[Federal Register Volume 89, Number 150 (Monday, August 5, 2024)]
[Proposed Rules]
[Pages 63334-63381]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-17028]


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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

46 CFR Part 401

[Docket No. USCG-2024-0406]
RIN 1625-AC94


Great Lakes Pilotage Rates--2025 Annual Review

AGENCY: Coast Guard, DHS.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In accordance with the statutory provisions enacted by the 
Great Lakes Pilotage Act of 1960, the Coast Guard is proposing new 
pilotage rates for 2025. The Coast Guard estimates that this proposed 
rule would result in approximately a 7 percent increase in operating 
costs compared to the 2024 season. The proposed new pilotage rates are 
the result of increases in both the number of Pilots and revenue needed 
for the working capital fund.

DATES: Comments and related material must be received by the Coast 
Guard on or before September 4, 2024.

ADDRESSES: You may submit comments identified by docket number USCG-
2024-0406 using the Federal Decision-Making Portal at 
www.regulations.gov. See the ``Public Participation and Request for 
Comments'' portion of the SUPPLEMENTARY INFORMATION section for further 
instructions on submitting comments. This notice of proposed rulemaking 
with its plain-language, 100-word-or-less proposed rule summary will be 
available in this same docket.

FOR FURTHER INFORMATION CONTACT: For information about this document 
call or email Mr. Brian Rogers, Commandant, Office of Waterways and 
Ocean Policy--Great Lakes Pilotage Division (CG-WWM-2), Coast Guard; 
telephone 410-360-9260, email [email protected].

SUPPLEMENTARY INFORMATION:

Table of Contents for Preamble

I. Public Participation and Request for Comments
II. Abbreviations
III. Basis and Purpose
IV. Background
V. Summary of the Ratemaking Methodology
VI. 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 Three
    A. Step 1: Recognize Previous Operating Expenses
    B. Step 2: Project Operating Expenses, Adjusting for Inflation 
or Deflation
    C. Step 3: Estimate Number of Registered Pilots and Apprentice 
Pilots
    D. Step 4: Determine Target Pilot Compensation Benchmark and 
Apprentice Pilot Wage Benchmark
    E. Step 5: Project Working Capital Fund
    F. Step 6: Project Needed Revenue
    G. Step 7: Calculate Initial Base Rates
    H. Step 8: Calculate Average Weighting Factors by Area
    I. Step 9: Calculate Revised Base Rates
    J. Step 10: Review and Finalize Rates
VII. Regulatory Analyses
    A. Regulatory Planning and Review
    B. Small Entities
    C. Assistance for Small Entities
    D. Collection of Information
    E. Federalism
    F. Unfunded Mandates
    G. Taking of Private Property
    H. Civil Justice Reform
    I. Protection of Children
    J. Indian Tribal Governments
    K. Energy Effects
    L. Technical Standards
    M. Environment

I. 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 www.regulations.gov. To do so, go 
to https://www.regulations.gov, type USCG-2024-0406 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 www.regulations.gov, call or 
email the person in the FOR FURTHER INFORMATION CONTACT section of this 
proposed rule for alternative 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 www.regulations.gov ``Frequently Asked Questions'' 
(FAQ) web page. That FAQ page also explains how to subscribe for email 
alerts that will notify you when comments are posted or if a final rule 
is published. 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 www.regulations.gov will include any personal information you 
have provided. For more about privacy and submissions to the docket in 
response to this document, see DHS's eRulemaking System of Records 
notice (85 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

2024 final rule Great Lakes Pilotage Rates--2024 Annual Review
2023 final rule Great Lakes Pilotage Rates--2023 Annual Ratemaking 
and Review of Methodology
APA American Pilots' Association
BLS Bureau of Labor Statistics
CFR Code of Federal Regulations
CPI Consumer Price Index
DHS Department of Homeland Security
Director U.S. Coast Guard's Director of the Great Lakes Pilotage
ECI Employment Cost Index
FOMC Federal Open Market Committee
FR Federal Register
GLPAC Great Lakes Pilotage Advisory Committee
LPA Lakes Pilots Association
NAICS North American Industry Classification System
NPRM Notice of proposed rulemaking
OMB Office of Management and Budget
PCE Personal Consumption Expenditures
Sec.  Section
SBA Small Business Administration
SLSPA Saint Lawrence Seaway Pilot Association

[[Page 63335]]

U.S.C. United States Code
WGLPA Western Great Lakes Pilots Association

III. Basis and Purpose

    The legal basis of this rulemaking is Title 46 of the United States 
Code (U.S.C.) Chapter 93,\1\ which requires foreign merchant vessels 
and United States vessels operating ``on register'' (meaning United 
States vessels engaged in foreign trade) to use United States or 
Canadian pilots while transiting the United States waters of the St. 
Lawrence Seaway and the Great Lakes system.\2\ For U.S. Great Lakes 
Pilots, the statute requires the Secretary to ``prescribe by regulation 
rates and charges for pilotage services, giving consideration to the 
public interest and the costs of providing the services.'' Title 46 of 
the U.S.C. 9303(f) also requires that rates be established or reviewed 
and adjusted each year, no later than March 1. The Secretary's duties 
and authority under 46 U.S.C. Chapter 93 have generally been delegated 
to the Coast Guard.\3\
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    \1\ 46 U.S.C. 9301-9308.
    \2\ 46 U.S.C. 9302(a)(1).
    \3\ Department of Homeland Security (DHS) Delegation No. 00170.1 
(II)(92)(f), Revision No. 01.4. The Secretary retains the authority 
under Section 9307 to establish, and appoint members to, a Great 
Lakes Pilotage Advisory Committee (GLPAC).
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    The purpose of this proposed rule is to issue new pilotage rates 
for 2025. The Coast Guard believes that the new rates will continue to 
promote our goal, as outlined in title 46 of the Code of Federal 
Regulations (CFR), 404.1(a), to promote safe, efficient, and reliable 
pilotage service in the Great Lakes by generating sufficient revenue 
for each pilot association to reimburse its necessary and reasonable 
operating expenses, fairly compensate trained and rested Pilots, and 
provide appropriate funds to use for improvements.

IV. Background

    Rates are the foundation for safe, efficient, and reliable pilotage 
service to facilitate maritime commerce, protect the marine 
environment, and comply with National Transportation Safety Board 
recommendations regarding staffing and pilot fatigue. The pilotage 
rates for the 2025 season range from a proposed $438 to $981 per pilot 
hour, depending on which of the specific 6 areas pilotage service is 
provided. The rates are paid by shippers to the pilot associations.
    There are three American pilotage districts on the Great Lakes, 
each represented by a pilot association.\4\ Each pilotage district is 
further divided into ``designated'' and ``undesignated'' areas. 
Designated areas, classified as such by Presidential Proclamation, are 
waters in which pilots must direct the navigation of vessels at all 
times.\5\ Undesignated areas are open bodies of water where pilots must 
only ``be on board and available to direct the navigation of the 
vessel'' at the discretion of the vessel master.\6\ For these reasons, 
pilotage rates in designated areas can be significantly higher than 
those in undesignated areas.
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    \4\ 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.
    \5\ Presidential Proclamation 3385, Designation of restricted 
waters under the Great Lakes Pilotage Act of 1960, December 22, 1960 
(https://www.archives.gov/federal-register/codification/proclamations/03385.html) (last accessed 5/01/24).
    \6\ 46 U.S.C. 9302(a)(1)(B).
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    The three pilot associations, which are the exclusive U.S. source 
of Registered Pilots on the Great Lakes, use the revenue from the 
shippers to cover operating expenses, maintain infrastructure, 
compensate Apprentice and Registered Pilots, acquire and implement 
technological advances, train new personnel, and provide for continuing 
professional development. Each pilot association is an independent 
business and is the sole provider of pilotage services in its district 
of operation. Each pilot association is responsible for funding its own 
operating expenses, infrastructure maintenance, and compensation for 
Pilots and Apprentice Pilots.\7\
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    \7\ Apprentice Pilots and Applicant Pilots are compensated by 
the pilot association they are training with, which is funded 
through the pilotage rates. The ratemaking methodology accounts for 
an Apprentice Pilot wage benchmark in Step 4 per 46 CFR 404.104(d). 
The Applicant Pilot salaries are included in the pilot associations' 
operating expenses used in Step 1 per 46 CFR 404.101.
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    The actual demand for service dictates the compensation amount for 
United States Registered Pilots. We divide that amount by the historic 
10-year average for pilotage demand. We recognize that, in years where 
demand for pilotage services exceeds the 10-year average, pilot 
associations will accrue more revenue than projected, while, in years 
where demand is below average, they will take in less. We believe that, 
over the long term, however, this scheme ensures that infrastructure 
will be maintained, and that Pilots will receive adequate compensation 
and work a reasonable number of hours, with adequate rest between 
assignments, to ensure retention of highly trained personnel.
    In this notice of proposed rulemaking (NPRM), we are conducting our 
annual review and interim adjustment to the base pilotage rates for 
2025. The Coast Guard last conducted a full ratemaking in 2023, with 
the ``Great Lakes Pilotage Rates--2023 Annual Ratemaking and Review of 
Methodology'' final rule (hereafter the ``2023 final rule'') (88 FR 
12226, published February 27, 2023). This proposed rule is an interim 
ratemaking under 46 CFR 404.100(b).

