# Regulatory Assessment

**The Ammonium Nitrate Security Program** 

**Notice of Proposed Rulemaking**

**DHS**

**- 200**  **8**

**- 0076** 

**J uly 1**  **, 2011**

**U.S. Department of Homeland Security**

### 2 

## Acronyms

AN Ammonium Nitrate

ANFO Ammonium Nitrate Fuel Oil explosives

ANPRM Advanced Notice of Proposed Rulemaking

ATF Bureau of Alcohol, Tobacco, Firearms, and Explosives

CFATS Chemical Facility Anti

- Terrorism Standards

CSAT Chemical Security Assessment Tool

DOJ Department of Justice

DOT Department of Transportation

FAST Free and Secure Trade

HME Hazardous Materials Endorsement

IED Improvised Explosive Device

IME Institute of Makers of Explosives

IRFA Initial Regulatory Flexibility Analysis

NAICS North American Industrial Classification System

NPRM Notice of Proposed Rulemaking

POC Point of Contact

RFA Regulatory Flexibility Act

SBA Small Business Administration

TSDB Terrorist Screening Database

TWIC Transportation Workers Identificatio n Credential

UMRA Unfunded Mandates Reform Act

4 USDA U.S. Department of Agriculture

VSL Value of Statistical Life

### 3 

## Contents

1. Executive Summary

................................ ................................ ................................ .................... 8

2. OMB Accounting Statement

................................ ................................ ................................ ..... 10

3. Benefits of the Amm onium Nitrate Security Program

................................ ............................. 11

4. NPRM Description

................................ ................................ ................................ .................... 20

5. Period of Analysis

................................ ................................ ................................ ..................... 23

6. Estimates of Regulated Population

................................ ................................ ........................... 23

Mixtures

................................ ................................ ................................ ................................ .... 25

Purchaser

................................ ................................ ................................ ................................ .. 26

Agents

................................ ................................ ................................ ................................ ........ 26

Sellers

................................ ................................ ................................ ................................ ........ 26

7. Registration of AN Sellers and AN Purchasers

................................ ................................ ........ 31

Appeals

................................ ................................ ................................ ................................ ...... 41

8. Point of Sale Activities

................................ ................................ ................................ ............. 44

Veri fication of AN Purchaser’s Identity

................................ ................................ ................... 46

Verification of AN Purchaser’s Registered User Number

................................ ........................ 46

Purchaser Verification Portal

................................ ................................ ................................ 47

Purchaser Verification Call Center

................................ ................................ ....................... 48

Purchaser Verification Portal and Call Center

................................ ................................ ...... 49

Visual Check of Photo ID

................................ ................................ ................................ ......... 49

Creation of the Transaction Record

................................ ................................ ......................... 49

Agent Verification

................................ ................................ ................................ ..................... 54

Opportunity Co st

................................ ................................ ................................ ....................... 59

9. Recordkeeping

................................ ................................ ................................ .......................... 60

10. Reporting Theft and/or Loss

................................ ................................ ................................ ... 67

11. Audits and Inspections

................................ ................................ ................................ ............ 71

12. Federal Costs

................................ ................................ ................................ ........................... 73

13. Total Costs

................................ ................................ ................................ .............................. 77

14. Initial Regulatory Flexibility Analysis

................................ ................................ .................... 80

Section 1: Reasons for and Objectives of the Proposed Rule

................................ ................... 81

Section 2: Affected Small Business Population and Estimated Impact of Compliance

............ 81

Number of Small Entiti es that may be AN Purchasers

................................ ............................. 82

### 4 Number of Small Entities that may be AN Sellers

................................ ................................ ..... 85

Alternatives Considered

................................ ................................ ................................ ............ 87

Average Costs per Facility

................................ ................................ ................................ ........ 98

Identification of Duplication, Overlap and Conflict with Other Federal Rules

..................... 101

15. International Trade Impact Assessment

................................ ................................ ................ 101

16. Unfunded Mandates Reform Act (UMRA)

................................ ................................ .......... 102

Appendix A

– Population Estimates

................................ ................................ ........................... 104

Appendix B

– Wage Rates

................................ ................................ ................................ .......... 107

Appendix C

– Computer and Internet Access on US Farms

................................ ...................... 111

### 5 Table 1. Summary of Estimated Total Costs ($ millions)

................................ .............................. 9 Table 2. Summary of Estimated Annualized Costs ($ millions)

................................ .................... 9

Table 3. Estimated 10

- year Cost by Program Element ($ millions)

................................ ............... 9

Table 4. OMB Accounting Statement of Annualized Costs and Benefits (Program Years 1

- 10) 10

Table 5. C ost Valuation of an Attack Based upon 1995 Murrah Federal Building Attack (Primary

VSL Estimate; All $ millions)

................................ ................................ ................................ ...... 17

Table 6. Cost Valuation of an Attack Based upon 1995 Murrah Federal Building Attack (Lower

VSL Estimate; All $ millions)

................................ ................................ ................................ ...... 18

Table 7. Cost Valuatio n of an Attack Based upon 1995 Murrah Federal Building Attack (High

VSL Estimate; All $ millions)

................................ ................................ ................................ ...... 19

Table 8. Frequency of Attacks Averted for AN Security Costs to Equal Expected Benefits ($

millions; Frequency years)

................................ ................................ ................................ ............ 20

Table 9. AN Purchasers

................................ ................................ ................................ ................ 30

Table 10. AN Sellers

................................ ................................ ................................ ..................... 31

Table 11. Cost of Registration Activities for AN Purchasers

– Low Population Estimate*

........ 34

Table 12. Cost of Registration Activities for AN Purchasers

– High Population Estimate*

........ 36

Table 13. Cost of Pre

- Registering Agents

– Low Population Estimate*

................................ ...... 36

Table 14. Cost of Pre

- Registering Agents

– High Population Estimate

................................ ....... 37

Table 15. Cost of Registration Activities for AN Sellers

– Low Population Estimate*

............... 38

Table 16. Cost of Registration Activities for AN Sellers

– High Population Estimate

................ 38

Table 17. Summary Cost of Registration Activities

– Initial Year, Low Population Estimate

.... 39

Table 18. Summary Cost of Registration Activities

– Initial Year, High Population Estimate

... 39

Table 19 . Assumptions Regarding Growth in Registrations

................................ ........................ 40

Table 20. Total Registration Activity Costs by Program Year

................................ ..................... 40

Table 21. Cost of Appeals for AN Purchasers

– Initial Year, Low Population Estimate*

............ 42

Table 22. Cost of Appeals for AN Purchasers

– Initial Year, High Population Estimate*

........... 42

Table 23. Cost of Appeals for AN Sellers

– Initial Year, Low Population Estimate*

.................. 43

Table 24. Cost of Appeals for AN Sellers

– Initial Year, High Population Estimate*

.................. 43

Table 25. Cost of Appeals by Program Year

................................ ................................ ................ 44

Table 26. Physical Costs for Web Portal

- Based Point of Sale Activities

– Low Population

Estimate

................................ ................................ ................................ ................................ ......... 50

Table 27. Physical Costs for Web Portal

- Based Point of Sale Activities

– High Population

Estimate

................................ ................................ ................................ ................................ ......... 51

Table 28. Web Portal

- based Seller Transaction and Labor Cost by Industry, Low Population

(First Year)

................................ ................................ ................................ ................................ .... 51

Table 29. Web Portal

- based Seller Transaction and Labor Cost by Industry,

.............................. 52

Table 30.Call Center

- Based Transactions for Point of Sale Activities (Hours Spent)

................. 53

Table 31. Labor Costs for Call Center

- Based Point of Sale Activities

– Low Population Estimate

................................ ................................ ................................ ................................ ....................... 53

