Federal Register Vol. 83, No.201,

I. Table of Abbreviations CFR Code of Federal Regulations DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking § Section U.S.C. United States Code COTP Captain of the Port II. Background, Purpose, and Legal Basis

Marine events are held on a recurring basis on the navigable waters within the Coast Guard Sector Detroit COTP Zone. In past history, the Coast Guard established special local regulations for these recurring event. These events have been submitted annually to ensure the protection of the maritime public and event participants from the hazards associated with these events. The Coast Guard has never received public comments or concerns regarding the impact to waterway traffic from these annually reoccurring events.

This proposed rule would consistently apprise the public in a timely manner through permanent publication in Title 33 of the Code of Federal Regulations. The table in this proposed rule would list each annual recurring event requiring a special local regulated area as administered by the Coast Guard.

By establishing permanent regulations containing these events, the Coast Guard would eliminate the need to establish temporary rules for events that occur on an annual basis and thereby limit the costs associated with cumulative regulations. This rulemaking would remove, add, and consolidate regulations to better meet the Coast Guard's intended purpose of ensuring safety during these events. The Coast Guard proposes this rulemaking under authority in 33 U.S.C. 1233.

The purpose of this rulemaking is to combine all of the Captain of the Port Detroit Zone's special local regulations from 33 CFR 100.911 through § 100.928, into one table under § 100.911. This table will ensure accuracy of times, dates, and dimensions for various marine events that are expected to be conducted within the Captain of the Port Detroit Zone throughout the year. We also propose to remove §  100.911, § 100.912, § 100.913, § 100.914, § 100.915, § 100.916, § 100.917, § 100.918, § 100.919, § 100.920 § 100.921, § 100.927, § 100.928 replacing these regulations with a table. In addition, we propose to add three rowing events, two swim events, and a water ski show to the table.

As large numbers of spectator vessels and marine traffic are expected to congregate around the event location, the regulated areas are needed to protect both spectators and participants from the safety hazards associated with the event. During the enforcement period of the regulated areas, persons and vessels would be prohibited from entering, transiting through, remaining, anchoring or mooring within the zone unless specifically authorized by the COTP or the designated representative. The Coast Guard may be assisted by other Federal, State and local agencies in the enforcement of these regulated areas. These events are listed below in the text of the regulation.

We developed this proposed rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and executive orders and we discuss First Amendment rights of protestors.

Executive Orders 12866 and 13563 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 13771 directs agencies to control regulatory costs through a budgeting process. This NPRM has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.

The Coast Guard has previously promulgated special local regulations or safety zones, in 33 CFR part 100, for all event areas contained within this proposed regulation and has not received notice of any negative impact caused by any of the special local regulations. By establishing a permanent regulation containing all of these events, the Coast Guard will eliminate the need to establish individual temporary rules for each separate event that occurs on an annual basis, thereby limiting the costs of cumulative regulations.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. 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. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.

While some owners or operators of vessels intending to transit the regulated areas may be small entities, for the reasons stated in section IV.A above this proposed rule would not have a significant economic impact on any vessel owner or operator.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section. The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

This proposed rule would not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

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. Though this proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

We have analyzed this proposed rule under Department of Homeland Security Directive 023-01 and Commandant Instruction M16475.1D, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves regulated areas for swim events and other marine events. Normally such actions are categorically excluded from further review under paragraph L61 of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A preliminary Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places, or vessels.

We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

We encourage you to submit comments through the Federal eRulemaking Portal at http://www.regulations.gov. If your material cannot be submitted using http://www.regulations.gov, contact the person in the FOR FURTHER INFORMATION CONTACT section of this document for alternate instructions.

We accept anonymous comments. All comments received will be posted without change to http://www.regulations.gov and will include any personal information you have provided. For more about privacy and the docket, visit http://www.regulations.gov/privacyNotice.

Documents mentioned in this NPRM as being available in the docket, and all public comments, will be in our online docket at http://www.regulations.gov and can be viewed by following that website's instructions. Additionally, if you go to the online docket and sign up for email alerts, you will be notified when comments are posted or a final rule is published.

I. Background

The U.S. Copyright Office (the “Office”) is statutorily responsible for administering the nation's copyright laws pursuant to the Copyright Act.1 One of the most significant responsibilities assigned to the Office is the registration of copyright claims. The Office's registration services are vital to creators and users of creative works of all types, including large and small businesses, individuals, and non-profit organizations. Copyright registration provides essential benefits for copyright owners. Before bringing a lawsuit for infringement of a U.S. work, registration of the claim must be made in accordance with the Copyright Act, or refused by the Office.2 A timely registration constitutes prima facie evidence of the validity of the copyright and the facts stated in the certificate of registration.3 Additionally, copyright owners must obtain a timely registration to seek statutory damages and attorney's fees in litigation.4 A registration also creates a public record that includes key facts relating to the authorship and ownership of the work, as well as information about the work itself, such as title, year of creation, and date of publication (if any). And an index of each registration is published in the Online Public Record, the database posted on the Office's website containing indexes of records relating to registrations and document recordations issued after 1977.5 In fiscal year 2017, the Office received 539,662 claims to copyright and issued 452,122 registrations.6 And in fiscal year 2018, the Office processed more than 600,000 claims. It is therefore crucial that the Office have an innovative and modern copyright registration system that can meet the rapidly expanding needs of the highly diverse copyright community and the public at large.

The Office is dedicated to modernizing its systems. Starting in 2011, the Office began a series of comprehensive and targeted efforts to understand and analyze its information technology (“IT”) needs. The Office issued its Priorities and Special Projects of the United States Copyright Office (October 2011-October 2013), which highlighted the need for technological upgrades. The Office then undertook a comprehensive study of its technological capabilities and needs, which included extensive stakeholder feedback. The resulting 2015 Report and Recommendations of the Technical Upgrades Special Project Team acknowledged challenges with the current user experience and access to the public record, and offered recommendations for improvement.7 Based on congressional direction, the Office followed its initial report with a more detailed plan, 2016's Provisional Information Technology Modernization Plan and Cost Analysis (“Provisional IT Plan”).8 And in 2017, the Office prepared a Modified U.S. Copyright Office Provisional IT Modernization Plan (“Modified IT Plan”) 9 at the direction of the House Committee on Appropriations that includes “potential opportunities for shared efficiencies and cost-savings as well as ways the [Library of Congress' (the “Library's”) Office of the Chief Information Officer (“OCIO”)] can support the Copyright Office in its overall modernization efforts.” 10

A principal reason that the Office has prioritized modernization is to improve the Office's processing times for claims submitted for registration.11 Current processing times vary based on a number of factors, including delays in the receipt of the deposit, the number of examiners available to review pending claims, the complexity of the claim, whether there are errors or inconsistencies in the registration materials, and whether the Office needs to correspond with an applicant to resolve those issues. If the examiner sends an email or other correspondence, the applicant will be given 45 days to respond, and if the applicant responds in a timely manner, the examiner will review and respond within 30 days after the applicant's response has been received.12

The Office intends to replace the current electronic system (known as “eCO”) with a modern solution that meets the changing needs of individual creators, industry (including on the user side), copyright practitioners, and the general public. In the past year, the Office engaged stakeholders in targeted outreach efforts with the assistance of a third-party contractor. The contractor interviewed numerous examiners, supervisors, and managers from the Office's Registration Program to identify common problems faced by applicants and the Office. External user interviews were conducted in Washington DC, New York City, Nashville, and Los Angeles with companies, organizations, lawyers, and individual creators who engage with the copyright registration system. In addition, the Office analyzed eCO survey data as well as calls received by the Public Information Office (“PIO”) and eCO help desk, which included over 10,000 responses from individual applicants.

Based on the information gathered during these outreach efforts, the Office is planning to develop several solutions to improve the registration system. These solutions will include a more powerful dashboard, which will allow users to track application progress; an integrated drag and drop submission option for electronic deposits; and an improved messaging system to confirm that a submission has been received and provide details on what to expect next. The Office also intends to improve the flow and usability of the user interface. For example, the Office plans to develop a mechanism that will allow users to view a draft version of the registration certificate before final submission to confirm that the correct information has been entered. The Office also plans to implement more automated validations to enhance the application.

As the Office identifies the IT infrastructure needed to support the new registration system, we are considering a number of legal and policy changes to improve the efficiency of the system for both users and the Office. The Office invites public comment in three specific areas of reform: The administration and substance of the application for registration, the utility of the public record, and the deposit requirements for registration.

While this document addresses a broad range of issues related to the national copyright registration system, the Office will continue to focus on additional topics in current and future rulemakings and notices of inquiry. For example, the Office has open rulemakings related to certain group registration options, and is preparing additional notices concerning group registration options for musical compositions and sound recordings, certain short online literary works, and websites.13

Through the data it has collected, the Office confirmed that users approach the electronic registration system with varying levels of understanding of copyright law and technical experience. Infrequent users require more guidance than frequent users. Therefore, in-application assistance should be pointed and flexible.