V. Summary of the Ratemaking Methodology

    The ratemaking methodology, outlined in 46 CFR 404.101 through 
404.110, consists of 10 steps that are designed to account for the 
revenues needed and total traffic expected in each district. The first 
several steps of the methodology establish base pilotage rates. 
Additional steps to incorporate the weighting factors are necessary to 
establish the final pilotage rates. The result is an hourly rate, 
determined separately for each of the areas administered by the Coast 
Guard.
    In Step 1, ``Recognize previous operating expenses,'' (Sec.  
404.101), the U.S. Coast Guard's Director of the Great Lakes Pilotage 
(``Director'') uses an independent third party to review each pilot 
association's audited operating expenses from each of the three pilot 
associations. Operating expenses include all allowable expenses, minus 
Pilot and Apprentice Pilot wages and benefits. This number forms the 
baseline amount that each association is budgeted. Because of the time 
delay between when the association submits raw numbers and when the 
Coast Guard receives audited numbers, this number is 3 years behind the 
projected year of expenses. Therefore, in calculating the 2025 rates in 
this proposal, we begin with the audited expenses from the shipping 
activity in 2022.
    While each pilot association operates in an entire district 
(including both designated and undesignated areas), the Coast Guard 
determines costs by area. We allocate certain operating expenses to 
designated areas and certain operating expenses to undesignated areas. 
In some cases, we can allocate the costs based on where they are 
accrued. For example, we can allocate the costs of insurance for 
Apprentice Pilots who operate in undesignated areas only. In other 
situations, such as general legal expenses, expenses are distributed 
between designated and undesignated waters on a ``pro rata'' basis, 
based upon the proportion of income forecasted from the respective 
portions of the district.

[[Page 63336]]

    In Step 2, ``Project operating expenses, adjusting for inflation or 
deflation,'' (Sec.  404.102), the Director develops the 2025 projected 
operating expenses. To do this, we apply inflation adjustors for 3 
years to the operating expense baseline received in Step 1. The 
inflation factors are from the Bureau of Labor Statistics' (BLS) 
Consumer Price Index (CPI) for the Midwest Region, or, if not 
available, the 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,'' (Sec.  404.103), the Director calculates how many Registered 
and Apprentice Pilots are needed for each district. To do this, we 
employ a ``staffing model,'' described in Sec.  401.220, paragraphs 
(a)(1) through (3), to estimate how many Pilots would be needed to 
handle shipping during the beginning and close of the season. This 
number provides guidance to the Director in approving an appropriate 
number of Pilots.
    At the September 7, 2023 GLPAC meeting, there was a unanimous 
recommendation for an August 1 cutoff date to allow an Apprentice 
Pilot, who has completed all their training, to be recognized as a 
fully registered Pilot in the rate.\8\ The Coast Guard agrees that this 
change is both necessary and reasonable, as it provides the proper 
compensation based on the most accurate data. If an Apprentice Pilot is 
scheduled to complete training and becomes a fully registered Pilot 
before August 1, they will be counted as a fully registered Pilot in 
the rate; but if they do not meet the August 1 deadline, those funds 
may be adjusted in the proceeding rate for up to the full amount. In 
addition, if a fully registered Pilot retires, or an Apprentice Pilot 
quits, and has been counted in the rate, the proceeding rate may be 
adjusted according for up to the full amount.
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    \8\ Transcript of United States Coast Guard Great Lakes Pilotage 
Advisory Committee Meeting at 97 (Sept. 7, 2023), https://www.regulations.gov/document/USCG-2023-0438-0009 (last accessed 05/
31/2024) (last accessed 05/31/2024).
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    In Step 4 of the ratemaking calculation, we determine the number of 
Pilots provided by the pilot associations (see Sec.  404.103) and use 
that figure to determine how many Pilots need to be compensated via the 
pilotage fees collected. In the first part of Step 4, ``Determine 
target Pilot compensation benchmark and Apprentice Pilot wage 
benchmark,'' (Sec.  404.104(b)(1)), the Director adjusts the previous 
year's individual target Pilot compensation by the difference between 
the previous year's BLS Employment Cost Index for the Transportation 
and Materials sector and the FOMC median economic projections for 
Personal Consumption Expenditures inflation value used to inflate the 
previous year's target Pilot compensation.
    In the second part of Step 4, (Sec.  404.104(b)(2)), the Director 
then adjusts that value by the FOMC median economic projections for 
Personal Consumption Expenditures inflation for the upcoming year.
    In the final part of Step 4, Sec.  404.104(c) and (d), the Director 
determines the total target compensation figure for each district. To 
do this, the Director multiplies the compensation benchmark by the 
number of Pilots for each area and district (from Step 3), producing a 
figure for total Pilot compensation. Based on the total Pilot 
compensation, the Director determines the individual Apprentice Pilot 
wage benchmark at the rate of 36 percent of the individual target Pilot 
compensation, as calculated according to paragraphs (a) or (b) of this 
section.
    In Step 5, ``Project working capital fund,'' (Sec.  404.105), the 
Director calculates an added value to pay for needed capital 
improvements and other non-recurring expenses, such as technology 
investments and infrastructure maintenance. This value is calculated by 
adding the total operating expenses (derived in Step 2) to the total 
target Pilot compensation and the total target Apprentice Pilot wage 
(derived in Step 4), then by multiplying that figure by the preceding 
year's average annual rate of return for new issues of high-grade 
corporate securities. This figure constitutes the ``working capital 
fund'' for each area and district.
    In Step 6, ``Project needed revenue,'' (Sec.  404.106), the 
Director simply adds the totals produced by the preceding steps. The 
projected operating expenses for each area and district (from Step 2) 
is added to the total 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,'' (Sec.  404.107), the 
Director calculates an hourly pilotage rate to cover the needed 
revenue, as calculated in Step 6. This step consists of first 
calculating the 10-year average of traffic hours for each area. Next, 
we divide the revenue needed in each area (calculated in Step 6) by the 
10-year average of traffic hours to produce an initial base rate.
    An additional element, the ``weighting factor,'' is required under 
Sec.  401.400. Pursuant to that section, ships pay a multiple of the 
``base rate,'' as calculated in Step 7, by a number ranging from 1.0 
(for the smallest ships, or ``Class I'' vessels) to 1.45 (for the 
largest ships, or ``Class IV'' vessels). This significantly increases 
the revenue collected, and we need to account for the added revenue 
produced by the weighting factors to ensure that shippers are not 
overpaying for pilotage services. We do this in the next step.
    In Step 8, ``Calculate average weighting factors by Area,'' (Sec.  
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,'' (Sec.  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,'' (Sec.  404.110), often 
referred to informally as ``Director's discretion'', the Director 
reviews the revised base rates (from Step 9) to ensure that they meet 
the goals set forth in 46 U.S.C. 9303(f) and 46 CFR 404.1(a), which 
include promoting efficient, safe, and reliable pilotage service on the 
Great Lakes; generating sufficient revenue for each pilot association 
to reimburse necessary and reasonable operating expenses; compensating 
trained and rested pilots fairly; and providing appropriate revenue for 
improvements.

