determine the individual 

apprentice pilot wage benchmark at the 

rate of 36 percent of the individual 

target pilot compensation, as calculated 

according to Step 4. The Director would 

determine each pilot association’s total 

apprentice pilot wage benchmark by 

multiplying the apprentice pilot wage 

benchmark by the number of apprentice 

pilots with limited registrations 

projected under § 404.103. For example, 

if the projected number of apprentice 

pilots is 4, we would first take 36 

percent of individual target pilot 

compensation (example: $359,887 × 

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

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

obtain the total apprentice pilot wage 

benchmark for each district. This 

process is based on the way we factor 

the fully registered pilot compensation 

into the ratemaking in existing Step 3 

(§ 404.103) and Step 4 (§ 404.104) 

described in the Summary of the 

Ratemaking Methodology section above. 

The Coast Guard proposes to set the 

apprentice pilot wage benchmark at a 

percentage of the target pilot 

compensation, rather than a specific 

dollar amount, to allow for inflation 

each year. We factor inflation into the 

target pilot compensation calculation 

during Step 4. We would take 36 

percent of the inflated target pilot 

compensation to obtain the apprentice 

pilot wage benchmark value. 

In ratemaking years 2016 through 

2019, the Coast Guard authorized 

surcharges to cover the districts’ 

apprentice pilot compensation. The 

Coast Guard never intended to use such 

surcharges as a permanent solution for 

compensating apprentice pilots, because 

the surcharge amounts were not derived 

from a formula that could take into 

consideration inflation and other 

reasonableness factors. 

The purpose of the surcharges was to 

provide reimbursement to the 

associations so that they could 

immediately hire additional apprentice 

pilots, rather than waiting three years to 

be reimbursed in the rates. The Coast 

Guard used surcharges as a temporary 

method to help the districts with pilot 

hiring and retention issues. In those 

ratemaking years, the Coast Guard made 

many Director’s adjustments to the 

authorized surcharges in order to ensure 

that the ratemaking reflected a 

reasonable amount in compensation. 

In the 2020 and 2021 ratemakings, the 

Coast Guard acknowledged that the 

pilot associations were able to hire a 

sufficient number of apprentice pilots 

and fully registered pilots. In the 2020 

and 2021 ratemakings, the Coast Guard 

authorized apprentice pilot salaries to 

be included in the association’s 

operating expenses for 2017 and 2018, 

respectively. We allowed the apprentice 

pilot wage expenses to be included in 

the operating expenses after the 

districts’ operating expenses were fully 

audited. In the 2021 ratemaking final 

rule, the Coast Guard reduced the 2018 

apprentice pilot salary operating 

expense (referred to as applicant pilot in 

the 2021 ratemaking) for District One 

and District Two to $132,151 per 

apprentice pilot because they paid in 

excess of that amount (86 FR 14184, 

14197, 14202, March 12, 2021). As 

District Three reported paying their 

apprentice pilots less than $132,151 per 

apprentice pilot each, no Director’s 

adjustment was made. 

The Coast Guard is proposing to set 

the apprentice pilot wage benchmark at 

36 percent of individual target pilot 

compensation based on reasonable 

amounts previously allowed in past 

ratemakings. In the 2019 rulemaking, we 

adjusted apprentice pilot salaries to 

approximately 36 percent of target pilot 

compensation. In the 2019 NPRM, the 

Coast Guard proposed to make an 

adjustment to District Two’s request for 

reimbursement of $571,248 for two 

applicant pilots ($285,624 per 

applicant). Instead of permitting 

$571,248 for two applicant pilots, we 

proposed allowing $257,566, or 

$128,783 per applicant pilot, based 

upon discussions with other pilot 

associations at the time. This standard 

went into effect in the final rule for 

2019. In development of the 2021 

proposed rule, we reached out to several 

of the pilot associations throughout the 

United States to see what percentage 

they pay their applicant pilots. We 

factored in the sea time and experience 

required to become an applicant pilot 

on the Great Lakes and discussed the 

percentage with each association to 

determine if it was fair and reasonable. 

For 2019, this was approximately 36 

percent ($128,783 ÷ $359,887 = 35.78 

percent). In the 2021 NPRM and final 

rule, the Coast Guard used the 36 

percent benchmark for calculating each 

district’s apprentice pilot compensation 

in its operating expenses. 

The Coast Guard solicited comments 

in the 2021 ratemaking NPRM on setting 

apprentice pilot salaries at a percentage 

of the fully registered target pilot 

compensation and including it in the 

ratemaking (85 FR 68210, October 27, 

2020). We received one pilot comment 

and a user coalition comment requesting 

that we return to the use of surcharges. 

The Coast Guard used surcharges to 

immediately reimburse apprentice pilot 

salaries to make improvements in hiring 

and retention of pilots in the districts. 

Going forward, authorizing apprentice 

pilot wages in the ratemaking continues 

to support hiring and retention in a way 

that is better calibrated to generate the 

specific amount of revenue needed, than 

providing a surcharge. The associations 

would be funded for apprentice pilot 

wages in the same year they are 

incurred, and the amount would be 

adjusted for inflation, along with the 

target pilot compensation. We are also 

interested in building the apprentice 

pilot salaries into the ratemaking for 

predictability and stability purposes. 

We previously authorized $150,000 per 

apprentice pilot when we used 

surcharges, but, in practice, that amount 

was reduced by Director’s adjustments 

to reasonable amounts. The proposed 

apprentice pilot wage benchmark in the 

ratemaking would not be adjusted by 

Director’s adjustments. 

The other comments from the pilots 

were generally supportive of including 

the apprentice pilot salaries in the 

ratemaking, but urged the Coast Guard 

to consider setting the salaries at a 

higher percentage than 36 percent of the 

fully registered pilot compensation, or 

implementing a gradual percentage 

increase for additional years served. 

This 36 percent equation creates a 

number consistent with what some 

districts paid and were reimbursed for 

apprentice pilots in previous ratemaking 

years. It is also reasonable in amount, 

because it is only wages and would not 

include apprentice pilot benefits and 

travel reimbursements. Those additional 

benefits would be reimbursed in full as 

allowable operating expenses for the 

districts. In the 2021 ratemaking, 

District Three reported paying 

apprentice pilot salaries at an amount of 

$132,151 per apprentice pilot, and we 

considered that amount reasonable. At 


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19These reports are available in the docket for 

this rulemaking. 

36 percent of registered pilot target 

compensation, the apprentice pilots 

would be authorized wages in the 

amount of $129,559, which is 

reasonable in consideration of the time 

in training, services provided, and past 

ratemakings. This number would be 

subject to inflation annually. 

Additionally, setting apprentice pilot 

salaries at one amount, irrespective of 

years in training, is consistent with our 

past practices and will help promote 

rate stability and predictability for all 

parties. In past ratemakings, we have 

historically used the term ‘‘applicant 

pilots’’ as a collective way of referring 

to both applicant trainees and 

apprentice pilots. In this proposed rule, 

we are distinguishing how we will 

incorporate apprentice pilot wages into 

the ratemaking methodology from how 

we incorporate applicant trainees 

wages. To help clarify this distinction, 

this proposed rule would also add 

definitions for the terms ‘‘apprentice 

pilot’’ and ‘‘limited registration’’ in the 

definition section in § 401.110. An 

apprentice pilot would be defined as a 

person, approved and certified by the 

Director, who is participating in an 

approved U.S. Great Lakes pilot training 

and qualification program and meets all 

the minimum requirements listed in 46 

CFR 401.211. The apprentice pilot 

definition would not include applicant 

trainees, who are pilots in training who 

have not acquired the minimum service 

requirements in § 401.210(a)(1). Under 

this proposed rule, salaries for applicant 

trainees would continue to be included 

in the district’s operating expenses for 

the year they are incurred. The 

‘‘apprentice pilot’’ definition would 

only be applicable in determining 

which pilots may be included in the 

apprentice pilot estimates, 

compensation, and operating expenses 

discussed in new §§ 404.2(b)(7), 

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

this proposed rule. 

The apprentice pilot would be 

required to be operating with a limited 

registration to be eligible for inclusion 

in the wage benchmark calculations in 

Steps 3 and 4. A limited registration is 

currently used in the apprentice pilot 

training process in the districts, but it is 

not defined in the Great Lakes pilotage 

regulations. We propose adding a 

definition for ‘‘limited registration’’ that 

would align with the current use of the 

term in the industry. A limited 

registration would be defined as an 

authorization given by the Director, 

upon the request of the respective pilot 

association, to an apprentice pilot to 

provide pilotage service without direct 

supervision from a fully registered pilot 

in a specific area or waterway. 

Apprentice pilots with limited 

registrations are performing the services 

of a pilot for the shipping industry, 

often without a fully registered pilot 

onboard. These apprentice pilots are 

providing pilotage services to the 

shipping industry for the rates set by the 

Coast Guard for the waterway. 

Compensating the apprentice pilots for 

these services has historically been 

considered a reasonable and necessary 

cost included in the ratemakings as 

either surcharges or operating expenses. 

However, instead of evaluating the 

apprentice pilot wages annually for 

reasonableness in the operating 

expenses, the Coast Guard is proposing 

to include a specific and predictable 

apprentice pilot wage benchmark 

calculation into the ratemaking. 

C. Apprentice Pilots’ Expenses and 

Benefits as Approved Operating 

Expenses 

In § 404.2 ‘‘Procedure and criteria for 

recognizing association expenses,’’ we 

propose to insert the pilot association’s 

expenses for apprentice pilots operating 

with limited registrations as approved 

operating expenses. These expenses 

have historically been allowed in 

previous ratemakings’ operating 

expenses. We are proposing to 

specifically list apprentice pilot with 

limited registrations expenses in the 

regulations to codify current practices 

and distinguish these expenses from the 

apprentice pilot wage benchmark that 

we propose to include in Step 4 of the 

ratemaking methodology. 

The associations would continue to 

include health care, travel expenses, 

training, and other expenses incurred on 

behalf of apprentice pilots with limited 

registrations, when determined to be 

necessary and reasonable by the 

Director. Associations currently fund 

travel and employment benefits for 

apprentice pilots with limited 

registrations in order to train pilots and 

provide pilotage services to the shipping 

industry. Apprentice pilots with limited 

registrations are expected to travel and 

be away from home while performing 

these duties. It is reasonable and 

consistent with industry practice for the 

association to cover their travel 

expenses. These travel costs are also 

allowed for fully registered pilots 

operating on the Great Lakes performing 

substantially similar services. 

The approved operating expenses 

could include health care and other 

necessary and reasonable employment 

benefits as well. Apprentice pilots are 

often offered benefits to help with 

retention and recruitment. Allowing 

associations to include necessary and 

reasonable expenses for apprentice 

pilots with limited registrations as 

operating expenses in the ratemaking 

would continue to promote adequate 

funding for apprentice pilot training and 

provision of pilotage services in the 

Great Lakes. 

VII. Discussion of Proposed Rate 

Adjustments 

In this NPRM, based on the proposed 

policy changes described in the 

previous section, we are proposing new 

pilotage rates for 2022. We propose to 

conduct the 2022 ratemaking as an 

‘‘interim year,’’ as was done in 2021, 

rather than a full ratemaking, as was 

conducted in 2018. Thus, the Coast 

Guard proposes to adjust the 

compensation benchmark following the 

procedures for an interim ratemaking 

year pursuant to § 404.100(b) for this 

purpose, rather than the full ratemaking 

year procedures in § 404.100(a). 

This section discusses the proposed 

rate changes using the ratemaking steps 

provided in 46 CFR part 404, 

incorporating the proposed changes 

discussed in section VI. We will detail 

all 10 steps of the ratemaking procedure 

for each of the 3 districts to show how 

we arrive at the proposed new rates. 

District One 

A. Step 1: Recognize Previous Operating 

Expenses 

Step 1 in our ratemaking methodology 

requires that the Coast Guard review 

and recognize the previous year’s 

operating expenses (§ 404.101). To do 

so, we begin by reviewing the 

independent accountant’s financial 

reports for each association’s 2018 

expenses and revenues.19 For 

accounting purposes, the financial 

reports divide expenses into designated 

and undesignated areas. For costs 

accrued by the pilot associations 

generally, such as employee benefits, for 

example, the cost is divided between 

the designated and undesignated areas 

on a pro rata basis. The recognized 

operating expenses for District One are 

shown in table 3. 

Adjustments have been made by the 

auditors and are explained in the 

auditor’s reports, which are available in 

the docket for this rulemaking where 

indicated under the Public Participation 

and Request for Comments portion of 

the preamble. 

In the 2019 expenses used as the basis 

for this rulemaking, districts used the 

term ‘‘applicant’’ to describe applicant 

trainees and persons who would be 


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51056 Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Proposed Rules 

called apprentices (applicant pilots) 

under the new definition proposed in 

this rulemaking. Therefore, when 

describing past expenses, we use the 

term ‘‘applicant’’ to match what was 

reported from 2019, which includes 

both applicant and apprentice pilots. 

We use ‘‘apprentice’’ to distinguish 

apprentice pilot wages and describe the 

impacts of the ratemaking going 

forward. 

