Rule2026-03054
Great Lakes Pilotage Rates-2026 Annual Review and Revisions to Methodology
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
February 17, 2026
Effective
March 19, 2026
Issuing agencies
Homeland Security DepartmentCoast Guard
Abstract
The Coast Guard is issuing new base Great Lakes pilotage rates for the 2026 shipping season. The Coast Guard estimates that this final rule will result in an approximately 6-percent decrease in operating costs compared to the 2025 season, while facilitating commerce and supply chains. The Coast Guard is also making one change to the ratemaking methodology: the removal of Step 5 regarding the working capital fund. We conducted a full ratemaking for the 2026 ratemaking and considered comments on the Great Lakes pilotage ratemaking methodology.
Full Text
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<title>Federal Register, Volume 91 Issue 31 (Tuesday, February 17, 2026)</title>
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[Federal Register Volume 91, Number 31 (Tuesday, February 17, 2026)]
[Rules and Regulations]
[Pages 7121-7148]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-03054]
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DEPARTMENT OF HOMELAND SECURITY
Coast Guard
46 CFR Parts 401, 403, and 404
[Docket No. USCG-2025-0252]
RIN 1625-AD03
Great Lakes Pilotage Rates--2026 Annual Review and Revisions to
Methodology
AGENCY: Coast Guard, Department of Homeland Security (DHS).
ACTION: Final rule.
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SUMMARY: The Coast Guard is issuing new base Great Lakes pilotage rates
for the 2026 shipping season. The Coast Guard estimates that this final
rule will result in an approximately 6-percent decrease in operating
costs compared to the 2025 season, while facilitating commerce and
supply chains. The Coast Guard is also making one change to the
ratemaking methodology: the removal of Step 5 regarding the working
capital fund. We conducted a full ratemaking for the 2026 ratemaking
and considered comments on the Great Lakes pilotage ratemaking
methodology.
DATES: This final rule is effective March 19, 2026.
ADDRESSES: To view documents mentioned in this preamble as being
available in the docket, go to <a href="http://www.regulations.gov">www.regulations.gov</a>, type USCG-2025-0252
in the search box, and click ``Search.'' Next, in the Document Type
column, select ``Supporting & Related Material.''
FOR FURTHER INFORMATION CONTACT: For information about this document
call or email Mr. Brian Rogers, Commandant, Office of Waterways and
Ocean Policy--Great Lakes Pilotage Division (CG-WWM-2), Coast Guard;
telephone 571-608-8418 or email <a href="/cdn-cgi/l/email-protection#8ccefee5ede2a2dee3ebe9feffccf9ffefeba2e1e5e0"><span class="__cf_email__" data-cfemail="41033328202f6f132e2624333201343222266f2c282d">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Table of Contents for Preamble
I. Abbreviations
II. Basis and Purpose, and Regulatory History
III. Discussion of Methodological Changes
IV. Discussion of Comments
V. Discussion of Rate Adjustments
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. Redesignated Step 5: Project Needed Revenue (Previously Step
6)
F. Redesignated Step 6: Calculate Initial Base Rates (Previously
Step 7)
G. Redesignated Step 7: Calculate Average Weighting Factors by
Area (Previously Step 8)
H. Redesignated Step 8: Calculate Revised Base Rates (Previously
Step 9)
I. Redesignated Step 9: Review and Finalize Rates (Previously
Step 10)
VI. Tables Showing Calculations by District
VII. Regulatory Analyses
A. Regulatory Planning and Review
B. Small Entities
C. Assistance for Small Entities
D. Collection of Information
E. Federalism
F. Unfunded Mandates
G. Taking of Private Property
H. Civil Justice Reform
I. Protection of Children
J. Indian Tribal Governments
K. Energy Effects
L. Technical Standards
M. Environment
I. Abbreviations
2023 final rule Great Lakes Pilotage Rates--2023 Annual Ratemaking
and Review of Methodology
2025 final rule Great Lakes Pilotage Rates--2025 Annual Review
2026 Ratemaking NPRM Great Lakes Pilotage Rates--2026 Annual Review
and Revisions to Methodology
APA American Pilots' Association
Apprentice Pilot United States Registered Apprentice Pilot
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
Pilot United States Registered Pilot
Sec. Section
SBA Small Business Administration
SLSPA Saint Lawrence Seaway Pilots Association
U.S.C. United States Code
WGLPA Western Great Lakes Pilots Association
II. Basis and Purpose, and Regulatory History
The legal basis of this rulemaking is 46 U.S.C. Chapter 93,\1\
which requires foreign merchant vessels and United States vessels
operating ``on register'' (meaning United States vessels engaged in
foreign trade) to use United States or Canadian Registered Pilots while
transiting the United States waters of the St. Lawrence Seaway and the
Great Lakes system.\2\ For United States Registered Pilots (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.'' \3\ The statute
requires that rates be established or reviewed and adjusted each year,
not later than March 1.\4\ 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.\5\ The Secretary's duties and authority under
46 U.S.C. Chapter 93 have generally been delegated to the Coast
Guard.\6\
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\1\ 46 U.S.C. 9301-9308.
\2\ 46 U.S.C. 9302(a)(1).
\3\ 46 U.S.C. 9303(f).
\4\ Id.
\5\ Id.
\6\ Department of Homeland Security Delegation 00170.1, Revision
No. 01.4, paragraph (II)(92)(f).
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The purpose of this rulemaking is to conduct a full ratemaking and
issue new pilotage rates for the 2026 shipping season. The full
ratemaking includes soliciting feedback regarding the methodology and
the staffing model. The new rates and changes to the methodology
continue to promote our goal, as outlined in 46 CFR 404.1, to promote
safe, efficient, and reliable pilotage service on the Great Lakes by
generating for each pilotage association sufficient revenue to
reimburse its necessary and reasonable operating expenses and fairly
compensate trained and rested Pilots. This ratemaking continues to meet
the other Sec. 404.1 goal of providing sufficient revenue to use for
improvements, as explained later in this preamble.
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 2026 season range from $382 to $978 per pilot hour,
depending on which of the six areas pilotage service is provided. The
rates are paid by shippers to the pilotage associations.
[[Page 7122]]
Table 1--2025 and 2026 Pilotage Rates on the Great Lakes
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Final 2025 Final 2026
Area Name pilotage rate pilotage rate
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District One: Designated...................... St. Lawrence River.............. $986 $978
District One: Undesignated.................... Lake Ontario.................... 643 623
District Two: Designated...................... Navigable waters from Southeast 753 681
Shoal to Port Huron, MI.
District Two: Undesignated.................... Lake Erie....................... 576 555
District Three: Designated.................... St. Marys River................. 825 868
District Three: Undesignated.................. Lakes Huron, Michigan, and 440 382
Superior.
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There are three American pilotage districts on the Great Lakes,
each represented by a pilotage association.\7\ 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.\8\ 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.\9\
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\7\ The Saint Lawrence Seaway Pilots 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.
\8\ Presidential Proclamation 3385, Designation of restricted
waters under the Great Lakes Pilotage Act of 1960, December 22,
1960, <a href="https://www.archives.gov/federal-register/codification/proclamations/03385.html">https://www.archives.gov/federal-register/codification/proclamations/03385.html</a>; accessed 08/08/25.
\9\ 46 U.S.C. 9302(a)(1)(B).
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The three pilotage associations, which are the exclusive source of
Pilots on the Great Lakes, use the revenue from the shippers to cover
operating expenses, maintain infrastructure, compensate Pilots and
United States Registered Apprentice Pilots (Apprentice Pilots), acquire
and implement technological advances, train new personnel, and provide
for continuing professional development. Each pilotage association is
an independent business and is the sole provider of pilotage services
in its district of operation. Each pilotage association is responsible
for funding its own operating expenses, infrastructure maintenance, and
compensation for Pilots and Apprentice Pilots.\10\
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\10\ Apprentice Pilots and Applicant Pilots are compensated by
the pilotage 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 pilotage
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
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, pilotage associations will accrue
more revenue than projected, while, in years where demand is below
average, they will take in less. 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. Using a 10-year average also results in less
rate volatility.
In this final rule, we conducted a full ratemaking under 46 CFR
404.100(a) to establish base pilotage rates for 2026. We conducted a
full ratemaking because the Coast Guard made changes to the
methodology. Specifically, we removed Step 5, which calculates a
working capital fund for each pilotage association.
We published a notice of proposed rulemaking (NPRM) titled Great
Lakes Pilotage Rates-2026 Annual Review and Revisions to Methodology
(hereafter ``the 2026 Ratemaking NPRM'') on September 5, 2025 (90 FR
42899). The comment period ended on October 8, 2025, and we received
seven comment submissions.
III. Discussion of Methodological Changes
The Coast Guard makes one change to the ratemaking methodology: to
remove Step 5 for calculating a working capital fund.
According to 46 U.S.C. 9303(f), and restated in 46 CFR 404.100(a),
the Coast Guard must establish base rates by a full ratemaking at least
once every 5 years. We have determined that the current base rate and
existing methodology in Steps 1 through 4 and 6 through 10 still adhere
to the Coast Guard's goals of safety through rate stability, while
promoting recruitment and retention of qualified Pilots. Therefore, we
are not making any methodological changes to Steps 1 through 4. For
Steps 6 through 10, the only change we made is to redesignate them as
Steps 5 through 9, and any references to previous steps be renumbered
as required.
A. Removal of Sec. 404.105--Ratemaking Step 5: Project Working Capital
Fund
We removed Step 5 and retained the other nine steps of the
ratemaking methodology. We made this change in response to public
comments and upon review of the three pilotage associations' assets and
expenses. As noted later in this preamble, we did not receive any
opposition to the proposed removal of the working capital fund, and the
commenters who discussed it supported the change. The 2026 Ratemaking
NPRM, at 90 FR 42901, contains a detailed explanation of why we
proposed the change.
The working capital fund was put in place so that the three
districts could have sufficient proof of funds to receive loans and
lines of credit from financial institutions for large projects. The
U.S. Coast Guard's Director of the Great Lakes Pilotage (Director) has
reviewed and monitored the working capital fund accounts each year and
has determined that the pilotage associations now have the funds needed
and the ability to plan for infrastructure maintenance, non-recurring
expenses, and credit worthiness. We will continue to monitor the pilot
associations and ensure they have sufficient revenue to cover most
maintenance projects by early planning and setting funds aside.
If a necessary and reasonable expense presents itself as outside
the financial means of the organization, the Director may approve the
use of a surcharge, as we have done in the past. A surcharge provides
transparency in both the amount and the association's purpose for
collecting the funds. If a surcharge is authorized in the future, the
amount collected will be included in the revenue reports for the Coast
Guard's review. Any surplus in revenue from the surcharge will be
deducted from Step 1 expenses, as necessary.
[[Page 7123]]
B. Summary of Changes From Proposed Rule to Final Rule
Table 2 summarizes the changes between the 2026 Ratemaking NPRM and
this final rule. The table includes changes to Apprentice Pilot numbers
in response to public comments, and updated inflation data becoming
available since the publication of the proposed rule. We also updated a
couple cross references to reflect the removal of the working capital
fund calculations in previous Step 5.
Table 2--Changes Between the NPRM and Final Rule
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Change Reasoning
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Updates 2024 Employment Cost Index More recent figures were
(ECI) inflation from 4.2%, listed in published since the Coast
the NPRM, to 3.6%. Guard conducted the analysis
for the NPRM.
Updates 2025 Personal Consumption
Expenditures (PCE) inflation from
2.5%, listed in the NPRM, to 3.1%.
Updates 2026 PCE inflation from 2.2%,
listed in the NPRM, to 2.4%.
Updates District One Apprentice Pilots Requested in public comments.
from one to two.
Updates District Three Apprentice
Pilots from four to five.
Removes a sentence from Sec. This requirement is no longer
403.110(b) that required each pilot applicable because the minimum
association to deposit into the amount calculation itself
working capital fund an amount at (formerly in Sec. 404.105,
least equal to the amount calculated Step 5) has been eliminated
in deleted Step 5, Sec. 404.105. from the ratemaking
methodology. Since the
regulation no longer
determines a required deposit
amount, the corresponding
mandate to deposit that amount
it is also removed.
In Sec. 404.100, this rule updates This is a conforming amendment
the CFR citation for the final to reflect the new citations
ratemaking step to be Sec. 404.109, for the 9-step methodology.
instead of Sec. 404.110. This rule removes Step 5, so
we redesignate previous Step
10 in Sec. 404.110 as Step 9
in revised Sec. 404.109.
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C. Rates and Pilot Staffing
The rates shown in table 1 are based on the new 9-step ratemaking
model.
This final rule affects 57 Pilots, 7 Apprentice Pilots, 3 pilotage
associations, and the owners and operators of an average of 258
oceangoing vessels that transit the Great Lakes annually. This final
rule is not economically significant under Executive Order 12866 and
does 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 pilotage
association.
The estimated overall annual regulatory economic impact of this
rate change is a net decrease of $2,708,485 in estimated payments made
by the foreign shippers, foreign cruise ships, and vessels requesting
voluntary pilotage service, an approximately 6-percent decrease from
operating costs in the 2025 shipping season. This represents a decrease
in revenue needed for total target Pilot compensation, an increase in
revenue needed for the total target Apprentice Pilot wage benchmark, a
decrease in the revenue needed for adjusted operating expenses, and a
decrease in the revenue needed for the working capital fund because of
the removal of Step 5 from the ratemaking.
D. Individual Target Pilot Compensation Benchmark
This final rule establishes the 2026 yearly base compensation for
Pilots on the Great Lakes at $481,642 per Pilot (a $17,325 increase, or
3.73 percent, over their 2025 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, of this preamble provides the
regulatory impact analyses of this final rule.
The Coast Guard sets the target Pilot compensation benchmark at the
target compensation for the ratemaking year 2025, adjusted for
inflation. This is the same method we used for setting the target
compensation benchmark in the previous full ratemaking in 2023. This
method resembles the interim ratemaking year requirements in Sec.
404.104(b), where the base target Pilot compensation is adjusted
annually for inflation. For a detailed history of how we arrived at the
target benchmark in previous years, please see the Great Lakes Pilotage
Rates--2023 Annual Ratemaking and Review of Methodology (hereafter
``the 2023 final rule'') (88 FR 12226). For the reasons discussed in
the 2023 final rule, the base compensation as adjusted annually has
provided an appropriate level of compensation for Pilots.
Based on the information we have exchanged with the Pilots and
industry over the past two ratemakings (2024-2025), the Director
concludes that the level of target Pilot compensation for those years
continued to provide an appropriate level of compensation for Pilots.