VI. Discussion of Proposed Rate Adjustments

    In this NPRM, we are proposing new pilotage rates for 2025. We 
propose to conduct the 2025 ratemaking as an interim ratemaking, as we 
did in the 2024 ratemaking (89 FR 9038). Thus, the Coast Guard proposes 
to adjust the compensation benchmark following the interim ratemaking 
procedures under Sec.  404.100(b), rather than following the procedures 
for a full ratemaking under Sec.  404.100(a).
    This section discusses the proposed rate changes using the 
ratemaking steps provided in 46 CFR part 404. We will detail all 10 
steps of the ratemaking

[[Page 63337]]

procedure for each of the 3 districts to show how we arrive at the 
proposed new rates.
    The Coast Guard is proposing the rates shown in table 1.
    [GRAPHIC] [TIFF OMITTED] TP05AU24.093
    
    This proposed rule would affect 61 U.S. Great Lakes Pilots, 3 
Apprentice Pilots, 3 pilot associations, and the owners and operators 
of an average of 280 oceangoing vessels that transit the Great Lakes 
annually. This proposed rule would not affect the Coast Guard's budget 
or increase Federal spending, because foreign shippers, foreign cruise 
ships, and vessels requesting voluntary pilotage pay these rates 
directly to the respective pilot association The estimated overall 
annual regulatory economic impact of this rate change would be a net 
increase of $2,639,968 in payments made by the foreign shippers, 
foreign cruise ships, and vessels requesting voluntary pilotage 
service, a seven percent increase from operating costs in the 2024 
shipping season. This represents an increase in revenue needed for 
target Pilot compensation, a decrease in revenue needed for the total 
Apprentice Pilot wage benchmark, an increase in the revenue needed for 
adjusted operating expenses, and an increase in the revenue needed for 
the working capital fund.
    This proposed rule would establish the 2025 yearly target 
compensation for Pilots on the Great Lakes at $461,611 per Pilot (a 
$20,953, or 4.75 percent, increase over their 2024 target 
compensation). Because the Coast Guard must review, and, if necessary, 
adjust rates each year, we analyze these as single-year costs and do 
not annualize them over 10 years. Section VII., Regulatory Analyses, in 
this preamble provides the regulatory impact analyses of this proposed 
rule. The following work demonstrates how we arrived at the proposed 
rate for each pilotage district.

District One

A. Step 1: Recognize Previous Operating Expenses
    Step 1 in the ratemaking methodology requires that the Coast Guard 
review and recognize the operating expenses for the last full year for 
which figures are available (Sec.  404.101). To do so, we begin by 
reviewing the independent accountant's financial reports for each 
association's 2022 expenses and revenues.\9\ For accounting purposes, 
the financial reports divide expenses into designated and undesignated 
areas. For costs accrued by the pilot associations generally, such as 
employee benefits, the cost is divided between the designated and 
undesignated areas on a pro rata basis. Adjustments have been made by 
the auditors and are explained in the auditor's reports, which are 
available in the docket for this

[[Page 63338]]

rulemaking, where indicated under Section I., Public Participation and 
Request for Comments.
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    \9\ These reports are available in the docket for this proposed 
rule.
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    The recognized operating expenses for District One are shown in 
table 2.
BILLING CODE 9110-04-P
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[GRAPHIC] [TIFF OMITTED] TP05AU24.095

BILLING CODE 9110-04-C
B. Step 2: Project Operating Expenses, Adjusting for Inflation or 
Deflation
    In accordance with the text in Sec.  404.102, having identified the 
recognized 2022 operating expenses in Step 1, the next step is to 
estimate the current year's operating expenses by adjusting for 
inflation over the 3-year

[[Page 63340]]

period. We calculate inflation using the BLS data from the CPI for the 
Midwest Region of the United States for the 2023 inflation rate.\10\ 
Because the BLS does not provide forecasted inflation data, we use 
economic projections from the Federal Reserve for the 2024 and 2025 
inflation modification.\11\ Based on that information, the calculations 
for Step 2 are as presented in table 3.
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    \10\ The CPI is defined as ``All Urban Consumers (CPI-U), All 
Items, 1982-4=100.'' Series CUUR0200SA0 (Downloaded February 22, 
2024). Available at https://www.bls.gov/cpi/data.htm., All Urban 
Consumers (Current Series), multiscreen data, not seasonally 
adjusted, 0200 Midwest, Current, All Items, Monthly, 12-month 
Percent Change and Annual Data (last accessed 05/31/2024).
    \11\ The 2024 and 2025 inflation rates are available at https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20240320.pdf. We used the Core PCE December Projection 
found in table 1. (Downloaded March 2024).
[GRAPHIC] [TIFF OMITTED] TP05AU24.096

C. Step 3: Estimate Number of Registered Pilots and Apprentice Pilots
    In accordance with the text in Sec.  404.103, the Coast Guard 
estimates the number of fully registered Pilots in each district. In 
the past, this was done using the staffing model and the process 
described in Sec.  404.103. Last year, during the 2023 GLPAC meeting, 
there was a unanimous recommendation by the GLPAC that, after 2024, the 
Director be given discretion to increase the staffing model plus three 
Pilots per District, based on industry demand and to ensure shipping 
reliability.\12\ Additionally, the previous staffing model's maximum is 
now considered the minimum in regard to the number of Pilots needed in 
each district.\13\
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    \12\ Transcript, supra note 8, at 89-90.
    \13\ Id. at 57-58.
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    We determine the number of fully registered Pilots based on data 
provided by the SLSPA as well as the previously mentioned 
recommendation. We determine the number of Apprentice Pilots based on 
input from the district on anticipated retirements and staffing needs. 
These numbers can be found in table 4.
[GRAPHIC] [TIFF OMITTED] TP05AU24.097

D. Step 4: Determine Target Pilot Compensation Benchmark and Apprentice 
Pilot Wage Benchmark
    In this step, we determine the total target Pilot compensation for 
each area. Because we are issuing an interim ratemaking this year, we 
follow the procedure outlined in paragraph (b) of Sec.  404.104, which 
adjusts the existing compensation benchmark by inflation. First, we 
adjust the 2024 target compensation benchmark of $440,658 by 2.5 
percent for a value of $451,674. This accounts for the difference in 
actual first quarter 2024 Employment Cost Index (ECI) inflation, which 
is 5.1 percent, and the 2024 PCE estimate of 2.6 
percent.14 15
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    \14\ Employment Cost Index, Total Compensation for Private 
Industry workers in Transportation and Material Moving, Annual 
Average, Series ID: CIU2010000520000A. https://www.bls.gov/news.release/eci.t05.htm (last accessed 04/30/24).
    \15\ 2.6 percent was the latest figure available for the 2024 
final rule. Table 1, Summary of Economic Projections, Median Core 
PCE Inflation June Projection. https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20230920.pdf (last accessed 05/31/
2024).
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    The second step accounts for projected inflation from 2024 to 2025, 
which is 2.2 percent.\16\ Based on the projected 2025 inflation 
estimate, the proposed target compensation benchmark for 2025 is 
$461,611 per pilot. The proposed Apprentice Pilot wage benchmark is 36 
percent of the target Pilot compensation, or $166,180 ($461,611 x 
0.36).
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    \16\ Table 1, Summary of Economic Projections, Median Core PCE 
Inflation December Projection. https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20240320.pdf. (Downloaded March 
2024).
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    In accordance with Sec.  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 5. We estimate 
that the number of Apprentice Pilots needed will be one for District 
One in the 2025 rulemaking. The total target wages for Apprentice 
Pilots are allocated with 60 percent for the

[[Page 63341]]

designated area and 40 percent for the undesignated area, in accordance 
with the allocation for operating expenses.
[GRAPHIC] [TIFF OMITTED] TP05AU24.098

E. Step 5: Project Working Capital Fund
    Next, the Coast Guard calculates the working capital fund revenues 
needed for each area. We first add the figures for projected operating 
expenses, total target Pilot compensation, and total target Apprentice 
Pilot wage for each area. Then we find the preceding year's average 
annual rate of return for new issues of high-grade corporate 
securities. Using Moody's data, the number is 4.8100 percent, 
rounded.\17\ By multiplying the two figures, we obtain the working 
capital fund contribution for each area, as shown in table 6.
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    \17\ Moody's Seasoned Aaa Corporate Bond Yield, average of 2023 
monthly data. The Coast Guard uses the most recent year of complete 
data. Moody's is taken from Moody's Investors Service, which is a 
bond credit rating business of Moody's Corporation. Bond ratings are 
based on creditworthiness and risk. The rating of ``Aaa'' is the 
highest bond rating assigned with the lowest credit risk. See 
https://fred.stlouisfed.org/series/AAA (last accessed 01/08/2024).
[GRAPHIC] [TIFF OMITTED] TP05AU24.099


[[Page 63342]]


F. Step 6: Project Needed Revenue
    In this step, we add the expenses accrued to derive the total 
revenue needed for each area. These expenses include the projected 
operating expenses (from Step 2), the total target Pilot compensation 
(from Step 4), total target Apprentice Pilot wage (from Step 4), and 
the working capital fund contribution (from Step 5). We show these 
calculations in table 7.
[GRAPHIC] [TIFF OMITTED] TP05AU24.100

G. Step 7: Calculate Initial Base Rates
    Having determined the revenue needed for each area in the previous 
six steps, we divide that number by the expected number of traffic 
hours to develop an hourly rate.
    Step 7 is a two-part process. The first part entails calculating 
the 10-year traffic average in District One, using the total time on 
task or Pilot bridge hours. To calculate the time on task for each 
district, the Coast Guard used billing data from SeaPro. The Coast 
Guard received revised 2022 bridge hours in the revenue reports 
submitted by our third-party auditor and has implemented them into the 
rate in this step of the rulemaking.\18\ Because we calculate separate 
figures for designated and undesignated waters, there are two parts for 
each calculation. We show these values in table 8.
---------------------------------------------------------------------------

    \18\ See details on the revised figures in Section VII., 
Regulatory Analyses.
[GRAPHIC] [TIFF OMITTED] TP05AU24.101

    Next, we derive the initial hourly rate by dividing the revenue 
needed by the average number of hours for each area. This produces an 
initial rate, which is necessary to produce the revenue needed for each 
area, assuming the amount of traffic is as expected. We present the 
calculations for District One in table 9.