There was one Director’s adjustment 

for District One, a deduction for 

$282,015, the amount of surcharge 

collected in 2019. As this amount 

exceeds the reported 2019 applicant 

salaries of $227,893, there is no further 

Director’s adjustment. We continue to 

include applicant salaries as an 

allowable expense in the 2022 

ratemaking, as it is based on 2019 

operating expenses, when salaries were 

still an allowable expense. The 

apprentice salaries paid in the years 

2019, 2020, and 2021 have not been 

reimbursed in the ratemaking as of 

publication of this proposed rule. 

Applicant salaries (including applicant 

trainees and apprentice pilots) will 

continue to be an allowable operating 

expense through the 2024 ratemaking, 

which uses operating expenses from 

2021 where the wages for apprentice 

pilots were still authorized as operating 

expenses. Starting in the 2025 

ratemaking, apprentice pilot salaries 

would no longer be included as a 2022 

operating expense, because apprentice 

pilot wages would have already been 

factored into the ratemaking Steps 3 and 

4 in calculation of the 2022 rates. 

Starting in 2025, the applicant salaries’ 

operating expenses for 2022 will consist 

of only applicant trainees (those who 

are not yet apprentice pilots). 

TABLE 3—2019 RECOGNIZED EXPENSES FOR DISTRICT ONE

Reported operating expenses for 2019 

Designated Undesignated 

Total St. Lawrence 

River 

Lake 

Ontario 

Applicant Pilot Salaries: 

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

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

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

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

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

Other Pilot Cost: 

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

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

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

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

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

Pilot Boat and Dispatch Costs: 

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

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

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

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

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

Administrative Expenses: 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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20The 2020 inflation rate is available at https:// 

beta.bls.gov/dataViewer/view/timeseries/ 

CUUR0200SA0. Specifically the CPI is defined as 

‘‘All Urban Consumers (CPI–U), All Items, 1982– 

4=100’’. (Downloaded April 2021) 

21The 2021 and 2022 inflation rates are available 

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

files/fomcprojtabl20210317.pdf. We used the PCE 

median inflation value found in table 1. 

(Downloaded March 24, 2021) 

22For a detailed calculation, refer to the Great 

Lakes Pilotage Rates—2017 Annual Review final 

rule, which contains the staffing model. See 82 FR 

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

23Employment Cost Index, Total Compensation 

for Private Industry workers in Transportation and 

Material Moving, Series ID: CIU2010000520000A. 

24CPI for All Urban Consumers, Series ID 

CUUR0200SA0. 

25https://www.federalreserve.gov/ 

monetarypolicy/files/fomcprojtabl20210317.pdf. 

B. Step 2: Project Operating Expenses, 

Adjusting for Inflation or Deflation 

Having identified the recognized 2019 

operating expenses in Step 1, the next 

step is to estimate the current year’s 

operating expenses by adjusting those 

expenses for inflation over the 3-year 

period. We calculate inflation using the 

BLS data from the CPI for the Midwest 

Region of the United States for the 2020 

inflation rate.20 Because the BLS does 

not provide forecasted inflation data, we 

use economic projections from the 

Federal Reserve for the 2021 and 2022 

inflation modification.21 Based on that 

information, the calculations for Step 2 

are as follows: 

TABLE 4—ADJUSTED OPERATING EXPENSES FOR DISTRICT ONE

District One 

Designated Undesignated Total 

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

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

2021 Inflation Modification (@2.4%) ........................................................................................... 54,059 36,042 90,101 

2022 Inflation Modification (@2%) .............................................................................................. 46,130 30,756 76,886 

Adjusted 2021 Operating Expenses ..................................................................................... 2,352,634 1,568,537 3,921,171 

C. Step 3: Estimate Number of 

Registered Pilots and Apprentice Pilots 

In accordance with the text in 

§ 404.103, we estimate the number of 

fully registered pilots in each district. 

We determine the number of fully 

registered pilots based on data provided 

by the SLSPA. Using these numbers, we 

estimate that there will be 18 registered 

pilots in 2022 in District One. We 

determine the number of apprentice 

pilots based on input from the district 

on anticipated retirements and staffing 

needs. Using these numbers, we 

estimate that there will be two 

apprentice pilots in 2022 in District 

One. Based on the seasonal staffing 

model discussed in the 2017 ratemaking 

(see 82 FR 41466), and our proposed 

changes to that staffing model, we 

assign a certain number of pilots to 

designated waters and a certain number 

to undesignated waters, as shown in 

table 5. Without rounding up, there 

would be 7 pilots assigned to the 

undesignated area of District One (6.8 

pilots which is rounded up to 7 pilots). 

These numbers are used to determine 

the amount of revenue needed in their 

respective areas. 

TABLE 5—AUTHORIZED PILOTS

Item District One 

Proposed Maximum Number of Pilots (per § 401.220(a)) 22 ............................................................................................................... 18 

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

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

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

2022 Apprentice Pilots ......................................................................................................................................................................... 2 

D. Step 4: Determine Target Pilot 

Compensation Benchmark and 

Apprentice Pilot Wage Benchmark 

In this step, we determine the total 

target pilot compensation for each area. 

As we are issuing an ‘‘interim’’ 

ratemaking this year, we follow the 

procedure outlined in paragraph (b) of 

§ 404.104, which adjusts the existing 

compensation benchmark by inflation. 

As stated in section VI.A of the 

preamble, we are proposing to use a 

two-step process to adjust target pilot 

compensation for inflation. First, we 

adjust the 2021 percent target 

compensation benchmark of $378,925 

by 1.8 percent for an adjusted value of 

$385,746. The adjustment accounts for 

the difference in actual fourth quarter 

(Q4) 2020 ECI inflation, which is 3.5 

percent, and the 2020 PCE estimate of 

1.7 percent.23 24 The second step 

accounts for projected inflation from 

2021 to 2022, 2.0 percent.25 Based on 

the projected 2022 inflation estimate, 

the proposed target compensation 

benchmark for 2022 is $393,461 per 

pilot. The target apprentice pilot wage is 

36 percent of the target pilot 

compensation, $141,646 (= $393,461 × 

0.36). 

TABLE 6—TARGET PILOT COMPENSATION

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

Difference between Actual 2021 ECI inflation (3.5%) and 2020 PCE Estimate (1.7%) ..................................................................... 1.80% 

Adjusted 2021 Compensation ............................................................................................................................................................. $385,746 

2021 to 2022 Inflation Factor .............................................................................................................................................................. 2.00% 

2022 Target Pilot Compensation ......................................................................................................................................................... $393,461 

2022 Target Apprentice Pilot Wage .................................................................................................................................................... $141,646 


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26Moody’s Seasoned Aaa Corporate Bond Yield, 

average of 2020 monthly data. The Coast Guard uses 

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

taken from Moody’s Investors Service, which is a 

bond credit rating business of Moody’s Corporation. 

Bond ratings are based on creditworthiness and 

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

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

fred.stlouisfed.org/series/AAA. (Downloaded March 

26, 2021) 

Next, we certify that the number of 

pilots estimated for 2021 is less than or 

equal to the number permitted under 

the proposed changes to the staffing 

model in § 401.220(a). The proposed 

changes to the staffing model suggest 

that the number of pilots needed is 18 

pilots for District One, which is less 

than or equal to 18, the number of 

registered pilots provided by the pilot 

associations. In accordance with the 

proposed changes to § 404.104(c), we 

use the revised target individual 

compensation level to derive the total 

pilot compensation by multiplying the 

individual target compensation by the 

estimated number of registered pilots for 

District One, as shown in table 7. We 

estimate that the number of apprentice 

pilots with limited registration needed 

will be two for District One in the 2022 

season. The total target wages for 

apprentices are allocated with 60 

percent for the designated area, and 40 

percent for the undesignated area, in 

accordance with the way operating 

expenses are allocated. 

TABLE 7—TARGET COMPENSATION FOR DISTRICT ONE

District One 

Designated Undesignated Total 

Target Pilot Compensation .......................................................................................................... $393,461 $393,461 $393,461 

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

Total Target Pilot Compensation .......................................................................................... $3,934,610 $3,147,688 $7,082,298 

Target Apprentice Pilot Wage ..................................................................................................... $141,646 $141,646 $141,646 

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

Total Target Apprentice Pilot Wages ................................................................................... $169,975 $113,317 $283,292 

E. Step 5: Project Working Capital Fund 

Next, we calculate the working capital 

fund revenues needed for each area. 

First, we add the figures for projected 

operating expenses, total pilot 

compensation, and total target 

apprentice pilot wage for each area. 

Next, we find the preceding year’s 

average annual rate of return for new 

issues of high-grade corporate securities. 

Using Moody’s data, the number is 

2.4767 percent.26 By multiplying the 

two figures, we obtain the working 

capital fund contribution for each area, 

as shown in table 8. 

TABLE 8—WORKING CAPITAL FUND CALCULATION FOR DISTRICT ONE

District One 

Designated Undesignated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $2,352,634 $1,568,537 $3,921,171 

Total Target Pilot Compensation (Step 4) ................................................................................... 3,934,610 3,147,688 7,082,298 

Total Target Apprentice Pilot Wages (Step 4) ............................................................................ 169,975 113,317 283,292 

Total 2022 Expenses ............................................................................................................ 6,457,219 4,829,542 11,286,761 

Working Capital Fund (2.48%) .................................................................................................... 159,924 119,612 279,536 

F. Step 6: Project Needed Revenue 

In this step, we add all the expenses 

accrued to derive the total revenue 

needed for each area. These expenses 

include the projected operating 

expenses (from Step 2), the total pilot 

compensation (from Step 4), total target 

apprentice pilot wage (from Step 4), and 

the working capital fund contribution 

(from Step 5). We show these 

calculations in table 9. 

TABLE 9—REVENUE NEEDED FOR DISTRICT ONE

District One 

Designated Undesignated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $2,352,634 $1,568,537 $3,921,171 

Total Target Pilot Compensation (Step 4) ................................................................................... 3,934,610 3,147,688 7,082,298 

Total Target Apprentice Pilot Wages (Step 4) ............................................................................ 169,975 113,317 283,292 

Working Capital Fund (Step 5) .................................................................................................... 159,924 119,612 279,536 

Total Revenue Needed ........................................................................................................ 6,617,143 4,949,154 11,566,297 


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27To calculate the time on task for each district, 

the Coast Guard uses billing data from the Great 

Lakes Pilotage Management System (GLPMS). We 

pull the data from the system filtering by district, 

year, job status (we only include closed jobs), and 

flagging code (we only include U.S. jobs). After 

downloading the data, we remove any overland 

transfers from the dataset, if necessary, and sum the 

total bridge hours, by area. We then subtract any 

non-billable delay hours from the total. 

28To calculate the number of transits by vessel 

class, we use the billing data from GLPMS and 

SeaPro, filtering by district, year, job status (we only 

include closed jobs), and flagging code (we only 

include U.S. jobs). We then count the number of 

jobs by vessel class and area. (SeaPro, used by all 

three pilot districts, is the approved dispatch and 

invoicing system that tracks pilot and vessel transits 

in place of the GLPMS.) 

G. Step 7: Calculate Initial Base Rates 

Having determined the revenue 

needed for each area in the previous six 

steps, to develop an hourly rate we 

divide that number by the expected 

number of hours of traffic. Step 7 is a 

two-part process. In the first part, we 

calculate the 10-year average of traffic in 

District One, using the total time on task 

or pilot bridge hours.27 Because we 

calculate separate figures for designated 

and undesignated waters, there are two 

parts for each calculation. We show 

these values in table 10. 

TABLE 10—TIME ON TASK FOR

DISTRICT ONE

[Hours] 

Year 

District One 

Designated Undesignated 

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

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

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

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

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

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

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

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

2012 .......... 4,771 5,121 

2011 .......... 5,045 5,377 

TABLE 10—TIME ON TASK FOR

DISTRICT ONE—Continued 

[Hours] 

Year 

District One 

Designated Undesignated 

Average 6,271 6,885 

Next, we derive the initial hourly rate 

by dividing the revenue needed by the 

average number of hours for each area. 

This produces an initial rate, which is 

necessary to produce the revenue 

needed for each area, assuming the 

amount of traffic is as expected. We 

present the calculations for each area in 

table 11. 

TABLE 11—INITIAL RATE CALCULATIONS FOR DISTRICT ONE

Designated Undesignated 

Revenue Needed (Step 6) ....................................................................................................................................... $6,617,143 $4,949,154 

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

Initial Rate ................................................................................................................................................................ $1,055 $719 

H. Step 8: Calculate Average Weighting 

Factors by Area 

In this step, we calculate the average 

weighting factor for each designated and 

undesignated area. We collect the 

weighting factors, set forth in 46 CFR 

401.400, for each vessel trip. Using this 

database, we calculate the average 

weighting factor for each area using the 

data from each vessel transit from 2014 

onward, as shown in tables 12 and 13.28

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

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

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

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

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

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

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

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

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

Class 2 (2014) ............................................................................................................................. 285 1.15 327.75 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

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

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

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

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

TABLE 13—AVERAGE WEIGHTING FACTOR FOR DISTRICT ONE, UNDESIGNATED AREAS

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

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

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

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

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

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

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

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

Class 2 (2014) ............................................................................................................................. 238 1.15 273.7 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

I. Step 9: Calculate Revised Base Rates 

In this step, we revise the base rates 

so that once the impact of the weighting 

factors is considered; the total cost of 

pilotage will be equal to the revenue 

needed. To do this, we divide the initial 

base rates calculated in Step 7 by the 

average weighting factors calculated in 

Step 8, as shown in table 14. 