Table 32. Labor Costs for Call Center

- Based Point of Sale Activities

– High Population Estimate

................................ ................................ ................................ ................................ ....................... 54

Table 33. Labor Costs for Agent Verification

– Low Population Estimate*

................................ 55

Table 34. Labor Costs for Agent Verification

– High Population Estimate*

............................... 56

Table 35. Total Costs for Web Portal

- Based Point of Sale Activities by Program Yea r

– Low Population Estimate ($)

................................ ................................ ................................ ................. 57

### 6 Table 36. Total Costs for Web Portal

- Based Point of Sale Activities by Program Year

– High

Popula tion Estimate ($)

................................ ................................ ................................ ................. 58

Table 37. Total Costs for Call Center

- Based Point of Sale Activities by Program Year

– Low

Population Estimat e ($)

................................ ................................ ................................ ................. 58

Table 38. Total Costs for Call Center

- Based Point of Sale Activities by Program Year

– High
Population Estimate ($)

................................ ................................ ................................ ................. 58

Table 39. Point of Sale Opportunity Costs (First Year Detail and Yrs 1

- 10)

.............................. 59

Table 40. Physical Costs for Paper

- Based Recordkeeping

– Low Population Estimate

.............. 61

Table 41. Physical Costs for Paper

- Based Recordkeeping

– High Population Estimate

.............. 62

Table 42. Labor Costs for Paper

- Based Recordkeeping

– Low Population Estimate

.................. 62

Table 43. Labor Costs for Paper

- Based Recordkeeping

– High Population Estimate

.................. 63

Table 44. Total Costs for Paper

- Based Recordkeeping

– Low Population Estimate

................... 63

Table 45. Total Costs for Paper

- Based Recordkeeping

– High Population Estimate

................... 64

Table 46. Physical Costs for Electronic

- Based Recordkeeping

– Low Population Estimate

....... 64

Table 47. Physical Costs for Electronic

- Based Recordkeeping

– High Population Estimate

...... 65

Table 48. Labor Costs for Electronic

- Based Recordkeeping

– Low Population Estimate

........... 65

Table 49. Labor Costs for Electronic

- Based Recordkeeping

– High Population Estimate

.......... 66

Table 50. Total Costs for Electronic

- Based Recordkeeping

– Low Population Estimate

............ 66

Table 51. Total Costs for Electronic

- Based Recordkeeping

– High Populati on Estimate

........... 67

Table 52. Estimated Number of Theft/Loss Reports Generated

................................ ................... 69

Table 53. Costs for Reporting Theft and Loss

– Low Population Estimate

................................ . 69

Table 54. Costs for Reporting Theft and Loss

– High Population Estimate

................................ . 70

Table 55. Annual Costs for R eporting Theft and Loss

................................ ................................ . 70

Table 56. Cost of Audits/Inspections

– Low Population Estimate

................................ ............... 72

Table 57. Cost of Audits/Inspections

– High Population Estimate

................................ .............. 73

Table 58. Cost of Inspections/Audits

................................ ................................ ............................ 73

Table 59. Federal Costs System and Support, Fixed Level, All Populations

.............................. 75

Table 60. Federal Costs System and Support, Fixed Level, All Populations (cont’d)

................ 75

Table 61.Federal Vetting and Total Costs, Low Population Scenario

................................ .......... 75

Table 62. Federal Vetting and Total Costs, High Population Scenario

................................ ........ 76

Table 63.Federal Vetting and Total Costs, Mean Population Scenario

................................ ........ 76 Table 64. . Summary of Costs (Undiscounted $ millions)

– Low Population/Low Transactions

E stimate

................................ ................................ ................................ ................................ ......... 77 Table 66. Summary of Costs (Undiscounted $ millions)

– High Population/High Transactions

Estimate

................................ ................................ ................................ ................................ ......... 78
Table 70. Summary of Costs (3 percent discount rate, $ millions)

– Low Population/Low

Transactions Estimate

................................ ................................ ................................ ................... 79 Table 71. Summary of Costs (3 percent discount rate, $ millions)

– Primary Estimate (mean of

High and Low)

................................ ................................ ................................ .............................. 79 Table 72. Summary of Costs (3 percent discount rate, $ millions)

– High Population/High

Transactions Estimate

................................ ................................ ................................ ................... 80

Table 73. Number of U.S. Farms by the Market Value of Agricultural Products Sold (2007)

.... 83

Table 74. Primary NAICS Codes, Descriptions and Definitions for Small Entities that May Be

AN Purchasers (Employee Size)*

................................ ................................ ................................ . 83

Table 75. Primary NAICS Codes, Descriptions and Definitions for Small Entities that May Be

AN Purchasers (Sales Size)*

................................ ................................ ................................ ........ 85

### 7 Table 76. Primary NAICS Codes, Descriptions and Definitions for Small Entities that May Be

AN Sellers (Employee Size)*

................................ ................................ ................................ ....... 86

Table 77. Primary NAICS Codes, Descriptions and Definitions for Small Entities that May Be

AN Sellers (Sales Size)*

................................ ................................ ................................ ............... 87

Table 78. Differences between alternatives costs

................................ ................................ ......... 90

Table 79. Point of Sale Average Cost Summary*

................................ ................................ ........ 91

Table 80. Average Cost per AN Purchaser

- Low Population/Low Transactions *

.................... 99

Table 81. .Average Cost per AN Purchaser

- High Population/High Transactions *

................. 100

Table 82. . Average Cost per AN Seller Facility

- Low Population/Low Transactions Estimate*

................................ ................................ ................................ ................................ ..................... 100

Table 83. Average Cost per AN Facility

- High Population/High Transactions Estimate

......... 101

Table 84 . Hourly Wage Rates at 50 th 

### Percentile (median) ($/hour)

................................ .......... 108

Table 85. Total Compensation/Wage and Salary M ultiplier

................................ ...................... 108

Table 86. Loaded Wage Rates at 50 th 

### Percentile (Hourly wage rate * multiplier) ($/hour)

....... 109

Table 87, Calculation of Population Weighted Average Fully loaded Rate for Opportunity cost

for purchasers; Low Population

................................ ................................ ................................ .. 109

Table 88, Calculation of Population Weighted Average Fully loaded Rate for Opportunity cost

for purchasers; High Population

................................ ................................ ................................ . 110

Table 89. Computer and Internet Access for Top 15 A mmonium Nitrate Consuming States, 2007

................................ ................................ ................................ ................................ ..................... 112

### 8 

## 1. Executive Summary

After the catastrophic terrorist attack in Oklahoma City in April 1995, in which ammonium

nitrate was used in the bomb that killed 168 people and injured nearly 60 0 more, industry

practices regarding the sale and transfer of ammonium nitrate have become increasingly

more secure. However, in the interest of national security, Congress has directed the

Department of Homeland Security (DHS or the Department) to promulgate regulations to

protect the public from the misuse of ammonium nitrate in an act of terrorism

.

As a result, the Department proposes the Ammonium Nitrate Security Program , which is

outlined in the Notice of Proposed Rulemaking ( NPRM ). The program seeks to reduce the

likelihood of a terrorist attack involving misused ammonium nitrate.

Broadly speaking, this proposed rule creates a registration program for purchasers and

sellers of ammonium nitrate. Each purchaser and seller will be required to app ly for an

A mmonium N itrate ( AN ) Registered User Number with the Department

. Suitability for

registration will be based on a comparison of the applicant against the Terrorist Screening

D atabase (TSDB). Transactions involving the sale or transfer of ammonium nitrate will be

regulated at the point of sale and procedures for reporting a theft or loss of ammonium

nitrate will be established. Sellers of ammonium nitrate will be required to deny sale or

transfer of ammonium nitrate to individuals who do not posses s a valid AN Registered User

Number accompanied by a valid photo ID. Businesses will be required to keep records of all

ammonium nitrate transactions for two years.