[[Page 63343]]

[GRAPHIC] [TIFF OMITTED] TP05AU24.102

H. Step 8: Calculate Average Weighting Factors by Area
    In this step, the Coast Guard calculates the average weighting 
factor for each designated and undesignated area by first collecting 
the weighting factors, set forth in 46 CFR 401.400, for each vessel 
trip. Using the weight factor report from SeaPro, we calculate the 
average weighting factor for each area using the data from each vessel 
transit from 2014 onward, as shown in tables 10 and 11.
BILLING CODE 9110-04-P
[GRAPHIC] [TIFF OMITTED] TP05AU24.103


[[Page 63344]]


[GRAPHIC] [TIFF OMITTED] TP05AU24.104


[[Page 63345]]


[GRAPHIC] [TIFF OMITTED] TP05AU24.105


[[Page 63346]]


[GRAPHIC] [TIFF OMITTED] TP05AU24.106

BILLING CODE 9110-04-C
I. Step 9: Calculate Revised Base Rates
    In this step, we revise the base rates so that the total cost of 
pilotage will be equal to the revenue needed, after considering the 
impact of the weighting factors. To do this, we divide the initial base 
rates calculated in Step 7 by the average weighting factors calculated 
in Step 8, as shown in table 12.

[[Page 63347]]

[GRAPHIC] [TIFF OMITTED] TP05AU24.107

J. Step 10: Review and Finalize Rates
    In this step, the Director reviews the base pilotage rates 
calculated in Sec.  404.109 of this part to ensure it meets the goal of 
ensuring safe, efficient, and reliable pilotage service. To establish 
this, the Director considers whether the proposed rates incorporate 
appropriate compensation for Pilots to handle heavy traffic periods and 
whether there are enough Pilots to handle those heavy traffic periods. 
The Director also considers whether the proposed rates would cover 
operating expenses and infrastructure costs, including average traffic 
and weighting factors. Based on these considerations, the Director is 
not proposing any alterations to the rates in this step. We propose to 
modify Sec.  401.405(a)(1) and (2) to reflect the final rates shown in 
table 13.
[GRAPHIC] [TIFF OMITTED] TP05AU24.108

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 (Sec.  
404.101). To do so, we begin by reviewing the independent accountant's 
financial reports for each association's 2022 expenses and 
revenues.\19\ For accounting purposes, the financial reports divide 
expenses into designated and undesignated areas. For costs generally 
accrued by the pilot associations, such as employee benefits, the cost 
is divided between the designated and undesignated areas on a pro rata 
basis. Adjustments have been made by the auditors and are explained in 
the auditor's reports, which are available in the docket for this 
rulemaking, where indicated under Section I., Public Participation and 
Request for Comments.
---------------------------------------------------------------------------

    \19\ These reports are available in the docket for this proposed 
rule.
---------------------------------------------------------------------------

    The recognized operating expenses for District Two are shown in 
table 14.
BILLING CODE 9110-04-P

[[Page 63348]]

[GRAPHIC] [TIFF OMITTED] TP05AU24.109


[[Page 63349]]


[GRAPHIC] [TIFF OMITTED] TP05AU24.110

BILLING CODE 9110-04-C
B. Step 2: Project Operating Expenses, Adjusting for Inflation or 
Deflation
    In accordance with the text in Sec.  404.102, having identified the 
recognized 2022 operating expenses in Step 1, the next step is to 
estimate the current year's operating expenses by adjusting for 
inflation over the 3-year

[[Page 63350]]

period. We calculate inflation using the BLS data from the CPI for the 
Midwest Region of the United States for the 2023 inflation rate.\20\ 
Because the BLS does not provide forecasted inflation data, we use 
economic projections from the Federal Reserve for the 2024 and 2025 
inflation modification.\21\ Based on that information, the calculations 
for Step 2 are presented in table 15.
---------------------------------------------------------------------------

    \20\ CPI, supra note 10.
    \21\ Core PCE December Projection, supra note 11.
    [GRAPHIC] [TIFF OMITTED] TP05AU24.111
    
C. Step 3: Estimate Number of Registered Pilots and Apprentice Pilots
    In accordance with the text in Sec.  404.103, the Coast Guard 
estimates the number of fully registered Pilots in each district. In 
the past, this was done using the staffing model and the process 
described in Sec.  404.103. Last year, during the 2023 GLPAC meeting, 
there was a unanimous recommendation by the GLPAC that, after 2024, the 
Director be given discretion to increase the staffing model plus three 
Pilots per District, based on industry demand and to ensure shipping 
reliability.\22\ Additionally, the previous staffing model's maximum is 
now considered the minimum in regard to the number of Pilots needed in 
each district.\23\
---------------------------------------------------------------------------

    \22\ Transcript, supra note 8 at 89-90.
    \23\ Id. at 57-58.
---------------------------------------------------------------------------

    We determine the number of fully registered Pilots based on data 
provided by the LPA as well as the previous mentioned recommendation. 
We determine the number of Apprentice Pilots based on input from the 
district on anticipated retirements and staffing needs. These numbers 
can be found in table 16.
[GRAPHIC] [TIFF OMITTED] TP05AU24.112

D. Step 4: Determine Target Pilot Compensation Benchmark and Apprentice 
Pilot Wage Benchmark
    In this step, we determine the total target Pilot compensation for 
each area. Because we are issuing an interim ratemaking this year, we 
follow the procedure outlined in paragraph (b) of Sec.  404.104, which 
adjusts the existing compensation benchmark by inflation. First, we 
adjust the 2024 target compensation benchmark of $440,658 by 2.5 
percent for a value of $451,674. This accounts for the difference in 
actual first quarter 2024 ECI inflation, which is 5.1 percent, and the 
2024 PCE estimate of 2.6 percent.24 25 The second step 
accounts for projected inflation from 2024 to 2025, which is 2.2 
percent.\26\ Based on the projected 2025 inflation estimate, the 
proposed target compensation benchmark for 2025 is $461,611 per Pilot. 
The proposed Apprentice Pilot wage benchmark is 36 percent of the 
target Pilot compensation, or $166,180 ($461,611 x 0.36).
---------------------------------------------------------------------------

    \24\ ECI, supra note 14.
    \25\ Median Core PCE Inflation June Projection, supra note 15.
    \26\ Median Core PCE Inflation December Projection, supra note 
16.
---------------------------------------------------------------------------

    In accordance with Sec.  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 17. The total 
target wages for Apprentice Pilots are allocated with 60 percent for 
the designated area and 40 percent for the undesignated area, in 
accordance with the allocation for operating expenses.

[[Page 63351]]

[GRAPHIC] [TIFF OMITTED] TP05AU24.113

E. Step 5: Project Working Capital Fund
    Next, the Coast Guard calculates the working capital fund revenues 
needed for each area. We first add the figures for projected operating 
expenses, total target Pilot compensation, and total target Apprentice 
Pilot wage for each area. Then we find the preceding year's average 
annual rate of return for new issues of high-grade corporate 
securities. Using Moody's data, the number is 4.8100 percent, 
rounded.\27\ By multiplying the two figures, we obtain the working 
capital fund contribution for each area, as shown in table 18.
---------------------------------------------------------------------------

    \27\ Moody's Seasoned Aaa Corporate Bond Yield, supra note 17.
    [GRAPHIC] [TIFF OMITTED] TP05AU24.114
    
F. Step 6: Project Needed Revenue
    In this step, the Coast Guard adds all the expenses accrued to 
derive the total revenue needed for each area. These expenses include 
the projected operating expenses (from Step 2), the total target Pilot 
compensation (from Step 4), total target Apprentice Pilot wage (from 
Step 4), and the working capital fund contribution (from Step 5). We 
show these calculations in table 19.
[GRAPHIC] [TIFF OMITTED] TP05AU24.115


[[Page 63352]]