TABLE 14—REVISED BASE RATES FOR DISTRICT ONE

Area Initial rate 

(step 7) 

Average 

weighting 

factor 

(step 8) 

Revised Rate 

(initial rate ÷ 

average 

weighting 

factor) 

District One: Designated .............................................................................................................. $1,055 1.29 $818 

District One: Undesignated .......................................................................................................... 719 1.29 557 

J. Step 10: Review and Finalize Rates 

In this step, the Director reviews the 

rates set forth by the staffing model and 

ensures that they meet the goal of 

ensuring safe, efficient, and reliable 

pilotage. To establish this, the Director 

considers whether the proposed rates 

incorporate appropriate compensation 

for pilots to handle heavy traffic periods 

and whether there is a sufficient number 

of pilots to handle those heavy traffic 

periods. The Director also considers 

whether the proposed rates would cover 

operating expenses and infrastructure 

costs, including average traffic and 

weighting factions. Based on the 

financial information submitted by the 


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29These reports are available in the docket for 

this 2022 ratemaking rulemaking (see Docket No. 

USCG–2021–0431). 

pilots, the Director is not proposing any 

alterations to the rates in this step. We 

propose to modify § 401.405(a)(1) and 

(2) to reflect the final rates shown in 

table 15. 

TABLE 15—PROPOSED FINAL RATES FOR DISTRICT ONE

Area Name Final 2021 

pilotage rate 

Proposed 

2022 pilotage 

rate 

District One: Designated .............................................. St. Lawrence River ....................................................... $800 $818 

District One: Undesignated .......................................... Lake Ontario ................................................................. 498 557 

District Two 

A. Step 1: Recognize Previous Operating 

Expenses 

Step 1 in our ratemaking methodology 

requires that the Coast Guard review 

and recognize the previous year’s 

operating expenses (§ 404.101). To do 

so, we begin by reviewing the 

independent accountant’s financial 

reports for each association’s 2019 

expenses and revenues.29 For 

accounting purposes, the financial 

reports divide expenses into designated 

and undesignated areas. For costs 

accrued by the pilot associations 

generally, such as employee benefits, for 

example, the cost is divided between 

the designated and undesignated areas 

on a pro rata basis. The recognized 

operating expenses for District Two are 

shown in table 16. 

Adjustments made by the auditors are 

explained in the auditors’ reports 

(available in the docket where indicated 

in the Public Participation and Request 

for Comments portion of this 

document). 

In the 2019 expenses used as the basis 

for this rulemaking, districts used the 

term ‘‘applicant’’ to describe applicant 

trainees and persons who would be 

called apprentices under the new 

definition proposed in this rulemaking. 

Therefore, when describing past 

expenses, we use the term ‘‘applicant’’ 

to match what was reported from 2019, 

but use ‘‘apprentice’’ to distinguish the 

impacts of the ratemaking going 

forward. 

There are two Director’s adjustments 

for District Two. The first deduction is 

$173,818, the amount of surcharge 

collected in 2019 to recoup expenses of 

one applicant pilot, which is greater 

than the allowable surcharge of 

$150,000 per applicant pilot. The 

second deduction of $287,836 reduces 

the allowable expenses for applicant 

pilot salaries to 36 percent of target pilot 

compensation. District Two reported 

$417,395 in expenses for the salary of a 

single applicant pilot, more than the 

salary of a fully registered pilot. Using 

the 36 percent target, the allowable 

applicant salary would have been 

$129,559, meaning the district paid an 

excess of $287,836 in applicant salaries 

($417,395¥$129,559 = $287,836). We 

continue to include applicant salaries as 

an allowable expense in the 2022 

ratemaking as it is based on 2019 

operating expenses, when salaries were 

still an allowable expense. The 

apprentice salaries paid in the years 

2019, 2020, and 2021 have not been 

reimbursed in the ratemaking as of 

publication of this proposed rule. 

Applicant salaries (including applicant 

trainees and apprentice pilots) will 

continue to be an allowable operating 

expense through the 2024 ratemaking, 

which uses operating expenses from 

2021, where the wages for apprentice 

pilots were still authorized as operating 

expenses. Starting in the 2025 

ratemaking, apprentice pilot salaries 

would no longer be included as a 2022 

operating expense, because apprentice 

pilot wages would have already been 

factored into the ratemaking Steps 3 and 

4 in calculation of the 2022 rates. 

Starting in 2025, the applicant salaries’ 

operating expenses for 2022 will consist 

of only applicant trainees (those who 

are not yet apprentice pilots). 

TABLE 16—2019 RECOGNIZED EXPENSES FOR DISTRICT TWO

Reported operating expenses for 2019 

District Two 

Undesignated Designated 

Total Lake 

Erie 

SES to Port 

Huron 

Total Other Pilotage Costs: 

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

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

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

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

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

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

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

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

Total Applicant Pilotage Cost: 

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

Applicant Health Insurance .................................................................................................. 80 120 200 

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

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


tkelley on DSK125TN23PROD with PROPOSALS
51062 Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Proposed Rules 

30The 2020 inflation rate is available at https:// 

beta.bls.gov/dataViewer/view/timeseries/ 

CUUR0200SA0. Specifically the CPI is defined as 

‘‘All Urban Consumers (CPI–U), All Items, 1982– 

4=100.’’ (Downloaded April 2021) 31The 2021 and 2022 inflation rates are available 

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

files/fomcprojtabl20210317.pdf. We used the PCE 

median inflation value found in table 1. 

(Downloaded March 24, 2021) 

TABLE 16—2019 RECOGNIZED EXPENSES FOR DISTRICT TWO—Continued 

Reported operating expenses for 2019 

District Two 

Undesignated Designated 

Total Lake 

Erie 

SES to Port 

Huron 

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

Total Applicant Cost ...................................................................................................... 182,468 273,702 456,170 

Pilot Boat and Dispatch Costs: 

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

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

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

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

Administrative Expense: 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Total OpEx (Pilot Costs + Applicant Cost + Pilot Boats + Admin) ............................................. 1,166,567 1,749,851 2,916,418 

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

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

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

Total Operating Expenses (OpEx + Adjustments) ................................................. 981,906 1,472,859 2,454,764 

* Values may not sum due to rounding. 

B. Step 2: Project Operating Expenses, 

Adjusting for Inflation or Deflation 

Having identified the recognized 2019 

operating expenses in Step 1, the next 

step is to estimate the current year’s 

operating expenses by adjusting those 

expenses for inflation over the 3-year 

period. 

We calculate inflation using the BLS 

data from the CPI for the Midwest 

Region of the United States for the 2020 

inflation rate.30 Because the BLS does 

not provide forecasted inflation data, we 

use economic projections from the 

Federal Reserve for the 2021 and 2022 

inflation modification.31 Based on that 

information, the calculations for Step 2 

are as follows: 

TABLE 17—ADJUSTED OPERATING EXPENSES FOR DISTRICT TWO

District Two 

Undesignated Designated Total 

Total Operating Expenses (Step 1) ............................................................................................. $981,906 $1,472,859 $2,454,764 

2020 Inflation Modification (@1%) .............................................................................................. 9,819 14,729 24,548 

2021 Inflation Modification (@2.4%) ........................................................................................... 23,801 35,702 59,503 

2022 Inflation Modification (@2%) .............................................................................................. 20,311 30,466 50,777 

Adjusted 2022 Operating Expenses ..................................................................................... 1,035,837 1,553,756 2,589,592 


tkelley on DSK125TN23PROD with PROPOSALS
Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Proposed Rules 51063 

32For a detailed calculation refer to the Great 

Lakes Pilotage Rates—2017 Annual Review final 

rule, which contains the staffing model. See 82 FR 

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

33Employment Cost Index, Total Compensation 

for Private Industry workers in Transportation and 

Material Moving, Series ID: CIU2010000520000A. 

34CPI for All Urban Consumers, Series ID 

CUUR0200SA0. 

35https://www.federalreserve.gov/ 

monetarypolicy/files/fomcprojtabl20210317.pdf. 

36See table 6 of the Great Lakes Pilotage Rates— 

2017 Annual Review final rule, 82 FR 41466 at 

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

staffing model is discussed at length in the final 

rule (see pages 41476–41480 for a detailed analysis 

of the calculations). 

37See footnote 22 for more information. 

C. Step 3: Estimate Number of 

Registered Pilots and Apprentice Pilots 

In accordance with the text in 

§ 404.103, we estimate the number of 

registered pilots in each district. We 

determine the number of registered 

pilots based on data provided by the 

LPA. Using these numbers, we estimate 

that there will be 16 registered pilots in 

2022 in District Two. We determine the 

number of apprentice pilots based on 

input from the district on anticipated 

retirements and staffing needs. Using 

these numbers, we estimate that there 

will be two apprentice pilots in 2022 in 

District Two. Furthermore, based on the 

seasonal staffing model discussed in the 

2017 ratemaking (see 82 FR 41466) and 

our proposed changes to that staffing 

model, we assign a certain number of 

pilots to designated waters and a certain 

number to undesignated waters, as 

shown in table 18. Without rounding 

up, there would be 8 pilots assigned to 

the undesignated area of District Two 

(8.6 pilots which is rounded up to 9 

pilots). These numbers are used to 

determine the amount of revenue 

needed in their respective areas. 

TABLE 18—AUTHORIZED PILOTS

Item District 

Two 

Proposed Maximum Number of Pilots (per § 401.220(a)) 32 ............................................................................................................... 16 

2022 Authorized Pilots (total) .............................................................................................................................................................. 16 

Pilots Assigned to Designated Areas .................................................................................................................................................. 7 

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

2022 Apprentice Pilots ......................................................................................................................................................................... 2 

D. Step 4: Determine Target Pilot 

Compensation Benchmark and 

Apprentice Pilot Wage Benchmark 

In this step, we determine the total 

pilot compensation for each area. As we 

are issuing an ‘‘interim’’ ratemaking this 

year, we follow the procedure outlined 

in paragraph (b) of § 404.104, which 

adjusts the existing compensation 

benchmark by inflation. As stated in 

section VI.A of the preamble, we are 

proposing to use a two-step process to 

adjust target pilot compensation for 

inflation. First, we adjust the 2021 

percent target compensation benchmark 

of $378,925 by multiplying by 1.8 

percent for an adjusted value of 

$385,746. The adjustment accounts for 

the difference in actual Q4 2020 ECI 

inflation, 3.5 percent, and the 2020 PCE 

estimate of 1.7 percent.33 34 The second 

step accounts for projected inflation 

from 2021 to 2022, which is 2.0 

percent.35 The proposed compensation 

benchmark for 2022 is $393,461 per 

pilot, as calculated in table 6. The target 

apprentice pilot wage is 36 percent of 

the target pilot compensation, $141,646 

(= $393,461 × 0.36). 

Next, we certify that the number of 

pilots estimated for 2022 is less than or 

equal to the number permitted under 

the proposed changes to the staffing 

model in § 401.220(a). The proposed 

changes to the staffing model suggest 

that the number of pilots needed is 16 

pilots for District Two, which is less 

than or equal to 16, the number of 

registered pilots provided by the pilot 

associations.36

Thus, in accordance with 

§ 404.104(c), we use the revised target 

individual compensation level to derive 

the total pilot compensation by 

multiplying the individual target 

compensation by the estimated number 

of registered pilots for District Two, as 

shown in table 19. 

TABLE 19—TARGET COMPENSATION FOR DISTRICT TWO

District Two 

Undesignated Designated Total 

Target Pilot Compensation .......................................................................................................... $393,461 $393,461 $393,461 

Number of Pilots .......................................................................................................................... 9 7 16 

Total Target Pilot Compensation .......................................................................................... $3,541,149 $2,754,227 $6,295,376 

Target Apprentice Pilot Wage ..................................................................................................... $141,646 $141,646 $141,646 

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

Total Target Apprentice Pilot Wages ................................................................................... $169,975 $113,317 $283,292 

E. Step 5: Project Working Capital Fund 

Next, we calculate the working capital 

fund revenues needed for each area. 

First, we add the figures for projected 

operating expenses, total pilot 

compensation, and total target 

apprentice pilot wages for each area. 

Next, we find the preceding year’s 

average annual rate of return for new 

issues of high-grade corporate securities. 

Using Moody’s data, the number is 

2.4767 percent.37 By multiplying the 

two figures, we obtain the working 

capital fund contribution for each area, 

as shown in table 20. 


tkelley on DSK125TN23PROD with PROPOSALS
51064 Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Proposed Rules 

38See footnote 23 for more information. 