The Department estimates the number of persons and entities that purchase ammonium

nitrat e to range from 64,950 to 106,200. These p urchasers include farms, fertilizer mixers,

farm supply wholesalers and cooperatives ( co

- ops ) , golf courses, landscaping services,

explosives distributors, mines, retail garden centers and lab supply wholesalers. T he

Department estimates the number of persons and entities that sell ammonium nitrate to be

between 2,486 and 6,236 , many of which are also p urchasers. These s ellers include

ammonium nitrate fertilizer and explosive manufacturers, fertilizer mixers, farm s upply

wholesalers and co

- ops , retail garden center s , explosives distributors, fertilizer applicator

services, and lab supply wholesalers. Individuals or firms that provide transportation

services within the distribution chain may be categorized as sellers , agents, or facilities

depending upon their business relationship with the other parties to the transaction. The

total number of potentially regulated farms and other businesses ranges from 6 4

, 9 86 to

10 6 ,236 (including overlap between the categories).

### 9 The cost of this proposed rule ranges from $ 30 0 million to $ 1,04 1 million over 10 years at a

7% discount rate. The primary estimate is the mean which is $ 670.6 million. For

comparison, at a 3% discount rate, the cost of the program ranges from $ 364 million to

$1. 3 billion with a primary (mean) estimate of $ 814 m illion. The average annualized cost

for the program ranges from $ 43 million to $ 14 8 million (with a mean of $ 96 million), also

employing a 7% discount rate. Tables 1 and 2 present the summary discount ed total and

annualized costs for the rule.

**Table 1** 

**. Summary of Estimated Total Costs ($ millions)** 

10 year/

Discount Rate Primary estimate Low population

estimate High population

estimate

10 year , 7% 670.6 300.2 1,041.0

10 year, 3% 814.0 364.2 1,263.7



### Table **2**

**. Summary of Estimated Annualized Costs ($ millions)** 

Primary estimate Low population

estimate High population

estimate

10 year , 7% 95.5 42.7 148.2

10 year, 3% 95.4 42.7 148.1



### The largest cost component of the proposed rule is related to the point of sale. Depending

on scenario (low population/low transactions vs. high population/high transactions), point

of sale activities account for 55 % to 80 % of the total program cost. This is followed by

registration activities, federal costs, recordkeeping, inspections/audits, and reporting

theft/loss. Table 3 presents the estimated 10

- year cost by program element.

**Table 3** 

**. Estimated**  **10**

**- year Cost by Program El**  **ement ($ millions)** 

Registration Appeals Point of

Sale Reco rd

keeping Reporting

Theft/

Loss Audits/

Inspcts

. Federal

Costs Total Cost

7% Discounted

-

Low

– 56.2 0.2 166.0 21.4 0.1 1.8 54.6 300.2

7% Discounted

-
High

– 86.3 0.4 841.6 52.2 0.1 4.4 56.0 1,041.0

3% Discounted

-

Low

– 68.5 0.3 201.5 25.9 0.1 2.1 65.9 364.2

3% Discounted

-
High

– 105.1 0.5 1,022.0 63.1 0.2 5.3 67.6 1,263.7

### 10 DHS conducted a break

- even analysis that examines the required reduction in the potential

frequency of an attack. The proposed rule is cost effective if the result is a reduction in the

event frequency by at least one event t he size of the Oklahoma City bo mbing per 14 years.



## 2. OMB Accounting Statement

As required by OMB Circular A

- 4, the Department has prepared an accounting statement

showing the classification of the costs and benefits associated with this rule. Table 4

provides an estimate of the dollar amount of these costs and benefits expressed in 2009

dollars, at three percent and seven percent discount rates. The Department estimates the

cost of this rule will be approximately $ 95.5 million annualized at the 7 perc ent discount

rate and $ 95.4 million annualized at the 3 percent discount rate. Non

- quantified benefits

are reduced vulnerability.

**Table 4** 

**. OMB Accounting Statement of Annualized Costs and Benefits (**  **Program Years 1**

**- 10**  **)**

3% discount rate 7% discount rate

Primary

Estimate Minimum

Estimate Maximum

Estimate Primary

Estimate Minimum

Estimate Maximum

Estimate

COSTS

Annualized monetized costs $ 95.4

million $ 4 2.7

million $ 1 48.1

million $ 9 5.5

million $ 4 2.7 milli

on $ 14 8.2

million

Annualized quantified, but un

monetized costs None None

Qualitative (un

- quantified) costs None None

BENEFITS

Annualized monetized benefits None None

Annualized quantified, but un

monetized benefits None None

Qualitative (un

- quantified) benefits Reduced vulnerability to terrorist

attack using ammonium nitrate Reduced vulnerability to terrorist

attack using ammonium nitrate

### 11 

## 3. Benefits of the Ammonium Nitrate Security P rogram

“The April 19, 1995, bombing of the Alfred P. Murrah Federal Building (Murrah Building) in

Oklahoma City sent shock waves throughout America. The bombing took its toll in human

life and property damage and changed the community's and the Nation's general sense of

safety and security. The explosion rocked downtown Oklahoma City, reduced the north face

of the Murrah Building to rubble, and dealt extensive damage to each of the nine floors as

they collapsed into the center, pancaking one on top of the other. When the dust cleared,

one

- third of the buil ding lay in ruins. The force of the blast damaged 324 surrounding

buildings, overturned automobiles, touched off car fires, and blew out windows and doors

in a 50

- block area. News reports indicated the explosion was felt 55 miles from the site and

register ed 6.0 on the Richter scale.” 1 

### “The bomb damaged 312 buildings in Oklahoma City.

Thirty buildings were heavily damaged and approximately 16 have since been torn down.

Twenty blocks of downtown [Oklahoma City] had to be cordoned off due to the bomb’s

extent .” 2 

### “At the close of the response, over 6,800 volunteers had worked on the job.” 3



### “ Within days after a terrorist bomb destroyed [ the ] Murrah Federal Building and took 168

lives in Oklahoma City, on April 19, 1995, [ the Federal government ] embarked upon a

program that has significantly upgraded security in the facilities under our control. Since

that awful day, [ the Federal government has ] :

**•** Supervised the placement of nearly 8,000 security countermeasures

recommended by lay committees in F ederal buildings;

**•** Nearly doubled the size of our uniformed Federal Protective Service

Officers, from 376 officers to a planned strength of 724 (with all but 52

actually on board);

1 Data comes from multiple s ources and is a djusted to $ 2010 using a 42.3% increase in the Consumer Price

Index (all items) between 1995 and 2010(Bureau of Labor Statistics, http://data.bls.gov/cgi

- bin/cpicalc.pl ).

For various discussions of inj uries and costs see:

"Physical Injuries and Fatalities Resulting From the Oklahoma City Bombing.” JAMA, August 7, 1996

Sue Mallonee, RN, MPH; Sheryll Shariat, MPH; Gail Stennies, MD, MPH; Rick Waxweiler, PhD;

David Hogan, DO; Fred Jordan, MD, pp 382

- 387av ailable at:

http://jama.ama

- assn.org/cgi/reprint/276/5/382 ; estimates of injuries differ by source. DHS used the detailed

JA MA article as it was based on survey and interview data and has thorough documentation. 167 individuals

were killed by the explosion and 1 additional death of an emergency worker occurred during the rescue and

recovery operation.

