Federal Register - March 12, 2021
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Source: Federal Register
14216
Federal Register / Vol. 86, No. 47 / Friday, March 12, 2021 / Rules and Regulations
revenue needed for all three districts is $30,332,652.
To estimate the change in cost to shippers from this rule, the Coast Guard compared the 2021 total projected revenues to the 2020 projected revenues. Because we review and prescribe rates for the Great Lakes Pilotage annually, the effects are
estimated as a single-year cost rather than annualized over a 10-year period.
In the 2020 rulemaking, we estimated the total projected revenue needed for 2020 as $28,268,030.66 This is the best approximation of 2020 revenues, as, at the time of this publication, the Coast Guard does not have enough audited
data available for the 2020 shipping season to revise these projections.67
Table 43 shows the revenue projections for 2020 and 2021 and details the additional cost increases to shippers by area and district as a result of the rate changes on traffic in Districts One, Two, and Three.
TABLE 43EFFECT OF THE RULE BY AREA AND DISTRICT
$U.S.; non-discounted Revenue needed in 2020
Area
Revenue needed in 2021
Change in costs of this rule
Total, District One
Total, District Two
Total, District Three
$9,210,888
8,345,871
10,711,271
$10,620,941
8,506,705
11,205,006
$1,410,053
160,834
493,735
System Total
28,268,030
30,332,652
2,064,622
The resulting difference between the projected revenue in 2020 and the projected revenue in 2021 is the annual change in payments from shippers to pilots as a result of the rate change imposed by this rule. The effect of the rate change to shippers varies by area and district. After taking into account the change in pilotage rates, the rate changes will lead to affected shippers operating in District One experiencing an increase in payments of $1,410,053
over the previous year. District Two and
District Three will experience an increase in payments of $160,834 and $493,735, respectively, when compared with 2020. The overall adjustment in payments will be an increase in payments by shippers of $2,064,622
across all three districts a 7-percent increase when compared with 2020.
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 44 shows the difference in revenue-by-revenue-component from 2020 to 2021 and presents each revenuecomponent as a percentage of the total revenue needed. In both 2020 and 2021, the largest revenue-component was pilot compensation 68 percent of total revenue needed in 2020 and 67 percent of total revenue needed in 2021, followed by operating expenses 29
percent of total revenue needed in both 2020 and 2021.
TABLE 44DIFFERENCE IN REVENUE BY COMPONENT
Revenue needed in 2020
Revenue-component
Adjusted Operating Expenses
Total Target Pilot Compensation
Working Capital Fund
Total Revenue Needed
Percentage of total revenue needed in 2020
percent
$8,110,685
19,088,420
1,068,925
28,268,030
Percentage of total revenue needed in 2021
percent
Revenue needed in 2021
29
68
4
100
$8,876,850
20,461,950
993,852
30,332,652
29
67
3
100
Difference 2021
revenue 2020
revenue $766,165
1,373,530
75,073
2,064,622
Percentage change from previous year percent 9
7
7
7
Note: Totals may not sum due to rounding.
As stated above, we estimate that there will be a total increase in revenue needed by the pilot associations of $2,064,622. This represents an increase in revenue needed for target pilot compensation and adjusted operating expenses of $1,373,530 and $766,165, respectively, and a decrease in the revenue needed for the working capital fund of $75,073. The removal of legal fees associated with litigation against the Coast Guard will reduce the revenue needed in 2021 by $29,802. This number includes adjustments made to 66 85
FR 20088, see table 41.
rates for 2021 do not account for the impacts COVID19 may have on shipping traffic and subsequently pilotage revenue, as we do not 67 The
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the base legal fee amount of $27,594 for inflation and the working capital fund.
While the shippers will no longer reimburse the legal fees associated with litigation via the rate under the rule, the pilot associations may still be reimbursed for these expenses by the Coast Guard under the EAJA.
The majority of the increase in revenue needed, $1,373,530, is the result of changes to target pilot compensation. These changes are due to three factors: 1 The changes to adjust 2020 pilotage compensation to account
for the difference between actual and predicted inflation; 2 the net addition of two additional pilots; and 3
inflation of pilotage compensation to adjust target compensation values from 2020 dollars to 2021 dollars.
The target compensation is $378,925
per pilot in 2021, compared to $367,085
in 2020. The changes to modify the 2020
pilot compensation to account for the difference between predicted and actual inflation will increase the 2020 target compensation value by 1.5 percent. As shown in Table 45, this inflation
have complete data for 2020. The rates for 2022 will take into account the impact of COVID19 on shipping traffic, because that future ratemaking will include 2020 traffic data. However, the Coast Guard
uses 10-year average when calculating traffic in order to smooth out variations in traffic caused by global economic conditions, such as those caused by the COVID19 pandemic.
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