According to Sec. 404.104(a), the Director may make necessary and
reasonable adjustments to the benchmark based on current information.
However, current circumstances do not indicate that an adjustment,
other than for inflation, is necessary. The Director bases this
decision on the fact that there is no data that Pilots are resigning
due to their compensation, or that this compensation benchmark is
causing shortfalls in achieving reliable pilotage service. The Coast
Guard finds that the Pilot compensation benchmark is appropriate
relative to the expertise required to perform the necessary job
functions. The compensation will continue to be adjusted annually, in
accordance with published inflation rates, which will ensure the
compensation remains competitive and current for upcoming years.
Therefore, at this time, the Coast Guard simply adjusts the amount
of target Pilot compensation for inflation as our target compensation
benchmark for 2025, as shown in Step 4. This target compensation
benchmark approach has advanced and will continue to advance the Coast
Guard's goals through rate and compensation stability while also
promoting recruitment and retention of qualified Pilots.
IV. Discussion of Comments
The Coast Guard received seven comment submissions on the NPRM for
this final rule. We summarize the relevant concerns and our responses
next.
Working Capital Fund and Surcharge
Nealy half of all commenters expressed support for eliminating the
working capital fund. The Coast Guard received no comments opposing the
removal of Step 5, the working capital fund. This final rule removes
step 5, the
[[Page 7124]]
working capital fund, from the methodology. Pilotage associations will
continue to plan and reserve a portion of their existing revenues to
cover routine capital requirements.
Two commenters requested that the Coast Guard provide an
explanation of the processes for sustaining solvency of the fund and of
the use of surcharges for increased clarity and transparency (Comments
USCG-2025-0252-0012 and USCG-2025-0252-0011).
Response: The Coast Guard's first priority in this rulemaking is
safety through rate stability and predictability of future revenues,
while promoting recruitment and retention of qualified Pilots. The
Coast Guard will continue to track the working capital fund and ensure
the districts' overall financial health, stability, and long-term
viability, ensuring they have enough assets to cover their liabilities
and continue operations. We will ensure the remaining funds are used
for necessary and reasonable expenses and adjust the operating expenses
in future rulemakings as needed. These funds will not be used for
compensation. The pilot associations will continue to issue Working
Capital Fund Reports annually. In the event of necessary extraordinary
capital investments, as approved by the Coast Guard, we may authorize a
transparent, time-limited surcharge.
Number of Apprentice Pilots
Three commenters, one from each district, requested an increase in
the number of Apprentice Pilots funded for their respective districts.
The Coast Guard allotted one Apprentice Pilot to District One, zero
Apprentice Pilots to District Two, and four Apprentice Pilots to
District Three in the NPRM.
District One requests an increase to two Apprentice Pilots because
they currently have two working Apprentice Pilots: one started in April
2025 and the other in July 2025 (Comment USCG-2025-0252-0014).
Response: We concur and conclude that two Apprentice Pilots are
sufficient for District One in the 2026 shipping year, an increase of
one from the NPRM.
District Two requests an increase to one Apprentice Pilot (Comment
USCG-2025-0252-0013). District Two's comment proposes hiring an
Apprentice Pilot for the 2026 shipping season to prepare for potential
Pilot retirement in the future and to give the Apprentice Pilot
adequate time in the training program.
Response: We disagree that an additional Apprentice Pilot is
necessary for District Two. Upon further review, this pilotage district
does not have a potential retirement in the next 2 years. We invite
this pilotage association to discuss staffing issues during the next
Great Lakes Pilotage Advisory Committee (GLPAC) Meeting and in future
rulemaking comment solicitations.
District Three requests an increase to six Apprentice Pilots. They
currently claim five Apprentice Pilots and are expecting to add a sixth
in 2026 (Comment USCG-2025-0252-0010).
Response: We disagree that District Three needs six Apprentice
Pilots. After reviewing staffing levels and potential retirements, we
conclude that five Apprentice Pilots will be sufficient for District
Three in the 2026 shipping year, an increase of one from the NPRM. We
invite this pilotage association to discuss staffing issues during the
next GLPAC Meeting and in future rulemaking comment solicitations.
2023 Arbitration Expenses
The Western Great Lakes Pilots Association (WGLPA) commented that
it does not intend to pursue an upward adjustment related to a 2023
arbitration (Comment USCG-2025-0252-0010).
Response: Accordingly, we have not added any additional expenses to
the 2023 expenses for District 3. We do not plan to address this issue
in future rulemakings.
Pilot Compensation and Targeted Individual Compensation
The Coast Guard received two comments raising concerns about Pilot
compensation. One commenter's concern was that although the pilotage
rates decreased, ``the targeted compensation continues to rise'' (USCG-
2025-0252-0012). The commenter reminded the Coast Guard about a
previous request to use the Federal Open Market Committee (FOMC)
measure instead of the Consumer Price Index (CPI). The commenter
acknowledges the Coast Guard's response that it does not average rates
but claims that the CPI ``includes average of all measures, high and
low . . . most of which are high.'' The commenter argues for the FOMC,
stating:
The FOMC metric eliminates high and lows in arriving at a
measurement and is a means to constrain unwieldy increases of high
net income compensation. Not willing to provide transparency of an
actual and knowable compensation the CG might consider the appl the
inflation measure against the first $250,000 of compensation
addressing the uses of inflation of expenses most consumers
experience.
Response: We disagree and are not changing how inflation is applied
to target compensation during this rulemaking. We may add this topic to
a future GLPAC meeting so we can discuss other alternatives with
stakeholders. The FOMC projection of PCE inflation is not a substitute
for the CPI measure because they are fundamentally estimating different
timeframes. The PCE projection is looking forward, while the CPI
measure is backward-looking. Further, the commenter's description of
the FOMC measure removing highs and lows applies only to the central
tendency measures, whereas the Coast Guard employs the median
estimates. The Coast Guard makes no alteration to any inflation measure
before implementing the ratemaking methodology and will continue to
apply inflation equally to the entire compensation figure. This process
can be found in 46 CFR 404.102, and we describe our process in detail
in the NPRM at 90 FR 42901-42902. Our goal in applying inflation
figures is to be as objective as possible to make the estimates an
accurate reflection of trends in inflation rather than weighting the
outcome in favor of a trend up or down.
Another commenter with the same concern about transparency
recommended releasing an annual, anonymized accounting of compensation
distribution to individual Pilots. This commenter recommended ``an
independent review and analysis be undertaken with a view to
establishing a methodology which users can support'' (USCG-2025-0252-
0011).
Response: As part of our oversight responsibilities, we conduct
annual reviews which include ratemaking and other information unrelated
to ratemakings. If we note any significant differences in pilot
compensation, we take independent corrective action. We do not retain
the supporting records due to Privacy Act concerns. We have
historically declined to provide specific accounting of compensation
for individual Pilots and maintain the same reasoning given in previous
ratemaking final rule preambles. The Coast Guard does not use the
actual individual Pilot earnings or average earnings; instead, we use
target pilot compensation (described in Step 4 of the existing
methodology), which the Coast Guard has determined to be reasonable and
necessary. Because actual salary values are not used in the ratemaking,
the Coast Guard believes that a requirement to report Pilot
compensation is not in the public interest or necessary to provide for
the costs of services. Progress toward pilot retention can be reviewed
through pilot turnover and the association's ability to promptly fill
Pilot vacancies for fully registered Pilots
[[Page 7125]]
and Apprentice Pilots. We take input from all public comments and
representatives at the GLPAC meetings to help shape the methodology. We
also provide reoccurring opportunity to provide feedback on the entire
methodology during the full ratemaking process. During this full
ratemaking comment period, we did not receive any requests to change
the methodology steps (other than concurring with our proposal to
remove the working capital fund step) or feedback that the methodology
is no longer supportive to the Pilots or industry needs. We received
one request to change the inflation source we use for the Pilot
compensation, as discussed earlier in this section. The opportunities
to provide feedback on the methodology are available to all users
through the annual ratemakings and full ratemakings. The Government
Accountability Office reviewed the methodology in 2019 and found it
reasonable. We are not currently planning to do another independent
review of the methodology.
Restructuring Dispatch
The Coast Guard received two comments related to restructuring the
dispatch process. One commenter encouraged the Coast Guard to build on
its September 2024 presentation at the GLPAC meeting examining each
pilotage association's dispatching and transportation services (Comment
USCG-2025-0252-0015). The commenter also encouraged exploring the
possibility of combining dispatching services across the three
districts. The commenter notes that, given advances in communication
technology, a single entity could provide dispatching services across
the three districts, providing industry efficiencies and cost savings
without compromising safety. Another commenter echoed these ideas,
adding that identifying opportunities for operational efficiencies,
improved service reliability, and cost savings could result in ``. . .
at minimum, greater integration between existing district systems''
(USCG-2025-0252-0011).
Response: We agree. We initiated a pilot program when the Seaway
Locks opened in the spring of 2025 at the request of the shippers (Fed
Nav, Canfornav, Wagenborg, and Polsteam). All orders for Pilots and
Canadian Registered Pilots in District 3 go through the dispatch center
located in Massena, NY. The dispatch process is outside the scope of
this rulemaking, so we are not implementing any changes in this rule.
However, the Director will continue to monitor, address, and discuss
the dispatch process with the stakeholders involved. Our goal is to
maintain maritime safety and achieve efficiencies without creating a
single point of failure. We will provide an update at the next GLPAC
Meeting and continue to seek input from stakeholders before finalizing
our decision.
Updating the GLP Memorandum of Understanding (MOU) With Canada
The Coast Guard received two comments related to updating the MOU
between the United States Coast Guard and the Canadian Great Lakes
Pilotage Authority, which provides for the coordination of services
across the Great Lakes. Both commenters noted that the MOU was last
updated in 2013. One commenter commended the Coast Guard for its
leadership in initiating talks, especially related to ensuring Pilot
availability. The same commenter ``recognizes the progress the Director
has made to address this issue on the U.S. side'' (USCG-2025-0252-
0015). Another commenter noted that there is value in reviewing and
updating the MOU and encouraged initiating discussions in the ``most
expeditious way possible'' (USCG-2025-0252-0011).
Response: We also received this request as a recommendation from
the GLPAC meeting on July 23, 2025 (meeting transcript is in the
docket). This MOU update is outside the scope of the ratemaking
methodology rulemaking, and we are reviewing it separately.
Coordinating With GLPAC
The Coast Guard received two comments related to better
coordination with GLPAC, specifically requesting that the NPRM publish
in time for GLPAC to review it at the annual July meeting. One
commenter noted ``the timing of the Meeting and the release of the NPRM
should be such that the GLPAC members have sufficient time to evaluate,
discuss, and comment in a public forum on the NPRM'' (USCG-2025-0252-
0012). Another commenter also requested better coordination between
NPRM publication and GLPAC meetings whenever possible (USCG-2025-0252-
0011).
Response: We cannot guarantee alignment with GLPAC meetings and
future rulemakings. Several factors impact the publication timing of an
NPRM, which makes timing it with a GLPAC meeting every year an
unattainable goal. In addition, we also hold ourselves to giving at
least 15 calendar days of notice between Federal Register announcements
of advisory committee meetings and the date of the meeting. Therefore,
planning and timing these two events to overlap is not attainable every
year. We continue to use the GLPAC meeting recommendations and
discussions to help develop our ratemaking proposed rules and final
rules each year, regardless of the timing.
Necessary and Reasonable Expenses
The Coast Guard received one comment regarding the designation of
necessary and reasonable expenses. The commenter pointed out that the
Coast Guard's response to a previous year's question related to
necessary and reasonable expenses was that the third-party auditor
makes that designation. They explained that the Coast Guard responded
that GLPAC unanimously approved the third-party auditor to make the
necessary and reasonable designations. The commenter pointed out that
``the transcript does not support the conclusion offered by the Coast
Guard; the vote was about continuing the use of the third party auditor
in question and contained one abstention'' (USCG-2025-0252-0012).
Response: The commenter is correct in that the GLPAC meeting
recommendation was to continue using the same auditor, not a
recommendation whether to use an auditor or not. The Director makes all
final necessary and reasonable determinations for operating expenses.
We have provided the auditors with some guidance on how to make
preliminary determinations that they consider alongside their
independent judgement and expertise.
Necessity for Undesignated Waters
The Coast Guard received one comment requesting an examination of
``the requirement for pilots to be assigned within undesignated waters
under the necessary and reasonable standard'' (USCG-2025-0252-0012).
The commenter suggested that, depending on the review findings, a
legislative change proposal could be made that would modernize the
system of assigning and dispatching Pilots. The commenter noted that
GLPAC would be available to review the Coast Guard's work on the
requirement review and possible legislative change proposal.
Response: We disagree, and this comment is outside the scope of
what we have statutory authority to change in regulation. We will
continue to follow and enforce the statutory requirements for pilotage
in undesignated waters.
This commentor made similar statements during the 2025 GLPAC
Meeting in Port Huron. Neither the GLPAC nor the annual rulemaking are
the appropriate venues for this topic.
[[Page 7126]]
We encourage this commenter to coordinate with his elected officials if
he desires a change to the Great Lakes Pilotage Act of 1960, as
amended.
2023 Apprentice Pilot Compensation and Reimbursement
The Coast Guard received one comment that seeks to correct a
misunderstanding related to 2023 Apprentice Pilot compensation in
District One. In the NPRM, the Coast Guard explained that the auditors
mislabeled $466,144 as ``applicant salaries,'' and stated that the
Coast Guard believed it to be a redundant counting of Apprentice Pilot
salaries, which are already accounted for in Step 4 of the ratemaking
methodology. See 90 FR 42899, 42915-42916. Accordingly, the Coast Guard
excluded $466,144 from Step 1.
The commenter from District One explained that this rationale is
incorrect. In 2023, District One had two Apprentice Pilots funded in
the rate but employed a total of four Apprentice Pilots over the course
of the year. The $466,144 reflects the total amount for four Apprentice
Pilot salaries. The commenter maintains that the additional two
Apprentice Pilots should be accounted for in the expenses. To arrive at
the correct number for expenses, the commenter suggested splitting the
number in two parts. The salaries for the two funded Apprentice Pilots
should be subtracted from the $466,144. Two Apprentice Pilots at
$152,783 each comes to $305,566. When $305,566 is subtracted from
$466,144, the difference is $160,758. One Apprentice Pilot was employed
from the beginning of the year through November and the other from
October to the end of the year. The commenter stated that $160,758
should have remained an expense for the two unfunded Apprentice Pilots.