“Responding to Terrorism V ictims: Oklahoma City and Beyond,” U.S. Department of Justice, Office of Justice

Programs, Office for Victims of Crime, October 2000, available at

http://www.ojp.usd oj.gov/ovc/publications/infores/respterrorism/welcome.html

2 National Park Service OKC FAQs available at http://www.nps.gov/okci/faqs.htm

3 The Oklahoma Department of Civil Emergency Management After Action R eport: Alfred P. Murrah Federal

Building Bombing, 19 April 1995 in Oklahoma City, Oklahoma. Available at

http://www.ok.gov/OEM/documents/Bombing%20After%20Action%20Report.p df

### 12 **•** More than doubled the number of contracted guards in Federal work

locations, from 2,300 to more than 5,000;

**•** Enhanced intelligence

- sharing with other Federal law enforcement

agencies; and, revised our policies to provide more protected sites for

many new buildings and to discourage co

- locating low

- risk agencies with

higher

- risk one s ;

**•** The Federal government ha s redirected training and duties of our

security force and issued revised design criteria for new and renovated

Federal buildings ;

**•** All this comes at a cost, of course. The [Building Security Committee]

countermeasures, which in clude large numbers of security screening and

surveillance devices and additional personnel to monitor them, have

come at a capital cost of $148 million, and with additional operating costs

totaling $249 million, for a cost of $397 million since 1995. Virt ually all of

this cost has been funded through the Federal Buildings Fund, except for

a small supplemental appropriation in fiscal year 1995. ” 4



### While the attack in Oklahoma City marks the most significant, successful terrorist attack

using ammonium nitrate in the United States, for 30 years or more, ammonium nitrate has

been used successfully in terrorist attacks throughout the world. For instance, t he

Provisional Irish Republica n Army also used ammonium nitrate as part of its London

bombing campaign in the early 1980s. 5 

### More recently, ammonium nitrate was used in the

1998 East African embassy truck bombings, killing hundreds and injuring thousands at the

U.S. embassies in Dar es Salaam, Tanzania, and Nairobi, Kenya. 6 

### Ammonium nitrate was

also used in a November 2003 series of truck bombings in Turkey, killing over 50

individuals and injuring an additional 700 individuals at multiple locations across

Istanbul. 7 

### Additionally, since the events of 9/11, stores of ammonium nitrate have been

confiscated during raids on terrorist sites around the world, including raids on sites in

Canada

, 8 

### England

, 9 

### India

, 10 

### and the Philippines. 11

4 Security In Federal Buildings, Statement Of Robert A. Peck, Commissioner , Public Buildings Service, General

Services Administration, Before The Subcommittee On Public Buildings And Economic Development,

Committee On Transportation And Infrastructure United States House Of Representatives, June 4, 1998. As

Retrieved From the Web on 03/18/2010.

http://www.gsa.gov/portal/gsa/ep/contentview.do?conten ttype=gsa_basic&contentid=11807&noc=t

5 http://www.encyclopedia.com/doc/1P2

- 834282.html

6 http://www.justice.gov/opa/pr/2009/May/09

- ag

- 496.html

7 http://www.cbsnews.com/stories/2004/04/14/world/main611898.shtml

8 http://threatswatch.org/inbrief/2006/06/canada

- raid

- breaks

- cell

- 3

- tons/

9 http://news.bbc.co.uk/2/hi/uk_news/3582921.stm

10 http://www.zeenews.com/news605486.html

11 US Department of State Office of the Coordinator for Counterterrorism Country Reports on Terrorism 2005 , pg

78

### 13 By securing the nation’s supply of ammonium nitrate, it wil l be much more difficult for

terrorists to obtain ammonium nitrate materials for use in improvised explosive devices

(IEDs). As a result, there is a direct value in the deterrence of a catastrophic terrorist attack

using ammonium nitrate.

There are severa l key benefits of this proposed rule.

**•** This proposed rule will standardize and build upon successful industry “know

your customer” initiatives and state regulations to prevent the misappropriation

or use of ammonium nitrate in a terrorist attack.

**•** This proposed rule will provide timely, accurate vett ing of persons wishing to

possess or transfer ammonium nitrate. By requiring individuals to be vett ed

against the TSDB, known and suspected terrorists would be denied an AN

Registered User Number.

**•** This propo sed rule will allow AN Sellers to identify non

- authorized persons and

requires them to deny sale or transfer of ammonium nitrate to these persons. By

complying with the point of sale requirements to verify the accuracy and

currency of a potential purchaser ’s AN Registered User Number and an

inspection of his/her photo ID, AN Sellers will have the knowledge to allow or

deny sale or transfer of ammonium nitrate.

**•** This proposed rule will eliminate gaps in Federal oversight of ammonium nitrate

supplies used in e xplosives manufacturing.

To understand the cost

- benefit relationship, costs and benefits of reducing the risk of a

terrorist attack must first be quantified. The benefit of reducing risk of a terrorist attack is

comprised of two components: the increment al risk reduction and the value of such a

reduction. The incremental risk reduction is estimated in terms of casualties, property

damage, and other non

- monetary impacts resulting from the implementation of the

proposed rule. Casualty and other non

- monetary impacts are then translated into

monetary terms via one of several widely accepted valuation methods, such as willingness

to pay.

Ideally, the quantification and monetization of the beneficial security effects of this

proposed regulation would involve tw o steps. First, the Department would estimate the

reduction in the probability of a successful terrorist attack and avoidance of the

consequences of the terror attack resulting from implementation of the proposed rule.

Second, the Department would identify individuals’ willingness to pay for this incremental

risk reduction and multiply it by the population experiencing the benefit. Both of these

steps, however, rely on key data that are not available for the proposed rule. In light of

### 14 these limitations, the Department conducted a “break

- even” analysis to determine what

reduction of overall risk of a terror attack, and consequently the resulting reduction in the

expected losses for the nation due to a terror attack, would be necessary in order for the

expecte d benefits of the proposed rule to exceed the domestic costs of compliance with the

proposed rule.

Break

- Even Analysis 12



### A break

- even analysis for a rulemaking such as this proposed rule is aimed at framing the

relationships between the effects of the rule making (in increasing domestic security and

reducing the risk of terror attack), the cost of implementing the rule, and the baseline risks

of domestic terror attacks which would be mitigated by increased security of the AN supply

chain. Given the complex n ature of the benefits expressed as reduced risk, it is difficult to

quantify these kinds of benefits with any certainty. This is also the case with quantifying

the risk reduction attributed to this proposed rule compared to the baseline risk of a terror

at tack involving ammonium nitrate

.

The intent of the analysis is to organize information on benefits and costs and present them

in a way to further inform decision makers in their assessment of the proposed rule. The

proposed rule is cost beneficial if the benefits of risk reduction exceed the cost of

implementing this proposed rule. The damages from a terror attack are many and it is

difficult to quantify such losses. Data from past attacks are a starting point for analysis, but

are imperfect proxies for what may occur in the future. In addition, it is difficult to estimate

the likelihood with which a successful attack may occur over any given time period. In fact,

this likelihood and the degree to which authorities are able to gauge it may change over

tim e as geopolitical circumstances change.

The types of attacks that would be prevented by this regulation could vary widely in

intensity and effect, depending both on the intent and effectiveness of those undertaking

the attack. The most widely known incid ent involving ammonium nitrate in the U.S. was the

April 19, 1995, bombing of the Alfred P. Murrah Federal Building in Oklahoma City.

The practice of benefits valuation is based on an extensive literature of an individual’s

willingness to pay for an incr emental reduction in the risk of injury or death, constrained

by that individual’s financial resources. Because the willingness to pay for a reduction in

risk of injury or death is not observable in the marketplace, economists use other methods

12 For a background on break even analysis as applied to regulatory analysis in the context of terrorism

prevention , see Latourrette , T. and Henry H. Willis, Rand Corporation, “Using Probabilistic Terrorism Risk

Modeling for Regulatory Benefit

- Cost Analysis: Application to the Western Hemisphere Travel Initiative

Implemented in the Land Environment”, May 2007, available at

http://www.rand.org/pubs/working_papers/2007/RAND_WR487.pdf

.