G. Step 7: Calculate Initial Base Rates
    Having determined the revenue needed for each area in the previous 
six steps, we divide that number by the expected number of traffic 
hours to develop an hourly rate.
    Step 7 is a two-part process. The first part entails calculating 
the 10-year traffic average in District Two, using the total time on 
task or Pilot bridge hours. To calculate the time on task for each 
district, the Coast Guard used billing data from SeaPro. The Coast 
Guard received revised 2022 bridge hours in the revenue reports 
submitted by our third-party auditor and has implemented them into the 
rate in this step of the rulemaking.\28\ Because we calculate separate 
figures for designated and undesignated waters, there are two parts for 
each calculation. We show these values in table 20.
---------------------------------------------------------------------------

    \28\ See details on the revised figures in Section VII., 
Regulatory Analyses.
[GRAPHIC] [TIFF OMITTED] TP05AU24.116

    Next, we derive the initial hourly rate by dividing the revenue 
needed by the average number of hours for each area. This produces an 
initial rate, which is necessary to produce the revenue needed for each 
area, assuming the amount of traffic is as expected. We present the 
calculations for District Two in table 21.
[GRAPHIC] [TIFF OMITTED] TP05AU24.117

H. Step 8: Calculate Average Weighting Factors by Area
    In this step, the Coast Guard calculates the average weighting 
factor for each designated and undesignated area by first collecting 
the weighting factors, set forth in 46 CFR 401.400, for each vessel 
trip. Using the weight factor report from SeaPro, we calculate the 
average weighting factor for each area using the data from each vessel 
transit from 2014 onward, as shown in tables 22 and 23.
BILLING CODE 9110-04-P

[[Page 63353]]

[GRAPHIC] [TIFF OMITTED] TP05AU24.118


[[Page 63354]]


[GRAPHIC] [TIFF OMITTED] TP05AU24.119


[[Page 63355]]


[GRAPHIC] [TIFF OMITTED] TP05AU24.120


[[Page 63356]]


[GRAPHIC] [TIFF OMITTED] TP05AU24.121

BILLING CODE 9110-04-C
I. Step 9: Calculate Revised Base Rates
    In this step, we revise the base rates so that the total cost of 
pilotage will be equal to the revenue needed, after considering the 
impact of the weighting factors. To do this, we divide the initial base 
rates calculated in Step 7 by the average weighting factors calculated 
in Step 8, as shown in table 24.
[GRAPHIC] [TIFF OMITTED] TP05AU24.122

J. Step 10: Review and Finalize Rates
    In this step, the Director reviews the base pilotage rates 
calculated in Sec.  404.109 of this part to ensure it meets the goal of 
ensuring safe, efficient, and reliable pilotage service. To establish 
this, the Director considers whether the proposed rates incorporate 
appropriate compensation for Pilots to handle heavy traffic periods and 
whether there are enough Pilots to handle those heavy traffic periods. 
The Director also considers whether the proposed rates would cover 
operating expenses and infrastructure costs, including average traffic 
and weighting factors. Based on these considerations, the Director is 
not proposing any alterations to the rates in this step. We propose to 
modify Sec.  401.405(a)(3) and (4) to reflect the final rates shown in 
table 25.

[[Page 63357]]

[GRAPHIC] [TIFF OMITTED] TP05AU24.123

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 (Sec.  
404.101). To do so, we review the independent accountant's financial 
reports for each association's 2022 expenses and revenues.\29\ For 
accounting purposes, the financial reports divide expenses into 
designated and undesignated areas. For costs generally accrued by the 
pilot associations, such as employee benefits, the cost is divided 
between the designated and undesignated areas on a pro rata basis. 
Adjustments have been made by the auditors and are explained in the 
auditor's reports, which are available in the docket for this 
rulemaking, where indicated under Section I., Public Participation and 
Request for Comments.
---------------------------------------------------------------------------

    \29\ These reports are available in the docket for this proposed 
rule.
---------------------------------------------------------------------------

    The recognized operating expenses for District Three are shown in 
table 26.
BILLING CODE 9110-04-P

[[Page 63358]]

[GRAPHIC] [TIFF OMITTED] TP05AU24.124


[[Page 63359]]


[GRAPHIC] [TIFF OMITTED] TP05AU24.125

BILLING CODE 9110-04-C
B. Step 2: Project Operating Expenses, Adjusting for Inflation or 
Deflation
    In accordance with the text in Sec.  404.102, having identified the 
recognized 2022 operating expenses in Step 1, the next step is to 
estimate the current year's operating expenses by adjusting those 
expenses for inflation

[[Page 63360]]

over the 3-year period. We calculate inflation using the BLS data from 
the CPI for the Midwest Region of the United States for the 2023 
inflation rate.\30\ Because the BLS does not provide forecasted 
inflation data, we use economic projections from the Federal Reserve 
for the 2024 and 2025 inflation modification.\31\ Based on that 
information, the calculations for Step 2 are as presented in table 27.
---------------------------------------------------------------------------

    \30\ CPI, supra note 10.
    \31\ Core PCE, supra note 11.
    [GRAPHIC] [TIFF OMITTED] TP05AU24.126
    
C. Step 3: Estimate Number of Registered Pilots and Apprentice Pilots
    In accordance with the text in Sec.  404.103, the Coast Guard 
estimates the number of fully registered Pilots in each district. In 
the past, this was done using the staffing model and the process 
described in Sec.  404.103. Last year, during the 2023 GLPAC meeting, 
there was a unanimous recommendation by the GLPAC that, after 2024, the 
Director be given discretion to increase the staffing model plus three 
Pilots per District, based on industry demand and to ensure shipping 
reliability.\32\ Additionally, the previous staffing model's maximum 
are now considered the minimum regarding the number of Pilots needed in 
each district.\33\
---------------------------------------------------------------------------

    \32\ Transcript, supra note 8, at 89-90.
    \33\ Id. at 57-58.
---------------------------------------------------------------------------

    We determine the number of fully registered Pilots based on data 
provided by the WGLPA, as well as the previous mentioned 
recommendation. We determine the number of Apprentice Pilots based on 
input from the district on anticipated retirements and staffing needs. 
These numbers can be found in table 28.
[GRAPHIC] [TIFF OMITTED] TP05AU24.127

D. Step 4: Determine Target Pilot Compensation Benchmark and Apprentice 
Pilot Wage Benchmark
    In this step, we determine the total target Pilot compensation for 
each area. Because we are issuing an interim ratemaking this year, we 
follow the procedure outlined in paragraph (b) of Sec.  404.104, which 
adjusts the existing compensation benchmark by inflation. First, we 
adjust the 2024 target compensation benchmark of $440,658 by 2.5 
percent for a value of $451,674. This accounts for the difference in 
actual first quarter 2024 ECI inflation, which is 5.1 percent, and the 
2024 PCE estimate of 2.6 percent.34 35 The second step 
accounts for projected inflation from 2024 to 2025, which is 2.2 
percent.\36\ Based on the projected 2025 inflation estimate, the 
proposed target compensation benchmark for 2025 is $461,611 per pilot. 
The proposed apprentice pilot wage benchmark is 36 percent of the 
target Pilot compensation, or $166,180 ($461,611 x 0.36).
---------------------------------------------------------------------------

    \34\ ECI, supra note 14.>
    \35\ Median Core PCE Inflation June Projection, supra note 15.
    \36\ Median Core PCE Inflation December Projection, supra note 
16.
---------------------------------------------------------------------------

    In accordance with Sec.  404.104(c), we use the revised target 
individual compensation level to derive the total target Pilot 
compensation by multiplying the individual target compensation by the 
estimated number of Registered Pilots for District Three, as shown in 
table 29. We estimate that the number of Apprentice Pilots needed for 
District Three in the 2024 season will be one. The total target wages 
for Apprentice Pilots are allocated with 21 percent for the designated 
area, and 79 percent for the undesignated areas, in accordance with the 
allocation for operating expenses.