The Office is considering a multi-tier option that will offer different levels of support during the online application process. The first level, or Tier One, would provide the most elementary and basic support by placing an icon next to certain application terms that would expand to display one to two concise sentences of explanatory text. At Tier Two, users would receive in-depth substantive assistance through a help panel that would expand to provide comprehensive information and instructions on pertinent copyright concepts. The Office is also contemplating a live chat support feature to resolve common problems quickly and efficiently, subject to the availability of resources.

The Office welcomes comment on these multi-tier support options and invites other ideas for improving in-application assistance and support. The Office also seeks comment on the potential value and benefit of a live chat service as well as the most common questions users have when filling out applications for registration.

Section 409 of the Copyright Act authorizes the Register of Copyrights to prescribe forms for copyright registration. At present, the Office maintains three basic registration forms: The Standard and Single electronic applications, and the paper application. Paper applications, however, continue to be less efficient than electronic forms. The Office must scan each paper form into the registration system and input the relevant information by hand before an examiner even begins to review the claim. This is a cumbersome, labor-intensive process. Also, a significant portion of claims submitted on paper forms require correspondence or other action from the Office, which further increases pendency times and contributes to the overall backlog of pending claims.14 For example, applicants routinely fail to provide information expressly requested on paper forms, or add materially conflicting information. In many cases, the Office must contact the applicant to request additional information or permission to correct the application. As a result, paper applications are more costly to process than electronic applications, and the corresponding filing fee for a basic registration submitted on a paper form is $85 (compared to $55 for a basic registration submitted on an electronic form).15

Addressing common errors on paper applications imposes significant burdens on the Office's limited resources, and has had an adverse effect on the examination of claims submitted on electronic forms. Eliminating the paper application should mitigate many of these problems. Among other improvements, the new online application is expected to contain automated validations that would prevent applicants from submitting claims that fail to provide pertinent information. Also, the Office intends to develop a reliable system that is maintained to mitigate service interruptions and technical processing delays. For these reasons, the Office believes mandating electronic applications is necessary to improve the overall efficiency of the registration process.

The Office is also contemplating requiring the designation of an email address for receiving correspondence concerning applications for registration, and eliminating physical correspondence and physical forms of payment such as checks and money orders. These changes would facilitate end-to-end electronic processing of applications, thereby improving efficiency, reducing processing errors, and decreasing pendency times.16

The Office recognizes that public access to computers and internet technology continues to rise. Nearly every local library provides free public access to computers and the internet.17 In fiscal year 2017, 96% of basic registrations were submitted electronically, which reflects the pervasiveness of computer and internet access among the Office's users.

At the same time, the Office is aware that certain communities do not have access to computer and internet technologies. A number of factors may contribute to a person's ability to access the Office's electronic system, including age, educational attainment, household income, and community type. Some of the most frequent users of paper applications include older adults and individuals who are incarcerated. Thus, to serve these populations and other individual needs, the Office is considering offering the paper application upon written request demonstrating sufficient need.

The Office welcomes comment on the viability of the proposal to require electronic applications and payments and invites the submission of other proposals to improve the efficiency of the Office's registration processes for populations with limited access to computer and internet technology.

The Copyright Act mandates the payment of a fee as one of the conditions for seeking a copyright registration.18 Section 708(a)(1) of the statute provides that fees shall be paid to the Register “on filing each application . . . for registration of a copyright claim” and for “the issuance of a certificate of registration if registration is made.” The cost of issuing a certificate is included in the filing fee for a basic registration, though the Office does charge an additional fee if extra copies of the certificate are needed.19

The Office has always issued certificates of registration on a special type of paper that confirms the authenticity of each document. The Office prints roughly 10,000 to 20,000 certificates in any given week. This requires a substantial amount of resources both in terms of employee compensation and the cost of maintaining printing equipment. Paper certificates are also subject to delays associated with mail delivery, and many certificates are returned to the Office as undeliverable due to errors or omissions in the mailing addresses provided by applicants.20 To expedite the delivery of certificates, and to reduce the rate of returned mail, the Office is contemplating providing electronic certificates of registration with appropriate watermarks or other security measures needed to ensure authenticity (in lieu of issuing paper certificates). The cost of the electronic certificate would be included in the basic registration fee. But upon request, the Office would provide paper certificates for an additional fee.

For copyright owners, defaulting to electronic certificates would facilitate speedier access to certificates. And it would allow the Office to reallocate resources used in printing and mailing paper certificates to other important tasks.

The Office welcomes comment on this proposal.

On May 24, 2018, the Office issued a Notice of Proposed Rulemaking and Fee Study proposing the adoption of a new fee schedule to account for inflationary increases and the expected cost of IT modernization over the next several years.21 The Fee Study was issued pursuant to the Office's routine adjustment of fees, which occurs every three to five years, so it did not address alternative models for calculating and collecting fees.

As mentioned above, the Copyright Act requires the payment of fees “on filing each application under section 408 for registration of a copyright claim or for a supplementary registration.” 22 Currently, the Office maintains three basic registration forms: (1) The Standard Application, (2) the Single Application, and (3) the paper application. And the Office recently proposed fees for nine types of group applications.23 Basic and group registrations account for the highest volume of the Office's fee generating services, and processing these registrations is the costliest activity the Office performs.24 This is due, in part, to the varying complexity posed by certain types of claims. For example, claims submitted on the Single Application tend to be straightforward, because they must be limited to one work by one author that is owned by that same individual. By contrast, claims submitted on the Standard Application tend to be more complex because they may involve works created by multiple authors, works with multiple owners, as well as works made for hire, derivative works, collective works, compilations, or other complicated issues.

Setting fees that accurately account for difficult and/or divergent claims is important because the Office recovers approximately 60% of its costs through fees.25 To achieve a more precise pricing model, the Office is considering adopting a system that varies fees based upon the kind of work submitted for registration and/or the number of works included in each application. This approach may also address user concerns regarding the numerical limits that currently apply to the Office's existing group registration options.

Under this approach, the fee for any particular application could be dynamic and vary based on information provided in the application. The Office could charge a base fee for registering an individual work, and an incrementally higher fee for each additional work that is added to the application (assuming the pertinent facts for each work remains the same). Or the Office could conceivably offer a subscription service that would let authors register a specific number of works over a designated period (assuming the pertinent facts for each work remain the same).

Many commenters have expressed support for these ideas.26 The Office invites additional comment on this approach, as well as the submission of alternative methods for calculating fees that would sustain the Office, provide equity to users, and encourage registration.

Section 409 of the Copyright Act enumerates nine items of information that should be requested on the application for registration. None of these provisions requires the applicant to identify the type of work or the type of authorship being registered, except in the case of a compilation or derivative work. But section 409(10) gives the Register discretion to request “any other information regarded” by her “as bearing upon the preparation or identification of the work or the existence, ownership, or duration of the copyright.” Pursuant to this section, the Office has required applicants to “clearly identif[y] the copyrightable authorship that the applicant intends to register” and “assert a claim to copyright in that authorship.” 27

The statute also authorizes the Register to issue regulations specifying the “administrative classes into which works are to be placed for purposes of deposit and registration” and to develop the application forms that should be used to register each claim.28 Pursuant to this authority, the Office established five administrative classes for purposes of registration—namely, literary works, serials, works of the visual arts, works of the performing arts, and sound recordings—and developed a corresponding application for each class—Forms TX, SE, VA, PA, and SR.

Because these forms can be used to register different types of works,29 the Office added a space to each application that asked the applicant to identify the “nature of authorship” being registered. But the Office found that some applicants provided vague or ambiguous statements in this portion of the application, such as “plot,” “character,” “story idea,” “beats,” “loops,” or “remastering.” To address situations where it was unclear whether statements referred to copyrightable authorship or uncopyrightable material, the Office developed extensive practices for communicating with the applicant, amending the application, and/or annotating the certificate.30

When the Office introduced the eCO system, it included a series of checkboxes in the “Author Created” field, which were intended to minimize these problems.31 These boxes encourage applicants to provide an authorship statement that describes the work being registered. But many of the checkboxes focus on the individual elements of the work, such as “text,” “music,” or “lyrics,” rather than the work as a whole.

Collectively, this system can cause confusion for applicants and additional work for examiners. The Office is considering requiring applicants to identify the type of work being deposited. This approach has the benefit of ensuring that the work as a whole is considered by the examiner in addition to the individual elements of authorship. The Office is currently testing this approach with the new version of the Single Application, which was released on December 18, 2017. Instead of providing a blank space or a series of checkboxes that encourage applicants to assert claims in the individual elements of the work, the applicant is prompted to select an entry from a dropdown list that best describes the work as a whole. The Office intends to follow this same approach when it launches the new application for registering groups of unpublished works.32

The Office welcomes public comment on how this approach has been working. In addition, the Office welcomes public comment on the following proposals or other alternative suggestions for improving this portion of the application:

(a) Should the Office eliminate the Author Created and Nature of Authorship sections in all of its applications, and instead, allow the applicant to provide a general statement that appropriately describes the work as a whole?