### 15 to elicit t he value society places on these risk reductions. Surveys of individuals ’

preferences in a hypothetical situation can reveal these values, as can observations of

individuals’ purchases of items that reduce risk of injury or death (e.g., bike helmets). This

measure of willingness to pay is known as Value of a Statistical Life (VSL). In order to

compare the losses associated with such an event to the cost of the proposed rule, the

Department assigns a statistical monetary value to potential casualties, and al so takes into

account other direct costs due to the attack, such as property damage. This analysis uses the Department of Transportation’s (DOT) VSL of $ 6.0 million. 13 

### The VSL represents an

individuals ’ willingness to pay to avoid a fatality, based on econo mic studies of the value

individuals place on small changes in risk. The same guidance on the use of VSL

recommends the use of a range of values rather than a point estimate. For this analysis the

Department used the DOT 2009 guidance of one standard devia tion which results in a

range from $3.4 million to $8.6 million ($6.0±$2.6). Lastly, b ased on the same DOT

standards, DHS values moderate injuries at 1.55% of the VSL and severe injuries at 18.75%

of the VSL. The Department emphasizes that the VSL is a sta tistical value used only for

regulatory comparison and in no way suggests that the actual value of a life can be stated in

dollar terms.

Table 5 shows many cost components from the Oklahoma City attack. For the purpose of

the break

- even analysis, the Dep artment believes that this is the best example to use as a

potential attack. There were 168 deaths which are used as the multiplier times the value of

a statistical life which results in just over $1 billion in valuation. ($6.0 million/statistical life

* 1 68 lives = $1,008 million). The Department utilized “ Physical Injuries and Fatalities

Resulting from the Oklahoma City Bombing ” for the injury data. Because the article

categorizes injuries as to where they were treated and separately by specific kinds of

injuries but without severity, there was no definite crosswalk to the DOT injury categories

the Department utilizes. The Depar tment used the hospitalization numbers for the severe

injuries (18.75% of the VSL) and non

- hospitalization valued at the DOT moderate category

(1.55% of the VSL). The 83 hospitalizations results in $93.4 million while the non

hospitalization injuries add a nother $47.3 million. The statistical valuation for fatalities and

injuries equates to somewhat more than $1.1 billion. The emergency appropriations in

1995 14

13 U.S. Department of Transportation memorandum, Treatment of the Economic Value of a Statistical Life in

Departmental Analyses. 2009 Annual Revision. Office of the Secretary of Transportation, March 19, 2009 at

http://gov.rosenet.org/uploads/254/treatment_of_a_statistical_life_dot.pdf 

### provided funding for the Federal building replacement and a number of

Department of Justice (DOJ) emergency expenses directly related to the incident. Other

agencies received emergency appropriations to cover losses but the information in the act

is less clear as to the nature of the expenses. The DOJ expenses are clearly direct expenses

14 The emergency appropriations language and values is available at http://frwebgate.access.gpo.gov/cgi

bin/getdoc.cgi?dbname=104_cong_public_laws&docid=f:publ19.104.pdf

### 16 and would like ly represent similar costs should another event occur. The statute and other

references mentioned earlier in this section identify damage to 312 other buildings and

businesses. The appropriation identified these costs at $39.4 million. The Oklahoma

Departm ent of Civil Emergency Management After Action Repor t 15 

### and GSA Commissioner

Peck’s testimony 16 

### reports these values as substantially higher with significantly more

categories of expense. However, the descriptions mix indirect with direct cost so the

Departm ent has not included the larger numbers. Those items were described at the

beginning of the benefits section to provide insight to potential costs even though not

included in the values below. When the1995 non

- injury costs are adjusted with an inflation

fa ctor of 1.42 17 

### the total event valuation is approximately $1.35 billion. The Department

notes that our $1.35 billion estimate may not include every possible societal cost that

stemmed from the attack, such as the economic turmoil it caused. The Department

w elcomes additional information from commenters that further informs our $1.35 billion

estimate.

In addition to reducing the possibility of an ammonium nitrate

- based terrorist attack,

promulgating this rulemaking provides the benefit of allowing the Department to comply

with the law. The Consolidated Appropriations Act, 2008 18



### , (H.R. 2764; Public Law 110

– 161) states the “Secretary shall regulate the sale and transfer of ammonium nitrate by an

ammonium nitrate facility

. . . to prevent the misappropria tion or use of ammonium nitrate

in an act of terrorism.” S ection II. A of the accompanying preamble provides a more

detailed background discussion of the regulatory requirements expressly contained in the

statute , such as the registration requirement for certain ammonium nitrate sellers and

purchasers.

15 The Oklahoma Department of Civil Emergency Management After Action Rep ort: Alfred P. Murrah Federal

Building Bombing, 19 April 1995 in Oklahoma City, Oklahoma. Available at

http://www.ok.gov/OEM/documents/Bombing%20After%20Action%20Report.pdf

16 Security In Federal Buildings, Statement Of Robert A. Peck, Commissioner , Public Buildings Service,

General Services Administration, Before The Subcommittee On Public Buildings And Economic Development,

Committee On Transportation And Infrastructure United States House Of Representatives, June 4, 1998. As

Retrieved f rom the Web on 03/ 18/2010.

http://www.gsa.gov/portal/gsa/ep/contentview.do?contenttype=gsa_basic&contentid=11807&noc=t

17 CPI

- U seasonally adjusted values from BLS. http://www.bls.gov/cpi/#data as of 4/12/2010 and represent

the most recently available and August 1995 for the appropriations values (217.59/152.9=1.42).

18 The Consolidated Appropriations Act, 2008, (H.R. 2764; Public Law 110

– 161) as found on pages 1002

-
1009. Retrieved from http://frwebgate.access.gpo.gov/cgi

bin/getdoc.cgi?dbname=110_cong_house_committee_prints&docid=f:39564e.pdf . All references in this

evaluation t o this act refer to this citation. For simplicity, some references have been shortened to the 2008

Consolidate Appropriations Act, Subtitle J, or merely legislation when mentioned near text that also discusses

the statute.

### 17 **Table 5** 

**. Cost Valuation of an Attack**  **B ased upon 1995 Murrah Federal Building Attack** 
**(Primary VSL Estimate; All $ millions)**

Number VSL VSL

Multiplier

for

Injuries Valuation

(A) (B) (C) (D)= A*B*C

Lives Lost 168 $6.0 100% $ 1,008.0

Severe Injuries 83 $6.0 18.75% $ 93.4

Moderate Injuries 509 $6.0 1.55% $ 47.3

Subtotal Valuation Life and Injuries $ 1,148.7

Value
($1995) Inflation

Multiplier Value
($2010)

(D) (E) (F)=D*E

Murrah Building Replacement Costs $ 40.4 1.42 $ 57.5

Congressional Emergency Appropriation

Other Building Recovery and community aid $ 39.4 1.42 $ 56.1

Attorney General Terrorism fund associated to

OKC $ 34.2 1.42 $ 48.7

US Attorney Extraordinary expenses due to

bombing $ 10.3 1.42 $ 14.7

Additional Judge Security $ 16.6 1.42 $ 23.6

Subtotal Property and Other Direct $ 200.5

Total Impact (sum of 2 subtotals) $ 1,349.2



### Because VSL is likely to represent a range, this analysis uses the DOT guidance of plus or

minus 1 standard deviation. Based on $6.0 million ± $2.6 million the lower VSL is $3.4

million and the upper is $8.6 million. The non

- injury costs do not change but using the

upper and lower VSL values moves costs ± $497.8 million around the $1.35 billion

estimate. The detailed calculations are shown in the next two tables.