[[Page 63361]]

[GRAPHIC] [TIFF OMITTED] TP05AU24.128

E. Step 5: Project Working Capital Fund
    Next, the Coast Guard calculates the working capital fund revenues 
needed for each area. We first add the figures for projected operating 
expenses, total target Pilot compensation, and total target Apprentice 
Pilot wage for each area, and then we find the preceding year's average 
annual rate of return for new issues of high-grade corporate 
securities. Using Moody's data, the number is 4.8100 percent, 
rounded.\37\ By multiplying the two figures, we obtain the working 
capital fund contribution for each area, as shown in table 30.
---------------------------------------------------------------------------

    \37\ Moody's Seasoned Aaa Corporate Bond Yield, supra note 17.
    [GRAPHIC] [TIFF OMITTED] TP05AU24.129
    
F. Step 6: Project Needed Revenue
    In this step, the Coast Guard adds all the expenses accrued to 
derive the total revenue needed for each area. These expenses include 
the projected operating expenses (from Step 2), the total target Pilot 
compensation (from Step 4), and the working capital fund contribution 
(from Step 5). The calculations are shown in table 31.
[GRAPHIC] [TIFF OMITTED] TP05AU24.130


[[Page 63362]]


G. Step 7: Calculate Initial Base Rates
    Having determined the revenue needed for each area in the previous 
six steps, we divide that number by the expected number of traffic 
hours to develop an hourly rate.
    Step 7 is a two-part process. The first part is calculating the 10-
year traffic average in District Three using the total time on task or 
Pilot bridge hours. To calculate the time on task for each district, 
the Coast Guard used billing data from SeaPro. The Coast Guard received 
revised 2022 bridge hours in the revenue reports submitted by our 
third-party auditor and has implemented them into the rate in this step 
of the rulemaking.\38\ Because we calculate separate figures for 
designated and undesignated waters, there are two parts for each 
calculation. We show these values in table 32.
---------------------------------------------------------------------------

    \38\ See details on the revised figures in Section VII., 
Regulatory Analyses.
[GRAPHIC] [TIFF OMITTED] TP05AU24.131

    Next, we derive the initial hourly rate by dividing the revenue 
needed by the average number of hours for each area. This produces an 
initial rate, which is necessary to produce the revenue needed for each 
area, assuming the amount of traffic is as expected. We present the 
calculations for District Three in table 33.
[GRAPHIC] [TIFF OMITTED] TP05AU24.132

H. Step 8: Calculate Average Weighting Factors by Area
    In this step, the Coast Guard calculates the average weighting 
factor for each designated and undesignated area by first collecting 
the weighting factors, set forth in 46 CFR 401.400, for each vessel 
trip. Using the weight factor report from SeaPro, we calculate the 
average weighting factor for each area using the data from each vessel 
transit from 2014 onward, as shown in tables 34 and 35. Transits are 
listed in both the bridge hour report and the weight factor report. For 
this step, the Coast Guard uses the transits from the weight factor 
report.
BILLING CODE 9110-04-P

[[Page 63363]]

[GRAPHIC] [TIFF OMITTED] TP05AU24.133


[[Page 63364]]


[GRAPHIC] [TIFF OMITTED] TP05AU24.134


[[Page 63365]]


[GRAPHIC] [TIFF OMITTED] TP05AU24.135


[[Page 63366]]


[GRAPHIC] [TIFF OMITTED] TP05AU24.136

I. Step 9: Calculate Revised Base Rates
    In this step, we revise the base rates so that the total cost of 
pilotage will be equal to the revenue needed, after considering the 
impact of the weighting factors. To do this, we divide the initial base 
rates calculated in Step 7 by the average weighting factors calculated 
in Step 8, as shown in table 36.

[[Page 63367]]

[GRAPHIC] [TIFF OMITTED] TP05AU24.137

[GRAPHIC] [TIFF OMITTED] TP05AU24.138

J. Step 10: Review and Finalize Rates
    In this step, the Director reviews the base pilotage rates 
calculated in Sec.  404.109 of this part to ensure it meets the goal of 
ensuring safe, efficient, and reliable pilotage service. To establish 
this, the Director considers whether the proposed rates incorporate 
appropriate compensation for Pilots to handle heavy traffic periods and 
whether there are enough Pilots to handle those heavy traffic periods. 
The Director also considers whether the proposed rates would cover 
operating expenses and infrastructure costs, including average traffic 
and weighting factors. Based on these considerations, the Director is 
not proposing any alterations to the rates in this step. We propose to 
modify Sec.  401.405(a)(5) and (6) to reflect the proposed rates shown 
in table 37.

[[Page 63368]]

[GRAPHIC] [TIFF OMITTED] TP05AU24.139

VII. 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), as amended 
by Executive Order 14094 (Modernizing Regulatory Review), and 13563 
(Improving Regulation and Regulatory Review) direct agencies to assess 
the costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility.
    The Office of Management and Budget (OMB) has not designated this 
rule a significant regulatory action under section 3(f) of Executive 
Order 12866, as amended by Executive Order 14094. Accordingly, OMB has 
not reviewed this regulatory action. The purpose of this proposed rule 
is to establish new pilotage rates, as 46 U.S.C. 9303(f) requires that 
rates be established or reviewed and adjusted each year. The statute 
also requires that base rates be established by a full ratemaking at 
least once every 5 years, and, in years when base rates are not 
established, they must be reviewed and, if necessary, adjusted. The 
Coast Guard concluded the last full ratemaking in February of 2023.\39\ 
For this NPRM, the Coast Guard estimates an increase in cost of 
approximately $2.64 million to industry. This is approximately a 7-
percent increase because of the change in revenue needed in 2025 
compared to the revenue needed in 2024. See table 38.
---------------------------------------------------------------------------

    \39\ Great Lakes Pilotage Rates--2023 Annual Ratemaking and 
Review of Methodology (88 FR 12226), published February 27, 2023.

---------------------------------------------------------------------------

[[Page 63369]]

[GRAPHIC] [TIFF OMITTED] TP05AU24.140

    In the Great Lakes Pilotage Rates--2024 Annual Review (``2024 final 
rule'') (89 FR 9038), the Coast Guard used monthly reports for the 2022 
bridge hours in Step 7 as provided by the pilot associations. Since 
that final rule, the Coast Guard received revised estimates of the 2022 
bridge hours in the revenue reports submitted by Cohn Reznik. 
Similarly, the pilot associations were also able to provide updated 
2022 monthly reports in April 2024. For this proposed rule, the Coast 
Guard revises the bridge hours for 2022 in Step 7, using the latest 
available information. This revision ensures that all figures are 
comparable, since the initial monthly reports and weight factor reports 
received for the 2024 final rule showed different totals for bridge 
hours.
    Table 39 shows the difference between the 2022 bridge hour figures 
as published in the 2024 final rule, and the revised figures as of this 
proposed rule.
[GRAPHIC] [TIFF OMITTED] TP05AU24.141

    Similarly, the Coast Guard received updated 2022 weight factor 
reports in April 2024. The Coast Guard uses the latest available 
information to revise the number of transits by vessel class in Step 8, 
``Calculate average weighting factors by Area''. Table 40 shows the 
difference between the 2022 transit figures as published in the 2024 
final rule, and the revised figures as of this proposed rule.
BILLING CODE 9110-04-P

[[Page 63370]]

[GRAPHIC] [TIFF OMITTED] TP05AU24.142

BILLING CODE 9110-04-C
    The Coast Guard is required to review and adjust pilotage rates on 
the Great Lakes annually. See Section III., Basis and Purpose, of this 
preamble for detailed discussions of the legal basis and purpose for 
this rulemaking. Based on our annual review for this rulemaking, we are 
adjusting the pilotage rates in 2025 to generate sufficient revenues 
for each district to reimburse its necessary and reasonable operating 
expenses, to fairly compensate properly trained and rested Pilots, and 
to provide an appropriate working capital fund to use for improvements. 
The result would be an increase in rates for both areas in District 
One, the designated area for District Two, and the undesignated area in 
District Three. The result would be a decrease in rates for the 
undesignated area for District Two and the designated area for District 
Three. These changes would also lead to a net increase in the cost of 
service to shippers. The change in per-unit cost to each individual 
shipper would depend on their area of operation.
    A detailed discussion of our economic impact analysis follows.
Affected Population
    This proposed rule affects United States Great Lakes Pilots and 
Apprentice Pilots, the 3 pilot associations, and the owners and 
operators of 280 oceangoing vessels that transit the Great Lakes 
annually on average from 2021 to 2023. The Coast Guard estimates that 
there will be 61 Registered Pilots and 3 Apprentice Pilots during 2025. 
The shippers affected by these rate changes