(b) Should the Office eliminate the Author Created and Nature of Authorship sections in all of its applications, and instead, allow the examiner to add a statement that appropriately describes the work submitted for registration?

(c) Should the Office eliminate the Author Created and Nature of Authorship sections in all of its applications, and instead, develop a searchable, crowdsourced list of terms that could be used to describe the work—similar to the USPTO's trademark ID manual for identifying and classifying goods and services? 33

The Office also invites comment on its current administrative classifications. These classes are solely for administrative purposes and have no bearing on the subject matter or exclusive rights provided by copyright.34 Instead, they identify the application form used to register each type of work and determine how the Office assigns applications to examiners for processing. If the work is registered, the administrative class will be reflected in the registration number that is assigned to the certificate and the public record for that claim. Interested parties often use this information to search the Office's records for specific types of works or authors.

The Office, however, recognizes that these classifications, and the corresponding application forms, may be confusing for some applicants. Many works do not fit neatly into a specific class. For example, a children's book could be classified as either a literary or visual arts work, depending on the amount of text versus artwork that appears within the deposit, and the Office will accept such a work regardless of whether it is submitted on Form TX or Form VA.

This confusion could be alleviated by letting applicants provide a general statement describing the work as a whole. The Office could use that information to assign the work to the appropriate class for purposes of routing the application for examination and indexing the public record. The Office requests public comment on this idea. We also welcome comment on whether the Office should modify the current administrative classes or create additional or alternative class structures.

The Copyright Act defines a derivative work as “a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted.” 35 This category also includes “[a] work consisting of editorial revisions, annotations, elaborations, or other modifications, which, as a whole, represent an original work of authorship.” 36 Thus, by definition, a derivative work contains at least two forms of authorship: (1) “The authorship in the preexisting work(s) that have been recast, transformed, or adapted within the derivative work; and [(2)] the new authorship involved in recasting, transforming, or adapting the preexisting work(s).” 37

To register a claim to copyright in a derivative work, the Copyright Act states that the application must include “an identification of any preexisting work or works that it is based on or incorporates, and a brief, general statement of the additional material covered by the copyright claim being registered.” 38 The Office obtains this information on the current application in two steps. First, the Office requires the applicant to “identify the new authorship that the applicant intends to register” by checking “one or more boxes that appear under the heading Author Created” in the online application, or by providing a statement in the Nature of Authorship space on the paper application, “that accurately describe[s] the new material that the applicant intends to register.” 39 Second, if the derivative work contains an appreciable amount of preexisting material that is previously published, previously registered, in the public domain, or owned by a third party, the applicant must identify that material “by checking one or more boxes” in the Material Excluded field of the online application or by providing a brief statement in the corresponding section of the paper application. As with the Author Created section discussed above, these checkboxes encourage applicants to identify individual elements of the work that should be excluded from the claim, without identifying the preexisting work itself. In addition, the applicant must identify the elements of the work that should be “included” in the claim by completing another set of checkboxes in the online application or by providing a brief statement in the corresponding section of the paper application.

The Office is considering a different approach to streamline the way that applicants provide this type of information. As discussed above, applicants would be asked to identify the type of work the author created. Applicants would be given an opportunity to identify any elements that should be excluded from the claim using their own words, rather than a set of predetermined checkboxes. And the Office would eliminate the requirement to identify the new material that should be “included” in the claim and assume that the applicant intends to register all copyrightable aspects of the work that have not been expressly disclaimed.40

In addition, the Office is considering asking applicants to affirmatively state whether the work submitted for registration is a derivative work. The question would be accompanied by informational text to educate applicants on derivative work authorship. If the applicant identifies the work as a derivative work, the applicant would be asked to identify the preexisting work that the derivative work is based on or incorporates. The Office welcomes comment on these proposals. The Office also invites comment on whether the Office should take a similar approach with claims involving compilations and collective works.

Copyright ownership in a work initially vests in the author or authors of that work.41 However, “[t]he ownership of a copyright may be transferred in whole or in part by any means of conveyance or by operation of law, and may be bequeathed by will or pass as personal property by the applicable laws of intestate succession.” 42 If the individual or organization named as the claimant or co-claimant is not an author of the work, the applicant must provide “a brief statement of how the claimant obtained ownership of the copyright.” 43 The Office refers to this as a transfer statement.44

The transfer statement should confirm that the copyright was transferred to the claimant by written agreement, by inheritance, or by operation of law.45 In the current online application, the applicant may provide this information by selecting one of the options listed in a dropdown menu.46 The options include “By written agreement” (which is the most common response provided) and “By inheritance.” If these options do not fully describe the transfer, the applicant may provide a more specific transfer statement in a blank space marked “Transfer Statement Other.” 47 This option has created inefficiencies for the Office. Providing conflicting information in the “Other” field is one of the most common reasons that the Office must correspond with applicants, which delays the resolution of claims and increases pendency times.

Because the only acceptable means of transferring a copyright are “by written agreement,” “by inheritance,” or “by operation of law,” the Office is considering whether to add “by operation of law” to the list of acceptable transfer statements and remove the “Other” space. In addition, the Office plans to include automated validations that would prevent an applicant from submitting an application without a transfer statement in cases where the names provided in the author and claimant fields do not match. The Office welcomes comment on these proposals.

Currently the Office does not permit an applicant to make manual corrections or edits to an application once it has been received by the Office. To make a correction or edit, an applicant must contact PIO and ask the Office to make the revision on the applicant's behalf. To improve efficiency, the Office is considering allowing applicants to make changes to pending applications at any point before an examiner opens the application for review.

To implement this proposal, the Office must be able to assign an appropriate Effective Date of Registration (“EDR”). The EDR is the day on which an acceptable application, complete deposit copy, and filing fee—which are later determined by the Register of Copyrights or a court of competent jurisdiction to be acceptable for registration—have all been received in the Office in proper form.48 “Where the three necessary elements are received at different times the date of receipt of the last of them is controlling, regardless of when the Copyright Office acts on the claim.” 49 Certain in-process changes can affect the EDR assigned to a registered work. For example, the EDR may change if the applicant replaces the deposit copy that accompanies an application for registration or submits an insufficient or uncollectible filing fee.50 By contrast, replacing or updating the title of the work would not change the EDR.51

The Office invites comment on this proposal.

In completing an online application for registration, an “applicant may provide the name, address, and other contact information for the person and/or organization that should be contacted for permission to use the work.” 52 This is known as Rights and Permissions information. Providing this information is optional and applicants may include as little information as they prefer. The application also cautions that any information provided in this portion of the application will appear in the Online Public Record for the work.53

Once a certificate of registration has been issued, the Office may remove certain personally identifiable information from the Online Public Record and replace it with substitute information. To do so, the author, claimant, or an authorized representative must submit “a written request in the form of an affidavit, and must pay the appropriate fee for this service.” 54 Alternatively, an author, claimant, or other interested party may update Rights and Permissions information by submitting an application for a supplementary registration and paying the appropriate fee for that service.55 If the application is approved, the Office will issue a separate certificate containing the updated information, and cross-reference the records for the initial registration and the supplementary registration. However, the Office will not remove or replace the Rights and Permissions information that appears on the original certificate or record.

The Office is considering building a user interface that will let users update Rights and Permissions information, as necessary, without having to submit a formal written removal request and fee and without having to seek a supplementary registration. This proposal is aligned with the Office's general goal to empower users to engage with the Online Public Record. The Office also believes that this change would improve the accuracy of Rights and Permissions information for persons who may be interested in licensing particular works.

The Office welcomes comment on this proposal, specifically addressing how it may affect the user's decision to provide Rights and Permissions information in an application for registration and how self-service changes may improve the quality of the Online Public Record. The Office also requests comment on whether this option should be limited to the party that submitted the initial application or the account associated with that submission to prevent third parties from making unauthorized changes to the record.

The utility of the Office's Online Public Record is affected by the search capability of the electronic system (currently, the Voyager system), but it is also affected by the data contained within the record itself. The Office seeks input from members of the public that use and search the Online Public Record to determine whether additional data could be included in the online record to enhance the functionality of the system. For instance, the number of page numbers in a book might assist in matching a particular publication with the edition of a work that was registered. Low-resolution images or sound clips could help identify a work for potential licensing. The Office welcomes comments on any additional data that should be included in the registration record to enhance the value of the public registry. In particular, should the Office allow applicants to voluntarily upload low-resolution images or sound bites of their works to appear in the Online Public Record?