### 18 **Table 6** 

**. Cost Valuation of an Attack**  **B ased upon 1995 Murrah Federal B**  **uilding Attack**
**(Lower VSL Estimate; All $ millions)**

Number VSL VSL

Multiplier

for

Injuries Valuation

(A) (B) (C) (D)=

A*B*C

Lives Lost 168 $3.4 100% $ 571.2

Severe Injuries 83 $3.4 18.75% $ 52.9

Moderate Injuries 509 $3.4 1.55% $ 26.8

Subtotal Valuation Life and Injuries $ 650.9

Value
($1995) Inflation

Multiplier Value
($2010)

(D) (E) (F)=D*E

Murrah Building Replacement Costs $ 40.4 1.42 $ 57.5

Congressional Emergency Appropriation

Economic revitalization, Other Building Recovery $ 39.4 1.42 $ 56.1

Attorney General Terrorism fund associated to OKC $ 34.2 1.42 $ 48.7

US Attorney Extraordinary expenses due to bombing $ 10.3 1.42 $ 14.7

Additional Judge Security $ 16.6 1.42 $ 23.6

Subtotal Property and Other Direct $ 200. 6

Total Impact (sum of 2 subtotals) $ 851. 5

### 19 **Table 7**  **. Cost Valuation of an Attack** B **ased upon 1995 Murrah Federal Building Attack (High** 
**VSL Estimate; All $ millions)**

Number VSL VSL

Multiplier

for

Injuries Valuation

(A) (B) (C) (D)=

A*B*C

Lives Lost 168 $8.6 100% $ 1,444.8

Severe Injuries 83 $8.6 18.75% $ 133.8

Moderate Injuries 509 $8.6 1.55% $ 67.8

Subtotal Valuation Life and Injuries $ 1,646.5

Value
($1995) Inflation

Multiplier Value
($2010)

(D) (E) (F)=D*E

Murrah Building Replacement Costs $ 40.4 1.42 $ 57.5

Congressional Emergency Appropriation

Economic revitalization, Other Building Recovery $ 39.4 1.42 $ 56.1

Attorney General Terrorism fund associated to OKC $ 34.2 1.42 $ 48.7

US Attorney Extraordinary expenses due to bombing $ 10.3 1.42 $ 14.7

Additional Judge Security $ 16.6 1.42 $ 23.6

Subtotal Property and Other Direct $ 200.5

Total Impact (sum of 2 subtotals) $ 1,847.0



### I f the program is to be cost effective , t he amount by which baseline risk must be reduced by

the Ammonium Nitrate Security Program can be directly calculated as a ratio of annualized,

discounted program costs to attack consequences. However, the underlying baseline risk of

an attack in any given year is highly uncertain and variable over time, making the break

even analysis especially useful. To determine the freq uency of attack that results in a

break

- even point, we divide the total attack valuation by the annualized proposed rule

program costs discounted at 7%. The table below shows the calculation for three VSL

values. The minimum frequency reductions in years b etween attacks are 14 .1

, 8. 9 , and 19 .3

which represent the minimum reduction of one attack the size of the 1995 Oklahoma City

bombing per the calculated number of years.

### 20 **Table 8** 

**. Frequency of Attacks Averted for AN Security**  **Costs to Equal Expected Benefits ($** 

**millions; Frequency years)**

**VSL=$6.0 VSL** 

**- 1 Std** 

**Deviation**

**($3.4) VSL+1 Std** 

**Deviation**

**($8.6)**

**Total Impact (sum of 2 subtotals)** $1,349.2 $851.4 $1,847.0

**Total rule cost annualized at 7%**

**(from Accounting Summary)** $ 95.5 $ 95.5 $9 5.5

**Frequency of Attacks Averted by AN**

**Security Procedures to Break Even.**

**(Total Impact/Total Cost)**

**Interpret attack rate as one attack per**

**number of years** One attack every

14 .1 years One attack every

8. 9

years One attack every

19. 3

Years



## 4. N PRM D escription

The 2008 Consolidated Appropriations Act amends the Homeland Security Act of 2002 and

provides the Department with the authority to “regulate the sale and transfer of

ammonium nitrate by an ammonium nitrate facility . . . to prevent the misappropriation or

use of ammonium nitrate in an act of terrorism.” The Department published an Advance

Notice of Proposed Rule making (ANPRM) for the Secure Handling of Ammonium Nitrate

Program on October 28, 2008 (73 FR 64280). The ANPRM summarized the activities

expected to be covered in this proposed regulatory program, including registration

activities, point of sale activitie s, theft or loss reporting, inspections and audits, appeals and

penalties, and establishing a threshold level of ammonium nitrate in a mixture for the

purposes of regulation under this program. Simultaneously with the release of this

Regulatory Assessment, the Department is releasing a Notice of Proposed Rulemaking

containing a proposed rule. The proposed rule includ es alternatives considered, and

solicits public comment on th e proposed approach.

This regulatory evaluation attempts to mirror the provisions laid out in the NPRM. The

Department has made no attempt, however, to precisely replicate rule or NPRM language

in this regulatory evaluation. Should there be a discrepancy between the regulatory

evaluation and the proposed rule or NPRM, the language of t he proposed rule or NPRM will

### 21 have precedence. This is particularly important with regards to terminology describing AN

Facilities and AN Purchasers. For regulatory purposes, these two terms have specific legal

definitions. To clearly identify cost groups and specific definitions applicable to analysis in

support of the Regulatory Flexibility Act, such as the Initial Regulatory Flexibility Act

Analysis (IRFA) in this document, some compromise and simplification is necessary to

maintain simplicity when labe ling cost information, particularly in tables. DHS believes the

use of these two terms and similar terms in this document should be readily

understandable. Use of these terms in this document does not alter the specific definitions

and usage in the propose d rule text or in the NPRM. When we use these terms in this

document, we are using them terms in broad manners, not in the precise manners in which

they are used in the NPRM or in the proposed rule text. For purposes of this document only,

‘AN Sellers’ can include individuals who are AN Sellers, AN Facility Representatives, and

Designated AN Facility POCs, and can also include businesses, organizations, and other

entities that sell or transfer ammonium nitrate. Similarly, for purposes of this document

only, ‘AN Purchasers’ can include individuals who are AN Purchasers, and can also include

businesses, organizations, and other entities that buy or obtain ammonium nitrate. DHS

invites comments on the clarity of the use of these simplified terms in this documen t.

For purposes of the proposed rule, an AN Facility is any person or entity that produces,

sells, or otherwise transfers ownership of, or provides application services for, ammonium

nitrate. The proposed rule requires that all AN Sellers (i.e., any indiv idual involved in the

sale or transfer of ammonium nitrate from an AN Facility or designated to act on behalf of

an AN Facility for purposes of compliance with the proposed rule) and AN Purchasers (i.e.,

any individual seeking to purchase ammonium nitrate from an AN Facility) register with

the Department to obtain an AN Registered User Number. Each applicant for an AN

Registered User Number must apply electronically using the AN User Registration Portal

, an online web portal. AN Facilities include producers

, distributors , and some independent

transporters of ammonium nitrate. The term producer is not used in Subtitle J and

therefore the Department has not used this term in the proposed preamble and rule. For

purposes of this Regulatory Assessment, the Depart ment considers producers to be a

subset of AN Facilities because they manufacture ammonium nitrate

, sell or transfer the

ammonium nitrate to distributors , applicators, retailers, etc

. Therefore, producers of

ammonium nitrate are subject to the same regulat ory requirements a s all other AN

Facilities.