Response: Based on the current administrative record, the Coast
Guard cannot verify (1) the total number of Apprentice Pilots employed
in District One during 2023, (2) which Apprentice Pilots were included
in Step 4 funding for that year, or (3) whether the proposed $160,758
represents necessary and reasonable costs that are not already
reflected elsewhere in the ratemaking calculations. Because the
requested adjustment would affect a prior expense year and requires
verification of underlying payroll records and funding assumptions, the
Coast Guard cannot resolve this issue within the timeframe for this
final rule. Accordingly, the Coast Guard does not include the requested
adjustment in this final rule.
The Coast Guard will evaluate this request in a future ratemaking
if the commenter provides supporting documentation, including payroll
records identifying the dates and amounts paid to each Apprentice Pilot
in 2023 and an explanation of how the proposed adjustment was derived,
including whether the amounts include wages only or wages plus benefits
and related costs. If supported, the Coast Guard will include any
necessary and reasonable, non-duplicative Apprentice Pilot compensation
in a subsequent ratemaking.
GLPAC Recommendations
The Coast Guard received one comment concerning the implementation
of GLPAC recommendations to the Great Lakes pilotage ratemaking
process. The comment articulates that GLPAC met on July 23, 2025 and
adopted five recommendations, all of which directly or indirectly
relate to the Great Lakes pilotage ratemaking process. The commenter
encouraged the Coast Guard ``to act in accordance with these five
recommendations as swiftly as possible'' (USCG-2025-0252-0016).
Response: The Coast Guard acknowledges the role of GLPAC in
providing advisory input on pilotage matters and is considering those
recommendations separately. This rulemaking is limited to the annual
rate review and targeted methodological revisions described in the NPRM
and does not discuss broader ratemaking reforms. The Coast Guard
intends to evaluate the GLPAC recommendations in the context of future
ratemaking or policy development, as appropriate. Accordingly, this
final rule does not adopt additional changes based on those
recommendations.
V. Discussion of Rate Adjustments
The ratemaking methodology, as revised by this rule in 46 CFR
404.101 through 404.109, consists of nine steps designed to account for
the revenues needed and total traffic expected in each district. Please
see the NPRM starting at 90 FR 42903 for a detailed summary of the nine
steps.
In this final rule, based on the methodology changes described in
the previous sections, we set new pilotage rates for 2026. We conducted
the 2026 ratemaking as a full ratemaking, as we last did in 2023 (88 FR
12226). Thus, the Coast Guard sets the target Pilot compensation
benchmark at the target compensation for the ratemaking year 2025,
adjusted for inflation. This method resembles the interim ratemaking
year requirements in Sec. 404.104(b), where the base target Pilot
compensation is adjusted annually for inflation.
This section discusses the rate changes using the ratemaking steps
provided in 46 CFR part 404. The following sections demonstrate how we
arrived at the rates for each pilotage district and includes omitting
Step 5, the working capital fund calculation.
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 2023 expenses and revenues.\11\ For accounting purposes,
the financial reports divide expenses into designated and undesignated
areas. For costs accrued by the pilotage associations generally, such
as employee benefits, for example, the cost is divided between the
designated and undesignated areas on a pro rata basis.
---------------------------------------------------------------------------
\11\ These reports are available in the docket for this
rulemaking.
---------------------------------------------------------------------------
Adjustments have been made by the auditors and are explained in the
auditors' reports, which are available in the docket for this
rulemaking. As noted in the response to comments, the Coast Guard
excluded a District One expense for $466,144 in ``applicant salaries,''
but may reconsider this in the 2027 ratemaking if we receive further
information.
The recognized operating expenses for Districts One, Two, and Three
are shown in tables 3, 14, and 25, respectively.
B. Step 2: Project Operating Expenses, Adjusting for Inflation or
Deflation
In accordance with Sec. 404.102, having identified the recognized
2023 operating expenses in Step 1, the next step is to project the
current year's operating expenses by adjusting those expenses for
inflation over the 3-year period. We calculate inflation using the
Bureau of Labor Statistics (BLS) data from the CPI for the Midwest
Region of the United States for the 2024 inflation rate.\12\ Because
the BLS does not provide forecasted inflation data, we use economic
projections from the Federal Reserve for the 2025 and 2026 inflation
[[Page 7127]]
modification.\13\ Based on that information, the calculations for Step
2 are shown in tables 4, 15, and 26 for Districts One, Two, and Three,
respectively.
---------------------------------------------------------------------------
\12\ The CPI is defined as ``All Urban Consumers (CPI-U), All
Items, 1982-4=100.'' Series CUUR0200SA0. Available at <a href="https://www.bls.gov/cpi/data.htm">https://www.bls.gov/cpi/data.htm</a>., All Urban Consumers (Current Series),
multiscreen data, not seasonally adjusted, 0200 Midwest, Current,
All Items, Monthly, 12-month Percent Change and Annual Data;
accessed 01/28/2025.
\13\ The 2025 and 2026 inflation rates are available at <a href="https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20250917.pdf">https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20250917.pdf</a>. We used the Core PCE June Projection value
found in table 1; accessed 11/14/2025.
---------------------------------------------------------------------------
C. Step 3: Estimate Number of Registered Pilots and Apprentice Pilots
In accordance with Sec. 404.103, we estimate the number of fully
registered Pilots in each district. As established by the ``Great Lakes
Pilotage Rates--2021 Annual Review and Revisions to Methodology'' final
rule (86 FR 14184), the minimum number of Pilots for District One is
18, for District Two is 16, and for District Three is 22. The Great
Lakes Pilotage Rates--2025 Annual Review (hereafter ``the 2025 final
rule'') established the maximum number as 21 Pilots for District One,
19 for District Two, and 25 for District Three. We project the number
of fully registered Pilots based on data provided by the SLSPA, LPA,
and WGLPA. We determine the number of Apprentice Pilots based on input
from the districts on anticipated retirements and staffing needs.
Currently, as shown in table 5, District One has 20 Pilots. Table 16
shows that District Two has 17 Pilots, and table 27 shows that District
Three has 20 Pilots.
D. Step 4: Determine Target Pilot Compensation Benchmark and Apprentice
Pilot Wage Benchmark
In this step, we determine the total Pilot compensation for each
area. Because we conducted a full ratemaking this year, we follow the
procedure outlined in paragraph (a) of Sec. 404.104, which requires us
to develop a benchmark after considering the most relevant currently
available non-proprietary information. In accordance with the
discussion in Section III.D, Individual Target Pilot Compensation
Benchmark, of this preamble, the compensation benchmark for 2026 uses
the 2025 compensation of $464,317 per Pilot as a base, then adjusts for
inflation following the procedure outlined in paragraph (b) of Sec.
404.104. First, we adjust the 2025 target compensation benchmark of
$464,317 by 1.3 percent, for a value of $470,353. This accounts for the
difference in actual second quarter 2025 ECI inflation, which is 3.6
percent, and the 2025 PCE estimate of 2.3 percent.<SUP>14 15</SUP>
---------------------------------------------------------------------------
\14\ Employment Cost Index, Total Compensation for Private
Industry workers in Transportation and Material Moving, Annual
Average (June 2025), Series ID: CIU2010000520000A. <a href="https://www.bls.gov/news.release/eci.t05.htm">https://www.bls.gov/news.release/eci.t05.htm</a>; accessed 11/14/2025.
\15\ 2.3 percent was the latest figure available for the 2025
final rule. Table 1, Summary of Economic Projections, Median Core
PCE Inflation June Projection. <a href="https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20240918.pdf">https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20240918.pdf</a>; accessed 10/02/2024.
---------------------------------------------------------------------------
The second step accounts for projected inflation from 2025 to 2026,
which is 2.4 percent.\16\ Based on the projected 2026 inflation
estimate, the target compensation benchmark for 2026 is $481,642 per
Pilot. In accordance with Sec. 404.104(d), the Apprentice Pilot wage
benchmark is 36 percent of the target Pilot compensation, or $173,391
($481,642 x 0.36).
---------------------------------------------------------------------------
\16\ Table 1, Summary of Economic Projections, Median Core PCE
Inflation June Projection. <a href="https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20250917.pdf">https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20250917.pdf</a>; accessed 11/14/2025.
---------------------------------------------------------------------------
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 Pilots for Districts One, Two, and Three, as shown in tables 6, 17,
and 28, respectively. We estimate that the number of Apprentice Pilots
needed will be two for District One, zero for District Two, and five
for District Three in the 2026 season. For Districts One and Two, the
total target wages for Apprentice Pilots are allocated with 60 percent
for the designated area and 40 percent for the undesignated area, and
for District Three, the total target wages for Apprentice Pilots are
allocated with 22 percent for the designated area and 78 percent (53
percent + 25 percent) for the undesignated areas, in accordance with
the allocation for operating expenses.
E. Redesignated Step 5: Project Needed Revenue (Previously Step 6)
In this step, we calculate the projected revenue needed for each
area. These expenses include the projected operating expenses (from
Step 2), the total target Pilot compensation (from Step 4), and total
target Apprentice Pilot wage (also from Step 4). We show these
calculations for Districts One, Two, and Three in tables 7, 18, and 29,
respectively.
F. Redesignated Step 6: Calculate Initial Base Rates (Previously Step
7)
Having determined the revenue needed for each area in the previous
five steps, we develop an hourly rate by dividing that number by the
expected number of hours of traffic. Step 6 is a two-part process. In
the first part, we calculate the 10-year average of traffic in
Districts One, Two, and Three, using the total time on task or pilot
bridge hours. Because we calculate separate figures for designated and
undesignated waters, there are two parts for each calculation. We show
these values for Districts One, Two, and Three in tables 8, 19, and 30,
respectively.
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 Districts One, Two, and Three in tables 9, 20, and 31,
respectively.
G. Redesignated Step 7: Calculate Average Weighting Factors by Area
(Previously Step 8)
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 the weighting
factor reports from SeaPro, we calculate the average weighting factor
for each area using the data from each vessel transit in Districts One,
Two, and Three from 2015 to 2024, as shown in tables 10 and 11; 21 and
22; and 32 and 33, respectively.
H. Redesignated Step 8: Calculate Revised Base Rates (Previously Step
9)
After considering the impact of the weighting factors, we revise
the base rates in this step so that the total costs of pilotage will be
equal to the revenue needed. To do this, we divide the initial base
rates calculated in redesignated Step 6 by the average weighting
factors calculated in redesignated Step 7, as shown for Districts One,
Two, and Three in tables 12, 23, and 34, respectively.
I. Redesignated Step 9: Review and Finalize Rates (Previously Step 10)
In this step, the Director reviews the rates set forth by the
staffing model and ensures that they meet the goal of ensuring safe,
efficient, and reliable pilotage. To establish this, the Director
considers whether the rates incorporate appropriate compensation for
Pilots to handle heavy traffic periods and whether there is a
sufficient number of Pilots to handle those heavy traffic periods. The
Director also considers whether the rates cover operating expenses and
infrastructure costs, including average traffic and weighting factors.
Based on these considerations, the Director makes no alterations to the
rates in this step. In this final rule, we modify Sec. 401.405(a)(1)
through (6) to reflect the final rates for Districts One,
[[Page 7128]]
Two, and Three, as shown in tables 13, 24, and 35, respectively.
VI. Tables Showing Calculations by District
District 1
Table 3--Step 1: 2023 Recognized Expenses for District One
----------------------------------------------------------------------------------------------------------------
District One
-----------------------------------------------
Designated Undesignated
Reported operating expenses for 2023 --------------------------------
St. Lawrence Total
River Lake Ontario
----------------------------------------------------------------------------------------------------------------
Applicant Pilot Compensation:
Travel...................................................... $11,548 $7,699 $19,247
License Insurance........................................... 2,872 1,915 4,787
Other Expenses.............................................. 1,246 830 2,076
Employee Benefits........................................... 16,409 10,940 27,349
-----------------------------------------------
Total Applicant Pilot Compensation...................... 32,075 21,384 53,459
Operating Expenses:
Hotel/Lodging............................................... 54,912 36,608 91,520
Payroll Taxes............................................... 208,891 139,261 348,152
Pilot Subsistence........................................... 146,031 97,340 243,351
Travel...................................................... 654,922 436,614 1,091,536
License Insurance........................................... 51,302 34,202 85,504
-----------------------------------------------
Total Other Pilotage Costs.............................. 1,116,038 744,025 1,860,063
Pilot Boat and Dispatch Costs:
Dispatch Cost............................................... 207,397 138,265 345,662
Employee Benefits........................................... 57,739 38,492 96,231
Pilot Boat Cost............................................. 19,798 13,198 32,996
Travel...................................................... 2,732 1,821 4,553
Salaries.................................................... 243,523 162,348 405,871
-----------------------------------------------
Total Pilot and Dispatch Costs.......................... 531,189 354,124 885,313
Administrative Expenses:
Accounting/Professional fees................................ 12,300 8,200 20,500
American Pilots' Association (APA) Dues..................... 29,374 19,583 48,957
Depreciation/Auto Leasing/Other............................. 173,910 115,940 289,850
Depreciation/Auto Leasing/Other--D1-23-03................... -68,486 -45,657 -114,143
Dues and subscriptions...................................... 5,055 3,370 8,425
Employee benefits........................................... 3,685 2,456 6,141
Insurance................................................... 48,133 32,089 80,222
Interest.................................................... 32,274 21,516 53,790
Interest--D1-23-04.......................................... -17,344 -11,562 -28,906
Legal--Shared Counsel (K&L Gates)........................... 52,858 35,239 88,097
Legal--Shared Counsel (K&L Gates)--D1-23-05................. -3,494 -2,329 -5,824
Legal....................................................... 6,871 4,581 11,452
Other Expenses.............................................. 174,482 116,321 290,803
Other Expenses--D1-23-02.................................... 8,642 5,761 14,403
Other Taxes................................................. 91,261 60,841 152,102
Payroll Taxes............................................... 56,253 37,502 93,755
Pilot Training.............................................. 50,734 33,823 84,557
Real Estate taxes........................................... 23,053 15,369 38,422
Salaries.................................................... 92,117 61,411 153,528
Travel...................................................... 7,875 5,250 13,125
Travel--D1-23-01............................................ -3,168 -2,112 -5,280
Utilities................................................... 29,952 19,968 49,920
Total Administrative Expenses........................... 806,337 537,560 1,343,896
-----------------------------------------------
Total Expenses (OpEx + Applicant + Pilot Boats + Admin + 2,485,639 1,657,093 * 4,142,731
Capital).......................................................