As another example, the current system allows the applicant to include certain unique identifiers in the application, including an International Standard Book Number (“ISBN”), International Standard Recording Code (“ISRC”), International Standard Serial Number (“ISSN”), International Standard Audiovisual Number (“ISAN”), International Standard Music Number (“ISMN”), International Standard Musical Work Code (“ISWC”), International Standard Text Code (“ISTC”), or Entertainment Identifier Registry number (“EIDR”).56 If these numbers are provided in the appropriate fields, they will appear on the certificate and in the Online Public Record. These unique identifiers may assist “in the identification of a work and may facilitate licensing,” particularly in the digital environment.57

The Office is considering making it mandatory for applicants to provide unique identifiers for published works if a number or code has been assigned when the claim is submitted. Alternatively, the applicant could be required to add an identifier to the record if it appears in or on the deposit copy submitted with the application for registration. The Office believes this would improve the utility of the public record because users would be able to search the Online Public Record using those unique identifiers.

The Office has noted, “reliable, up-to-date information about copyrighted works is a critical prerequisite for efficient licensing.” 58 As such, consistent with the in-process correction process noted above, the Office would allow applicants to add unique identifiers to pending cases as long as the changes are made before the case has been opened by the examiner. In addition, the Office is considering establishing a procedure for adding unique identifiers to completed registration records, potentially at no cost, which would be similar to the proposed procedure for updating Rights and Permissions information.

Finally, the Office appreciates that standard identifiers are not a static universe. Therefore, it is considering accepting additional identifiers in the new system, such as the Interested Parties Information (“IPI”), International Standard Name Identifier (“ISNI”), and the Plus Registry.

The Office welcomes comment on these proposals. We also invite the public to identify other types of data that could be included in the registration application—either on an optional or mandatory basis—to improve the quality and utility of the public record. The Office encourages commenters to identify any special considerations for particular categories of copyrighted works.

The Office is exploring the use of standard application programming interfaces (“APIs”) as part of the new electronic registration system. APIs offer opportunities for automated advancements. They could be used by companies to build a registration workflow into their normal business processes, or by third parties to create customized user interfaces for particular types of creators or industries, such as photographers, songwriters, book publishers, or recording artists. APIs could facilitate batch submissions of applications for registration. They could also be used to import and autofill work information, such as the title, author name(s), and date of publication from other databases when an author provides a unique identifier on an online application. In addition to making the application easier to complete, APIs could improve the accuracy of information provided on the application by minimizing errors from manual input, thereby increasing efficiency and decreasing processing times.

Post-registration, APIs could also facilitate the export of data from the Office's Online Public Record, allowing the record to be augmented by private entities to provide potentially useful facts about the work that may not be captured in the Online Public Record, such as additional information about the deposited works. This could foster efficient licensing transactions in registered works, and help detect the infringement of registered works. That said, the Office is committed to providing the public with accurate information about copyright and does not want the introduction of third-party API access to enable consumer confusion or facilitate business models that charge excessive premiums or otherwise prey upon individual authors who may be less sophisticated about the copyright system.

The Office invites comment on how it should utilize APIs to integrate external data into the official registry or export internal data from the Office's registry to facilitate enhanced services offered by private entities. What factors should the Office consider? Should the Office limit API access to verified entities to minimize spam submissions and deter predatory behavior? Should the Office initiate API access through a pilot program, similar to past initiatives? 59

Because the Copyright Office is primarily an office of public record,60 all “public records, indexes, and deposits” are available for public inspection pursuant to section 705(c) of the Copyright Act. In addition, with the exception of deposited articles retained by the Office,61 section 706(a) of the Copyright Act makes the Office's records available for copying by the public. To that end, registration application materials that the Office receives, including any associated correspondence between the Office and an applicant, create public records that the Office maintains in full form within the Office and in condensed form in the Online Public Record.

Full records of approved, closed, or refused registration applications, and pending applications, including any associated correspondence, are available in the Office for public inspection and copying, under certain circumstances, and for a fee.62 Condensed indexes of approved post-1977 registration applications are available on the Office's website for free via the Online Public Record.63 The Office maintains the Online Public Record pursuant to section 707(a) of the Act, which provides that the Register “shall compile and publish at periodic intervals catalogs of all copyright registrations.” This provision also gives the Register the discretion to “determine, on the basis of practicability and usefulness, the form” of publication of these records.64

Due to considerations of feasibility and current technological limitations, the Online Public Record does not contain all of the information that is contained in the Office's full registration records. In particular, it does not include a copy of any correspondence between the Office and the applicant. It does not include information concerning claims that have been refused, claims that have been voluntarily withdrawn, or claims that have been closed for failure to respond to a written communication from the Office. Likewise, it does not contain information concerning first or second requests for reconsideration (although recent decisions that have been issued by the Review Board are available on the Office's website).65 These types of records are maintained solely in the full registration record, which must be viewed at the Office.66 As a result, courts, litigants, and the public may not be aware of refused claims or communications between the Office and applicant that resulted in material modifications to the registration materials.

The Office is considering whether to expand the Online Public Record to include correspondence records between the Office and an applicant, and refused registration application records including any associated appeal records.67 The Office believes these additions would greatly improve the utility of the public record, and invites public comment on the type and scope of information that should be included in the Online Public Record. In particular, the Office invites comment on whether it should publish condensed or full versions of these records, and comment on how these changes to the public record would affect stakeholders in different industries.

In addition to expanding the type of information included in the Online Public Record, the Office seeks to build improved search functionality, which will include enhancing the connection between its registration and recordation records. Currently, registration and recordation records are maintained as discrete data sets. A search for a name, title, or registration number pulls up the records for any registration or recordation that has been indexed with that information. And in some cases, there are hyperlinks within the registration record that allows the user to pull up any corresponding recordation records. But it is not possible to view all of the registration and recordation information on the same screen. This limits the functionality of the Online Public Record and makes it difficult to obtain chain of title information.

The Office seeks to create a new version of the Online Public Record that would seamlessly link registration and recordation records and provide robust chain of title information. To inform its future activities concerning this endeavor, the Office invites comment on how it should link registration and recordation records in the Online Public Record, the level of detail and specificity that should be included within the chain of title, and the potential value of that information to copyright owners, users, and the general public.

The Office currently uses multiple identification numbers to keep track of applications, correspondence, and requests for reconsideration. The Office assigns a service request/case number to each application to keep track of the claim within the electronic registration system. A separate “THREAD ID” is assigned to each email communication sent by the Office. A separate “Correspondence ID” is assigned to each letter that is sent by the Office. And the Office assigns another “Correspondence ID” when it issues a response to a request for reconsideration.

Administering and tracking disparate numbers for these types of records has created internal and external challenges for the Office and users alike. For instance, THREAD and Correspondence ID numbers have occasionally been attached to the wrong service request/case number. Examiners often catch these errors, but they must be fixed by hand to ensure that the correspondence materials are assigned to the appropriate case. To avoid these problems and improve the transparency of its records, the Office is proposing to unify its identification numbers to create a clear relationship between an application for registration, any correspondence, and any associated request for reconsideration. This would benefit users because they would only be tasked with monitoring one case number over the life cycle of a claim. The Office invites comment on this proposal.

The Office is seeking comment on a new approach for registration deposits. Under this approach, applicants would be required to submit electronic deposit copies and phonorecords, or other identifying material, for the purpose of registering a work under section 408 of the Copyright Act. Copyright owners would only be expected to submit physical copies or phonorecords if they receive a written demand from the Office for that material pursuant to the mandatory deposit provisions set forth in section 407. In other words, the Library would continue to receive physical copies or phonorecords through mandatory deposit if they are needed for its collections, but only if the Office affirmatively issues a written demand for that material on the Library's behalf and provides adequate notice to the copyright owner.68

The Office already administers two separate sets of deposit requirements as codified in the Copyright Act: The requirements for depositing a work for the Library pursuant to section 407 (the “mandatory deposit requirement”) 69 and the deposit requirements for registering a work with the Copyright Office pursuant to section 408 (the “deposit requirements for registration”).70 It has been suggested that a digital approach to deposit requirements for registration would make clearer the discrete aims of the registration and mandatory deposit requirements, as the deposit needs for registration examination purposes in many cases can be fulfilled without receiving a physical copy of the work where identifying material is sufficient.71

Both sections 407 and 408 give the Register broad authority to issue regulations dictating the specific nature of the copies and phonorecords that must be deposited, and in practice, the Register has traditionally exercised this authority in significant ways. Specifically, section 408(c)(1) authorizes the Register to “specify by regulation the administrative classes into which works are to be placed for purposes of deposit and registration, and the nature of the copies or phonorecords to be deposited in the various classes specified.” 72 In addition, the Register may further “require or permit, for particular classes, the deposit of identifying material instead of copies or phonorecords.” 73 Currently, a wide range of works may be registered with identifying material, including most pictorial and graphic works and computer programs.74

In enacting section 407, Congress balanced different, important interests, including the “value of the copies or phonorecords to the collections of the Library of Congress” and “the burdens and costs to the copyright owner of providing [copies of the works].” 75 Thus, under section 407(c), the Register may exempt any categories of material from the mandatory deposit requirements, or demand only one copy or phonorecord if it provides a “satisfactory archival record of a work.” 76 As both the Office and the Library acknowledge that the Library does not need every deposit submitted for registration in its collections, over the years the Register has adopted a series of exemptions from the mandatory deposit requirement, including exemptions for most electronic works that are available only online, musical works that are published solely on phonorecords, advertising material, scientific or technical diagrams, greeting cards, individual lectures or sermons, and most three-dimensional sculptural works.77

Considering a digital approach to deposit requirements for registration, the Office seeks comment on whether and how it should expand the classes of excepted works under section 408. Pursuant to its authority under section 408(c)(1), the Office is considering whether it should, for all classes of works, accept only, or preferentially, electronic copies or phonorecords and identifying material to satisfy the deposit requirement for registration.78

The Office takes seriously its responsibility to administer both the registration and mandatory deposit requirements. But the advent of a new registration system provides an opportunity to think innovatively about the best way to design a 21st century copyright registration system while serving the Library's collection needs. A digital approach to deposit requirements for registration would aim to (1) reduce the pendency time for processing applications, (2) reduce the number of physical deposit materials that the Office of Registration Policy & Practice (“RPP”) processes, and (3) simplify the deposit requirements for registration.