To register, AN S ellers must provide information including : name, address, telephone

number, photo identification document number, place of birth, date of birth, citizenship,

gender, and information identifying all AN Facilities where applicant will serve as an AN

Seller or AN Facility Representative or Designated AN Facility POC. Additionally,

a pplication info rmation we are reserving the right to collect includes any other information

### 22 dee med necessary by the Department t o carry out vetting, and any other information

deemed necessary by the Department to verify the results of previous TSDB vetting. Each

applicant will be checked against the TSDB and may be denied an AN Registered User

Numbe r if there is a match on the TSDB. The Department intends to provide e ach applicant

with their AN Registered User Number via e

- mail within 72 hours. Where this is not

practicable, the Department intends to provide notice of the delay to the applicants with in

the 72 hour timeframe. Each AN Registered User Number would be valid for five years after

its generation by the Department.

Purchasers of ammonium nitrate will also have to register with the D epartment using the

AN User Registration Portal. They will h ave to provide information as describe above for

sellers, and may also provide name s of any agent s who may act on the AN P urchaser’s

behalf at the point of sale . Each purchaser’s registration application will also have to

provide a description of the inten ded use of the ammonium nitrate the purchaser plans to

procure. As with AN Sellers, AN Purchaser’s information will be checked against the TSDB.

If a person moves, changes their name, etc., they are responsible for notifying the

Department of these changes . They must notify the Department via the AN Registered User

Portal.

T he proposed rule requires the AN S eller to verify the purchaser holds a valid AN

Registered User Number. The Department believes this will occur a t the point of sale 19



### although that is not a requirement. To do this, the Department is considering requiring t he

AN S eller to enter the potential purchaser’s AN Registered User Number into an online web

portal or call a call

- center established by the Department for verificati on of the prospective

purchaser’s AN Registered User Number

. For purposes of the primary estimate in this

Regulatory Assessment, the Department is assuming that only the online web portal will be

available to AN Sellers to use for this verification. The De partment will confirm that the

number provided is a valid AN Registered User Number

.

The AN S eller must also perform a visual check of the photo identification ( e. g.

, d river’s

l icense ; passport) of the individual taking possession of the ammonium nitrate (i.e., the AN

Purchaser or his/her agent)

. The AN S eller must record pertinent details about each

ammonium nitrate transaction, including the AN P urchaser’s (and

, if applicable , agent’s )

name, address, telephone number, AN Registered User Number

, Departme nt Confirmation

, documentation that a photo ID was inspected, and amount of ammonium nitrate in the

transaction. Where an agent is used, photo ID of the agent must also be presented to verify

the identity of the agent

. The AN Facility must keep the se recor ds for at least two years.

19 The “poi nt of sale” is the point at which the possession of AN is transferred from an AN Facility to an AN

Purchaser or his/her agent pursuant to a sale or transfer of AN.

### 23 Further, the Department requires that these records be and secured during this two

- year

period

.

AN Facility Representatives (i.e., any AN Seller with responsibility for an AN Facility’s

overall compliance with the proposed rule ) and Designated AN Facility POCs must report a

theft or loss of ammonium nitrate to Federal law enforcement within one calendar day of

discovering the theft or loss

. The Department recognizes that much of the ammonium

nitrate supply is bulk and because of the hygroscopic nature of the material, some losses

are inevitable.



## 5. Period of A nalysis

T he Department has presented the costs for a ten year period. The Department assumes

implementation will begin early in 201 2 or 2013

.



## 6. Estimates of R egulated P opulation

Congress defines ammonium nitrate for purposes of the 2008 Consolidated Appropriations

Act as “solid ammonium nitrate that is chiefly the ammonium salt of nitric acid and

contains not less than 33 percent nitrogen by weight.” Included in the de finition of

ammonium nitrate is “any mixture containing a percentage of ammonium nitrate that is

equal to or greater than the percentage determined by [ the Department ].” In establishing

this mixture percentage

, the Department is required to consult with th e heads of

appropriate Federal departments and agencies (including the Secretary of Agriculture) and

to provide notice and an opportunity for comment. The Department is also considering

establishing a minimum threshold amount of ammonium nitrate that must change hands as

part of a sale or transfer before that sale or transfer (including the individuals participating

in the transaction) is subject to Subtitle J’s requirements

.

Ammonium nitrate is primarily used as a nitrogen source in fertilizer and as an input into

industrial explosives. The majority of ammonium nitrate in commerce is solid while a small

amount of solution is used as a direct application fertilizer. Under Subtitle J , the

Department has authority to regulate transactions (and the individual s conducting them)

involving any amount of ammonium nitrate regardless of packaging. The Department

believes, however, that the security benefits gained from regulating transactions involving

either de minimis quantities of ammonium nitrate or products pac kaged in such a way as to

make them unlikely to be chosen by an individual for conversion to an ammonium nitrate

based explosive may be outweighed by the costs of regulating those transactions. To avoid

including these transactions and the individuals cond ucting them under its regulatory

### 24 authority, the Department is considering including both a minimum threshold weight and

an individual products exemption in the definition of ammonium nitrate

.

In agricultural applications, ammonium nitrate is used to ferti lize pastureland, wheat, corn,

grapes, fruit orchards, and other agricultural products. It is a readily available source of

nitrogen and its fast release makes it a preferred fertilizer to other nitrogenous fertilizers

(including urea, calcium ammonium nitrate, and ammonium sulfate) in relatively dry

climates. According to the Fertilizer Ins titute, the largest ammonium nitrate consuming

State s include: Missouri, Alabama, Tennessee, Texas, Mississippi, Kentucky, Kansas,

Arkansas, Georgia, and Oklahoma. Combined, these ten State s accounted for 77.4% of

ammonium nitrate fertilizer consumption in 2007. 20 

### There is no source of information

about how many individual farms use ammonium nitrate fertilizer. According to the U.S.

Department of Agriculture, 1,022,036 farms incurred expenses for Commercial fertilizer,

lime, and soil conditioners. 21 

### Only a f raction of these farms use ammonium nitrate

fertilizer, however. The Department assumes that between 100,000 and 150,000 farms use

ammonium nitrate based on information provided by state plant food control officials

. 22



### Informed by discussions with the ferti lizer industry, the Department assumes

approximately 50% of these farms use fertilizer applicator services

, 23 

### and thus never

purchase ammonium nitrate directly

. Rather, they purchase ammonium nitrate application

services. Others in the ammonium nitrate supp ly chain include manufacturers, fertilizer

mixers, explosives distributors, farm wholesalers/co

- ops, retail garden centers, golf

courses, landscaping services, blasting services, mines, and laboratory supply companies.

Refer to Appendix A for more informat ion on population estimates. Because point

estimates were difficult to obtain, the Department has provided range estimates for several

segments of the potentially regulated population. The Department welcomes comment on

the estimates of AN P urchasers, A gen ts and F acilities.

Ammonium nitrate is also used in very small amounts in first aid cold packs 24

20 Association of American Plant Food Control Officials and The Fertilizer Institute, Commerc ial Fertilizers

2007, page 11. 

### to generate

an endothermic reaction when mixed with water. At this time, the list of such products that

21 U.S. Department of Agriculture, National Agricultural Statistics Services, 2007 Census of Agriculture (US

data), Table 45.

22 4/17/09 listening session with plant food control officials from several State s. Roughly 50,000

– 75,000

farms in Missouri and 3,000 farms in Texas were reported to use AN fertilizer. Estimating the average

fertilizer consumption per State and applying to the national totals, DHS estimates roughly 100,000 to

150,000 farms using AN fertilizer.

23 4/17/09 listening session with plant food control officials from several State s. Nationally, about half of

farms were thought to use applicator services and thus never take custody of ammonium nitrate fertilizer.