----------------------------------------------------------------------------------------------------------------
* Where the total column for a line from the expense report did not match manual addition, the Coast Guard
manually matched to the line total for that expense and continued to sum down the column. As a result, the
ending total for each column (designated, undesignated, and total) may not sum across.
Table 4--Step 2: Adjusted Operating Expenses for District One
----------------------------------------------------------------------------------------------------------------
District One
-----------------------------------------------
Designated Undesignated Total
----------------------------------------------------------------------------------------------------------------
Total Operating Expenses (Step 1)............................... $2,485,639 $1,657,093 $4,142,731
2024 Inflation Modification (@2.7%)............................. 67,112 44,742 111,854
2025 Inflation Modification (@3.1%)............................. 79,135 52,757 131,892
[[Page 7129]]
2026 Inflation Modification (@2.4%)............................. 63,165 42,110 105,275
-----------------------------------------------
Adjusted 2026 Operating Expenses............................ 2,695,051 1,796,702 4,491,752
----------------------------------------------------------------------------------------------------------------
* As a result of rounding in Step 1, the total for each column may not sum across.
Table 5--Step 3: Authorized Pilots for District One
------------------------------------------------------------------------
Item District One
------------------------------------------------------------------------
2026 Authorized Pilots (total).......................... 20
Pilots Assigned to Designated Areas..................... 11
Pilots Assigned to Undesignated Areas................... 9
2026 Apprentice Pilots.................................. 2
------------------------------------------------------------------------
Table 6--Step 4: Target Compensation for District One
----------------------------------------------------------------------------------------------------------------
District One
-----------------------------------------------
Designated Undesignated Total
----------------------------------------------------------------------------------------------------------------
Target Pilot Compensation....................................... $481,642 $481,642 $481,642
Number of Pilots................................................ 11 9 20
-----------------------------------------------
Total Target Pilot Compensation............................. $5,298,062 $4,334,778 $9,632,840
Target Apprentice Pilot Compensation............................ $173,391 $173,391 $173,391
Number of Apprentice Pilots..................................... .............. .............. 2
-----------------------------------------------
Total Target Apprentice Pilot Compensation.................. $208,069 $138,713 $346,782
----------------------------------------------------------------------------------------------------------------
Table 7--Step 5: Revenue Needed for District One
----------------------------------------------------------------------------------------------------------------
District One
-----------------------------------------------
Designated Undesignated Total
----------------------------------------------------------------------------------------------------------------
Adjusted Operating Expenses (Step 2)............................ $2,695,051 $1,796,702 $4,491,752
Total Target Pilot Compensation (Step 4)........................ 5,298,062 4,334,778 9,632,840
Total Target Apprentice Pilot Compensation (Step 4)............. 208,069 138,713 346,782
-----------------------------------------------
Total Revenue Needed........................................ 8,201,182 6,270,193 14,471,374
----------------------------------------------------------------------------------------------------------------
* As a result of rounding in Step 1, the total for each column may not sum across.
Table 8--Step 6: Time on Task for District One
[Hours]
------------------------------------------------------------------------
District One
Year -------------------------------
Designated Undesignated
------------------------------------------------------------------------
2024.................................... 6,232 8,075
2023.................................... 5,810 7,650
2022.................................... 6,577 8,356
2021.................................... 6,166 7,893
2020.................................... 6,265 7,560
2019.................................... 8,232 8,405
2018.................................... 6,943 8,445
2017.................................... 7,605 8,679
2016.................................... 5,434 6,217
2015.................................... 5,743 6,667
-------------------------------
Average............................. 6,501 7,795
------------------------------------------------------------------------
[[Page 7130]]
Table 9--Step 6: Initial Rate Calculations for District One
------------------------------------------------------------------------
Designated Undesignated
------------------------------------------------------------------------
Revenue needed (Step 5)................. $8,201,182 $6,270,193
Average time on task (hours)............ 6,501 7,795
Initial rate............................ $1,262 $804
------------------------------------------------------------------------
Table 10--Step 7: Average Weighting Factor for District One, Designated Areas
----------------------------------------------------------------------------------------------------------------
Number of Weighting Weighted
Vessel class/year transits factor transits *
----------------------------------------------------------------------------------------------------------------
Class 1 (2015).................................................. 41 1 41
Class 1 (2016).................................................. 31 1 31
Class 1 (2017).................................................. 28 1 28
Class 1 (2018).................................................. 54 1 54
Class 1 (2019).................................................. 72 1 72
Class 1 (2020).................................................. 8 1 8
Class 1 (2021).................................................. 10 1 10
Class 1 (2022).................................................. 39 1 39
Class 1 (2023).................................................. 19 1 19
Class 1 (2024).................................................. 26 1 26
Class 2 (2015).................................................. 295 1.15 339
Class 2 (2016).................................................. 185 1.15 213
Class 2 (2017).................................................. 352 1.15 405
Class 2 (2018).................................................. 559 1.15 643
Class 2 (2019).................................................. 378 1.15 435
Class 2 (2020).................................................. 560 1.15 644
Class 2 (2021).................................................. 315 1.15 362
Class 2 (2022).................................................. 462 1.15 531
Class 2 (2023).................................................. 481 1.15 553
Class 2 (2024).................................................. 467 1.15 537
Class 3 (2015).................................................. 28 1.3 36
Class 3 (2016).................................................. 50 1.3 65
Class 3 (2017).................................................. 67 1.3 87
Class 3 (2018).................................................. 86 1.3 112
Class 3 (2019).................................................. 122 1.3 159
Class 3 (2020).................................................. 67 1.3 87
Class 3 (2021).................................................. 52 1.3 68
Class 3 (2022).................................................. 103 1.3 134
Class 3 (2023).................................................. 34 1.3 44
Class 3 (2024).................................................. 69 1.3 90
Class 4 (2015).................................................. 251 1.45 364
Class 4 (2016).................................................. 214 1.45 310
Class 4 (2017).................................................. 285 1.45 413
Class 4 (2018).................................................. 393 1.45 570
Class 4 (2019).................................................. 730 1.45 1,059
Class 4 (2020).................................................. 427 1.45 619
Class 4 (2021).................................................. 407 1.45 590
Class 4 (2022).................................................. 446 1.45 647
Class 4 (2023).................................................. 420 1.45 609
Class 4 (2024).................................................. 471 1.45 683
-----------------------------------------------
Total....................................................... 9,104 .............. 11,735
----------------------------------------------------------------------------------------------------------------
Average weighting factor (weighted transits / number of .............. 1.29 ..............
transits)......................................................
----------------------------------------------------------------------------------------------------------------
* Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses
unrounded figures.
Table 11--Step 7: Average Weighting Factor for District One, Undesignated Areas
----------------------------------------------------------------------------------------------------------------
Number of Weighting Weighted
Vessel class/year transits factor transits *
----------------------------------------------------------------------------------------------------------------
Class 1 (2015).................................................. 28 1 28
Class 1 (2016).................................................. 18 1 18
Class 1 (2017).................................................. 19 1 19
Class 1 (2018).................................................. 22 1 22
Class 1 (2019).................................................. 30 1 30
Class 1 (2020).................................................. 3 1 3
Class 1 (2021).................................................. 19 1 19
Class 1 (2022).................................................. 27 1 27
Class 1 (2023).................................................. 31 1 31
Class 1 (2024).................................................. 10 1 10
[[Page 7131]]
Class 2 (2015).................................................. 263 1.15 302
Class 2 (2016).................................................. 169 1.15 194
Class 2 (2017).................................................. 290 1.15 334
Class 2 (2018).................................................. 352 1.15 405
Class 2 (2019).................................................. 366 1.15 421
Class 2 (2020).................................................. 358 1.15 412
Class 2 (2021).................................................. 463 1.15 532
Class 2 (2022).................................................. 349 1.15 401
Class 2 (2023).................................................. 346 1.15 398
Class 2 (2024).................................................. 334 1.15 384
Class 3 (2015).................................................. 42 1.3 55
Class 3 (2016).................................................. 28 1.3 36
Class 3 (2017).................................................. 45 1.3 59
Class 3 (2018).................................................. 63 1.3 82
Class 3 (2019).................................................. 58 1.3 75
Class 3 (2020).................................................. 35 1.3 46
Class 3 (2021).................................................. 71 1.3 92
Class 3 (2022).................................................. 65 1.3 85
Class 3 (2023).................................................. 44 1.3 57
Class 3 (2024).................................................. 44 1.3 57
Class 4 (2015).................................................. 269 1.45 390
Class 4 (2016).................................................. 222 1.45 322
Class 4 (2017).................................................. 285 1.45 413
Class 4 (2018).................................................. 382 1.45 554
Class 4 (2019).................................................. 326 1.45 473
Class 4 (2020).................................................. 334 1.45 484
Class 4 (2021).................................................. 466 1.45 676
Class 4 (2022).................................................. 386 1.45 560
Class 4 (2023).................................................. 328 1.45 476
Class 4 (2024).................................................. 421 1.45 610
-----------------------------------------------
Total....................................................... 7,411 .............. 9,592
----------------------------------------------------------------------------------------------------------------
Average weighting factor (weighted transits / number of .............. 1.29 ..............
transits)......................................................
----------------------------------------------------------------------------------------------------------------
* Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses
unrounded figures.
Table 12--Step 8: Revised Base Rates for District One
----------------------------------------------------------------------------------------------------------------
Initial rate Average weighting Revised rate (initial rate /
Area (Step 6) factor (Step 7) average weighting factor)
----------------------------------------------------------------------------------------------------------------
District One: Designated...................... $1,262 1.29 $978
District One: Undesignated.................... 804 1.29 623
----------------------------------------------------------------------------------------------------------------
Table 13--Step 9: Final Rates for District One
----------------------------------------------------------------------------------------------------------------
Final 2025 Final 2026
Area Name pilotage rate pilotage rate
----------------------------------------------------------------------------------------------------------------
District One: Designated..................... St. Lawrence River............. $986 $978
District One: Undesignated................... Lake Ontario................... 643 623
----------------------------------------------------------------------------------------------------------------
District 2
Table 14--Step 1: 2023 Recognized Expenses for District Two
----------------------------------------------------------------------------------------------------------------
District Two
--------------------------------------------------
Undesignated Designated
Reported operating expenses for 2023 -----------------------------------
Southeast Shoal Total
Lake Erie to Port Huron
----------------------------------------------------------------------------------------------------------------
Applicant Pilot Employee Benefits............................ $80 $120 $200
--------------------------------------------------
Total Other Applicant Cost............................... 80 120 200
Other Pilotage Cost:
[[Page 7132]]
Pilot Subsistence........................................ 93,840 140,760 234,600
Travel................................................... 37,469 56,204 93,673
License renewal.......................................... 931 1,396 2,327
License Insurance........................................ 7,656 11,485 19,141
--------------------------------------------------
Total Other Pilotage Costs........................... 139,896 209,845 349,741
Pilot Boat and Dispatch Costs:
Pilot boat costs......................................... 76,785 115,177 191,962
Employee Benefits........................................ 88,722 133,084 221,806
Insurance................................................ 11,550 17,324 28,874
Salaries................................................. 192,299 288,448 480,747
--------------------------------------------------
Total Pilot and Dispatch Costs....................... 369,356 554,033 923,389
Administrative Expenses:
Legal--general counsel................................... 3,947 5,921 9,868
Legal--shared counsel (K&L Gates)........................ 4,955 7,432 12,386
Legal--shared counsel (K&L Gates)--D2-23-02.............. -2,071 -3,106 - 5,177
Office Rent.............................................. 29,508 44,262 73,770
Insurance................................................ 14,083 21,124 35,207
Employee benefits........................................ 28,614 42,922 71,536
Payroll Taxes............................................ 149,889 224,833 374,722
Other taxes.............................................. 103,752 155,628 259,380
Other taxes--D2-23-01.................................... -45,722 -68,583 -114,305
Real Estate taxes........................................ 8,193 12,289 20,482
Travel................................................... 20,430 30,646 51,076
Depreciation............................................. 23,140 34,710 57,850
APA Dues................................................. 16,428 24,641 41,069
Dues and subscriptions................................... 2,634 3,950 6,584
Utilities................................................ 4,956 7,434 12,390
Salaries................................................. 65,850 98,776 164,626
Accounting/Professional fees............................. 15,997 23,996 39,993
Pilot Training........................................... 17,644 26,465 44,109
Other.................................................... 124,233 186,349 310,582
Other--D2-23-01.......................................... -70,962 -106,442 -177,404
--------------------------------------------------
Total Administrative Expenses........................ 515,498 773,247 1,288,744
----------------------------------------------------------------------------------------------------------------
Total Expenses (OPEX + Applicant + Pilot Boats + Admin + 1,024,830 1,537,245 * 2,562,074
Capital)....................................................
----------------------------------------------------------------------------------------------------------------
* Where the total column for a line from the expense report did not match manual addition, Coast Guard manually
matched to the line total for that expense and continued to sum down the column. As a result, the ending total
for each column (designated, undesignated, and total) may not sum across.
Table 15--Step 2: Adjusted Operating Expenses for District Two
----------------------------------------------------------------------------------------------------------------
District Two
-----------------------------------------------
Undesignated Designated Total
----------------------------------------------------------------------------------------------------------------
Total Operating Expenses (Step 1)............................... $1,024,830 $1,537,245 $2,562,074
2024 Inflation Modification (@2.7%)............................. 27,670 41,506 69,176
2025 Inflation Modification (@3.1%)............................. 32,628 48,941 81,569
2026 Inflation Modification (@2.4%)............................. 26,043 39,065 65,108
Adjusted 2026 Operating Expenses................................ 1,111,171 1,666,757 2,777,927
----------------------------------------------------------------------------------------------------------------
* As a result of rounding in Step 1, the total for each column may not sum across.