Although pendency times have improved,79 this remains a crucial concern for the Office. On April 25, 2018, the House Subcommittee on Legislative Branch Appropriations highlighted the need for the Office to decrease its processing times in its hearing on the Library of Congress's fiscal year 2019 budget request.80 While inquiring about the appropriate turnaround time for completing a copyright registration, Chairman Kevin Yoder emphasized that the aim is to make the registration system “more efficient and quicker.” 81 It is believed that this proposal would further significantly decrease burdens on both copyright owners and the Copyright Office by simplifying registration requirements and the examination process, and subsequently decreasing pendency times.

When an applicant sends a physical deposit with their application for registration, that deposit must be sent offsite to be screened and decontaminated for possible pathogens. Once the deposit is delivered to the Office, the Office's Receipt Analysis and Control Division (“RAC”) must manually match the physical deposit to its corresponding pending application and deliver the deposit to an examiner.82 This time consuming process can delay examination. And if the examiner later discovers that the applicant submitted an incorrect deposit, this process may be repeated, which would delay examination and re-set the EDR to the date that an acceptable deposit was received by the Office. Additionally, physical deposits are often heavy and unwieldy. The Office moves these deposits multiple times during the examination process, which increases the risk that they may be damaged, misplaced, mismatched, or lost.

By contrast, when an applicant uploads a digital deposit to the electronic registration system, the Office receives the deposit as soon as the application is submitted. An examiner can immediately access the deposit when they open the application. Examiners do not need to move deposits around the Office. Electronic deposits allow examiners to process more claims per hour, thereby cutting processing times significantly.

The Office is interested in hearing from copyright owners on how this digital approach may or may not incentivize the routine registration of copyrighted works and improve the efficiency of the registration system. The Office also seeks comments on how this approach may affect copyright owners with regard to their compliance with mandatory deposit.

Any approach that increases the deposit of digital formats must be supported by a robust security system. Users have expressed concern regarding the capacity of the Office's current IT infrastructure to handle an increase in digital deposits, as well as the Office's mechanisms for securing these deposits.

The Office currently utilizes a multi-level security design to ensure the confidentiality, integrity, and availability of the data within the eCO system. The system is certified to operate at the National Institute of Standards and Technology (“NIST”) Moderate security level.83 The entire eCO system operates on hardware and software dedicated to this system and it does not share any computer or storage resources. Strict access controls are in place throughout the system for public users, staff, and system administrators, enforcing the principle of least privilege, which means that users in each role may only access what is needed for their role. The system is also protected by multiple levels of network firewalls and other network-based security, such as anti-malware protection. Finally, the eCO system is under continuous monitoring, both operational and security, to ensure that these security controls are and remain effective.

The Office, working with OCIO, plans to implement these same controls in the new online registration system. Additionally, the Office's IT infrastructure is being updated to support increased numbers of digital deposits. The Office welcomes comment on the current and future state of the Office's deposit security as well as any additional approaches to this issue.

The Office is dedicated to developing a robust and efficient registration system and invites comment on any additional considerations that it should take into account during its modernization process.

The Clinical Laboratory Improvement Amendments of 1988 (Pub. L. (PL) 100-578) amended section 353 of the Public Health Service Act to establish legal requirements for the staffing, management, procedures, and oversight of clinical laboratories that perform testing used for the diagnosis, prevention, or treatment of any disease or impairment of, or health assessment of, human beings. These statutory requirements are codified at 42 U.S.C. 263a. The term “laboratory” or “clinical laboratory” are defined at 42 U.S.C. 263a(a) as a facility for the biological, microbiological, serological, chemical, immuno-hematological, hematological, biophysical, cytological, pathological, or other examination of materials derived from the human body for the purpose of providing information for the diagnosis, prevention, or treatment of any disease or impairment of, or the assessment of the health of, human beings. Centers for Medicare & Medicaid Services (CMS), within HHS, promulgated regulations for the Clinical Laboratory Improvement Amendments (CLIA) at title 42, Code of Federal Regulations (CFR), Part 493. CMS has primary responsibility for the administration of the CLIA program.

“. . . [T]o assure consistent performance of medical facility laboratories under the jurisdiction of the Secretary [of Veterans Affairs] of valid and reliable laboratory examinations and other procedures,” section 101 of Public Law 102-139 (“1991 Act”) was enacted, requiring VA, within a specified time-frame and in consultation with HHS, “to establish standards [by regulation] equal to that applicable to other medical facility laboratories in accordance with the requirements of section 353(f) of the Public Health Service Act.” VA's regulations must “include appropriate provisions respecting compliance with such requirements [set forth in section 353(f) of the Public Health Service Act]” and may include appropriate provisions respecting waivers and accreditations described in sections 353(d) and 353(e), respectively, of the Public Health Service Act. As a matter of policy and practice, VA believes it has met these statutory requirements; however, VA is issuing this proposed rule to comply with the requirement for formal rulemaking. Since enactment of section 101(a) of the 1991 Act, VA has collaborated with HHS in reviewing VA requirements and in developing standards for VA's medical facility laboratories that meet the requirements of law.

VA policy and practice regarding CLIA compliance was developed in consultation with HHS in 1994 and 1998. VA laboratories are accredited by accrediting organizations granted deeming authority by CMS (i.e., HHS-approved accreditation organization) to ensure its laboratories are in compliance with current CLIA regulations. Based on consultation with CMS in 1994 and 1998, the accreditation organization(s) provide oversight for proficiency testing in VA laboratories, as set forth in CLIA. Deeming authority is granted to an accrediting organization by CMS after a determination that the organization's accreditation oversight program requires that laboratories comply with or exceed CLIA standards. CMS has granted “deeming authority” to several other organization allowing them to accredit laboratories and inspect the laboratories in CMS's stead. The history of the process of the development of CLIA equivalent VHA standards in consultation with CMS is documented in the interagency agreement (IAA) between VA and CMS.

In 2000, after further consultation, VA and CMS entered into an IAA, which documented the history of the parties' consultations and agreements and granted VA limited authority to act on behalf of CMS. Specifically, the IAA authorized VA to issue CMS CLIA numbers and CLIA certificates to VA laboratories, which requires VA to notify CMS when VA suspends or retires CLIA numbers assigned to VA laboratories.

This agreement was renewed in 2010, and CMS and VA have agreed to review and update the interagency agreement as necessary in 2018, and every 6 years thereafter. In addition, CMS and VA agree to meet annually to discuss program issues of mutual importance.

To ensure VA remains current with CMS CLIA requirements, VA participates in the CMS Partners in Laboratory Oversight group, consults will CMS as needed, and participates in at least one formal consultative meeting per year. These engagements with CMS facilitates ongoing communication and coordination, and promotes effective oversight necessary to coordinate major activities, and expeditious, effective response to complaints, survey findings, and publicly volatile situations. VA staff attend State Agency Surveyor training, and CLIA surveyor webinars. VA has also convened ad hoc conferences with CMS when the exchange of information on CLIA may be needed. VA provides updates at the annual partners meeting and participates in audio conferences as requested. The CMS CLIA Program Director participates in VA's annual conference in which CMS, VA, and Department of Defense provide updates on laboratory issues and enforcement of laboratory regulations. As discussed below, VA laboratories that perform testing are all accredited and inspected by accrediting organizations granted deeming authority by CMS. As such, VA has documentation that its laboratories meet current CLIA standards.

VA provides updated data to CMS for each VA laboratory assigned a CLIA number at least every two years, or as changes occur. VA provides CMS with any requested information regarding the operation and performance of VA laboratories and the operations of the oversight program.

Under the 1991 Act, the definition of “medical facility laboratories” has the same meaning previously used to define the terms “laboratory” or “clinical laboratory” pursuant to section 353(a) of the Public Health Service Act, codified at 42 U.S.C. 263a(a). VA concluded that it should adopt 42 CFR part 493 regulations that were applicable to clinical laboratory operations but keep oversight and enforcement of these regulations as applied to VA laboratories within VA, rather than HHS. Under current VA practice, VA fulfills all laboratory oversight of and enforcement functions for VA laboratories that CMS fulfills for HHS with respect to laboratories subject to CLIA. VA has the authority and responsibility to provide enforcement of the CLIA regulations for VA laboratories, including imposing sanctions and discontinuing laboratory testing. VA believes this determination is consistent with the fact that Congress passed an entirely separate law (Pub. L. 102-139) for VA medical facility laboratories under the exclusive jurisdiction and control of the Secretary of Veterans Affairs.