TABLE 20—WORKING CAPITAL FUND CALCULATION FOR DISTRICT TWO

District Two 

Undesignated Designated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $1,035,837 $1,553,756 $2,589,592 

Total Target Pilot Compensation (Step 4) ................................................................................... 3,541,149 2,754,227 6,295,376 

Total Target Apprentice Pilot Wages (Step 4) ............................................................................ 169,975 113,317 283,292 

Total 2022 Expenses ............................................................................................................ 4,746,961 4,421,300 9,168,260 

Working Capital Fund (2.48%) .................................................................................................... 117,566 109,501 227,067 

F. Step 6: Project Needed Revenue 

In this step, we add all the expenses 

accrued to derive the total revenue 

needed for each area. These expenses 

include the projected operating 

expenses (from Step 2), the total pilot 

compensation (from Step 4), total target 

apprentice pilot wages, and the working 

capital fund contribution (from Step 5). 

We show these calculations in table 21. 

TABLE 21—REVENUE NEEDED FOR DISTRICT TWO

District Two 

Undesignated Designated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $1,035,837 $1,553,756 $2,589,592 

Total Target Pilot Compensation (Step 4) ................................................................................... 3,541,149 2,754,227 6,295,376 

Total Target Apprentice Pilot Wages (Step 4) ............................................................................ 169,975 113,317 283,292 

Working Capital Fund (Step 5) .................................................................................................... 117,566 109,501 227,067 

Total Revenue Needed ........................................................................................................ 4,864,527 4,530,801 9,395,327 

G. Step 7: Calculate Initial Base Rates 

Having determined the revenue 

needed for each area in the previous six 

steps, to develop an hourly rate we 

divide that number by the expected 

number of hours of traffic. Step 7 is a 

two-part process. In the first part, we 

calculate the 10-year average of traffic in 

District Two, using the total time on 

task or pilot bridge hours.38 Because we 

calculate separate figures for designated 

and undesignated waters, there are two 

parts for each calculation. We show 

these values in table 22. 

TABLE 22—TIME ON TASK FOR DISTRICT TWO

[Hours] 

Year 

District Two 

Designated Undesignated 

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

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

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

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

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

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

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

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

2012 ......................................................................................................................................................................... 3,848 3,922 

2011 ......................................................................................................................................................................... 3,708 3,680 

Average ............................................................................................................................................................ 5,701 5,978 

Next, we derive the initial hourly rate 

by dividing the revenue needed by the 

average number of hours for each area. 

This produces an initial rate, which is 

necessary to produce the revenue 

needed for each area, assuming the 

amount of traffic is as expected. The 

calculations for each area are set forth 

in table 23. The initial rate for the 

designated area is lower than last year’s 

rate because of the increase in bridge 

hours shown as the average time on 

task, making the denominator of the 

revenue needed divided by bridge hours 

larger, and therefore making the initial 

rate lower. 


tkelley on DSK125TN23PROD with PROPOSALS
Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Proposed Rules 51065 

39See footnote 24 for more information. 

TABLE 23—INITIAL RATE CALCULATIONS FOR DISTRICT TWO

Item Undesignated Designated 

Revenue Needed (Step 6) ....................................................................................................................................... $4,864,527 $4,530,801 

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

Initial Rate ................................................................................................................................................................ $853 $758 

H. Step 8: Calculate Average Weighting 

Factors by Area 

In this step, we calculate the average 

weighting factor for each designated and 

undesignated area. We collect the 

weighting factors, set forth in 46 CFR 

401.400, for each vessel trip. Using this 

database, we calculate the average 

weighting factor for each area using the 

data from each vessel transit from 2014 

onward, as shown in tables 24 and 25.39

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

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

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

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

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

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

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

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

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

Class 2 (2014) ............................................................................................................................. 356 1.15 409.4 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

TABLE 25—AVERAGE WEIGHTING FACTOR FOR DISTRICT TWO, DESIGNATED AREAS

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

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

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

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

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

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

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

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

Class 2 (2014) ............................................................................................................................. 237 1.15 272.55 

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

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

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

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

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

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

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


tkelley on DSK125TN23PROD with PROPOSALS
51066 Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Proposed Rules 

40These reports are available in the docket for 

this rulemaking (see Docket No. USCG–2019–0736). 

TABLE 25—AVERAGE WEIGHTING FACTOR FOR DISTRICT TWO, DESIGNATED AREAS—Continued 

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

I. Step 9: Calculate Revised Base Rates 

In this step, we revise the base rates 

so that once the impact of the weighting 

factors is considered, the total cost of 

pilotage will be equal to the revenue 

needed. To do this, we divide the initial 

base rates calculated in Step 7 by the 

average weighting factors calculated in 

Step 8, as shown in table 26. 

TABLE 26—REVISED BASE RATES FOR DISTRICT TWO

Area Initial rate 

(step 7) 

Average 

weighting 

factor 

(step 8) 

Revised rate 

(initial rate ÷ 

average 

weighting 

factor) 

District Two: Designated .............................................................................................................. $758 1.32 $574 

District Two: Undesignated .......................................................................................................... 853 1.31 651 

J. Step 10: Review and Finalize Rates 

In this step, the Director reviews the 

rates set forth by the staffing model and 

ensures that they meet the goal of 

ensuring safe, efficient, and reliable 

pilotage. To establish this, the Director 

considers whether the proposed rates 

incorporate appropriate compensation 

for pilots to handle heavy traffic 

periods, and whether there is a 

sufficient number of pilots to handle 

those heavy traffic periods. The Director 

also considers whether the proposed 

rates would cover operating expenses 

and infrastructure costs, and takes 

average traffic and weighting factors 

into consideration. Based on this 

information, the Director is not 

proposing any alterations to the rates in 

this step. The proposed 2021 rate for the 

designated area of District Two is lower 

than the 2020 final rate because of the 

increased traffic shown in Step 7. We 

propose to modify § 401.405(a)(3) and 

(4) to reflect the final rates shown in 

table 27. 

TABLE 27—PROPOSED FINAL RATES FOR DISTRICT TWO

Area Name Final 2020 

pilotage rate 

Proposed 

2021 pilotage 

rate 

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

Huron, MI.

$580 $574 

District Two: Undesignated .......................................... Lake Erie ...................................................................... 566 651 

District Three 

A. Step 1: Recognize Previous Operating 

Expenses 

Step 1 in our ratemaking methodology 

requires that the Coast Guard review 

and recognize the previous year’s 

operating expenses (§ 404.101). To do 

so, we begin by reviewing the 

independent accountant’s financial 

reports for each association’s 2018 

expenses and revenues.40 For 

accounting purposes, the financial 

reports divide expenses into designated 

and undesignated areas. For costs 

accrued by the pilot associations 

generally, such as employee benefits, for 

example, the cost is divided between 

the designated and undesignated areas 

on a pro rata basis. The recognized 

operating expenses for District Three are 

shown in table 28. 

Adjustments made by the auditors are 

explained in the auditors’ reports 

(available in the docket where indicated 

in the Public Participation and Request 

for Comments portion of this 

document). 

In the 2019 expenses used as the basis 

for this rulemaking, districts used the 


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Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Proposed Rules 51067 

term ‘‘applicant’’ to describe applicant 

trainees and persons who would be 

called apprentices under the new 

definition proposed in this rulemaking. 

Therefore, when describing past 

expenses, we use the term ‘‘applicant’’ 

to match what was reported from 2019, 

but use ‘‘apprentice’’ to describe the 

impacts of the ratemaking going 

forward. 

There are two Director’s adjustments 

for District Three. The first deduction is 

$746,802, the amount of surcharge 

collected in 2019 to recoup expenses of 

four applicant pilots, which is greater 

than the allowable surcharge of 

$150,000 per applicant pilot. The 

second deduction of $1,921 reduces the 

allowable expenses for applicant pilots 

to 36 percent of target pilot 

compensation. District Three reported 

$520,158 in expenses for the salary of 

four applicant pilots. Using the 36 

percent target, the allowable applicant 

salary would have been $129,559 per 

applicant for a total of $518,237 for four 

applicant pilots, meaning the district 

paid an excess of $1,921 in applicant 

salaries ($520,158¥$518,237 = $1,921). 

Applicant salaries (including applicant 

trainees and apprentice pilots) will 

continue to be an allowable operating 

expense through the 2024 ratemaking, 

which uses operating expenses from 

2021 where the wages for apprentice 

pilots were still authorized as operating 

expenses. Starting in the 2025 

ratemaking, apprentice pilot salaries 

would no longer be included as a 2022 

operating expense, because apprentice 

pilot wages would have already been 

factored into the ratemaking Steps 3 and 

4 in calculation of the 2022 rates. 

Starting in 2025, the applicant salaries 

operating expenses for 2022 will consist 

of only applicant trainees (those who 

are not apprentice pilots). 

TABLE 28—2019 RECOGNIZED EXPENSES FOR DISTRICT THREE

Reported operating expenses for 2019 

District Three 

Total Undesignated Designated Undesignated 

Lakes Huron 

and Michigan 

St. Mary’s 

River 

Lake 

Superior 

Other Pilotage Costs: 

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

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

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

Payroll Taxes ............................................................................................ ........................ ........................ ........................ 0 

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

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

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

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

Applicant Cost: 

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

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

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

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

Pilot Boat and Dispatch Costs: 

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

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

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

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

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

Administrative Cost: 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Directors Adjustments—Excess Applicant Salary Paid ............................ (989.36) (412.38) (518.98) (1,921) 


tkelley on DSK125TN23PROD with PROPOSALS
51068 Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Proposed Rules 

41The 2020 inflation rate is available at https:// 

beta.bls.gov/dataViewer/view/timeseries/ 

CUUR0200SA0. Specifically the CPI is defined as 

‘‘All Urban Consumers (CPI–U), All Items, 1982¥4 

= 100’’. (Downloaded April 2021) 

42The 2021 and 2022 inflation rates are available 

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

files/fomcprojtabl20210317.pdf. We used the PCE 

median inflation value found in table 1. 

(Downloaded March 24, 2021) 

43For a detailed calculation, refer to the Great 

Lakes Pilotage Rates—2017 Annual Review final 

rule, which contains the staffing model. See 82 FR 

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

44Employment Cost Index, Total Compensation 

for Private Industry workers in Transportation and 

Material Moving, Series ID: CIU2010000520000A. 

45CPI for All Urban Consumers, Series ID 

CUUR0200SA0. 

TABLE 28—2019 RECOGNIZED EXPENSES FOR DISTRICT THREE—Continued 

Reported operating expenses for 2019 

District Three 

Total Undesignated Designated Undesignated 

Lakes Huron 

and Michigan 

St. Mary’s 

River 

Lake 

Superior 

Total Directors Adjustments .............................................................. (385,667) (160,751) (202,305) (748,723) 

Total Operating Expenses (OpEx + Adjustments) ..................... 1,573,412 655,819 825,346 3,054,577 

B. Step 2: Project Operating Expenses, 

Adjusting for Inflation or Deflation 

Having identified the recognized 2019 

operating expenses in Step 1, the next 

step is to estimate the current year’s 

operating expenses by adjusting those 

expenses for inflation over the 3-year 

period. 

We calculate inflation using the BLS 

data from the CPI for the Midwest 

Region of the United States for the 2020 

inflation rate.41 Because the BLS does 

not provide forecasted inflation data, we 

use economic projections from the 

Federal Reserve for the 2021 and 2022 

inflation modification.42 Based on that 

information, the calculations for Step 2 

are as follows: 

TABLE 29—ADJUSTED OPERATING EXPENSES FOR DISTRICT THREE

District Three 

Undesignated Designated Total 

Total Operating Expenses (Step 1) ............................................................................................. $2,398,758 $655,819 $3,054,577 

2020 Inflation Modification (@1%) .............................................................................................. 23,988 6,558 30,546 

2021 Inflation Modification (@2.4%) ........................................................................................... 58,146 15,897 74,043 

2022 Inflation Modification (@2%) .............................................................................................. 49,618 13,565 63,183 

Adjusted 2022 Operating Expenses ..................................................................................... 2,530,510 691,839 3,222,349 

C. Step 3: Estimate Number of 

Registered Pilots and Apprentice Pilots 

In accordance with the text in 

§ 404.104(c), we estimate the number of 

registered pilots in each district. We 

determine the number of registered 

pilots based on data provided by the 

WGLPA. Using these numbers, we 

estimate that there will be 22 registered 

pilots in 2022 in District Three. We 

determine the number of apprentice 

pilots based on input from the district 

on anticipated retirements and staffing 

needs. Using these numbers, we 

estimate that there will be five 

apprentice pilots in 2022 in District 

Three. Furthermore, based on the 

seasonal staffing model discussed in the 

2017 ratemaking (see 82 FR 41466), and 

our proposed changes to that staffing 

model, we assign a certain number of 

pilots to designated waters and a certain 

number to undesignated waters, as 

shown in table 30. These numbers are 

used to determine the amount of 

revenue needed in their respective 

areas. 

TABLE 30—AUTHORIZED PILOTS

Item District 

Three 

Proposed Maximum Number of Pilots (per § 401.220(a)) 43 ............................................................................................................... 22 

2022 Authorized Pilots (total) .............................................................................................................................................................. 22 

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

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

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

D. Step 4: Determine Target Pilot 

Compensation Benchmark and 

Apprentice Pilot Wage Benchmark 

In this step, we determine the total 

pilot compensation for each area. As we 

are issuing an ‘‘interim’’ ratemaking this 

year, we follow the procedure outlined 

in paragraph (b) of § 404.104, which 

adjusts the existing compensation 

benchmark by inflation. First, we adjust 

the 2021 percent target compensation 

benchmark of $378,925 by 1.8 percent 

for an adjusted value of $385,746. The 

adjustment accounts for the difference 

in actual Q4 2020 ECI inflation, 3.5 

percent, and the 2020 PCE estimate of 

1.7 percent.44 45 The second step 

accounts for projected inflation from 


tkelley on DSK125TN23PROD with PROPOSALS
Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Proposed Rules 51069 

46https://www.federalreserve.gov/ 

monetarypolicy/files/fomcprojtabl20210317.pdf. 