Table 16--Step 3: Authorized Pilots for District Two
------------------------------------------------------------------------
Item District Two
------------------------------------------------------------------------
2026 Authorized Pilots (total).......................... 17
Pilots Assigned to Designated Areas..................... 10
Pilots Assigned to Undesignated Areas................... 7
2026 Apprentice Pilots.................................. 0
------------------------------------------------------------------------
[[Page 7133]]
Table 17--Step 4: Target Compensation for District Two
----------------------------------------------------------------------------------------------------------------
District Two
-----------------------------------------------
Undesignated Designated Total
----------------------------------------------------------------------------------------------------------------
Target Pilot Compensation....................................... $481,642 $481,642 $481,642
Number of Pilots................................................ 7 10 17
-----------------------------------------------
Total Target Pilots Compensation............................ $3,371,494 $4,816,420 $8,187,914
Target Apprentice Pilot Compensation............................ $173,391 $173,391 $173,391
Number of Apprentice Pilots..................................... .............. .............. 0
-----------------------------------------------
Total Target Apprentice Pilot Compensation.................. $0 $0 $0
----------------------------------------------------------------------------------------------------------------
Table 18--Step 5: Revenue Needed for District Two
----------------------------------------------------------------------------------------------------------------
District Two
-----------------------------------------------
Undesignated Designated Total
----------------------------------------------------------------------------------------------------------------
Adjusted Operating Expenses (Step 2)............................ $1,111,171 $1,666,757 $2,777,927
Total Target Pilot Compensation (Step 4)........................ 3,371,494 4,816,420 8,187,914
Total Target Apprentice Pilot Compensation (Step 4)............. 0 0 0
-----------------------------------------------
Total Revenue Needed........................................ 4,482,665 6,483,177 10,965,841
----------------------------------------------------------------------------------------------------------------
* As a result of rounding in Step 1, the total for each column may not sum across.
Table 19--Step 6: Time on Task for District Two
[Hours]
------------------------------------------------------------------------
District Two
Year -------------------------------
Undesignated Designated
------------------------------------------------------------------------
2024.................................... 5,809 8,308
2023.................................... 6,424 8,181
2022.................................... 7,695 9,044
2021.................................... 5,290 6,762
2020.................................... 6,232 8,401
2019.................................... 6,512 7,715
2018.................................... 6,150 6,655
2017.................................... 5,139 6,074
2016.................................... 6,425 5,615
2015.................................... 6,535 5,967
Average................................. 6,221 7,272
------------------------------------------------------------------------
Table 20--Step 6: Initial Rate Calculations for District Two
------------------------------------------------------------------------
Undesignated Designated
------------------------------------------------------------------------
Revenue needed (Step 5)................. $4,482,665 $6,483,177
Average time on task (hours)............ 6,221 7,272
Initial rate............................ $721 $892
------------------------------------------------------------------------
Table 21--Step 7: Average Weighting Factor for District Two, Undesignated Areas
----------------------------------------------------------------------------------------------------------------
Number of Weighting Weighted
Vessel class/year transits factor transits *
----------------------------------------------------------------------------------------------------------------
Class 1 (2015).................................................. 35 1 35
Class 1 (2016).................................................. 32 1 32
Class 1 (2017).................................................. 21 1 21
Class 1 (2018).................................................. 37 1 37
Class 1 (2019).................................................. 54 1 54
Class 1 (2020).................................................. 1 1 1
Class 1 (2021).................................................. 7 1 7
Class 1 (2022).................................................. 57 1 57
Class 1 (2023).................................................. 54 1 54
Class 1 (2024).................................................. 19 1 19
Class 2 (2015).................................................. 354 1.15 407
Class 2 (2016).................................................. 380 1.15 437
Class 2 (2017).................................................. 222 1.15 255
[[Page 7134]]
Class 2 (2018).................................................. 123 1.15 141
Class 2 (2019).................................................. 127 1.15 146
Class 2 (2020).................................................. 165 1.15 190
Class 2 (2021).................................................. 206 1.15 237
Class 2 (2022).................................................. 202 1.15 232
Class 2 (2023).................................................. 152 1.15 175
Class 2 (2024).................................................. 125 1.15 144
Class 3 (2015).................................................. 0 1.3 0
Class 3 (2016).................................................. 9 1.3 12
Class 3 (2017).................................................. 12 1.3 16
Class 3 (2018).................................................. 3 1.3 4
Class 3 (2019).................................................. 1 1.3 1
Class 3 (2020).................................................. 1 1.3 1
Class 3 (2021).................................................. 5 1.3 7
Class 3 (2022).................................................. 2 1.3 3
Class 3 (2023).................................................. 2 1.3 3
Class 3 (2024).................................................. 5 1.3 7
Class 4 (2015).................................................. 560 1.45 812
Class 4 (2016).................................................. 468 1.45 679
Class 4 (2017).................................................. 319 1.45 463
Class 4 (2018).................................................. 196 1.45 284
Class 4 (2019).................................................. 210 1.45 305
Class 4 (2020).................................................. 201 1.45 291
Class 4 (2021).................................................. 227 1.45 329
Class 4 (2022).................................................. 208 1.45 302
Class 4 (2023).................................................. 169 1.45 245
Class 4 (2024).................................................. 205 1.45 297
-----------------------------------------------
Total....................................................... 5,176 .............. 6,740
----------------------------------------------------------------------------------------------------------------
Average weighting factor (weighted transits / number of .............. 1.30 ..............
transits)......................................................
----------------------------------------------------------------------------------------------------------------
* Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses
unrounded figures.
Table 22--Step 7: Average Weighting Factor for District Two, Designated Areas
----------------------------------------------------------------------------------------------------------------
Number of Weighting Weighted
Vessel class/year transits factor transits *
----------------------------------------------------------------------------------------------------------------
Class 1 (2015).................................................. 15 1 15
Class 1 (2016).................................................. 28 1 28
Class 1 (2017).................................................. 15 1 15
Class 1 (2018).................................................. 42 1 42
Class 1 (2019).................................................. 48 1 48
Class 1 (2020).................................................. 7 1 7
Class 1 (2021).................................................. 12 1 12
Class 1 (2022).................................................. 53 1 53
Class 1 (2023).................................................. 56 1 56
Class 1 (2024).................................................. 24 1 24
Class 2 (2015).................................................. 217 1.15 250
Class 2 (2016).................................................. 224 1.15 258
Class 2 (2017).................................................. 127 1.15 146
Class 2 (2018).................................................. 153 1.15 176
Class 2 (2019).................................................. 281 1.15 323
Class 2 (2020).................................................. 342 1.15 393
Class 2 (2021).................................................. 240 1.15 276
Class 2 (2022).................................................. 327 1.15 376
Class 2 (2023).................................................. 318 1.15 366
Class 2 (2024).................................................. 318 1.15 366
Class 3 (2015).................................................. 8 1.3 10
Class 3 (2016).................................................. 4 1.3 5
Class 3 (2017).................................................. 4 1.3 5
Class 3 (2018).................................................. 14 1.3 18
Class 3 (2019).................................................. 1 1.3 1
Class 3 (2020).................................................. 5 1.3 7
Class 3 (2021).................................................. 2 1.3 3
Class 3 (2022).................................................. 4 1.3 5
Class 3 (2023).................................................. 5 1.3 7
Class 3 (2024).................................................. 11 1.3 14
Class 4 (2015).................................................. 340 1.45 493
Class 4 (2016).................................................. 281 1.45 407
[[Page 7135]]
Class 4 (2017).................................................. 185 1.45 268
Class 4 (2018).................................................. 379 1.45 550
Class 4 (2019).................................................. 403 1.45 584
Class 4 (2020).................................................. 405 1.45 587
Class 4 (2021).................................................. 268 1.45 389
Class 4 (2022).................................................. 391 1.45 567
Class 4 (2023).................................................. 349 1.45 506
Class 4 (2024).................................................. 474 1.45 687
-----------------------------------------------
Total....................................................... 6,380 .............. 8,343
----------------------------------------------------------------------------------------------------------------
Average weighting factor (weighted transits / number of .............. 1.31 ..............
transits)......................................................
----------------------------------------------------------------------------------------------------------------
* Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses
unrounded figures.
Table 23--Step 8: Revised Base Rates for District Two
----------------------------------------------------------------------------------------------------------------
Revised rate
Average (initial rate
Area Initial rate weighting average
(Step 6) factor (Step weighting
7) factor)
----------------------------------------------------------------------------------------------------------------
District Two: Designated........................................ $892 1.31 $681
District Two: Undesignated...................................... 721 1.30 555
----------------------------------------------------------------------------------------------------------------
Table 24--Step 9: Final Rates for District Two
----------------------------------------------------------------------------------------------------------------
Final 2025 Final 2026
Area Name pilotage rate pilotage rate
----------------------------------------------------------------------------------------------------------------
District Two: Designated...................... Navigable waters from Southeast $753 $681
Shoal to Port Huron, MI.
District Two: Undesignated.................... Lake Erie....................... 576 555
----------------------------------------------------------------------------------------------------------------
District 3
Table 25--Step 1: 2023 Recognized Expenses for District Three
----------------------------------------------------------------------------------------------------------------
District three
---------------------------------------------------------------
Undesignated Designated Undesignated
Reported operating expenses for 2023 ------------------------------------------------
Lakes Huron St. Marys Total
and Michigan River Lake Superior
----------------------------------------------------------------------------------------------------------------
Other Pilotage Costs:
Applicant Benefits.......................... $56,123 $23,720 $26,741 $106,584
Pilot subsistence........................... 163,861 69,254 78,076 311,190
Hotel/Lodging Cost.......................... 142,665 60,295 67,977 270,937
Hotel/Lodging Cost--D3-23-05................ -3,454 -1,460 -1,646 -6,560
Travel...................................... 235,214 99,410 112,074 446,698
License Renewal............................. 536 227 255 1,018
Payroll taxes............................... 211,362 89,329 100,709 401,400
Payroll taxes--D3-23-04..................... -5,075 -2,145 -2,418 -9,637
License Insurance............................... 16,953 7,165 8,078 32,196
---------------------------------------------------------------
Total Other Pilotage Costs.............. 818,185 345,795 389,846 1,553,826
Pilot Boat and Dispatch Costs:
Pilot boat costs............................ 613,308 259,207 292,227 1,164,742
Dispatch costs.............................. 149,831 63,324 71,391 284,546
Dispatch costs--D3-23-07.................... 23,851 10,080 11,365 45,296
Insurance....................................... 33,584 14,194 16,002 63,779
---------------------------------------------------------------
Total Pilot boat and dispatch costs..... 820,574 346,805 390,985 1,558,363
Administrative Cost:
Legal--general counsel...................... 26,809 11,331 12,774 50,914
Legal--general counsel--D3-23-01............ -2,098 -887 -999 -3,984
Legal--shared counsel (K&L Gates)........... 9,608 4,061 4,578 18,247
[[Page 7136]]
Legal--shared counsel (K&L Gates)--D3-23-01. -1,007 -426 -480 -1,913
Office Rent................................. 6,719 2,840 3,201 12,760
Insurance................................... 30,104 12,723 14,344 57,171
Employee benefits........................... 116,979 49,440 55,738 222,156
Payroll Tax................................. 57,428 24,271 27,363 109,062
Other taxes................................. 2,708 1,145 1,290 5,143
Real Estate Taxes........................... 1,609 680 766 3,055
Depreciation/Auto leasing/Other............. 88,577 37,436 42,205 168,218
Interest.................................... 13,424 5,673 6,396 25,493
APA Dues.................................... 30,519 12,899 14,542 57,960
APA Dues (D3-23-02)......................... -2,373 -1,003 -1,131 -4,507
Dues and subscriptions...................... 5,792 2,448 2,760 10,999
Utilities................................... 9,568 4,044 4,559 18,171
Salaries.................................... 60,558 25,594 28,855 115,007
Accounting/Professional fees................ 37,984 16,053 18,099 72,136
Pilot Training.............................. 13,645 5,767 6,501 25,913
Other expenses.............................. 84,033 35,516 40,040 159,589
Other expenses (D3-23-06)....................... -13,191 -5,575 -6,285 -25,051
---------------------------------------------------------------
Total Administrative Expenses........... 577,395 244,030 275,116 1,096,539
----------------------------------------------------------------------------------------------------------------
Total Operating Expenses (Other Costs + 2,216,154 936,630 1,055,947 *4,208,728
Applicant Cost + Pilot Boats + Admin)..........
---------------------------------------------------------------
Directors Adjustments--Applicant Surcharge -23,851 -10,080 -11,365 -45,296
Collected..................................
---------------------------------------------------------------
Total Directors Adjustment.............. -23,851 -10,080 -11,365 -45,296
---------------------------------------------------------------
Total Operating Expenses (OpEx + 2,192,303 926,550 1,044,582 4,163,432
Adjustments).......................
----------------------------------------------------------------------------------------------------------------
* Where the total column for a line from the expense report did not match manual addition, Coast Guard manually
matched to the line total for that expense and continued to sum down the column. As a result, the ending total
for each column (designated, undesignated, and total) may not sum across.
Table 26--Step 2: Adjusted Operating Expenses for District Three
----------------------------------------------------------------------------------------------------------------
District Three
-----------------------------------------------
Undesignated Designated Total
----------------------------------------------------------------------------------------------------------------
Total Operating Expenses (Step 1)............................... $3,236,885 $926,550 $4,163,432
2024 Inflation Modification (@2.7%)............................. 87,396 25,017 112,413
2025 Inflation Modification (@3.1%)............................. 103,053 29,499 132,552
2026 Inflation Modification (@2.4%)............................. 82,256 23,546 105,802
-----------------------------------------------
Adjusted 2026 Operating Expenses............................ 3,509,590 1,004,612 4,514,199
----------------------------------------------------------------------------------------------------------------
* As a result of rounding in Step 1, the total for each column may not sum across.
Table 27--Step 3: Authorized Pilots for District Three
------------------------------------------------------------------------
Item District Three
------------------------------------------------------------------------
2026 Authorized Pilots (total)....................... 20
Pilots Assigned to Designated Areas.................. 5
Pilots Assigned to Undesignated Areas................ 15
2026 Apprentice Pilots............................... 5
------------------------------------------------------------------------
Table 28--Step 4: Target Compensation for District Three
----------------------------------------------------------------------------------------------------------------
District Three
-----------------------------------------------
Undesignated Designated Total
----------------------------------------------------------------------------------------------------------------
Target Pilots Compensation...................................... $481,642 $481,642 $481,642
Number of Pilots................................................ 15 5 20
-----------------------------------------------
Total Target Pilot Compensation............................. $7,224,630 $2,408,210 $9,632,840
[[Page 7137]]
Target Apprentice Pilot Compensation............................ $173,391 $173,391 $173,391
Number of Apprentice Pilots..................................... .............. .............. 5
-----------------------------------------------
Total Target Apprentice Pilot Compensation.................. $676,225 $190,730 $866,955
----------------------------------------------------------------------------------------------------------------
Table 29--Step 5: Revenue Needed for District Three
----------------------------------------------------------------------------------------------------------------
District Three
--------------------------------------------------------------------------
Undesignated Designated Total
----------------------------------------------------------------------------------------------------------------
Adjusted Operating Expenses (Step 2). $3,509,590............. $1,004,612............. $4,514,199
Total Target Pilot Compensation (Step 7,224,630.............. 2,408,210.............. 9,632,840
4).