[[Page 63371]]

are those owners and operators of domestic vessels operating ``on 
register'' (engaged in foreign trade) and the owners and operators of 
non-Canadian foreign vessels on routes within the Great Lakes system. 
These owners and operators must have Pilots or pilotage service as 
required by 46 U.S.C. 9302. There is no minimum tonnage limit or 
exemption for these vessels. The statute applies only to commercial 
vessels, not to recreational vessels. United States-flagged vessels not 
operating on register, and Canadian ``lakers,'' which account for most 
commercial shipping on the Great Lakes, are not required by 46 U.S.C. 
9302 to have pilots. However, these United States- and Canadian-flagged 
lakers may voluntarily choose to engage a Great Lakes Registered Pilot. 
Vessels that are U.S.-flagged may opt to have a Pilot for varying 
reasons, such as unfamiliarity with designated waters and ports, or for 
insurance purposes.
    The Coast Guard used billing information from the years 2021 
through 2023 from SeaPro to estimate the average annual number of 
vessels affected by the rate adjustment. SeaPro tracks data related to 
managing and coordinating the dispatch of Pilots on the Great Lakes, 
and billing in accordance with the services. As described in Step 7 of 
the ratemaking methodology, we use a 10-year average to estimate the 
traffic. We used 3 years of the most recent billing data to estimate 
the affected population. We believe that using 3 years of billing data 
is a better representation of the vessel population currently using 
pilotage services and impacted by this proposed rule.
    We found that 484 unique vessels used pilotage services during the 
years 2021 through 2023. That is, these vessels had a Pilot dispatched 
to the vessel, and billing information was recorded in SeaPro. Of these 
vessels, 451 were foreign-flagged vessels and 33 were U.S.-flagged 
vessels. 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 can voluntarily choose to have one.
    Numerous factors affect vessel traffic, which varies from year to 
year. Therefore, rather than using the total number of vessels over the 
time period, the Coast Guard took an average of the unique vessels 
using pilotage services from the years 2021 through 2023 as the best 
representation of vessels estimated to be affected by the rates in this 
proposed rule. From 2021 through 2023, an average of 280 vessels used 
pilotage services annually.\40\ On average, 268 of these vessels were 
foreign-flagged, and 13 were U.S.-flagged vessels that voluntarily 
opted into the pilotage service (these figures are rounded averages).
---------------------------------------------------------------------------

    \40\ Some vessels entered the Great Lakes multiple times in a 
single year, affecting the average number of unique vessels using 
pilotage services in any given year.
---------------------------------------------------------------------------

Total Cost to Shippers
    The rate changes resulting from this adjustment to the rates would 
result in a net increase in the cost of service to shippers. However, 
the 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 2024 with the total projected revenues to cover costs in 2025. 
We set pilotage rates so that pilot associations receive enough revenue 
to cover their necessary and reasonable expenses. Shippers pay these 
rates when they engage a Pilot, as required by 46 U.S.C. 9302. 
Therefore, the aggregate payments of shippers to pilot associations are 
equal to the projected necessary revenues for pilot associations. The 
revenues each year represent the total costs that shippers must pay for 
pilotage services. The change in revenue from the previous year is the 
additional cost to shippers discussed in this proposed rule.
    The impacts of the rate changes on shippers are estimated from the 
district pilotage projected revenues (shown in tables 7, 19, and 31 of 
this preamble). The Coast Guard estimates that, for 2025, the projected 
revenue needed for all three districts is $42,920,634.
    To estimate the change in cost to shippers from this proposed rule, 
the Coast Guard compared the 2025 total projected revenues to the 2024 
projected revenues. Because we review and prescribe rates for Great 
Lakes pilotage annually, the effects are estimated as a single-year 
cost rather than annualized over a 10-year period. In the 2024 final 
rule, we estimated the total projected revenue needed for 2024 as 
$40,280,666.\41\ This is the best approximation of 2024 revenues, as, 
at the time of publication of this proposed rule, the Coast Guard does 
not have enough audited data available for 2024 to revise these 
projections. Table 41 shows the revenue projections for 2024 and 2025 
and details the additional cost increases to shippers by area and 
district as a result of the rate changes on traffic in Districts One, 
Two, and Three.
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    \41\ 2024 Final Rule, 89 FR at 9066 (Table 43).
    [GRAPHIC] [TIFF OMITTED] TP05AU24.143
    

[[Page 63372]]


    The resulting difference between the projected revenue in 2024 and 
the projected revenue in 2025 is the annual change in payments from 
shippers to pilots as a result of the rate changes proposed by this 
NPRM. The effect of the rate changes to shippers would vary by area and 
district. After considering the change in pilotage rates, the proposed 
rate changes would lead to affected shippers operating in District One 
experiencing an increase in payments of $936,031 over the previous 
year. Affected shippers operating in District Two and District Three 
would experience an increase in payments of $986,893 and $717,044, 
respectively, when compared with 2024. The overall adjustment in 
payments would increase payments by shippers of $2,639,968 across all 
three districts (a 7-percent increase when compared with 2024). Again, 
because the Coast Guard reviews and sets rates for Great Lakes pilotage 
annually, we estimate the impacts as single-year costs, rather than 
annualizing them over a 10-year period.
    Table 42 shows the difference in revenue by revenue-component from 
2024 to 2025 and presents each revenue-component as a percentage of the 
total revenue needed. In both 2024 and 2025, the largest revenue-
component was target pilotage compensation (63 percent of total revenue 
needed in 2024, and 66 percent of total revenue needed in 2025), 
followed by operating expenses (30 percent of total revenue needed in 
2024, and 29 percent of total revenue needed in 2025). The large 
increase in the working capital fund, 25 percent from 2024 to 2025, is 
driven by an increase in the Target Rate of Return on Investment, from 
4.0742 percent in 2022 to 4.8100 percent in 2023.\42\
---------------------------------------------------------------------------

    \42\ Moody's Seasoned Aaa Corporate Bond Yield, supra note 17.
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[[Page 63373]]

[GRAPHIC] [TIFF OMITTED] TP05AU24.144

BILLING CODE 9110-04-C
    As stated above, we estimate that there would be a total increase 
in revenue of $2,639,968 needed by the pilot associations. This 
represents an increase in revenue needed for target Pilot compensation 
of $2,600,107, a

[[Page 63374]]

decrease in revenue needed for the total Apprentice Pilot wage 
benchmark of ($453,282), an increase in the revenue needed for adjusted 
operating expenses of $100,275, and an increase in the revenue needed 
for the working capital fund of $392,868.
    The change in revenue needed for Pilot compensation, $2,600,107, is 
due to three factors: (1) The changes to adjust 2024 pilotage 
compensation to account for the difference between actual ECI inflation 
\43\ (5.1 percent) and predicted PCE inflation \44\ (2.6 percent) for 
2024; (2) projected inflation of pilotage compensation in Step 2 of the 
methodology, using predicted inflation through 2025; \45\ and (3) an 
increase of three authorized Pilots.
---------------------------------------------------------------------------

    \43\ ECI, supra note 14.
    \44\ Median Core PCE Inflation June Projection, supra note 15.
    \45\ Median Core PCE Inflation December Projection, supra note 
16.
---------------------------------------------------------------------------

    The target compensation is $461,611 per Pilot in 2025, compared to 
$440,658 in 2024. The proposed changes to modify the 2024 Pilot 
compensation to account for the difference between predicted and actual 
inflation would increase the 2024 target compensation value by 2.5 
percent. As shown in table 43, this inflation adjustment increases 
total compensation by $11,016 per Pilot, and the total revenue needed 
by $672,003, when accounting for all 61 Pilots.
[GRAPHIC] [TIFF OMITTED] TP05AU24.145

    Similarly, table 44 shows the impact of the difference between 
predicted and actual inflation on the target Apprentice Pilot 
compensation benchmark. The inflation adjustment increases the 
compensation benchmark by $3,966 per Apprentice Pilot, and the total 
revenue needed by $11,898 when accounting for all three Apprentice 
Pilots.
[GRAPHIC] [TIFF OMITTED] TP05AU24.146


[[Page 63375]]


    The Coast Guard predicts that 61 Pilots would be needed for the 
2025 season. This is an increase of three Pilots from the 2024 season. 
Table 45 shows the increase of $1,351,784 in revenue needed for Pilot 
compensation. To avoid double counting, this value excludes the change 
in revenue resulting from the change to adjust 2024 Pilot compensation 
to account for the difference between actual and predicted inflation.
[GRAPHIC] [TIFF OMITTED] TP05AU24.147

    Similarly, the Coast Guard predicts that three Apprentice Pilots 
would be needed for the 2025 season. This would be a decrease of three 
Apprentice Pilots from the 2024 season. Table 46 shows the decrease of 
($486,642) in revenue needed solely for Apprentice Pilot compensation. 
As noted previously, to avoid double counting, this value excludes the 
change in revenue resulting from the change to adjust 2024 Apprentice 
Pilot compensation to account for the difference between actual and 
predicted inflation.

[[Page 63376]]

[GRAPHIC] [TIFF OMITTED] TP05AU24.148

    Another increase, $606,130, would be the result of increasing 
compensation for the 61 Pilots, to account for future inflation of 2.2 
percent in 2025. This would increase total compensation by $9,937 per 
Pilot, as shown in table 47.
[GRAPHIC] [TIFF OMITTED] TP05AU24.149

    Similarly, an increase of $10,732 would be the result of increasing 
compensation for the three Apprentice Pilots, to account for future 
inflation of 2.2 percent in 2025. This would increase total 
compensation by $3,577 per Apprentice Pilot, as shown in table 48.