47See Table 6 of the Great Lakes Pilotage Rates— 

2017 Annual Review final rule, 82 FR 41466 at 

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

staffing model is discussed at length in the final 

rule (see pages 41476–41480 for a detailed analysis 

of the calculations). 

2021 to 2022, 2.0 percent.46 Based on 

the projected 2022 inflation estimate, 

the proposed compensation benchmark 

for 2022 is $393,461 per pilot as shown 

in table 6. The target apprentice pilot 

wage is 36 percent of the target pilot 

compensation, $141,646 (= $393,461 × 

0.36). 

Next, we certify that the number of 

pilots estimated for 2022 is less than or 

equal to the number permitted under 

the proposed changes to the staffing 

model in § 401.220(a). The proposed 

changes to the staffing model suggest 

that the number of pilots needed is 22 

pilots for District Three, which is less 

than or equal to 22, the number of 

registered pilots provided by the pilot 

associations.47

Thus, in accordance with 

§ 404.104(c), we use the revised target 

individual compensation level to derive 

the total pilot compensation by 

multiplying the individual target 

compensation by the estimated number 

of registered pilots for District Three, as 

shown in table 31. 

TABLE 31—TARGET COMPENSATION FOR DISTRICT THREE

District Three 

Undesignated Designated Total 

Target Pilot Compensation .......................................................................................................... $393,461 $393,461 $393,461 

Number of Pilots .......................................................................................................................... 18 4 22 

Total Target Pilot Compensation .......................................................................................... $7,082,298 $1,573,844 $8,656,142 

Target Apprentice Pilot Wage ..................................................................................................... $141,646 $141,646 $141,646 

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

Total Target Apprentice Pilot Wages ................................................................................... $424,938 $283,292 $708,229.80 

E. Step 5: Project Working Capital Fund 

Next, we calculate the working capital 

fund revenues needed for each area. 

First, we add the figures for projected 

operating expenses, total pilot 

compensation, and total target 

apprentice pilot wages for each area. 

Next, we find the preceding year’s 

average annual rate of return for new 

issues of high-grade corporate securities. 

Using Moody’s data, the number is 

2.4767 percent.48 By multiplying the 

two figures, we obtain the working 

capital fund contribution for each area, 

as shown in table 32. 

TABLE 32—WORKING CAPITAL FUND CALCULATION FOR DISTRICT THREE

District Three 

Undesignated Designated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $2,530,510 $691,839 $3,222,349 

Total Target Pilot Compensation (Step 4) ................................................................................... 7,082,298 1,573,844 8,656,142 

Total Target Apprentice Pilot Wages (Step 4) ............................................................................ 424,938 283,292 708,230 

Total 2022 Expenses ............................................................................................................ 10,037,746 2,548,975 12,586,721 

Working Capital Fund (2.48%) .................................................................................................... 248,602 63,130 311,732 

F. Step 6: Project Needed Revenue 

In this step, we add all the expenses 

accrued to derive the total revenue 

needed for each area. These expenses 

include the projected operating 

expenses (from Step 2), the total pilot 

compensation (from Step 4), and the 

working capital fund contribution (from 

Step 5). The calculations are shown in 

table 33. 

TABLE 33—REVENUE NEEDED FOR DISTRICT THREE

District Three 

Undesignated Designated Total 

Adjusted Operating Expenses (Step 2) ....................................................................................... $2,530,510 $691,839 $3,222,349 

Total Target Pilot Compensation (Step 4) ................................................................................... 7,082,298 1,573,844 8,656,142 

Total Target Apprentice Pilot Wages (Step 4) ............................................................................ 424,938 283,292 708,230 

Working Capital Fund (Step 5) .................................................................................................... 248,602 63,130 311,732 

Total Revenue Needed ........................................................................................................ 10,286,348 2,612,105 12,898,453 


tkelley on DSK125TN23PROD with PROPOSALS
51070 Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Proposed Rules 

49See footnote 22 for more information. 

G. Step 7: Calculate Initial Base Rates 

Having determined the revenue 

needed for each area in the previous six 

steps, to develop an hourly rate we 

divide that number by the expected 

number of hours of traffic. Step 7 is a 

two-part process. In the first part, we 

calculate the 10-year average of traffic in 

District Three, using the total time on 

task or pilot bridge hours.49 Because we 

calculate separate figures for designated 

and undesignated waters, there are two 

parts for each calculation. We show 

these values in table 34. 

TABLE 34—TIME ON TASK FOR DISTRICT THREE

[Hours] 

Year 

District Three 

Undesignated Designated 

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

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

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

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

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

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

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

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

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

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

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

Next, we derive the initial hourly rate 

by dividing the revenue needed by the 

average number of hours for each area. 

This produces an initial rate, which is 

necessary to produce the revenue 

needed for each area, assuming the 

amount of traffic is as expected. The 

calculations for each area are set forth 

in table 35. 

TABLE 35—INITIAL RATE CALCULATIONS FOR DISTRICT THREE

Undesignated Designated 

Revenue Needed (Step 6) ....................................................................................................................................... $10,287,977 $2,612,550 

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

Initial Rate ................................................................................................................................................................ 487 891 

H. Step 8: Calculate Average Weighting 

Factors by Area 

In this step, we calculate the average 

weighting factor for each designated and 

undesignated area. We collect the 

weighting factors, set forth in 46 CFR 

401.400, for each vessel trip. Using this 

database, we calculate the average 

weighting factor for each area using the 

data from each vessel transit from 2014 

onward, as shown in tables 36 and 37.50

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

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


tkelley on DSK125TN23PROD with PROPOSALS
Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Proposed Rules 51071 

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

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

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

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

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

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

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

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

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

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

Area 8: 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

TABLE 37—AVERAGE WEIGHTING FACTOR FOR DISTRICT THREE, DESIGNATED AREAS

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

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

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

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

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

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

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

Class 1 (2020) ............................................................................................................................. 16 1 16 

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

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

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

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

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

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

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

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

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

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

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

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

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

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


tkelley on DSK125TN23PROD with PROPOSALS
51072 Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Proposed Rules 

51 Great Lakes Pilotage Rates—2018 Annual 

Review and Revisions to Methodology (83 FR 

26162), published June 5, 2018. 

TABLE 37—AVERAGE WEIGHTING FACTOR FOR DISTRICT THREE, DESIGNATED AREAS—Continued 

Vessel class/year Number of 

transits 

Weighting 

factor 

Weighted 

transits 

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

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

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

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

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

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

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

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

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

I. Step 9: Calculate Revised Base Rates 

In this step, we revise the base rates 

so that once the impact of the weighting 

factors is considered, the total cost of 

pilotage will be equal to the revenue 

needed. To do this, we divide the initial 

base rates calculated in Step 7 by the 

average weighting factors calculated in 

Step 8, as shown in table 38. 

TABLE 38—REVISED BASE RATES FOR DISTRICT THREE

Area Initial rate 

(step 7) 

Average 

weighting 

factor 

(step 8) 

Revised rate 

(initial rate 

÷ average 

weighting 

factor) 

District Three: Designated ........................................................................................................... $891 1.30 $685 

District Three: Undesignated ....................................................................................................... 487 1.30 375 

J. Step 10: Review and Finalize Rates 

In this step, the Director reviews the 

rates set forth by the staffing model and 

ensures that they meet the goal of 

ensuring safe, efficient, and reliable 

pilotage. To establish this, the Director 

considers whether the proposed rates 

incorporate appropriate compensation 

for pilots to handle heavy traffic periods 

and whether there is a sufficient number 

of pilots to handle those heavy traffic 

periods. The Director also considers 

whether the proposed rates would cover 

operating expenses and infrastructure 

costs, and takes average traffic and 

weighting factors into consideration. 

Based on this information, the Director 

is not proposing any alterations to the 

rates in this step. We propose to modify 

§ 401.405(a)(5) and (6) to reflect the final 

rates shown in table 39. 

TABLE 39—PROPOSED FINAL RATES FOR DISTRICT THREE

Area Name Final 2020 

pilotage rate 

Proposed 

2021 

pilotage rate 

District Three: Designated ............................................ St. Marys River ............................................................. $586 $685 

District Three: Undesignated ........................................ Lakes Huron, Michigan, and Superior .......................... 337 375 

VIII. Regulatory Analyses 

We developed this proposed rule after 

considering numerous statutes and 

Executive orders related to rulemaking. 

A summary of our analyses based on 

these statutes or Executive orders 

follows. 

A. Regulatory Planning and Review 

Executive Orders 12866 (Regulatory 

Planning and Review) and 13563 

(Improving Regulation and Regulatory 

Review) direct agencies to assess the 

costs and benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying costs and benefits, reducing 

costs, harmonizing rules, and promoting 

flexibility. 

The Office of Management and Budget 

(OMB) has not designated this proposed 

rule a significant regulatory action 

under section 3(f) of Executive Order 

12866. Accordingly, OMB has not 

reviewed it. A regulatory analysis (RA) 

follows. The purpose of this proposed 

rule is to establish new base pilotage 

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

rates be established or reviewed and 

adjusted each year. The statute also 

requires that base rates be established by 

a full ratemaking at least once every 5 

years, and in years when base rates are 

not established, they must be reviewed 

and, if necessary, adjusted. The last full 

ratemaking was concluded in June of 

2018.51 For this ratemaking, the Coast 

Guard estimates an increase in cost of 

approximately $3.53 million to 

industry, an approximate 12-percent 

increase, because of the change in 

revenue needed in 2022 compared to 

the revenue needed in 2021. 

Table 40 summarizes proposed 

changes with no cost impacts or where 

the cost impacts are captured in the 


tkelley on DSK125TN23PROD with PROPOSALS
Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Proposed Rules 51073 

proposed rate change. Table 41 

summarizes the affected population, 

costs, and benefits of the proposed rate 

change. 

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

Change Description Affected population Basis for no cost or cost 

captured in the rate Benefits 

Add a definition of apprentice pilot.Distinguishes between applicants who have not 

yet entered training and 

apprentices, persons approved and certified by 

the Director who are 

participating in an approved U.S. Great Lakes 

pilot training and qualification program and 

meet all the minimum 

requirements listed in 46 

CFR 401.211.

Owners and operators of 

293 vessels transiting 

the Great Lakes system 

annually, 56 U.S. Great 

Lakes pilots, 9 apprentice pilots, and 3 pilotage associations.

No cost, strictly a definitional change.Provides clarity by distinguishing apprentice pilots from applicant trainees when calculating the 

apprentice pilot operating expenses, estimates and wage benchmark. 

Changes to staffing model The Coast Guard is proposing to modify the 

staffing model at 46 

CFR 401.220(a)(3) to 

round up to the nearest 

integer, as opposed to 

the existing method, 

which rounds to the 

nearest integer. In total, 

this would increase the 

maximum number of allowable pilots by 2, adding one pilot to each of 

the undesignated areas 

of District One and District Two.

Owners and operators of 

293 vessels transiting 

the Great Lakes system 

annually, 56 U.S. Great 

Lakes pilots, 9 apprentice pilots, and 3 pilotage associations.

The total number of pilots 

is accounted for in the 

base pilotage rates. For 

the 2022 ratemaking, 

this proposed change 

would allow for two additional pilots that would 

not have otherwise been 

allowed. This increases 

the total revenue needed by $773,281.

Rounding up in the staffing 

model accounts for extra 

staff or extra time spent 

by the pilot associations 

presidents not performing pilotage service. 

Rounding up allows us 

to account for this time 

and promote safety and 

restorative rest, while 

minimizing delays in providing pilotage services. 

Adding number of apprentice pilots to Step 3 and 

setting target apprentice 

pilot wage in Step 4.

The Coast Guard is proposing to modify the 

staffing model at 46 

CFR 404.103 to predict 

the number of apprentice pilots each district 

would need for the next 

season. 46 CFR 

404.103 would establish 

the target apprentice 

pilot wage at 36% of 

registered pilot compensation for that year.

Owners and operators of 

293 vessels transiting 

the Great Lakes system 

annually, 56 U.S. Great 

Lakes pilots, 9 apprentice pilots, and 3 pilotage associations.

Total cost of $1,274,814 

for the wages of 9 apprentice pilots for the 

2022 season. This 

amount is incorporated 

into the rate increase.

Setting a target wage of 

36% of registered pilot 

compensation better 

matches changes in registered pilot compensation and inflation and 

more evenly distributes 

the additional cost of apprentice pilots compared 

to the surcharge method. 

TABLE 41—ECONOMIC IMPACTS DUE TO PROPOSED CHANGES

Change Description Affected population Costs Benefits 

Rate and surcharge 

changes.