The 42 CFR part 493 regulations are very detailed and include multiple subparts that address clinical laboratory tests. The laboratory regulations include requirements for proficiency testing; facility administration; quality systems; personnel qualifications; responsibilities for laboratory personnel, including laboratory directors and testing personnel; laboratory inspections; and enforcement. Several subparts are not directly applicable to VA medical facility laboratories because they address administration of the oversight and enforcement functions performed by CMS under 42 CFR part 493. Sections of 42 CFR part 493 that refer to the interactions with state programs, collections of fees, suspension of payments, creation of an advisory committee, and civil action are not applicable to VA, as discussed in greater detail below.

Although the requirement for consultation between HHS and VA was accomplished over 20 years ago, we are now proposing to formalize, document, and update, as necessary, VA's application of the CLIA requirements to VA laboratory operations. VA proposes to amend its medical regulations to reference the portions of 42 CFR part 493 adopted by VA as they apply to VA medical facility laboratories and clinics and to clarify that these standards are subject to VA oversight and enforcement by VA only. In addition, the proposed rule would require VA laboratories to be accredited by an accreditation organization granted deeming authority by CMS, in accordance with the accreditation requirement in CLIA, and participate in an HHS approved proficiency testing program.

Through this proposed rulemaking, in accordance with current VA policy and practice, VA can continue to assure that medical facility laboratories across our system perform consistent, accurate and reliable laboratory testing, ensuring the provision of quality testing for our veteran-patients in a manner comparable to non-VA laboratories.

We note that, in addition to 42 CFR part 493 standards, VA recognizes and adheres to worker safety standards established by the Occupational Safety and Health Administration (OSHA) and the U.S. Nuclear Regulatory Commission (NRC). In addition, the U.S. Food and Drug Administration (FDA) regulates the collection of blood and blood components intended for transfusion or for further manufacturing use, such as to make clotting factors, and establishes standards for blood and blood products. FDA also regulates related products such as cell separation devices, blood collection containers and HIV screening tests that are intended for use in the manufacture of blood or blood products. FDA develops and enforces quality standards, inspects blood establishments, and monitors reports of errors, accidents and adverse clinical events. Those additional standards are beyond the scope of this proposed rule.

VA proposes to add a new section 17.3500, “Adopting 42 CFR Part 493 Laboratory Requirements,” to its medical regulations. There, we would address CLIA regulations found at 42 CFR part 493, by subpart, and how VA would apply those regulations.

We state that all laboratory testing within VA performed for the diagnosis, treatment, and prevention of disease, and assessment of health in patients would comply with the relevant requirements established by HHS under 42 CFR part 493 as enforced by VA. VA laboratory testing must meet, at a minimum, requirements established in 42 CFR part 493. These requirements must be met for any laboratory service offered by a VA medical facility, as well as contracted laboratory services performed on site at VA laboratories, outreach clinics, or testing sites. Provisions that are specific to oversight by state licensure programs are not applicable, since VA as a federal entity is not subject to state licensing requirements. Except as noted in the proposed rule, functions and responsibilities assigned to CMS in 42 CFR part 493 are assumed by VA with respect to laboratories operated by or on behalf of VA.

Part 493 subpart A covers general provisions. We propose that all provisions of subpart A would apply to VA with several exceptions intended to reflect that VA has the authority, responsibility, and duty to administer 42 CFR part 493 standards within VA. We state that functions assigned to HHS in this subpart would be performed by VA. This is consistent with an IAA previously entered into between VA and CMS. The regulation would set forth that the respective provisions of 42 CFR part 493 apply to VA laboratories performing waived, moderate, and high complexity tests.

Subparts B through D address certificates issued by CMS. Subpart B focuses on Certificates of Waiver. Subpart C addresses Registration Certificates, Certificates for PPM procedures, and Certificates of Compliance. PPM procedures are a select group of moderately complex microscopy tests commonly performed by specific health care providers during patient office visits. Tests included in PPM procedures do not meet the criteria for waiver because they are not simple procedures; they require training and specific skills for test performance. Subpart D focuses on Certificates of Accreditation. These subparts establish standards for CMS-issuance of the listed certificates as well as fees that must be remitted to CMS by regulated laboratories in order to apply for and receive certification. We state that all provisions of these subparts would apply to VA laboratories, except that certificates issued by HHS under these subparts are instead issued by VA pursuant to the previously noted interagency agreement between CMS and VA. As certificates are issued by VA rather than CMS, CMS does not require remittance of a fee from laboratories for any certificate issued by VA under these subparts.

Subpart E addresses accreditation by a private, nonprofit accreditation organization or exemption under an approved State laboratory program. Under this subpart, a laboratory may meet individual VA and CLIA program requirements through accreditation by a CMS approved nonprofit accreditation organization (AO). The subpart establishes an application and approval process for an accreditation organization seeking to be granted deeming authority by CMS, as well as a process in which CMS may validate findings of an accreditation organization by reinspection of a laboratory following an inspection by that accreditation organization. CLIA has granted “deeming authority” to several accreditation organizations allowing them to accredit laboratories and inspect the laboratories. These accreditation organizations must impose organizations' requirements equal to or more stringent than those contained in 42 CFR part 493 at the condition level. The subpart also establishes standards for CLIA exemptions under an approved State laboratory program. All provisions would apply to VA, to the extent that this subpart addresses accreditation by a private, nonprofit accreditation organization. However, the provisions related to approved State laboratory program do not apply to VA.

The proposed rule states that VA would use only accreditation agencies with CMS-granted deeming authority to accredit VA laboratories. This is consistent with current, longstanding, VA practice. CMS has an established process for determining whether an accreditation organization should be granted deeming authority, and experience in making that determination. VA has determined that there is no need to duplicate that process and relying on CMS' approval of an accreditation organization ensures that VA would not reach any conclusions on deeming authority that are inconsistent with CMS.

A validation inspection is a quality control measure performed by CMS under Subpart E. It involves CMS reinspection of a laboratory that has recently been inspected by an accreditation organization with deeming authority, to validate that AO's survey findings. We state that validation inspections performed by CMS under subpart E would be performed instead by VA. This is consistent with current practice, and VA's authority under the 1991 Act to provide oversight and enforcement of the requirements set forth in 42 CFR part 493, as oversight and enforcement functions under this subpart as applied to VA laboratories are performed by VA.

General administration provisions related to 42 CFR part 493 are found at Subpart F. This subpart sets forth the methodology for determining the amount of fees for issuing the appropriate certificate, and for determining compliance with the applicable standards of the Public Health Service Act and the Federal validation of accredited laboratories. We state that provisions of Subpart F would not be applicable to VA, as CMS does not collect fees for certification of VA laboratories

Subpart H addresses participation in proficiency testing for laboratories performing nonwaived testing. Nonwaived testing is the term used by CMS to refer collectively to moderate and high complexity testing. We state that all provisions of this subpart would apply to VA, and VA employs scoring criteria under this subpart.

Subpart I focuses on the approval of proficiency testing programs. The proposed rule states that VA would rely on HHS to approve proficiency testing programs. VA would continue to use only HHS approved proficiency testing programs. HHS has an established process for proficiency testing program approval and experience in making that determination. VA has determined that there is no need to duplicate that process and relies on HHS program approvals.

Subpart J addresses facility administration for nonwaived testing, and sets standards for facility construction, transfusion services, and records retention. We state that all provisions of this subpart would apply to VA.

Subpart K focuses on quality systems for nonwaived testing. Under this subpart, each laboratory that performs nonwaived testing must establish and maintain written policies and procedures that implement and monitor a quality system for all phases of the total testing process (that is, preanalytic, analytic, and postanalytic) as well as general laboratory systems. Laboratory quality systems must include a quality assessment component that ensures continuous improvement of the laboratory's performance and services through ongoing monitoring that identifies, evaluates, and resolves problems. The laboratory's quality system must be appropriate for the specialties and subspecialties of testing that the laboratory performs, services it offers, and clients it serves. This subpart establishes requirements for different specialties and subspecialties of laboratory tests and VA would apply all established requirements.

Personnel requirements for performing non-waived testing are addressed in subpart M. All applicable personnel requirements would meet CLIA requirements with the exception of state-specific licensing requirements. Subpart M requires that certain personnel maintain a license in the state in which the laboratory is located. While VA health care providers must be licensed in a state, there is no requirement that the health care provider be licensed in the state where the VA facility at which the provider works is located. See, 38 U.S.C. 7402 (requiring licensure in any state for eligibility to an appointment as VHA health care provider regardless of VHA facility location).