Total Target Apprentice Pilot 676,225................ 190,730................ 866,955
Compensation (Step 4).
--------------------------------------------------------------------------
Total Revenue Needed............. 11,410,445............. 3,603,552.............. 15,013,994
----------------------------------------------------------------------------------------------------------------
* As a result of rounding in Step 1, the total for each column may not sum across.
Table 30--Step 6: Time on Task for District Three
[Hours]
------------------------------------------------------------------------
District Three
Year -------------------------------
Undesignated Designated
------------------------------------------------------------------------
2024.................................... 26,359 3,437
2023.................................... 25,690 3,501
2022.................................... 24,148 3,426
2021.................................... 18,149 2,484
2020.................................... 23,678 3,520
2019.................................... 24,851 3,395
2018.................................... 19,967 3,455
2017.................................... 20,955 2,997
2016.................................... 23,421 2,769
2015.................................... 22,824 2,696
-------------------------------
Average............................. 23,004 3,168
------------------------------------------------------------------------
Table 31--Step 6: Initial Rate Calculations for District Three
------------------------------------------------------------------------
Undesignated Designated
------------------------------------------------------------------------
Revenue needed (Step 5)................. $11,410,445 $3,603,552
Average time on task (hours)............ 23,004 3,168
Initial rate............................ $496 $1,137
------------------------------------------------------------------------
Table 32--Step 7: Average Weighting Factor for District Three, Undesignated Areas
----------------------------------------------------------------------------------------------------------------
Number of Weighting Weighted
Vessel class/year transits factor transits *
----------------------------------------------------------------------------------------------------------------
Area 6
----------------------------------------------------------------------------------------------------------------
Class 1 (2015).................................................. 56 1 56
Class 1 (2016).................................................. 136 1 136
Class 1 (2017).................................................. 148 1 148
Class 1 (2018).................................................. 103 1 103
Class 1 (2019).................................................. 173 1 173
Class 1 (2020).................................................. 4 1 4
Class 1 (2021).................................................. 8 1 8
Class 1 (2022).................................................. 116 1 116
Class 1 (2023).................................................. 155 1 155
Class 1 (2024).................................................. 52 1 52
Class 2 (2015).................................................. 207 1.15 238
[[Page 7138]]
Class 2 (2016).................................................. 236 1.15 271
Class 2 (2017).................................................. 264 1.15 304
Class 2 (2018).................................................. 169 1.15 194
Class 2 (2019).................................................. 279 1.15 321
Class 2 (2020).................................................. 332 1.15 382
Class 2 (2021).................................................. 273 1.15 314
Class 2 (2022).................................................. 276 1.15 317
Class 2 (2023).................................................. 295 1.15 339
Class 2 (2024).................................................. 287 1.15 330
Class 3 (2015).................................................. 8 1.3 10
Class 3 (2016).................................................. 10 1.3 13
Class 3 (2017).................................................. 19 1.3 25
Class 3 (2018).................................................. 9 1.3 12
Class 3 (2019).................................................. 9 1.3 12
Class 3 (2020).................................................. 4 1.3 5
Class 3 (2021).................................................. 5 1.3 7
Class 3 (2022).................................................. 3 1.3 4
Class 3 (2023).................................................. 5 1.3 7
Class 3 (2024).................................................. 9 1.3 12
Class 4 (2015).................................................. 375 1.45 544
Class 4 (2016).................................................. 332 1.45 481
Class 4 (2017).................................................. 367 1.45 532
Class 4 (2018).................................................. 337 1.45 489
Class 4 (2019).................................................. 334 1.45 484
Class 4 (2020).................................................. 339 1.45 492
Class 4 (2021).................................................. 356 1.45 516
Class 4 (2022).................................................. 363 1.45 526
Class 4 (2023).................................................. 356 1.45 516
Class 4 (2024).................................................. 433 1.45 628
-----------------------------------------------
Total for Area 6............................................ 7,242 .............. 9,275
----------------------------------------------------------------------------------------------------------------
Area 8
----------------------------------------------------------------------------------------------------------------
Class 1 (2015).................................................. 0 1 0
Class 1 (2016).................................................. 4 1 4
Class 1 (2017).................................................. 4 1 4
Class 1 (2018).................................................. 0 1 0
Class 1 (2019).................................................. 0 1 0
Class 1 (2020).................................................. 1 1 1
Class 1 (2021).................................................. 5 1 5
Class 1 (2022).................................................. 10 1 10
Class 1 (2023).................................................. 5 1 5
Class 1 (2024).................................................. 6 1 6
Class 2 (2015).................................................. 169 1.15 194
Class 2 (2016).................................................. 174 1.15 200
Class 2 (2017).................................................. 151 1.15 174
Class 2 (2018).................................................. 102 1.15 117
Class 2 (2019).................................................. 120 1.15 138
Class 2 (2020).................................................. 180 1.15 207
Class 2 (2021).................................................. 124 1.15 143
Class 2 (2022).................................................. 89 1.15 102
Class 2 (2023).................................................. 118 1.15 136
Class 2 (2024).................................................. 122 1.15 140
Class 3 (2015).................................................. 0 1.3 0
Class 3 (2016).................................................. 7 1.3 9
Class 3 (2017).................................................. 18 1.3 23
Class 3 (2018).................................................. 7 1.3 9
Class 3 (2019).................................................. 6 1.3 8
Class 3 (2020).................................................. 1 1.3 1
Class 3 (2021).................................................. 1 1.3 1
Class 3 (2022).................................................. 6 1.3 8
Class 3 (2023).................................................. 0 1.3 0
Class 3 (2024).................................................. 4 1.3 5
Class 4 (2015).................................................. 253 1.45 367
Class 4 (2016).................................................. 204 1.45 296
Class 4 (2017).................................................. 269 1.45 390
Class 4 (2018).................................................. 188 1.45 273
Class 4 (2019).................................................. 254 1.45 368
Class 4 (2020).................................................. 265 1.45 384
Class 4 (2021).................................................. 319 1.45 463
[[Page 7139]]
Class 4 (2022).................................................. 243 1.45 352
Class 4 (2023).................................................. 268 1.45 389
Class 4 (2024).................................................. 345 1.45 500
-----------------------------------------------
Total for Area 8............................................ 4,042 .............. 5,433
-----------------------------------------------
Combined total.......................................... 11,284 .............. 14,708
----------------------------------------------------------------------------------------------------------------
Average weighting factor (weighted transits / number of .............. 1.30 ..............
transits)......................................................
----------------------------------------------------------------------------------------------------------------
* Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses
unrounded figures.
Table 33--Step 7: Average Weighting Factor for District Three, Designated Areas
----------------------------------------------------------------------------------------------------------------
Number of Weighting Weighted
Vessel class/year transits factor transits *
----------------------------------------------------------------------------------------------------------------
Class 1 (2015).................................................. 23 1 23
Class 1 (2016).................................................. 55 1 55
Class 1 (2017).................................................. 62 1 62
Class 1 (2018).................................................. 47 1 47
Class 1 (2019).................................................. 45 1 45
Class 1 (2020).................................................. 15 1 15
Class 1 (2021).................................................. 15 1 15
Class 1 (2022).................................................. 74 1 74
Class 1 (2023).................................................. 68 1 68
Class 1 (2024).................................................. 24 1 24
Class 2 (2015).................................................. 145 1.15 167
Class 2 (2016).................................................. 174 1.15 200
Class 2 (2017).................................................. 170 1.15 196
Class 2 (2018).................................................. 126 1.15 145
Class 2 (2019).................................................. 162 1.15 186
Class 2 (2020).................................................. 218 1.15 251
Class 2 (2021).................................................. 131 1.15 151
Class 2 (2022).................................................. 162 1.15 186
Class 2 (2023).................................................. 142 1.15 163
Class 2 (2024).................................................. 132 1.15 152
Class 3 (2015).................................................. 0 1.3 0
Class 3 (2016).................................................. 6 1.3 8
Class 3 (2017).................................................. 14 1.3 18
Class 3 (2018).................................................. 6 1.3 8
Class 3 (2019).................................................. 3 1.3 4
Class 3 (2020).................................................. 1 1.3 1
Class 3 (2021).................................................. 2 1.3 3
Class 3 (2022).................................................. 5 1.3 7
Class 3 (2023).................................................. 0 1.3 0
Class 3 (2024).................................................. 4 1.3 5
Class 4 (2015).................................................. 245 1.45 355
Class 4 (2016).................................................. 191 1.45 277
Class 4 (2017).................................................. 234 1.45 339
Class 4 (2018).................................................. 225 1.45 326
Class 4 (2019).................................................. 308 1.45 447
Class 4 (2020).................................................. 336 1.45 487
Class 4 (2021).................................................. 258 1.45 374
Class 4 (2022).................................................. 249 1.45 361
Class 4 (2023).................................................. 300 1.45 435
Class 4 (2024).................................................. 345 1.45 500
-----------------------------------------------
Total....................................................... 4,722 .............. 6,180
----------------------------------------------------------------------------------------------------------------
Average weighting factor (weighted transits / number of .............. 1.31 ..............
transits)......................................................
----------------------------------------------------------------------------------------------------------------
* Weighted transits are rounded to the nearest whole number for presentation, but the Total calculation uses
unrounded figures.
Table 34--Step 8: Revised Base Rates for District Three
----------------------------------------------------------------------------------------------------------------
Revised rate (initial
Area Initial rate Average weighting rate / average weighting
(Step 6) factor (Step 7) factor)
----------------------------------------------------------------------------------------------------------------
District Three: Undesignated................... $496 1.30 $382
[[Page 7140]]
District Three: Designated..................... $1,137 1.31 $868
----------------------------------------------------------------------------------------------------------------
Table 35--Step 9: Final Rates for District Three
----------------------------------------------------------------------------------------------------------------
Final 2025 Final 2026
Area Name pilotage rate pilotage rate
----------------------------------------------------------------------------------------------------------------
District Three: Designated................... St. Marys River................ $825 $868
District Three: Undesignated................. Lakes Huron, Michigan, and 440 382
Superior.
----------------------------------------------------------------------------------------------------------------
VII. Regulatory Analyses
We developed this rule after considering numerous statutes and
Executive orders related to rulemaking. Below, we summarize our
analyses based on these statutes or Executive orders.
A. Regulatory Planning and Review
Executive Orders 12866 (Regulatory Planning and Review) 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. Executive Order 13563 emphasizes the importance of
quantifying both costs and benefits, of reducing costs, of harmonizing
rules, and of promoting flexibility. Executive Order 14192 (Unleashing
Prosperity Through Deregulation) directs agencies to significantly
reduce the private expenditures required to comply with Federal
regulations and provides that ``any new incremental costs associated
with new regulations shall, to the extent permitted by law, be offset
by the elimination of existing costs associated with at least 10 prior
regulations.''
Two additional Executive orders promote the goals of Executive
Order 13563: Executive Order 13609 (Promoting International Regulatory
Cooperation) and Executive Order 13610 (Identifying and Reducing
Regulatory Burdens). Executive Order 13609 targets international
regulatory cooperation to reduce, eliminate, or prevent unnecessary
differences in regulatory requirements. Executive Order 13610 aims to
modernize the regulatory systems and reduce unjustified regulatory
burdens and costs on the public.
The Office of Management and Budget (OMB) has not designated this
rule a ``significant regulatory action'' under section 3(f) of
Executive Order 12866. Accordingly, OMB has not reviewed it.
This rule is not an Executive Order 14192 regulatory action because
this rule is not significant under Executive Order 12866. This final
rule is considered an Executive Order 14192 deregulatory action. See
OMB Memorandum M-25-20, ``Guidance Implementing Section 3 of Executive
Order 14192, titled `Unleashing Prosperity Through Deregulation' ''
(March 26, 2025).
A regulatory analysis (RA) follows.
The purpose of this final 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. For this ratemaking, the Coast
Guard estimates a decrease in cost of approximately $2.71 million to
industry. This is approximately a 6-percent decrease because of the
change in revenue needed in 2026 compared to the revenue needed in
2025, as shown in table 36.
Table 36--Economic Impacts Due to Changes
----------------------------------------------------------------------------------------------------------------
Affected
Change Description population Costs Benefits
----------------------------------------------------------------------------------------------------------------
Rate changes.................... In accordance with Owners and Decrease of New rates cover an
46 U.S.C. Chapter operators of 258 $2,708,485 due to association's
93, the Coast vessels change in revenue necessary and
Guard is required transiting the needed for 2026 reasonable
to review and Great Lakes ($40,451,209) operating
adjust base system annually, from revenue expenses.
pilotage rates 57 Pilots, 7 needed for 2025 Promotes safe,
annually. Apprentice ($43,159,694) as efficient, and
Pilots, and 3 shown in table 37. reliable pilotage
pilotage service on the
associations. Great Lakes.
Provides fair
compensation,
adequate
training, and
sufficient rest
periods for
Pilots.
Removal of Working Capital Fund. Following GLPAC The 3 pilotage A decrease of The associations
recommendation, associations. $1,980,709 in would need less
the Coast Guard revenue needed in revenue for
removed Step 5 of for the Working 2026 than if the
the ratemaking. Capital Fund for Working Capital
2026 compared to Fund had been
2025. This is included.
equal to the
revenue needed
for the working
capital fund
approved in the
2025 ratemaking.
----------------------------------------------------------------------------------------------------------------
The Coast Guard is required to review and adjust pilotage rates on
the Great Lakes annually. See Section II., Basis and Purpose, and
Regulatory History of this preamble for detailed discussions of the
legal basis and purpose for this rulemaking. Based on our annual review
for this rulemaking, we are adjusting the pilotage rates for the 2026
shipping season to generate sufficient revenues for each district to
reimburse its necessary and reasonable operating
[[Page 7141]]
expenses and fairly compensate trained and rested Pilots. The result is
a decrease in rates for all areas in District One and District Two. In
District Three, the rate will increase for the designated area and
decrease for the undesignated area. These changes also lead to a net
decrease in the cost of service to shippers. The change in per unit
cost to each individual shipper is dependent on their area of
operation.
A detailed discussion of our economic impact analysis follows.