In accordance with 46 

U.S.C. Chapter 93, the 

Coast Guard is required 

to review and adjust 

base pilotage rates annually.

Owners and operators of 

293 vessels transiting 

the Great Lakes system 

annually, 56 U.S. Great 

Lakes pilots, 9 apprentice pilots, and 3 pilotage associations.

Increase of $3,527,425 

due to change in revenue needed for 2022 

($33,860,077) from revenue needed for 2021 

($30,332,652), as shown 

in table 42.

New rates cover an association’s necessary and 

reasonable operating expenses. Promotes safe, 

efficient, and reliable pilotage service on the 

Great Lakes. Provides 

fair compensation, adequate training, and sufficient rest periods for pilots. Ensures the association receives sufficient revenues to fund 

future improvements. 

The Coast Guard is required to review 

and adjust pilotage rates on the Great 

Lakes annually. See sections IV and V 

of this preamble for detailed discussions 

of the legal basis and purpose for this 

rulemaking and for background 


tkelley on DSK125TN23PROD with PROPOSALS
51074 Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Proposed Rules 

52Some vessels entered the Great Lakes multiple 

times in a single year, affecting the average number 

of unique vessels utilizing pilotage services in any 

given year. 

53While the Coast Guard implemented a 

surcharge in 2019, we are not proposing any 

surcharges for 2022. 

54 85 FR 20088, see table 41. 

55The proposed rates for 2021 do not account for 

the impacts COVID–19 may have had on shipping 

traffic and subsequently pilotage revenue, as we do 

not have complete data for 2020. The rates for 2022 

will take into account for all and any pertinent 

impacts of COVID–19 on shipping traffic, because 

that future ratemaking will include 2020 traffic 

data. However, the Coast Guard uses 10-year 

average when calculating traffic in order to smooth 

out variations in traffic caused by global economic 

conditions, such as those caused by the COVID–19 

pandemic. 

information on Great Lakes pilotage 

ratemaking. Based on our annual review 

for this rulemaking, we are proposing to 

adjust the pilotage rates for the 2022 

shipping season to generate sufficient 

revenues for each district to reimburse 

its necessary and reasonable operating 

expenses, fairly compensate trained and 

rested pilots, and provide an 

appropriate working capital fund to use 

for improvements. The result would be 

an increase in rates for all areas in 

Districts One and Three and the 

undesignated area of District Two. The 

rate for the designated area of District 

Two would decrease. These changes 

would lead to a net increase in the cost 

of service to shippers. However, because 

the proposed rates would increase for 

some areas and decrease for others, the 

change in per unit cost to each 

individual shipper would be dependent 

on their area of operation, and if they 

previously paid a surcharge. 

A detailed discussion of our economic 

impact analysis follows. 

Affected Population 

This rule would affect U.S. Great 

Lakes pilots, the 3 pilot associations, 

and the owners and operators of 293 

oceangoing vessels that transit the Great 

Lakes annually. We estimate that there 

would be 56 registered pilots and 9 

apprentice pilots during the 2022 

shipping season. The shippers affected 

by these rate changes are those owners 

and operators of domestic vessels 

operating ‘‘on register’’ (engaged in 

foreign trade) and owners and operators 

of non-Canadian foreign vessels on 

routes within the Great Lakes system. 

These owners and operators must have 

pilots or pilotage service as required by 

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

tonnage limit or exemption for these 

vessels. The statute applies only to 

commercial vessels and not to 

recreational vessels. U.S.-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 U.S. 

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 2018 through 

2020 from the Great Lakes Pilotage 

Management System (GLPMS) to 

estimate the average annual number of 

vessels affected by the rate adjustment. 

The GLPMS tracks data related to 

managing and coordinating the dispatch 

of pilots on the Great Lakes, and billing 

in accordance with the services. As 

described in Step 7 of the methodology, 

we use a 10-year average to estimate the 

traffic. We used 3 years of the most 

recent billing data to estimate the 

affected population. When we reviewed 

10 years of the most recent billing data, 

we found the data included vessels that 

have not used pilotage services in recent 

years. We believe using 3 years of 

billing data is a better representation of 

the vessel population that is currently 

using pilotage services and would be 

impacted by this rulemaking. We found 

that 514 unique vessels used pilotage 

services during the years 2017 through 

2019. That is, these vessels had a pilot 

dispatched to the vessel, and billing 

information was recorded in the GLPMS 

or SeaPro. Of these vessels, 465 were 

foreign-flagged vessels and 49 were 

U.S.-flagged vessels. As stated 

previously, U.S.-flagged vessels not 

operating on register are not required to 

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

9302, but they can voluntarily choose to 

have one. 

Numerous factors affect vessel traffic, 

which varies from year to year. 

Therefore, rather than using the total 

number of vessels over the time period, 

we took an average of the unique vessels 

using pilotage services from the years 

2018 through 2020 as the best 

representation of vessels estimated to be 

affected by the rates in this rulemaking. 

From 2018 through 2020, an average of 

293 vessels used pilotage services 

annually.52 On average, 275 of these 

vessels were foreign-flagged vessels and 

19 were U.S.-flagged vessels that 

voluntarily opted into the pilotage 

service. 

Total Cost to Shippers 

The proposed rate changes resulting 

from this adjustment to the rates would 

result in a net increase in the cost of 

service to shippers. However, the 

proposed change in per unit cost to each 

individual shipper would be dependent 

on their area of operation. 

The Coast Guard estimates the effect 

of the rate changes on shippers by 

comparing the total projected revenues 

needed to cover costs in 2021 with the 

total projected revenues to cover costs 

in 2022, including any temporary 

surcharges we have authorized.53 We set 

pilotage rates so pilot associations 

receive enough revenue to cover their 

necessary and reasonable expenses. 

Shippers pay these rates when they 

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

9302. Therefore, the aggregate payments 

of shippers to pilot associations are 

equal to the projected necessary 

revenues for pilot associations. The 

revenues each year represent the total 

costs that shippers must pay for pilotage 

services. The change in revenue from 

the previous year is the additional cost 

to shippers discussed in this rule. 

The impacts of the rate changes on 

shippers are estimated from the district 

pilotage projected revenues (shown in 

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

The Coast Guard estimates that for the 

2022 shipping season, the projected 

revenue needed for all three districts is 

$33,860,077. 

To estimate the change in cost to 

shippers from this rule, the Coast Guard 

compared the 2022 total projected 

revenues to the 2021 projected 

revenues. Because we review and 

prescribe rates for the Great Lakes 

Pilotage annually, the effects are 

estimated as a single-year cost rather 

than annualized over a 10-year period. 

In the 2021 rulemaking, we estimated 

the total projected revenue needed for 

2021 as $30,332,652.54 This is the best 

approximation of 2021 revenues, as at 

the time of this publication the Coast 

Guard does not have enough audited 

data available for the 2021 shipping 

season to revise these projections.55

Table 42 shows the revenue projections 

for 2021 and 2022 and details the 

additional cost increases to shippers by 

area and district as a result of the rate 

changes on traffic in Districts One, Two, 

and Three. 


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56https://www.bls.gov/news.release/archives/eci_

01292021.htm. 

57https://www.federalreserve.gov/ 

monetarypolicy/fomcprojtabl20201216.htm. 

TABLE 42—EFFECT OF THE RULE BY AREA AND DISTRICT

[$U.S.; non-discounted] 

Area 

Revenue 

needed in 

2021 

Revenue 

needed in 

2022 

Change in 

costs of this 

proposed rule 

Total, District One ........................................................................................................................ $10,620,941 $11,566,297 $945,356 

Total, District Two ........................................................................................................................ 8,506,705 9,395,327 888,622 

Total, District Three ..................................................................................................................... 11,205,006 12,898,453 1,693,447 

System Total ......................................................................................................................... 30,332,652 33,860,077 3,527,425 

The resulting difference between the 

projected revenue in 2021 and the 

projected revenue in 2022 is the annual 

change in payments from shippers to 

pilots as a result of the rate change 

imposed by this proposed rule. The 

effect of the rate change to shippers 

varies by area and district. After taking 

into account the change in pilotage 

rates, the rate changes would lead to 

affected shippers operating in District 

One experiencing an increase in 

payments of $945,356 over the previous 

year. District Two and District Three 

would experience an increase in 

payments of $888,622 and $1,693,447, 

respectively, when compared with 2021. 

The overall adjustment in payments 

would be an increase in payments by 

shippers of $3,527,425 across all three 

districts (a 12-percent increase when 

compared with 2021). Again, because 

the Coast Guard reviews and sets rates 

for Great Lakes pilotage annually, we 

estimate the impacts as single-year costs 

rather than annualizing them over a 10- 

year period. 

Table 43 shows the difference in 

revenue by revenue-component from 

2021 to 2022 and presents each revenuecomponent as a percentage of the total 

revenue needed. In both 2021 and 2022, 

the largest revenue-component was 

pilotage compensation (71 percent of 

total revenue needed in 2021 and 65 

percent of total revenue needed in 

2022), followed by operating expenses 

(26 percent of total revenue needed in 

2021 and 29 percent of total revenue 

needed in 2022). 

TABLE 43—DIFFERENCE IN REVENUE BY COMPONENT

Revenue-component 

Revenue 

needed in 

2021 

Percentage of 

total revenue 

needed in 

2021 

Revenue 

needed in 

2022 

Percentage of 

total revenue 

needed in 

2022 

Difference 

(2022 revenue¥ 

2021 revenue) 

Percentage 

change from 

previous year 

Adjusted Operating Expenses .............................................. $8,876,850 29 $9,733,112 29 $856,262 10 

Total Target Pilot Compensation .......................................... 20,461,950 67 22,033,816 65 1,571,866 8 

Total Target Apprentice Pilot Wages .................................... ........................ ........................ 1,274,814 4 1,274,814 ........................

Working Capital Fund ........................................................... 993,852 3 818,335 2 (175,517) (18) 

Total Revenue Needed .................................................. 30,332,652 100 33,860,077 100 3,527,425 12 

Note: Totals may not sum due to rounding. 

As stated above, we estimate that 

there will be a total increase in revenue 

needed by the pilot associations of 

$3,527,425. This represents an increase 

in revenue needed for target pilot 

compensation of $1,571,866, the nowcodified revenue needed for total 

apprentice pilot wages of $1,274,814, 

and an increase in the revenue needed 

for adjusted operating expenses of 

$856,262 and a decrease in the revenue 

needed for the working capital fund of 

($175,517). 

The majority of the increase in 

revenue needed, $1,571,866, is the 

result of changes to target pilot 

compensation. These changes are due to 

three factors: (1) The proposed changes 

to adjust 2021 pilotage compensation to 

account for the difference between 

actual ECI inflation (3.5 percent) 56 and 

predicted PCE inflation (1.7 percent) 57

for 2021; (2) the net addition of two 

additional pilots; and (3) inflation of 

pilotage compensation in step 2 of the 

methodology using CPI from 2019 and 

predicted inflation through 2022. 

The proposed target compensation is 

$393,461 per pilot in 2022, compared to 

$378,925 in 2021. The proposed 

changes to modify the 2020 pilot 

compensation to account for the 

difference between predicted and actual 

inflation would increase the 2021 target 

compensation value by 1.8 percent. As 

shown in table 44, this inflation 

adjustment would increase total 

compensation by $6,821 per pilot, and 

the total revenue needed by $381,956 

when accounting for all 56 pilots. 


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58The 2020 projected revenues are from the Great 

Lakes Pilotage Rate—2020 Annual Review and 

Revisions to Methodology final rule (85 FR 20088), 

tables 8, 20, and 32. The 2021 projected revenues 

are from tables 9, 21, and 33 of this NPRM. 

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

CALCULATION IN STEP 4 

2021 target compensation ................................................................................................................................................................... $378,925 

Adjusted 2021 Compensation ($378,925 × 1.018) ............................................................................................................................. 385,746 

Difference between Target 2021 Compensation and Adjusted Target 2021 Compensation ($385,746¥$378,925) ........................ 6,821 

Increase in Total Revenue for 56 Pilots ($6,821 × 56) ....................................................................................................................... 381,956 

Adjusting rounding in the staffing 

model to always round up, rather than 

round to the nearest integer, would add 

an additional pilot to the undesignated 

areas of District One and District Two. 

The proposed addition of two fully 

registered pilots accounts for $773,281 

of the increase in needed revenue. As 

shown in table 44, to avoid double 

counting, this value excludes the change 

in revenue resulting from the proposed 

change to adjust 2021 pilotage 

compensation to account for the 

difference between actual and predicted 

inflation. 

TABLE 45—CHANGE IN REVENUE RESULTING FROM ADDING TWO ADDITIONAL PILOTS

2022 Target Compensation ................................................................................................................................................................. $393,461 

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

Total Cost of New Pilots ($393,461 × 2) ............................................................................................................................................. $786,922 

Difference between Adjusted Target 2021 Compensation and Target 2021 Compensation ($378,925¥$385,746) ........................ $6,821 

Increase in Total Revenue for 2 Pilots ($6,821 × 2) ........................................................................................................................... $13,641 

Net Increase in Total Revenue for 2 Pilots ($786,922¥$13,641) ...................................................................................................... $773,281 

Another proposed increase, $432,060, 

is the result of increasing compensation 

for the 56 pilots to account for future 

inflation of 2.0 percent in 2022. This 

would increase total compensation by 

$7,715 per pilot, as shown in table 46. 