Subpart Q establishes inspection requirements for all CLIA-certified and CLIA-exempt state laboratories. We state that all provisions would apply to VA, except that all enforcement and oversight functions that are assigned to HHS in this subpart are performed by VA.

Subpart R sets forth enforcement procedures, including the policies and procedures CMS uses to enforce CLIA requirements, as well as appeal rights of laboratories on which CMS imposes sanctions. We state that all provisions would apply to VA with the following exceptions. Suspension of the right to Medicare or Medicaid payments as an available sanction against VA laboratories is not applicable because VA laboratories do not participate in these programs. Enforcement and oversight functions would be performed by VA rather than HHS or CMS. VA is responsible for ensuring its laboratories comply with these CLIA requirements, and taking immediate action in the jeopardy to patients. See, Public Law 102-139, section 101; 42 CFR 493.1218. Due process protections afforded by CMS-certified laboratories facing sanctions would not apply to laboratories operating by or under contract with VA. If VA had a substantial testing issue with a non-VA CMS-certified laboratory, VA would notify CMS of that instant. Laboratories subject to this proposed rule are operated by VA or under contract with VA. Finally, we state that VA would not participate in laboratory registry under 42 CFR 493.1850. This is consistent with longstanding VA policy and practice. The laboratory registry operated by CMS under part 493 includes collection of data that is not applicable to VA. Examples include a list of laboratories that have been convicted, under Federal or State laws relating to fraud and abuse, false billing, or kickbacks; all appeals and hearing decisions; a list of laboratories against which CMS has sued under § 493.1846 and the reasons for those actions; and, a list of laboratories that have been excluded from participation in Medicare or Medicaid and the reasons for the exclusion. VA has made VA laboratory information available to the public in accordance with the Freedom of Information Act, 5 U.S.C. 552. VA believes this would provide the public with greater access to information than that found in the private sector.

Subpart T requires HHS to establish a Clinical Laboratory Improvement Advisory Committee (CLIAC) to advise and make recommendations on technical and scientific aspects of the provisions of part 493. The committee is managed by the Centers for Disease Control and Prevention (CDC), provides scientific and technical advice and guidance to HHS. The Committee includes diverse membership across laboratory specialties, professional roles, (laboratory management, technical, physicians, nurses) and practice settings (academic, clinical, public health), and includes a consumer representative. VA benefits from the diversity, broad knowledge, and expertise of government and non-government participants that make up CLIAC, because any issues addressed that result in changes to the part 493 regulations, then also become a requirement for VA. Since VA complies with part 493 regulations, VA ultimately benefits from revisions for improvement to standards initiated by CLIAC. CLIAC is governed by the Federal Advisory Committee Act (FACA), Public Law 92-463. FACA was enacted in 1972 to establish guidelines on federal advisory committee structures and operations. As VA does not have a similar FACA-level advisory committee, this subpart would not apply to VA.

The Code of Federal Regulations, as proposed to be revised by this proposed rulemaking, would represent the exclusive legal authority on this subject. No contrary rules or procedures would be authorized. All VA guidance would be read to conform with this proposed rulemaking if possible or, if not possible, such guidance would be superseded by this rulemaking.

This proposed rule contains no provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521).

The Secretary hereby certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. It would affect only the operations of VA medical facility laboratories. Therefore, pursuant to 5 U.S.C. 605(b), this rulemaking would be exempt from the initial and final regulatory flexibility analysis requirements of 5 U.S.C. 603 and 604.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 12866 (Regulatory Planning and Review) defines a “significant regulatory action,” requiring review by the Office of Management and Budget (OMB), unless OMB waives such review, as “any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.”

The economic, interagency, budgetary, legal, and policy implications of this proposed rule have been examined, and it has been determined to be a significant regulatory action under Executive Order 12866, because it raises novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order. VA's impact analysis can be found as a supporting document at http://www.regulations.gov, usually within 48 hours after the rulemaking document is published. Additionally, a copy of the rulemaking and its impact analysis are available on VA's website at http://www.va.gov/orpm/, by following the link for “VA Regulations Published From FY 2004 Through Fiscal Year to Date.” This proposed rule is not expected to be subject to the requirements of E.O. 13771 because this proposed rule is expected to result in no more than de minimis costs using a post-statutory baseline reflecting current practices within VA.

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. This proposed rule would have no such effect on State, local, and tribal governments, or on the private sector.

The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this document are 64.008—Veterans Domiciliary Care; 64.011—Veterans Dental Care; 64.029—Purchase Care Program; 64.033—VA Supportive Services for Veteran Families Program; 64.040—VA Inpatient Medicine; 64.041—VA Outpatient Specialty Care; 64.042—VA Inpatient Surgery; 64.043—VA Mental Health Residential; 64.044—VA Home Care; 64.045—VA Outpatient Ancillary Services; 64.046—VA Inpatient Psychiatry; 64.047—VA Primary Care; 64.048—VA Mental Health clinics; 64.049—VA Community Living Center; 64.050—VA Diagnostic Care; 64.054—Research and Development.

The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Gina S. Farrisee, Deputy Chief of Staff, Department of Veterans Affairs, approved this document on September 19, 2017, for publication.

For the reasons set forth in the preamble, VA proposes to amend 38 CFR part 17 as follows:

International Price and Service Adjustments

On October 10, 2018, the Postal Service filed a notice with the Postal Regulatory Commission in Docket No. R2019-1 of mailing services price adjustments, effective on January 27, 2019. The Postal Service proposes to revise Notice 123, Price List, available on Postal Explorer® at https://pe.usps.com, to reflect these new price changes. Proposed prices are or will be available under Docket Number R2019-1 on the Postal Regulatory Commission's website at www.prc.gov.

Over the course of time, country names have changed due to a variety of political or cultural reasons. In collaboration with International Postal Affairs and requests made through the UPU, the Postal Service is updating country names throughout mailing standards, changing Great Britain and Northern Ireland to United Kingdom of Great Britain and Northern Ireland and changing Swaziland to Eswatini.

This proposed rule also describes the price and classification changes and the corresponding mailing standards changes for the following market dominant international services:

We propose no increase in prices for single-piece FCMI letters, postcards, and flats. The price for a single-piece 1-ounce letter remains $1.15. The FCMI letter nonmachinable surcharge remains $0.21.

On October 10, 2018, the Postal Service filed a notice with the Postal Regulatory Commission in Docket No. MC2019-3. In this filing we propose a change in the maximum weight limit for First-Class Mail International (FCMI) large envelopes (flats) to 15.994 ounces, in lieu of the current 64 ounce limit. This change will more closely align the Postal Service's definition of FCMI large envelopes (flats) with the Universal Postal Union Convention's definition, which allows a maximum weight of 500 grams (17.6 ounces) for flat-shaped letter post items.

A mailpiece weighing 16 ounces or more that is presented as an FCM large envelope (flat) will be charged the applicable First-Class Package International Service® price. Alternatively, the mailer could elect to use another class of mail such as Priority Mail Express International® or Priority Mail International®, if the mailpiece meets the requirements for those mail classes.

The Postal Service proposes the following increase in fees for certain market dominant international extra services including:

• Certificate of Mailing.

• Registered Mail TM.

• Return Receipt.

• Customs Clearance and Delivery Fee.

• International Business Reply TM Mail Service.

Following the completion of Docket No. R2019-1, the Postal Service will adjust the prices for products and services covered by the IMM. These prices will be listed on Postal Explorer at https://pe.usps.com.

Accordingly, although exempt from the notice and comment requirements of the Administrative Procedure Act (5 U.S.C. 553(b), (c)) regarding proposed rulemaking by 39 U.S.C. 410(a), the Postal Service invites public comment on the following proposed changes to Mailing Standards of the United States Postal Service, International Mail Manual (IMM ®), which is incorporated by reference in the Code of Federal Regulations in accordance with 39 CFR 20.1, and to associated changes to Notice 123, Price List.

Proposed prices will be available under Docket No. R2019-1 on the PRC website at www.prc.gov.

The proposed rule includes changes to prices, mail classification updates, product simplification efforts, and a few minor revisions to the DMM.

Currently, Periodicals publishers who mail alternate addressed nonsubscriber-nonrequester copies receive and pay for manual address corrections or Address Correction Service (ACSTM). Undeliverable-as-addressed Periodicals do not receive forwarding service and are provided address-related notices via PS Form 3579, Notice of Undeliverable Periodical, or electronic ACS.

The Postal Service is proposing to introduce a specifically tailored Periodicals Service Type ID (STID) for publishers to include in the Intelligent Mail® barcode, (IMb®) along with authorized alternative addressing formats. If adopted, publishers will no longer receive address-related notices via PS Form 3579 or electronic ACS, if the address is vacant or not deliverable. Publications processed by the Postal Automated Redirection System, Computerized Forwarding System, or Remote Forwarding System will be discarded without notice to the publisher.

Currently, postage for basic and high volume Business Reply Mail (BRM) is based on the applicable retail “metered” letter price. This has resulted in basic and high volume BRM customers paying lower postage prices than QBRM customers.