Affected Population
This final rule affects Pilots and Apprentice Pilots, the 3
pilotage associations, and the owners and operators of 258 oceangoing
vessels that transit the Great Lakes annually, on average, from 2022 to
2024. We estimate that there will be 57 Pilots and 7 Apprentice Pilots
during the 2026 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 United States and Canadian-flagged
lakers may voluntarily choose to engage a 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 2022
through 2024 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 the ratemaking
methodology, we use a 10-year average to estimate the traffic. We used
3 years of the most recent billing data to estimate the affected
population. When we reviewed 10 years of the most recent billing data,
we found the data included vessels that have not used pilotage services
in recent years. Using 3 years of billing data is a better
representation of the vessel population currently using pilotage
services and that are impacted by this final rule. We found that 425
unique vessels used pilotage services during the years 2022 through
2024. That is, these vessels had a Pilot dispatched to the vessel and
billing information was recorded in SeaPro. Of these vessels, 403 were
foreign-flagged vessels and 22 were U.S.-flagged vessels. Again, U.S.-
flagged vessels not operating on register are not required to have a
Pilot per 46 U.S.C. 9302, but they can voluntarily choose to have one.
Any such vessels that voluntarily choose to have a Pilot are accounted
for in the methodology.
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 2022 through 2024 as the best
representation of vessels estimated to be affected by the rates in this
final rule. From 2022 through 2024, an average of 258 unique vessels
used pilotage services annually. On average, 249 of these vessels were
foreign-flagged and 9 were U.S.-flagged vessels that voluntarily opted
into the pilotage service (these figures are rounded averages).
Total Cost to Shippers
The rate changes resulting from this adjustment to the rates
results in a net decrease in the cost of service to shippers. However,
the change in per unit cost to each individual shipper is dependent on
their area of operation.
The Coast Guard estimates the effect of the rate changes on
shippers by comparing the total projected revenues needed to cover
costs in 2025 with the total projected revenues to cover costs in 2026.
We set pilotage rates, so pilotage 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 pilotage associations
are equal to the projected necessary revenues for pilotage
associations. The revenues each year represent the total costs that
shippers must pay for pilotage services. The change in revenue from the
previous year is the additional cost to shippers discussed in this
final rule.
The impacts of the rate changes on shippers are estimated from the
district pilotage projected revenues (shown in tables 7, 18, and 29 of
this preamble). The Coast Guard estimates that, for the 2026 shipping
season, the projected revenue needed for all three districts is
$40,451,209.
To estimate the change in cost to shippers from this final rule,
the Coast Guard compared the 2026 total projected revenues to the 2025
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 2025 final
rule, we estimated the total projected revenue needed for 2025 as
$43,159,694.\17\ This is the best approximation of 2025 revenues
because, at the time of publication of this final rule, the Coast Guard
does not have enough audited data available for the 2025 shipping
season to revise these projections. Table 37 shows the revenue
projections for 2025 and 2026. The cost changes to shippers are
detailed by area and district as a result of the rate changes on
traffic in Districts One, Two, and Three.
---------------------------------------------------------------------------
\17\ 89 FR 100810, see table 40. <a href="https://www.govinfo.gov/content/pkg/FR-2024-12-13/pdf/2024-29128.pdf">https://www.govinfo.gov/content/pkg/FR-2024-12-13/pdf/2024-29128.pdf</a>; accessed 03/25/2025.
Table 37--Effect of the Final Rule by Area and District
[$U.S.; non-discounted]
----------------------------------------------------------------------------------------------------------------
Additional
Area Revenue needed Revenue needed costs of this
in 2025 in 2026 rule
----------------------------------------------------------------------------------------------------------------
Total, District One............................................. $14,713,084 $14,471,374 -$241,710
Total, District Two............................................. 11,883,331 10,965,841 -917,490
Total, District Three........................................... 16,563,279 15,013,994 -1,549,285
-----------------------------------------------
[[Page 7142]]
System Total................................................ 43,159,694 40,451,209 -2,708,485
----------------------------------------------------------------------------------------------------------------
* All figures are rounded to the nearest dollar and may not sum.
The resulting difference between the projected revenue in 2025 and
the projected revenue in 2026 is the annual change in payments from
shippers to Pilots as a result of this final rule's rate changes. The
effect of the rate changes to shippers varies by area and district. The
rate changes lead to affected shippers operating in District One
experiencing a decrease in payments of $241,710 over 2025. District Two
and District Three will experience a decrease in payments of $917,490
and $1,549,285, respectively, when compared with 2025. The overall
adjustment in payments is a decrease in payments by shippers of
$2,708,485 across all three districts (a 6-percent decrease when
compared with 2025). 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 38 shows the difference in revenue by revenue-component from
2025 to 2026 and presents each revenue-component as a percentage of the
total revenue needed. In both 2025 and 2026, the largest revenue-
component was pilotage compensation (66 percent of total revenue needed
in 2025, and 68 percent of total revenue needed in 2026), followed by
operating expenses (29 percent of total revenue needed in 2025, and 29
percent of total revenue needed in 2026).
Table 38--Difference in Revenue by Revenue-Component
--------------------------------------------------------------------------------------------------------------------------------------------------------
Percentage of Percentage of Difference (2026 Percentage
Revenue-component Revenue needed total revenue Revenue needed total revenue revenue-2025 change from
in 2025 needed in 2025 in 2026 needed in 2026 revenue) previous year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Adjusted Operating Expenses........................... $12,354,186 29 $11,783,878 29 -$570,308 -5
Total Target Pilot Compensation....................... 28,323,337 66 27,453,594 68 -$869,743 -3
Total Target Apprentice Pilot Compensation............ 501,462 1 1,213,737 3 712,275 142
Working Capital Fund.................................. 1,980,709 5 0 0 -$1,980,709 -100
-------------------------------------------------------------------------------------------------
Total Revenue Needed.............................. 43,159,694 100 40,451,209 100 -$2,708,485 -6.28
--------------------------------------------------------------------------------------------------------------------------------------------------------
* All figures are rounded to the nearest dollar and may not sum.
As stated above, we estimate that there will be a total decrease in
revenue needed by the pilotage associations of $2,708,485. This
represents a decrease in revenue needed for total target Pilot
compensation of $869,743, an increase in revenue needed for total
target Apprentice Pilot wage benchmark of $712,275, a decrease in the
revenue needed for adjusted operating expenses of $570,308, and a
decrease in the revenue needed for the working capital fund of
$1,980,709.
The change in revenue needed for Pilot compensation, $869,743, is
due to three factors: (1) The changes to adjust 2025 pilotage
compensation to account for the difference between actual ECI inflation
\18\ (3.6 percent) and predicted PCE inflation \19\ (2.3 percent) for
2025; (2) projected inflation of pilotage compensation in Step 2 of the
methodology, using predicted inflation \20\ (2.4 percent) through 2026;
and (3) a decrease of four Pilots in District Three compared to 2025.
---------------------------------------------------------------------------
\18\ Employment Cost Index, Total Compensation for Private
Industry workers in Transportation and Material Moving, Annual
Average (June 2025), Series ID: CIU2010000520000A. <a href="https://www.bls.gov/news.release/eci.t05.htm">https://www.bls.gov/news.release/eci.t05.htm</a>; accessed 11/14/2025.
\19\ 2.3 percent was the latest figure available for the 2025
final rule. Table 1, Summary of Economic Projections, Median Core
PCE Inflation June Projection. <a href="https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20240918.pdf">https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20240918.pdf</a>; accessed 10/02/2024.
\20\ Table 1, Summary of Economic Projections, Median Core PCE
Inflation June Projection. <a href="https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20250917.pdf">https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20250917.pdf</a>; accessed 11/14/2025.
---------------------------------------------------------------------------
The target compensation is $481,642 per Pilot in 2026, compared to
$464,317 in 2025. The changes to modify the 2025 Pilot compensation to
account for the difference between predicted and actual inflation
increases the 2026 target compensation value by 1.3 percent. As shown
in table 39, this inflation adjustment increases total compensation by
$6,036 per Pilot, and the total revenue needed by $344,059 when
accounting for all 57 Pilots.
Table 39--Change in Revenue Resulting From the Change to Inflation of
Pilot Compensation Calculation in Step 4
------------------------------------------------------------------------
------------------------------------------------------------------------
2025 Target Pilot Compensation.......................... $464,317
Adjusted 2025 Compensation ($464,317 x 1.013)........... 470,353
Difference between Adjusted Target 2025 Compensation and 6,036
Target 2025 Compensation ($470,353-$464,317)...........
[[Page 7143]]
Change in total Revenue for 57 Pilots ($6,036 x 57)..... 344,059
------------------------------------------------------------------------
* All figures are rounded to the nearest dollar and may not sum.
Similarly, table 40 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 $2,173 per Apprentice Pilot, and the total
revenue needed by $15,211 when accounting for all seven Apprentice
Pilots.
Table 40--Change in Revenue Resulting From the Change to Inflation of
Apprentice Pilot Compensation Calculation in Step 4
------------------------------------------------------------------------
------------------------------------------------------------------------
2025 Target Apprentice Pilot Compensation............... $167,154
Adjusted 2025 Compensation ($167,154 x 1.013)........... 169,327
Difference between Adjusted Target 2025 Compensation and 2,173
Target Compensation ($169,327-$167,154)................
Change in total Revenue for Seven Apprentices ($2,173 x 15,211
7).....................................................
------------------------------------------------------------------------
* All figures are rounded to the nearest dollar and may not sum.
Another increase, $688,622, is the result of increasing
compensation for the 61 Pilots predicted for the 2025 season to account
for future inflation of 2.4 percent in 2026. This increases total
compensation by $11,289 per Pilot when accounting for all 61 Pilots in
the 2025 final rule, as shown in table 41.
Table 41--Change in Revenue Resulting From Inflating 2025 Compensation
to 2026
------------------------------------------------------------------------
------------------------------------------------------------------------
Adjusted 2025 Compensation.............................. $470,353
2026 Target Compensation ($470,353 x 1.024)............. 481,642
Difference between Adjusted 2025 Compensation and Target 11,289
2026 Compensation ($481,642-$470,353)..................
Change in total Revenue for 61 Pilots ($11,289 x 61).... 688,622
------------------------------------------------------------------------
* All figures are rounded to the nearest dollar and may not sum.
Similarly, an increase of $12,192 is the result of increasing
compensation for the three Apprentice Pilots predicted for the 2025
season to account for future inflation of 2.4 percent in 2026. This
increases total compensation by $4,064 per Apprentice Pilot when
accounting for the three Apprentice Pilots in the 2025 final rule, as
shown in table 42.
Table 42--Change in Revenue Resulting From Inflating 2025 Apprentice
Pilot Compensation to 2026
------------------------------------------------------------------------
------------------------------------------------------------------------
Adjusted 2025 Compensation.............................. $169,327
2026 Target Compensation ($481,642 x 36%)............... 173,391
Difference between Adjusted Compensation and Target 4,064
Compensation ($173,391-$169,327).......................
Change in total Revenue for 3 Apprentices ($4,064 x 3).. 12,192
------------------------------------------------------------------------
* All figures are rounded to the nearest dollar and may not sum.
As noted earlier, the Coast Guard predicts that 57 Pilots are
needed for the 2026 season. This reflects a decrease of four Pilots
compared to the 2025 season, in District Three.
Table 43 shows the decrease of $1,902,424 in revenue needed solely
for Pilot compensation. As noted previously, to avoid double counting,
this value excludes the change in revenue resulting from the change to
adjust 2025 pilotage compensation to account for the difference between
actual and predicted inflation.
Table 43--Change in Revenue Resulting From Decrease of Four Pilots
------------------------------------------------------------------------
------------------------------------------------------------------------
2026 Target Compensation................................ $481,642
Total Number of New Pilots.............................. -4
Total Cost of New Pilots ($481,642 x -4)................ -$1,926,568
Difference between Adjusted Target 2025 Compensation and $6,036
Target 2025 Compensation ($470,353-$464,317)...........
Change in total Revenue for -4 Pilots ($6,036 x -4)..... -$24,144
Net Change in total Revenue for -4 Pilots (-$1,926,568-- -$1,902,424
$24,144)...............................................
------------------------------------------------------------------------
* All figures are rounded to the nearest dollar and may not sum.
Similarly, the Coast Guard predicts that seven Apprentice Pilots
are needed for the 2026 season. This is a total increase of four
Apprentice Pilots from the 2025 season. The difference reflects an
increase of one Apprentice Pilot for District One, a decrease of one
Apprentice Pilot for District Two and an increase of four Apprentice
Pilots for District Three.
Table 44 shows the increase of $684,872 in revenue needed solely
for Apprentice Pilot compensation. As noted previously, to avoid double
counting this value excludes the change
[[Page 7144]]
in revenue resulting from the change to adjust 2025 Apprentice Pilotage
compensation to account for the difference between actual and predicted
inflation.
---------------------------------------------------------------------------
\21\ The 2025 projected revenues are from the Great Lakes
Pilotage Rate-2025 Annual Review final rule (89 FR 100810), tables
8, 20, and 32. The 2026 projected revenues are from tables 7, 18,
and 29 of this final rule.
Table 44--Change in Revenue Resulting From Increase of Four Apprentices
------------------------------------------------------------------------
------------------------------------------------------------------------
2026 Apprentice Target Compensation..................... $173,391
Total Number of New Apprentices......................... 4
Total Cost of new Apprentices ($173,391 x 4)............ $693,564
Difference between Adjusted Target 2025 Compensation and $2,173
Target 2025 Compensation ($169,327-$167,154)...........
Change in total Revenue for 4 Apprentices ($2,173 x 4).. $8,692
Net Change in total Revenue for 4 Apprentices ($693,564- $684,872
$8,692)................................................
------------------------------------------------------------------------
* All figures are rounded to the nearest dollar and may not sum.
Table 45 presents the percentage change in revenue by area and
revenue-component, excluding surcharges, as they are applied at the
district level.\21\
BILLING CODE 9110-04-P
[[Page 7145]]
[GRAPHIC] [TIFF OMITTED] TR17FE26.003
[[Page 7146]]
BILLING CODE 9110-04-C
Benefits
This final rule allows the Coast Guard to meet the requirements in
46 U.S.C. 9303 to review the rates for pilotage services on the Great
Lakes. The rate changes facilitate commerce and promote safe,
efficient, and reliable pilotage service on the Great Lakes by (1)
ensuring that rates cover an association's operating expenses, and (2)
providing fair Pilot compensation, adequate training, and sufficient
rest periods for Pilots. The rate changes also help recruit and retain
Pilots, which ensures a sufficient number of Pilots to meet peak
shipping demand, helping to reduce delays caused by Pilot shortages.
B. Small Entities
Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, we have
considered whether this rule will have a significant economic impact on
a substantial number of small entities. The term ``small entities''
comprises small businesses, not-for-profit organizations that are
independently owned and operated and are not dominant in their fields,
and governmental jurisdictions with populations of less than 50,000
people.