TABLE 46—CHANGE IN REVENUE RESULTING FROM INFLATING 2021 COMPENSATION TO 2022 

Adjusted 2021 Compensation ............................................................................................................................................................. $385,746 

2022 Target Compensation ($385,746 × 1.02) ................................................................................................................................... 393,461 

Difference between Adjusted 2021 Compensation and Target 2022 Compensation ($393,461¥$385,746) ................................... 7,715 

Increase in Total Revenue for 56 Pilots ($7,715 × 56) ....................................................................................................................... 432,060 

Finally, the second-largest part of the 

increase in revenue needed would be to 

account for the target apprentice pilot 

wage, now incorporated into the rate. 

First, in Step 3, we estimate the need for 

9 apprentice pilots for the 2022 

shipping season. Based on the 2022 

target pilot compensation of $393,461, 

the target apprentice pilot wage would 

be $141,646 ($393,461 × 0.36 = 

$141,646). Setting the target in this 

manner, rather than through a 

surcharge, better allows apprentice pilot 

wages to match fluctuations in the pilot 

wage, which follows changes in traffic 

and better accounts for changes in 

inflation than the surcharge. 

Additionally, unlike a surcharge, this 

method will not need to be ‘‘turned off,’’ 

which makes rates throughout the 

season more predictable for shippers. 

The total cost of wages for the 9 

apprentice pilots would be $1,274,814, 

as shown in table 47. 

TABLE 47—CHANGE IN REVENUE RESULTING FROM TARGET APPRENTICE PILOT WAGES

2022 Target Apprentice Pilot Wage .................................................................................................................................................... $141,646 

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

Total Cost of Apprentice Pilots ($141,646 × 9) ................................................................................................................................... $1,274,814 

Table 48 presents the percentage 

change in revenue by area and revenuecomponent, excluding surcharges, as they are applied at the district level.58


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TABLE 48—DIFFERENCE IN

REVENUE BY

COMPONENT AND

AREA

Adjusted operating expenses Total target pilot compensation Total 

target 

apprentice 

pilot wage 

Working capital fund Total revenue needed 

2021 2022 Percentage change 2021 2022 Percentage change 

2022 

2021 2022 Percentage change 2021 2022 Percentage change 

District One: Designated ..................... $2,328,981 $2,352,634 1 $3,789,250 $4,104,585 8 $169,975 $207,255 $159,924 (30) $6,325,486 $6,617,143 4 District One: Undesignated ....................... 1,502,239 1,568,537 4 2,652,475 3,261,005 19 113,317 140,741 119,612 (18) 4,295,455 4,949,154 13 District Two: Undesignated ....................... 1,003,961 1,035,837 3 3,031,400 3,711,124 18 169,975 136,698 117,566 (16) 4,172,059 4,864,527 14 District Two: Designated ..................... 1,540,146 1,553,756 1 2,652,475 2,867,544 8 113,317 142,025 109,501 (30) 4,334,646 4,530,801 4 District Three: Undesignated ..................... 1,947,484 2,530,510 23 6,820,650 7,507,236 9 424,938 297,021 248,602 (19) 9,065,155 10,286,348 12 District Three: Designated ..................... 554,039 691,839 20 1,515,700 1,857,136 18 283,292 70,112 63,130 (11) 2,139,851 2,612,105 18 


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59See https://www.manta.com/. 

60See https://resource.referenceusa.com/. 

61See https://www.sba.gov/document/support-- 

table-size-standards. SBA has established a ‘‘Table 

of Size Standards’’ for small businesses that sets 

small business size standards by NAICS code. A 

size standard, which is usually stated in number of 

employees or average annual receipts (‘‘revenues’’), 

represents the largest size that a business (including 

its subsidiaries and affiliates) may be in order to 

remain classified as a small business for SBA and 

Federal contracting programs. 

Benefits 

This proposed rule would allow the 

Coast Guard to meet requirements in 46 

U.S.C. 9303 to review the rates for 

pilotage services on the Great Lakes. 

The rate changes would promote safe, 

efficient, and reliable pilotage service on 

the Great Lakes by (1) ensuring that 

rates cover an association’s operating 

expenses; (2) providing fair pilot 

compensation, adequate training, and 

sufficient rest periods for pilots; and (3) 

ensuring pilot associations produce 

enough revenue to fund future 

improvements. The rate changes would 

also help recruit and retain pilots, 

which would ensure a sufficient number 

of pilots to meet peak shipping demand, 

helping to reduce delays caused by pilot 

shortages. 

B. Small Entities 

Under the Regulatory Flexibility Act, 

5 U.S.C. 601–612, we have considered 

whether this proposed rule would have 

a significant economic impact on a 

substantial number of small entities. 

The term ‘‘small entities’’ comprises 

small businesses, not-for-profit 

organizations that are independently 

owned and operated and are not 

dominant in their fields, and 

governmental jurisdictions with 

populations of less than 50,000. 

For the proposed rule, the Coast 

Guard reviewed recent company size 

and ownership data for the vessels 

identified in the GLPMS, and we 

reviewed business revenue and size data 

provided by publicly available sources 

such as Manta 59 and ReferenceUSA.60

As described in section VIII.A of this 

preamble, Regulatory Planning and 

Review, we found that 513 unique 

vessels used pilotage services during the 

years 2018 through 2020. These vessels 

are owned by 58 entities, of which 44 

are foreign entities that operate 

primarily outside the United States and 

the remaining 14 entities are U.S. 

entities. We compared the revenue and 

employee data found in the company 

search to the Small Business 

Administration’s (SBA) small business 

threshold as defined in the SBA’s 

‘‘Table of Size Standards’’ for small 

businesses to determine how many of 

these companies are considered small 

entities.61 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 

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

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

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

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

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

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

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

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

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

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

SBA’s small business standards for 

small entities. To estimate the potential 

impact on the seven small entities, the 

Coast Guard used their 2020 invoice 

data to estimate their pilotage costs in 

2022. Of the seven entities from 2018 to 

2020, only three used pilotage services 

in 2020. We increased their 2020 costs 

to account for the changes in pilotage 

rates resulting from this proposed rule 

and the Great Lakes Pilotage Rates— 

2021 Annual Review and Revisions to 

Methodology final rule (86 FR 14184). 

We estimated the change in cost to these 

entities resulting from this proposed 

rule by subtracting their estimated 2021 

costs from their estimated 2022 costs 

and found the average costs to small 

firms would be approximately $16,072, 

with a range of $607 to $70,853.62 We 

then compared the estimated change in 

pilotage costs between 2021 and 2022 

with each firm’s annual revenue. In all 

cases, their estimated pilotage expenses 

were below 1 percent of their annual 

revenue. 

In addition to the owners and 

operators discussed above, three U.S. 

entities that receive revenue from 

pilotage services would be affected by 

this proposed rule. These are the three 

pilot associations that provide and 

manage pilotage services within the 

Great Lakes districts. Two of the 

associations operate as partnerships, 

and one operates as a corporation. These 

associations are designated with the 

same NAICS code and small-entity size 

standards described above, but have 

fewer than 500 employees. Combined, 

they have approximately 65 employees 

in total and, therefore, are designated as 

small entities. The Coast Guard expects 

no adverse effect on these entities from 

this rule, because the three pilot 

associations would receive enough 

revenue to balance the projected 

expenses associated with the projected 

number of bridge hours (time on task) 

and pilots. 

Finally, the Coast Guard did not find 

any small not-for-profit organizations 

that are independently owned and 

operated and are not dominant in their 

fields that would be impacted by this 

proposed rule. We also did not find any 

small governmental jurisdictions with 

populations of fewer than 50,000 people 

that would be impacted by this 

proposed rule. Based on this analysis, 

we conclude this rulemaking would not 

affect a substantial number of small 

entities, nor have a significant economic 

impact on any of the affected entities. 

Based on our analysis, this proposed 

rule would have a less than 1 percent 

annual impact on three small entities; 

therefore, the Coast Guard certifies 

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

rule would not have a significant 

economic impact on a substantial 

number of small entities. If you think 

that your business, organization, or 

governmental jurisdiction qualifies as a 

small entity and that this proposed rule 

would have a significant economic 

impact on it, please submit a comment 

to the docket at the address listed in the 

ADDRESSES section of this preamble. In 

your comment, explain why you think 


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it qualifies and how and to what degree 

this proposed rule would economically 

affect it. 

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 proposed rule so that 

they can better evaluate its effects on 

them and participate in the rulemaking. 

If the proposed rule would affect your 

small business, organization, or 

governmental jurisdiction and you have 

questions concerning its provisions or 

options for compliance, please call or 

email the person in the FOR FURTHER

INFORMATION section of this proposed 

rule. The Coast Guard will not retaliate 

against small entities that question or 

complain about this proposed rule or 

any policy or action of the Coast Guard. 

Small businesses may send comments 

on the actions of Federal employees 

who enforce, or otherwise determine 

compliance with, Federal regulations to 

the Small Business and Agriculture 

Regulatory Enforcement Ombudsman 

and the Regional Small Business 

Regulatory Fairness Boards. The 

Ombudsman evaluates these actions 

annually and rates each agency’s 

responsiveness to small business. If you 

wish to comment on actions by 

employees of the Coast Guard, call 1– 

888–REG–FAIR (1–888–734–3247). 

D. Collection of Information 

This proposed rule would call for no 

new collection of information under the 

Paperwork Reduction Act of 1995, 44 

U.S.C. 3501–3520. 

E. Federalism 

A rule has implications for federalism 

under Executive Order 13132 

(Federalism) if it has a substantial direct 

effect on the States, on the relationship 

between the national government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of government. We have 

analyzed this proposed rule under 

Executive Order 13132 and have 

determined that it is consistent with the 

fundamental federalism principles and 

preemption requirements as described 

in Executive Order 13132. Our analysis 

follows. 

Congress directed the Coast Guard to 

establish ‘‘rates and charges for pilotage 

services’’. See 46 U.S.C. 9303(f). This 

regulation is issued pursuant to that 

statute and is preemptive of State law as 

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

U.S.C. 9306, a ‘‘State or political 

subdivision of a State may not regulate 

or impose any requirement on pilotage 

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

or local governments are expressly 

prohibited from regulating within this 

category. Therefore, this proposed rule 

is consistent with the fundamental 

federalism principles and preemption 

requirements described in Executive 

Order 13132. 

While it is well settled that States may 

not regulate in categories in which 

Congress intended the Coast Guard to be 

the sole source of a vessel’s obligations, 

the Coast Guard recognizes the key role 

that State and local governments may 

have in making regulatory 

determinations. Additionally, for rules 

with implications and preemptive 

effect, Executive Order 13132 

specifically directs agencies to consult 

with State and local governments during 

the rulemaking process. If you believe 

this rule has implications for federalism 

under Executive Order 13132, please 

contact the person listed in the FOR

FURTHER INFORMATION section of this 

preamble. 

F. Unfunded Mandates 

The Unfunded Mandates Reform Act 

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

Federal agencies to assess the effects of 

their discretionary regulatory actions. In 

particular, 46 U.S.C. Chapter 93 

addresses actions that may result in the 

expenditure by a State, local, or tribal 

government, in the aggregate, or by the 

private sector of $100 million (adjusted 

for inflation) or more in any one year. 

Although this proposed rule would not 

result in such an expenditure, we do 

discuss the effects of this proposed rule 

elsewhere in this preamble. 

G. Taking of Private Property 

This proposed rule would 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 proposed 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 proposed rule 

under Executive Order 13045 

(Protection of Children from 

Environmental Health Risks and Safety 

Risks). This proposed rule is not an 

economically significant rule and would 

not create an environmental risk to 

health or risk to safety that might 

disproportionately affect children. 

J. Indian Tribal Governments 

This proposed rule does not have 

tribal implications under Executive 

Order 13175 (Consultation and 

Coordination with Indian Tribal 

Governments), because it would 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 proposed rule 

under Executive Order 13211 (Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use). We have 

determined that it is not a ‘‘significant 

energy action’’ under that order because 

it is not a ‘‘significant regulatory action’’ 

under Executive Order 12866 and is not 

likely to have a significant adverse effect 

on the supply, distribution, or use of 

energy. 

L. Technical Standards 

The National Technology Transfer 

and Advancement Act, codified as a 

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

to use voluntary consensus standards in 

their regulatory activities unless the 

agency provides Congress, through 

OMB, with an explanation of why using 

these standards would be inconsistent 

with applicable law or otherwise 

impractical. Voluntary consensus 

standards are technical standards (e.g., 

specifications of materials, performance, 

design, or operation; test methods; 

sampling procedures; and related 

management systems practices) that are 

developed or adopted by voluntary 

consensus standards bodies. 

This proposed rule does not use 

technical standards. Therefore, we did 

not consider the use of voluntary 

consensus standards. If you disagree 

with our analysis or are aware of 

voluntary consensus standards that 

might apply, please send a comment 

explaining your disagreement or 

identifying appropriate standards to the 

docket using one of the methods listed 

in the ADDRESSES section of this 

preamble. 