The Postal Service is proposing to correct the anomaly by applying the retail “stamped” letter price to basic and high volume BRM. To offset the postage increase, basic and high volume BRM per piece fees are proposed to decrease from the current prices.

Currently, a picture permit imprint indicia may be used to pay postage and extra service fees on commercial mailings of full-service automation First-Class Mail® or USPS Marketing Mail® postcards, letters, or flats. Mailpieces bearing a picture permit imprint indicia must be prepared as IMb full-service automation mailings.

The Postal Service is proposing to eliminate the Full-Service requirement on commercial mailings of First-Class Mail or USPS Marketing Mail postcards, letters, or flats using picture permit imprint indicia.

Currently, shippers do not have an ACS option for receiving forwarding of small parcels.

The Postal Service is proposing to add a “small parcel” forwarding fee for USPS Marketing Mail parcels, similar to the USPS Marketing Mail letter-size and flat-size pieces forwarding fees. The forwarding fee would only apply for pieces endorsed “Change Service Requested” under “Option 2” (ACS only), that are forwarded due to an active change-of-address. All other undeliverable pieces will be discarded and an electronic ACS notice is provided in both cases.

As discussed in the August 29, 2018, Federal Register final rule (83 FR 43985-43986), the Postal Service is introducing a charge for items identified in the postal network that exceed the 70 pound weight limit for Postal Service products, and are therefore nonmailable. Overweight items identified in the postal network will be assessed a $100 charge payable before release of the item, unless the item is picked up at the same facility where it was entered.

Although exempt from the notice and comment requirements of the Administrative Procedure Act (5 U.S.C. 553(b), (c)) regarding proposed rulemaking by 39 U.S.C. 410(a), the Postal Service invites public comments on the following proposed revisions to Mailing Standards of the United States Postal Service, Domestic Mail Manual (DMM), incorporated by reference in the Code of Federal Regulations. See 39 CFR 111.1.

Accordingly, 39 CFR part 111 is proposed to be amended as follows:

Table of Contents for Preamble I. Public Participation and Request for Comments II. Abbreviations III. Executive Summary IV. Basis and Purpose V. Background VI. Discussion of Proposed Methodological and Other Changes VII. Discussion of Proposed Rate Adjustment A. Step 1: Recognition of Operating Expenses B. Step 2: Projection of Operating Expenses C. Step 3: Estimate Number of Working Pilots D. Step 4: Determine Target Pilot Compensation E. Step 5: Calculate Working Capital Fund F. Step 6: Calculate Revenue Needed G. Step 7: Calculate Initial Base Rates H. Step 8: Calculate Weighting Factors by Area I. Step 9: Calculate Revised Base Rates J. Step 10: Review and Finalize Rates K. Surcharges VIII. Regulatory Analyses A. Regulatory Planning and Review B. Small Entities C. Assistance for Small Entities D. Collection of Information E. Federalism F. Unfunded Mandates Reform Act G. Taking of Private Property H. Civil Justice Reform I. Protection of Children J. Indian Tribal Governments K. Energy Effects L. Technical Standards M. Environment I. Public Participation and Request for Comments

The Coast Guard views public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

We encourage you to submit comments through the Federal eRulemaking Portal at https://www.regulations.gov. If your material cannot be submitted using https://www.regulations.gov, contact the person in the FOR FURTHER INFORMATION CONTACT section of this proposed rule for alternate instructions. Documents mentioned in this proposed rule, and all public comments, are available in our online docket at https://www.regulations.gov, and can be viewed by following that website's instructions. Additionally, if you visit the online docket and sign up for email alerts, you will be notified when comments are posted or a final rule is published.

We accept anonymous comments. All comments received will be posted without change to https://www.regulations.gov and will include any personal information you have provided. For more about privacy and the docket, visit https://www.regulations.gov/privacyNotice.

We do not plan to hold a public meeting, but we will consider doing so if public comments indicate a meeting would be helpful. We would issue a separate Federal Register notice to announce the date, time, and location of such a meeting.

Pursuant to the Great Lakes Pilotage Act of 1960 (“the Act”),1 the Coast Guard regulates pilotage for oceangoing vessels on the Great Lakes—including setting the rates for pilotage services and adjusting them on an annual basis. The rates, which currently range from $271 to $653 per pilot hour (depending on the specific area where pilotage service is provided), are paid by shippers to pilot associations. The three pilot associations, which are the exclusive U.S. source of registered pilots on the Great Lakes, use this revenue to cover operating expenses, maintain infrastructure, compensate working pilots, and train new pilots. We use a ratemaking methodology that we have developed since 2016 in accordance with our statutory requirements and regulations. Our ratemaking methodology calculates the revenue needed for each pilotage association (including operating expenses, compensation, and infrastructure needs), and then divides that amount by the expected shipping traffic over the course of the year to produce an hourly rate. This process is currently effected through a 10-step methodology and supplemented with surcharges, which are explained in detail in this notice of proposed rulemaking (NPRM).

In this NPRM, we are proposing new pilotage rates for 2019 based on the existing methodology. As part of our annual review, we are proposing in this NPRM new rates for the 2019 shipping season. Based on the ratemaking model discussed in this NPRM, we are proposing the rates shown in table 1. The result is an increase in rates, due to adjustment for inflation and the addition of two pilots.

This proposed rule is not economically significant under Executive Order 12866. This proposed rule would impact 51 U.S. Great Lakes pilots, 3 pilot associations, and the owners and operators of an average of 256 oceangoing vessels that transit the Great Lakes annually. The estimated overall annual regulatory economic impact of this rate change is a net increase of $2,066,143 in payments made by shippers from the 2018 shipping season. Because we must review, and, if necessary, adjust rates each year, we analyze these as single year costs and do not annualize them over 10 years. This rule does not affect the Coast Guard's budget or increase Federal spending. Section VIII of this preamble provides the regulatory impact analyses of this proposed rule.

The legal basis of this rulemaking is the Great Lakes Pilotage Act of 1960 (“the Act”),2 which requires U.S. vessels operating “on register” and foreign vessels to use U.S. or Canadian registered pilots while transiting the U.S. waters of the St. Lawrence Seaway and the Great Lakes system.3 For the U.S. registered Great Lakes pilots (“pilots”), the Act 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.” 4 The Act requires that rates be established or reviewed and adjusted each year, not later than March 1. The Act requires that base rates be established by a full ratemaking at least once every 5 years, and in years when base rates are not established, they must be reviewed and, if necessary, adjusted. The Secretary's duties and authority under the Act have been delegated to the Coast Guard.5

The purpose of this NPRM is to propose new pilotage rates and surcharges for the 2019 shipping season. The Coast Guard believes that the new rates would promote pilot retention, ensure safe, efficient, and reliable pilotage services on the Great Lakes, and provide adequate funds to upgrade and maintain infrastructure.

Pursuant to the Great Lakes Pilotage Act of 1960, the Coast Guard, in conjunction with the Canadian Great Lakes Pilotage Authority, regulates shipping practices and rates on the Great Lakes. Under the Coast Guard regulations, all vessels engaged in foreign trade (often referred to as “salties”) are required to engage U.S. or Canadian pilots during their transit through the regulated waters.6 United States and Canadian “lakers,” which account for most commercial shipping on the Great Lakes, are not affected.7 Generally, vessels are assigned a U.S. or Canadian pilot depending on the order in which they transit a particular area of the Great Lakes and do not choose the pilot they receive. If a vessel is assigned a U.S. pilot, that pilot will be assigned by the pilotage association responsible for the particular district in which the vessel is operating, and the vessel operator will pay the pilotage association for the pilotage services.

The U.S. waters of the Great Lakes and the St. Lawrence Seaway are divided into three pilotage districts. Pilotage in each district is provided by an association certified by the Coast Guard's Director of the Great Lakes Pilotage (“the Director”) to operate a pilotage pool. The Saint Lawrence Seaway Pilotage Association provides pilotage services in District One, which includes all U.S. waters of the St. Lawrence River and Lake Ontario. The Lakes Pilotage Association provides pilotage services in District Two, which includes all U.S. waters of Lake Erie, the Detroit River, Lake St. Clair, and the St. Clair River. Finally, the Western Great Lakes Pilotage Association provides pilotage services in District Three, which includes all U.S. waters of the St. Mary's River; Sault Ste. Marie Locks; and Lakes Huron, Michigan, and Superior.

Each pilotage district is further divided into “designated” and “undesignated” areas. Designated areas are classified as such by Presidential Proclamation 8 to be waters in which pilots must, at all times, be fully engaged in the navigation of vessels in their charge. Undesignated areas, on the other hand, are open bodies of water, and thus are not subject to the same pilotage requirements. While working in those undesignated areas, pilots must “be on board and available to direct the navigation of the vessel at the discretion of and subject to the customary authority of the master.” 9 For pilotage purposes, rates in designated areas are significantly higher than those in undesignated areas for these reasons.