For the final rule, the Coast Guard reviewed recent company size
and ownership data for the vessels identified in SeaPro, and we
reviewed business revenue and size data provided by publicly available
sources such as Data Axle Reference Solutions.\22\ As described in
Section VII.A., Regulatory Planning and Review, of this preamble, we
found that 425 unique vessels used pilotage services during the years
2022 through 2024. These vessels are owned by 62 entities, of which 48
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.\23\ Table 46
shows the North American Industry Classification System (NAICS) codes
of the U.S. entities and the small entity standard size established by
the SBA.
---------------------------------------------------------------------------
\22\ See <a href="https://referencesolutions.data-axle.com/">https://referencesolutions.data-axle.com/</a>; accessed 03/
25/2025.
\23\ See <a href="https://www.sba.gov/document/support--table-size-standards">https://www.sba.gov/document/support--table-size-standards</a>. SBA has established a ``Table of Size Standards'' for
small businesses that sets small business size standards by NAICS
code. A size standard, which is usually stated in number of
employees or average annual receipts (``revenues''), represents the
largest size that a business (including its subsidiaries and
affiliates) may be in order to remain classified as a small business
for SBA and Federal contracting programs; accessed March 2024.
Table 46--NAICS Codes and Small Entities Size Standards
----------------------------------------------------------------------------------------------------------------
NAICS Description Small entity size standard
----------------------------------------------------------------------------------------------------------------
238910......................... Site Preparation Contractors... $19,000,000.
423860......................... Transportation Equipment and 175 Employees.
Supplies (except Motor
Vehicle) Merchant Wholesalers.
483211......................... Inland Water Freight 1,050 Employees.
Transportation.
484230......................... Specialized Freight (except 34,000,000.
Used Goods) Trucking, Long-
Distance.
488390......................... Other Support Activities for 47,000,000.
Water Transportation.
523910......................... Miscellaneous Intermediation... 47,000,000.
541611......................... Administrative Management and 24,500,000.
General Management Consulting
Services.
561510......................... Travel Agencies................ 25,000,000.
561599......................... All Other Travel Arrangement 32,500,000.
and Reservation Services.
562910......................... Remediation Services........... 25,000,000.
713930......................... Marinas........................ 11,000,000.
813910......................... Business Associations.......... 15,500,000.
----------------------------------------------------------------------------------------------------------------
Of the 14 U.S. entities, five exceed the SBA's small business
standards for small entities. To estimate the potential impact on the
nine small entities, the Coast Guard used their 2024 invoice data to
estimate their pilotage costs in 2026. Of the nine small entities, from
2022 to 2024, seven used pilotage services in 2024. We increased their
2024 costs to account for the changes in pilotage rates resulting from
this final rule and the 2025 final rule. We estimated the change in
cost to these entities resulting from this final rule by subtracting
their estimated 2026 pilotage costs from their estimated 2025 pilotage
costs and found the average impact to small firms are approximately -
$14,920 with a range of-$411 to -$50,086. We then compared the
estimated change in pilotage costs between 2025 and 2026 with each
firm's annual revenue. Because the rates in most areas decrease this
year, the expected impact on small entities is a cost savings, rather
than a net cost. That said, the Regulatory Flexibility Act directs
agencies to consider the magnitude of the impact, positive or negative,
on small entities. The change in per unit cost to each individual
shipper is dependent on their area of operation. This analysis
considers the impact of the average -6 percent change on revenues and
finds the impact ranges from -0.04 percent to-9.70 percent, with an
average of -3.20 percent. Within this range of negative impacts, three
entities experience an impact greater than one percent in absolute
terms.
In addition to the owners and operators discussed previously, three
U.S. entities that receive revenue from pilotage services are affected
by this final rule. These are the three pilotage associations that
provide and manage pilotage services within the Great Lakes districts.
District One's SLSPA uses the NAICS code ``Inland Water Freight
Transportation,'' with a small-entity size standard of 1,050 employees.
District Two's LPA uses the NAICS code, ``Business Associations,'' with
a small-entity size standard of $15,500,000 in revenue. District
Three's WGLPA did not have a registered NAICS code through Data Axle
Reference Solutions Resources. All three associations are considered
small entities by SBA size standards.
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 impacted by this final rule. We also did not
find any small governmental jurisdictions with populations of fewer
than 50,000 people impacted by this final rule. Based on this analysis,
we conclude that this final rule does not have a significant economic
impact on a substantial number of small entities.
[[Page 7147]]
Therefore, the Coast Guard certifies under 5 U.S.C. 605(b) that
this rule will not have a significant economic impact on a substantial
number of small entities.
C. Assistance for Small Entities
Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996, Public Law 104-121, we offer to assist small
entities in understanding this rule so that they can better evaluate
its effects on them and participate in the rulemaking. The Coast Guard
will not retaliate against small entities that question or complain
about this rule or any policy or action of the Coast Guard.
Small businesses may send comments on the actions of Federal
employees who enforce, or otherwise determine compliance with, Federal
regulations to the Small Business and Agriculture Regulatory
Enforcement Ombudsman and the Regional Small Business Regulatory
Fairness Boards. The Ombudsman evaluates these actions annually and
rates each agency's responsiveness to small business. If you wish to
comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR
(1-888-734-3247).
D. Collection of Information
This rule calls for no new collection of information, nor does it
adjust an existing collection of information under the Paperwork
Reduction Act of 1995, 44 U.S.C. 3501-3520.
E. Federalism
A rule has implications for federalism under Executive Order 13132
(Federalism) if it has a substantial direct effect on States, on the
relationship between the National Government and the States, or on the
distribution of power and responsibilities among the various levels of
government. We have analyzed this rule under Executive Order 13132 and
have determined that it is consistent with the fundamental federalism
principles and preemption requirements described in Executive Order
13132. Our analysis follows.
Congress directed the Coast Guard to establish ``rates and charges
for pilotage services'' 46 U.S.C. 9303(f). This regulation is issued
pursuant to that statute and is preemptive of State law as specified in
46 U.S.C. 9306. Under 46 U.S.C. 9306, a ``State or political
subdivision of a State may not regulate or impose any requirement on
pilotage on the Great Lakes.'' As a result, States or local governments
are expressly prohibited from regulating within this category.
Therefore, this final rule is consistent with the fundamental
federalism principles and preemption requirements described in
Executive Order 13132.
F. Unfunded Mandates
The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531-1538,
requires Federal agencies to assess the effects of their discretionary
regulatory actions. In particular, the Act addresses actions that may
result in the expenditure by a State, local, or tribal government, in
the aggregate, or by the private sector of $100,000,000 (adjusted for
inflation) or more in any one year. Although this rule will not result
in such expenditure, we do discuss the effects of this rule elsewhere
in this preamble.
G. Taking of Private Property
This rule will not cause a taking of private property or otherwise
have taking implications under Executive Order 12630 (Governmental
Actions and Interference with Constitutionally Protected Property
Rights).
H. Civil Justice Reform
This rule meets applicable standards in sections 3(a) and 3(b)(2)
of Executive Order 12988 (Civil Justice Reform) to minimize litigation,
eliminate ambiguity, and reduce burden.
I. Protection of Children
We have analyzed this rule under Executive Order 13045 (Protection
of Children from Environmental Health Risks and Safety Risks). This
rule is not an economically significant rule and will not create an
environmental risk to health or risk to safety that might
disproportionately affect children.
J. Indian Tribal Governments
This rule does not have tribal implications under Executive Order
13175 (Consultation and Coordination with Indian Tribal Governments)
because it will not have a substantial direct effect on one or more
Indian tribes, on the relationship between the Federal Government and
Indian tribes, or on the distribution of power and responsibilities
between the Federal Government and Indian tribes.
K. Energy Effects
We have analyzed this rule under Executive Order 13211 (Actions
Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use). We have determined that it is not a
``significant energy action'' under that order because it is not a
``significant regulatory action'' under Executive Order 12866 and is
not likely to have a significant adverse effect on the supply,
distribution, or use of energy.
L. Technical Standards
The National Technology Transfer and Advancement Act, codified as a
note to 15 U.S.C. 272, directs agencies to use voluntary consensus
standards in their regulatory activities unless the agency provides
Congress, through OMB, with an explanation of why using these standards
would be inconsistent with applicable law or otherwise impractical.
Voluntary consensus standards are technical standards (for example,
specifications of materials, performance, design, or operation; test
methods; sampling procedures; and related management systems practices)
that are developed or adopted by voluntary consensus standards bodies.
This rule does not use technical standards. Therefore, we did not
consider the use of voluntary consensus standards.
M. Environment
We have analyzed this rule under Department of Homeland Security
Management Directive 023-01, Rev. 1, associated implementing
instructions, and Environmental Planning COMDTINST 5090.1 (series),
which guide the Coast Guard in complying with the National
Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made
a determination that this action is one of a category of actions that
do not individually or cumulatively have a significant effect on the
human environment. A Record of Environmental Consideration supporting
this determination is available in the docket. For instructions on
locating the docket, see the ADDRESSES section of this preamble. This
rule is categorically excluded under paragraph A3 and L54 of Appendix
A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. Paragraph
A3 pertains to the promulgation of rules of the following nature: (a)
those of a strictly administrative or procedural nature; (b) those that
implement, without substantive change, statutory or regulatory
requirements; (c) those that implement, without substantive change,
procedures, manuals, and other guidance documents; (d) those that
interpret or amend an existing regulation without changing its
environmental effect; (e) those that provide technical guidance on
safety and security matters; and (f) those that provide guidance for
the preparation of security plans. Paragraph L54 pertains to
regulations which are editorial or procedural. This final rule involves
[[Page 7148]]
setting or adjusting the pilotage rates for the 2026 shipping season to
account for changes in district operating expenses, changes in the
number of Pilots, and anticipated inflation. The Coast Guard makes one
change to the methodology: the removal of step 5 regarding the working
capital fund. All of these changes are consistent with the Coast
Guard's maritime safety missions.
List of Subjects
46 CFR Part 401
Administrative practice and procedure, Great Lakes, Navigation
(water), Penalties, Reporting and recordkeeping requirements, Seamen.
46 CFR Part 403
Great Lakes, Navigation (water), Reporting and recordkeeping
requirements, Seamen, Uniform System of Accounts.
46 CFR Part 404
Great Lakes, Navigation (water), Seamen.
For the reasons discussed in the preamble, the Coast Guard amends
46 CFR parts 401, 403, and 404 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.
0
2. In Sec. 401.405, revise paragraphs (a)(1) through (6) to read as
follows:
Sec. 401.405 Pilotage rates and charges.
(a) * * *
(1) The St. Lawrence River is $978;
(2) Lake Ontario is $623;
(3) Lake Erie is $555;
(4) The navigable waters from Southeast Shoal to Port Huron, MI is
$681;
(5) Lakes Huron, Michigan, and Superior is $382; and
(6) The St. Marys River is $868.
* * * * *
PART 403--GREAT LAKES PILOTAGE UNIFORM ACCOUNTING SYSTEM
0
3. The authority citation for part 403 is revised to read as follows:
Authority: 46 U.S.C. 2103, 2104(a), 9303, 9304; DHS Delegation
No. 00170.1, Revision No. 01.4.
Sec. 403.110 [Amended]
0
4. In Sec. 403.110, amend paragraph (b) by:
0
a. Removing the second sentence; and
0
b. Removing the text ``this paragraph (403.110(b))'' and adding, in its
place, ``this paragraph (b)''.
PART 404--GREAT LAKES PILOTAGE RATEMAKING
0
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
No. 00170.1, Revision No. 01.4.
Sec. 404.100 [Amended]
0
6. In Sec. 404.100, in paragraphs (a) and (b), remove the text
``404.110'' and add, in its place, the text ``404.109''.
Sec. 404.105 [Removed]
0
7. Remove Sec. 404.105
Sec. Sec. 404.106 through 404.110 [Redesignated]
0
8. Redesignate Sec. Sec. 404.106 through 404.110 as follows:
------------------------------------------------------------------------
Old section New section
------------------------------------------------------------------------
404.106................................................. 404.105
404.107................................................. 404.106
404.108................................................. 404.107
404.109................................................. 404.108
404.110................................................. 404.109
------------------------------------------------------------------------
0
9. Revise newly redesignated Sec. Sec. 404.105 through 404.109 to read
as follows:
* * * * *
Sec.
404.105 Ratemaking step 5: Project needed revenue.
404.106 Ratemaking step 6: Calculate initial base rates.
404.107 Ratemaking step 7: Calculate average weighting factors by
area.
404.108 Ratemaking step 8: Calculate revised base rates.
404.109 Ratemaking step 9: Review and finalize rates.
* * * * *
Sec. 404.105 Ratemaking step 5: Project needed revenue.
The Director calculates each pilotage association's base projected
needed revenue by adding the projected adjusted operating expenses from
Sec. 404.102 (step 2) and the total target pilot compensation from
Sec. 404.104 (step 4).
Sec. 404.106 Ratemaking step 6: Calculate initial base rates.
The Director calculates initial base hourly rates by dividing the
projected needed revenue from Sec. 404.105 (step 5) by averages of
past hours worked in each district's designated and undesignated
waters, using available and reliable data for a multi-year period set
in accordance with Sec. 401.220(a) of this chapter.
Sec. 404.107 Ratemaking step 7: Calculate average weighting factors
by area.
The Director calculates the average weighting factor for each area
by computing the 10-year rolling average of weighting factors applied
in that area, beginning with the year 2014. If less than 10 years of
data are available, the Director calculates the average weighting
factor using data from each year beginning with 2014.
Sec. 404.108 Ratemaking step 8: Calculate revised base rates.
The Director calculates revised base rates for each area by
dividing the initial base rate from Sec. 404.106 (step 6) by the
average weighting factor from Sec. 404.107 (step 7) to produce a
revised base rate for each area.
Sec. 404.109 Ratemaking step 9: Review and finalize rates.
The Director reviews the base pilotage rates calculated in Sec.
404.108 (step 8) to ensure they meet the goal set in Sec. 404.1(a),
and either finalizes them or first makes necessary and reasonable
adjustments to them based on requirements of Great Lakes pilotage
agreements between the United States and Canada, or other supportable
circumstances.
Dated: February 11, 2026.
Robert C. Compher,
Captain, U.S. Coast Guard, Acting Assistant Commandant for Prevention
Policy.
[FR Doc. 2026-03054 Filed 2-13-26; 8:45 am]
BILLING CODE 9110-04-P
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