M. Environment 

We have analyzed this proposed rule 

under DHS Management Directive 023– 

01, Rev. 1, associated implementing 

instructions, and Environmental 

Planning COMDTINST 5090.1 (series), 

which guide the Coast Guard in 

complying with the National 


tkelley on DSK125TN23PROD with PROPOSALS
51080 Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Proposed Rules 

63https://www.dhs.gov/sites/default/files/ 

publications/DHS_Instruction%20Manual%20023- 

01-001-01%20Rev%2001_

508%20Admin%20Rev.pdf. 

Environmental Policy Act of 1969 1969 

(42 U.S.C. 4321–4370f), and have made 

a preliminary determination that this 

action is one of a category of actions that 

do not individually or cumulatively 

have a significant effect on the human 

environment. A preliminary 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 proposed rule meets the criteria 

for categorical exclusion (CATEX) under 

paragraphs A3 and L54 of Appendix A, 

Table 1 of DHS Instruction Manual 023– 

001–01, Rev. 1.63 Paragraph A3 pertains 

to the promulgation of rules, issuance of 

rulings or interpretations, and the 

development and publication of 

policies, orders, directives, notices, 

procedures, manuals, advisory circulars, 

and other guidance documents of the 

following nature: (a) Those of a strictly 

administrative or procedural nature; (b) 

those that implement, without 

substantive change, statutory or 

regulatory requirements; or (c) those 

that implement, without substantive 

change, procedures, manuals, and other 

guidance documents; and (d) those that 

interpret or amend an existing 

regulation without changing its 

environmental effect. Paragraph L54 

pertains to regulations, which are 

editorial or procedural. 

This proposed rule involves adjusting 

the pilotage rates to account for changes 

in district operating expenses, an 

increase in the number of pilots, and 

anticipated inflation. In addition, the 

Coast Guard is proposing how 

apprentice pilots will be compensated 

in future rulemakings. All of these 

proposed changes are consistent with 

the Coast Guard’s maritime safety 

missions. We seek any comments or 

information that may lead to the 

discovery of a significant environmental 

impact from this proposed rule. 

List of Subjects 

46 CFR Part 401 

Administrative practice and 

procedure, Great Lakes; Navigation 

(water), Penalties, Reporting and 

recordkeeping requirements, Seamen. 

46 CFR Part 404 

Great Lakes, Navigation (water), 

Seamen. 

For the reasons discussed in the 

preamble, the Coast Guard proposes to 

amend 46 CFR parts 401 and 404 as 

follows: 

PART 401—GREAT LAKES PILOTAGE 

REGULATIONS 

■ 1. The authority citation for part 401 

is revised to read as follows: 

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

7701, 8105, 9303, 9304; DHS Delegation 

00170.1, Revision No. 01.2, paragraphs 

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

■ 2. Amend § 401.110 by adding 

paragraphs (a)(18) and (19) to read as 

follows: 

§ 401.110 Definitions. 

(a) * * * 

(18) Apprentice Pilot means a person 

approved and certified by the Director 

who is participating in an approved U.S. 

Great Lakes pilot training and 

qualification program. This individual 

meets all the minimum requirements 

listed in 46 CFR 401.211. This 

definition is only applicable to 

determining which pilots may be 

included in the operating expenses, 

estimates, and wage benchmark in 

§§ 404.2(b)(7), 404.103(b), and 

404.104(d) and (e). 

(19) Limited Registration is a 

certificate issued by the Director, upon 

the request of the respective pilots 

association, to an Apprentice Pilot to 

provide pilotage service without direct 

supervision from a fully registered pilot 

in a specific area or waterway. 

■ 3. Amend § 401.220 by revising the 

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

as follows: 

§ 401.220 Registration of pilots. 

(a) * * * 

(3) The number of pilots needed in 

each district is calculated by totaling the 

area results by district and rounding 

them up to a whole integer. * * * 

* * * * * 

■ 4. Amend § 401.405 by revising 

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

follows: 

§ 401.405 Pilotage rates and charges. 

(a) * * * 

(1) The St. Lawrence River is $818; 

(2) Lake Ontario is $557; 

(3) Lake Erie is $651; 

(4) The navigable waters from 

Southeast Shoal to Port Huron, MI is 

$574; 

(5) Lakes Huron, Michigan, and 

Superior is $375; and 

(6) The St. Marys River is $685. 

* * * * * 

PART 404—GREAT LAKES PILOTAGE 

RATEMAKING 

■ 5. The authority citation for part 404 

is revised to read as follows: 

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

9304; DHS Delegation 00170.1, Revision No. 

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

■ 6. Amend § 404.2 by adding paragraph 

(b)(7) to read as follows: 

§ 404.2 Procedure and criteria for 

recognizing association expenses. 

* * * * * 

(b) * * * 

(7) Apprentice Pilot Expenses. The 

association’s expenses for Apprentice 

Pilots with limited registrations, such as 

health care, travel expenses, training, 

and other expenses are recognizable 

when determined to be necessary and 

reasonable. 

* * * * * 

■ 7. Amend § 404.103 as follows: 

■ a. Revise the section heading; 

■ b. Redesignate the introductory text as 

paragraph (a); and 

■ c. Add new paragraph (b). 

The revisions and additions read as 

follows: 

§ 404.103 Ratemaking step 3: Estimate 

number of registered pilots and apprentice 

pilots. 

* * * * * 

(b) The Director projects, based on the 

number of persons applying under 46 

CFR part 401 to become apprentice 

pilots, traffic projections, information 

provided by the pilotage association 

regarding upcoming retirements, and 

any other relevant data, the number of 

apprentice pilots with limited 

registrations expected to be in training 

and compensated. 

■ 8. Amend § 404.104 as follows: 

■ a. Revise the section heading; and 

■ b. Add new paragraphs (d) and (e). 

The revisions and additions read as 

follows: 

§ 404.104 Ratemaking step 4: Determine 

target pilot compensation benchmark and 

apprentice pilot wage benchmark. 

* * * * * 

(d) The Director determines the 

individual apprentice pilot wage 

benchmark at the rate of 36 percent of 

the individual target pilot 

compensation, as calculated according 

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

(e) The Director determines each pilot 

association’s total apprentice pilot wage 

benchmark by multiplying the 

apprentice pilot compensation 

computed in paragraph (d) of this 

section by the number of apprentice 

pilots with limited registrations 

projected under § 404.103(b). 

* * * * * 


tkelley on DSK125TN23PROD with PROPOSALS
Federal Register / Vol. 86, No. 175 / Tuesday, September 14, 2021 / Proposed Rules 51081 

Dated: September 3, 2021. 

J.W. Mauger, 

Rear Admiral, U.S. Coast Guard, Assistant 

Commandant for Prevention Policy. 

[FR Doc. 2021–19570 Filed 9–13–21; 8:45 am] 

BILLING CODE 9110–04–P 

FEDERAL COMMUNICATIONS 

COMMISSION 

47 CFR Part 52 

[WC Docket Nos. 13–97, 07–243, 20–67; IB 

Docket No. 16–155; FCC 21–94; FR ID 

43570] 

Numbering Policies for Modern 

Communications 

AGENCY: Federal Communications 

Commission. 

ACTION: Proposed rule. 

SUMMARY: In this document, the Federal 

Communications Commission 

(Commission or FCC) proposes to 

update rules regarding direct access to 

numbers by providers of interconnected 

voice over internet Protocol (VoIP) 

services. The Pallone-Thune Telephone 

Robocall Abuse Criminal Enforcement 

and Deterrence (TRACED) Act directed 

the Commission to examine ways to 

reduce access to telephone numbers by 

potential perpetrators of illegal 

robocalls. These proposals aim to 

safeguard the numbers and consumers, 

protect national security interests, 

promote public safety, and reduce 

opportunities for regulatory arbitrage. 

DATES: Comments are due on or before 

October 14, 2021, and reply comments 

are due on or before November 15, 2021. 

Written comments on the Paperwork 

Reduction Act proposed information 

collection requirements must be 

submitted by the public and other 

interested parties on or before 

November 15, 2021. 

ADDRESSES: You may send comments, 

identified by WC Docket Nos. 13–97, 

07–243, 20–67, and IB Docket No. 16– 

155 by any of the following methods: 

• Federal Communications 

Commission’s Website: http://

apps.fcc.gov/ecfs/. Follow the 

instructions for submitting comments. 

• Mail: Parties who choose to file by 

paper must file an original and one copy 

of each filing. Filings can be sent by 

commercial overnight courier, or by 

first-class or overnight U.S. Postal 

Service mail. All filings must be 

addressed to the Commission’s 

Secretary, Office of the Secretary, 

Federal Communications Commission. 

Commercial overnight mail (other than 

U.S. Postal Service Express Mail and 

Priority Mail) must be sent to 9050 

Junction Drive, Annapolis Junction, MD 

20701.U.S. Postal Service first-class, 

Express, and Priority mail must be 

addressed to 45 L Street NE, 

Washington, DC 20554. 

• Hand Delivery: Effective March 19, 

2020, and until further notice, the 

Commission no longer accepts any hand 

or messenger delivered filings. This is a 

temporary measure taken to help protect 

the health and safety of individuals, and 

to mitigate the transmission of COVID– 

19. See FCC Announces Closure of FCC 

Headquarters Open Window and 

Change in Hand-Delivery Policy, Public 

Notice, DA 20–304 (March 19, 2020). 

https://www.fcc.gov/document/fcccloses-headquarters-open-window-andchanges-hand-delivery-policy. 

• People With Disabilities: Contact 

the FCC to request reasonable 

accommodations (accessible format 

documents, sign language interpreters, 

CART, etc.) by email: FCC504@fcc.gov 

or phone: 202–418–0530 or TTY: 202– 

418–0432. 

For detailed instructions for 

submitting comments and additional 

information on the rulemaking process, 

see the SUPPLEMENTARY INFORMATION

section of this document. 

FOR FURTHER INFORMATION CONTACT: 

Wireline Competition Bureau, 

Competition Policy Division, Jordan 

Reth, at (202) 418–1418, Jordan.Reth@

fcc.gov. For additional information 

concerning the Paperwork Reduction 

Act information collection requirements 

contained in this document, send an 

email to PRA@fcc.gov or contact Nicole 

Ongele, Nicole.Ongele@fcc.gov. 

SUPPLEMENTARY INFORMATION: This is a 

summary of the Commission’s Further 

Notice of Proposed Rulemaking 

(FNPRM) in WC Docket Nos. 13–97, 07– 

243, 20–67, and IB Docket No. 16–155, 

adopted on August 5, 2021, and released 

on August 6, 2021. The full text of the 

document is available on the 

Commission’s website at https://

www.fcc.gov/document/fcc-proposesupdating-numbering-rules-fightrobocalls. To request materials in 

accessible formats for people with 

disabilities (e.g., braille, large print, 

electronic files, audio format, etc.), send 

an email to FCC504@fcc.gov or call the 

Consumer & Governmental Affairs 

Bureau at (202) 418–0530 (voice) or 

(202) 418–0432 (TTY). 

Initial Paperwork Reduction Act of 

1995 Analysis: This document contains 

proposed information collection 

requirements. The Commission, as part 

of its continuing effort to reduce 

paperwork burdens, invites the general 

public to comment on the information 

collection requirements contained in 

this document, as required by the 

Paperwork Reduction Act of 1995, 

Public Law 104–13. Public and agency 

comments are due November 15, 2021. 

Comments should address: (a) 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

Commission, including whether the 

information shall have practical utility; 

(b) the accuracy of the Commission’s 

burden estimates; (c) ways to enhance 

the quality, utility, and clarity of the 

information collected; (d) ways to 

minimize the burden of the collection of 

information on the respondents, 

including the use of automated 

collection techniques or other forms of 

information technology; and (e) way to 

further reduce the information 

collection burden on small business 

concerns with fewer than 25 employees. 

In addition, pursuant to the Small 

Business Paperwork Relief Act of 2002, 

Public Law 107–198, see 44 U.S.C. 

3506(c)(4), we seek specific comment on 

how we might further reduce the 

information collection burden for small 

business concerns with fewer than 25 

employees. 

Synopsis 

I. Further Notice of Proposed 

Rulemaking 

1. To provide additional guardrails to 

safeguard the Nation’s finite numbering 

resources, protect consumers, curb 

illegal and harmful robocalling, reduce 

the opportunity for regulatory arbitrage, 

and further promote public safety, we 

propose and seek comment on a number 

of modifications to our rules governing 

the authorization process for 

interconnected VoIP providers’ direct 

access to numbering resources. First, to 

enable Commission staff to have the 

necessary information to efficiently 

review direct access applications and 

continue protecting the public interest, 

we propose to require additional 

certifications as part of the direct access 

application process and clarify existing 

requirements. Second, to help address 

the risk of providing access to our 

numbering resources and databases to 

bad actors abroad, we propose clarifying 

that applicants must disclose foreign 

ownership information. Third, we 

propose clarifying that holders of a 

Commission direct access authorization 

must update the Commission and 

applicable states within 30 days of any 

change to the ownership information 

submitted to the Commission. Fourth, 

we seek comment whether any changes 

to our rules are necessary to clarify that 

holders of a Commission direct access 


tkelley on DSK125TN23PROD with PROPOSALS