[[Page 63377]]

[GRAPHIC] [TIFF OMITTED] TP05AU24.150

    Table 49 presents the percentage change in revenue by area and 
revenue-component, excluding surcharges, as they are applied at the 
district level.\46\
---------------------------------------------------------------------------

    \46\ The 2024 projected revenues are from the Great Lakes 
Pilotage Rate--2024 Annual Review and Revisions to Methodology final 
rule (89 FR 9038), tables 11, 23, and 35. The 2025 projected 
revenues are from tables 7, 19, and 31 of this proposed rule.
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BILLING CODE 9110-04-P

[[Page 63378]]

[GRAPHIC] [TIFF OMITTED] TP05AU24.151

BILLING CODE 9110-04-C
Benefits
    This proposed rule allows the Coast Guard to meet the requirements 
in 46 U.S.C. 9303 to review the rates for pilotage services on the 
Great Lakes. The rate changes promote safe, efficient, and reliable 
pilotage service on the Great Lakes by (1) ensuring that rates

[[Page 63379]]

cover an association's operating expenses; (2) providing fair Pilot 
compensation, adequate training, and sufficient rest periods for 
Pilots; and (3) ensuring that pilot associations produce enough revenue 
to fund future improvements. The rate changes also help recruit and 
retain Pilots, which ensures enough Pilots to meet peak shipping 
demand, helping to reduce delays caused by Pilot shortages.

B. Small Entities

    Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, we 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 this proposed rule, the Coast Guard reviewed recent company 
size and ownership data for the vessels identified in SeaPro, and we 
reviewed business revenue and size data provided by publicly available 
sources such as ReferenceUSA.\47\ As described in Section VII., 
Regulatory Analyses, of this preamble, we found that 484 unique vessels 
used pilotage services during the years 2021 through 2023. These 
vessels are owned by 63 entities, of which 49 are foreign entities that 
operate primarily outside the United States, and the remaining 14 
entities are U.S. entities. We compared the revenue and employee data 
found in the company search to the Small Business Administration's 
(SBA) small business threshold, as defined in the SBA's ``Table of Size 
Standards'' for small businesses, to determine how many of these 
companies are considered small entities.\48\ Table 50 shows the North 
American Industry Classification System (NAICS) codes of the U.S. 
entities and the small entity standard size established by the SBA.
---------------------------------------------------------------------------

    \47\ See Resources for Reference Solutions Users, ReferenceUSA, 
https://resource.referenceusa.com/ (last accessed 04/22/2024).
    \48\ See Table of Size Standards, https://www.sba.gov/document/support--table-size-standards (Last visited 5/01/24). SBA has 
established a ``Table of Size Standards'' for small businesses that 
sets small business size standards by NAICS code. A size standard, 
which is usually stated in number of employees or average annual 
receipts (``revenues''), represents the largest size that a business 
(including its subsidiaries and affiliates) may be in order to 
remain classified as a small business for SBA and Federal 
contracting programs.
[GRAPHIC] [TIFF OMITTED] TP05AU24.152

    Of the 14 U.S. entities, four exceed the SBA's small business 
standards for small entities. To estimate the potential impact on the 
remaining 10 small entities, the Coast Guard used their 2023 invoice 
data to estimate their pilotage costs in 2025. We increased their 2023 
costs to account for the changes in pilotage rates resulting from this 
proposed rule and the 2024 final rule. We estimated the change in cost 
to these entities resulting from this proposed rule by subtracting 
their estimated 2024 pilotage costs from their estimated 2025 pilotage 
costs and found the average costs to small firms would be approximately 
$12,510, with a range of $1,294 to $39,146. We then compared the 
estimated change in pilotage costs between 2024 and 2025 with each 
firm's annual revenue. In all but one case, the impact of the change in 
estimated pilotage expenses would be below 1 percent of revenues. For 
one entity, the impact would be 6.33 percent of revenues.
    In addition to the owners and operators discussed previously, 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. District One, ``St. Lawrence Seaway Pilots Association'' 
uses the NAICS code ``Inland Water Freight Transportation'' with a 
small-entity size standard of 1,050 employees. District Two, ``Lakes 
Pilots Association'' uses the NAICS code, ``Business Associations'' 
with a small-entity size standard of $15,500,000 in revenue. District 
Three, ``Western Great Lakes Pilots Association'' did not have a 
registered NAICS code through ReferenceUSA. All three associations are 
considered small entities.
    Finally, the Coast Guard did not find any small not-for-profit 
organizations that are independently owned and operated and are not 
dominant in their fields that 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 proposed rule 
would not have a significant economic impact on a substantial number of 
small entities.
    Therefore, the Coast Guard certifies under 5 U.S.C. 605(b) that 
this proposed

[[Page 63380]]

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 
Public Participation and Request for Comments section of this preamble. 
In your comment, explain why you think it qualifies and how and to what 
degree this proposed rule would economically affect it.
    The Coast Guard is unable to offer any meaningful alternatives to 
this proposed rule. Under 46 U.S.C. 9303, the Coast Guard is required 
to prescribe these rates via regulation and therefore cannot identify 
any significant alternatives which ``accomplish the stated objectives 
of the applicable statutes'' (5 U.S.C. 603(c)).

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 CONTACT 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 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 described in 
Executive Order 13132. Our analysis follows.
    Congress directed the Coast Guard to establish ``rates and charges 
for pilotage services.'' 46 U.S.C. 9303(f). This proposed 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 federalism 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 proposed rule would have 
implications for federalism under Executive Order 13132, please call or 
email the person listed in the FOR FURTHER INFORMATION CONTACT section 
of this preamble.

F. Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531-1538, 
requires Federal agencies to assess the effects of their discretionary 
regulatory actions. In particular, the Act addresses actions that may 
result in the expenditure by a State, local, or tribal government, in 
the aggregate, or by the private sector of $100 million (adjusted for 
inflation) or more in any one year. Although this proposed rule would 
not result in such an expenditure, we do discuss the potential 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

[[Page 63381]]

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.

M. Environment

    We have analyzed this proposed rule under Department of Homeland 
Security Management Directive 023-01, Rev. 1, associated implementing 
instructions, and Environmental Planning COMDTINST 5090.1 (series), 
which guide the Coast Guard in complying with the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made 
a 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 Public Participation 
and Request for Comments section of this preamble. This proposed rule 
would be categorically excluded under paragraphs A3 and L54 of Appendix 
A, Table 1 of the Department of Homeland Security (DHS) Instruction 
Manual 023-01-001-01, Rev. 1. Paragraph A3 pertains to the promulgation 
of rules of the following nature: (a) those of a strictly 
administrative or procedural nature; (b) those that implement, without 
substantive change, statutory or regulatory requirements; (c) those 
that implement, without substantive change, procedures, manuals, and 
other guidance documents; (d) those that interpret or amend an existing 
regulation without changing its environmental effect; (e) those that 
provide technical guidance on safety and security matters; and (f) 
those that provide guidance for the preparation of security plans. 
Paragraph L54 pertains to regulations which are editorial or 
procedural.
    This proposed rule involves adjusting the pilotage rates for 2025 
to account for changes in district operating expenses, changes in the 
number of pilots, and anticipated inflation. All changes are consistent 
with the Coast Guard's maritime safety missions. We seek any comments 
or information that may lead to the discovery of a significant 
environmental impact from this proposed rule.

List of Subjects in 46 CFR Part 401

    Administrative practice and procedure, Great Lakes; Navigation 
(water), Penalties, Reporting and recordkeeping requirements, Seamen.

    For the reasons discussed in the preamble, the Coast Guard proposes 
to amend 46 CFR part 401 as follows:

PART 401--GREAT LAKES PILOTAGE REGULATIONS

0
1. The authority citation for part 401 is revised to read as follows:

    Authority:  46 U.S.C. 2103, 2104(a), 6101, 7701, 8105, 9303, 
9304; DHS Delegation No. 00170.1, Revision No. 01.4, paragraphs 
(II)(92)(a), (d), (e), (f).

0
2. Amend Sec.  401.405 by revising paragraphs (a)(1) through (6) to 
read as follows:


Sec.  401.405  Pilotage rates and charges.

    (a) * * *
    (1) The St. Lawrence River is $981;
    (2) Lake Ontario is $640;
    (3) Lake Erie is $573;
    (4) The navigable waters from Southeast Shoal to Port Huron, MI is 
$748;
    (5) Lakes Huron, Michigan, and Superior is $438; and
    (6) The St. Marys River is $821.
* * * * *

     Dated: July 29, 2024.
W.R. Arguin,
Rear Admiral, U.S. Coast Guard, Assistant Commandant for Prevention 
Policy.
[FR Doc. 2024-17028 Filed 8-2-24; 8:45 am]
BILLING CODE 9110-04-P