24 For purposes of the proposed rule, the Departmen t proposes defining a cold pack as a small, commercially

available package commonly used as a replacement for ice in the application of first

- aid . Only those cold

packs containing unmixed water and AN that, immediately prior to use, is manipulated to cau se the

comingling of the water and the AN resulting in an endothermic reaction that significantly lowers the

### 25 the Department is considering granting an individual ex emption to is limited to cold packs.

The Department believes that not only would the cost of regulating cold packs far exceed

the security benefit gained by including them in the regulations, but also that Congress did

not intend cold packs

— nor the sportin g goods stores, recreational centers, schools, and

other entities that purchase or sell /transfer them

— to be covered under the Act.



## Mixtures

For purposes of the proposed rule , the Department proposes to define ammonium nitrate

to include any mixture that is 30 percent or more ammonium nitrate by weight. By setting

the mixture rule at 30 percent, the Department believes the regulations will capture those

ammonium nitrate mixtures that could be most effectively used in bomb

- making, or that

could be most eff ectively retooled or reconfigured for use in bomb

- making.

The Department is aware that this proposed mixture rule differs from the mixture rule

used for ammonium nitrate under the DHS Chemical Facility Anti

- Terrorism Standards

(CFATS)

. 25 

### Under CFATS, a mix ture containing ammonium nitrate is counted towards the

screening threshold quantity for ammonium nitrate if the ammonium nitrate represents 33

percent or more of the mixture. There are two primary reasons for the difference between

this and the CFATS appr oach to ammonium nitrate mixtures. First, the two mixture rules

exist to accomplish two different goals. First, t he CFATS mixture rule exists to help the

Department identify potentially high

- risk chemical facilities subject to CFATS, and at the

time of the development of CFATS, the Department believed that setting the ammonium

nitrate mixture at 33 percent accomplished this goal. For this proposed rule, the threshold

is solely meant to identify ammonium nitrate mixtures that have the potential to be

misused in acts of terrorism. Accordingly, a more conservative and inclusive mixture rule is

appropriate

. Second, the CFATS mixture rule was based on the best information available

to the Department at the time of the issuance of CFATS Appendix A, which occurred over

eighteen months ago. Since that time the Department has better information from the FBI ’ s

Explosives Unit concerning experiments that have shown that mixtures containing as low

as 30 percent ammonium nitrate by weight can be processed into viable exp losives. In light

of this new evidence, , the Department believes that setting the mixture rule for this

rulemaking at 30 percent ammonium nitrate is the correct course of action.

temperature of the package , could be affected. Many cold packs do not contain AN and would not require an

exemption.

25 CFATS was implemented by ru lemaking and is an ongoing program. The original final rule can be viewed at

http://www.regulations.gov/search/Regs/conten tStreamer?objectId=09000064802228b5&disposition=attachment&c

ontentType=pdf

### 26 For a variety of reasons discussed more extensively in the NPRM, the Depart ment is

proposing exempting mixtures regulated as “explosives” by the Bureau of Alcohol, Tobacco,

Firearms, and Explosives (ATF) from the definition of ammonium nitrate for purposes of

the regulation.



## Purchaser

Individuals seeking to purchase or otherwise acquire 25 pounds or more of ammonium

nitrate must apply to the Department of Homeland Security for an AN Registered User

Number. As mentioned in the NPRM, most home use fertilizer doesn’t contain enough AN to

b e regulated. T he purchaser will be required to present his/her AN Registered User

Number and submit to a purchaser identity verification process in order to purchase

ammonium nitrate based upon the proposed thresholds for weight and mix.



## Agents

The use of agents during the conduct of purchases or transfers of ammonium nitrate is a

common practice. For example, an AN Purchaser’s agent or representative will go to an AN

Seller to arrange a transaction of ammonium nitrate and take custody of the amm onium

nitrate on behalf of the AN Purchaser. Agents are not required to possess an AN Registered

User Number. The Department may, however, require AN Purchasers to identify on their

applications for a Registered AN User Number agents who they intend to use at the point of

sale and/or to verify for the AN Seller at the time of an ammonium nitrate transaction that

an individual is acting as an agent on the AN Purchaser’s behalf.



## Sellers

AN Sellers that must register with the Department include any person who may

individually perform all aspects of a sale or transfer of ammonium nitrate on behalf of an

AN Facility, including purchaser identity verification activities. Under this proposed rule

framework, there are three categories of AN Sellers:

1. AN Seller

2. AN Facility Representative

3. Designated AN Facility POC

Subtitle J requires any person who owns an AN Facility to register with the Department.

The Department is aware, however, that facilities selling or transferring ammonium nitrate

come in many forms, in cluding but not limited to corporations, partnerships, cooperatives,

and sole proprietorships. For many of these organizations, it may not be practical or

### 27 sensible to require all “owners” to register (for example, it would not be sensible to require

every shareholder of a publically

- held company to register with the Department). Similarly,

for some AN F acilities, such as those owned by large, publically

- held companies, there is no

single “owner” who can register on behalf of the AN F acility. Moreover, in ma ny cases

regardless of ownership structure, the AN Facility “owner” is not involved in the day

- to

- day

transactions of a n AN F acility, and thus would have no direct involvement in, or potentially

even oversight of, sales or transfers of ammonium nitrate

. Fo r these reasons, simply

requiring all AN F acility “owners” to register is not practicable

.

In light of this, the Department is proposing that, any individual who has an ownership or

operator interest in an AN Facility; is designated to act on behalf of a n AN F acility for

purposes of compliance with this regulation, such as, possibly, a site manager, sales

manager, or corporate officer; or is involved in the sale or transfer of ammonium nitrate at

an AN Facility, such as a sales clerk or cashier, may regist er as an “AN Seller.” This would

allow AN Facilities to conduct sales or transfers without direct involvement of an owner of

the AN F acility, while also ensuring that no sale or transfer on behalf of an AN Facility is

conducted by an in dividual who has not been vett ed by and registered with the

Department. For these reasons, the Department also is proposing that, while every AN

Facility will be required to have at least one AN Seller registered with the Department, not

every individual with an ownership interest in an AN Facility must register to be an AN

Se ller.

Within the category of AN Sellers, there is a subcategory of individuals called “AN Facility

Representatives.” The qualifications and responsibilities of AN Facility Representatives are

discussed below

. AN Sellers who are not AN Facility Representa tives would have authority

to perform all of the regulatory activities that “owners” must (e.g., verifying the identities of

prospective AN P urchasers, recording the details of completed sales or transfers , and

handing over possession of ammonium nitrate t o approved AN P urchasers), but would not

be liable for ensuring that other AN Facility personnel are following the Department’s

regulations.

The Department proposes that every AN Facility must have at least one registered AN

Seller, but may register as ma ny AN Sellers as it deems appropriate. Whether or not a n AN

F acility seeks registration of any additional AN Sellers is entirely discretionary. Under the

Department’s proposed approach, a n AN F acility may decide that it is most cost

- effective to

register o nly a single AN Seller; however, in that case the single AN Seller must perform all

point of sale purchaser verification activities and other regulatory compliance activities

proposed by th e NPRM.

### 28 The Department recognizes that not all AN Sellers will hav e the same level of non

regulatory responsibility and authority within an AN Facility, and that some AN Sellers may

not be in a position to monitor or control overall AN Facility compliance or the compliance

of other AN Facility employees with the final re gulations. In light of this, the Department is

proposing the creation of a subcategory of individuals called “AN Facility Representatives”

within the broader class of AN Sellers. The Department proposes that AN Facility

Representatives would be AN Sellers who are not only responsible for their own

compliance with the regulations, but also would be responsible for the AN Facility’s overall

compliance with the regulations and the compliance of all other AN Facility employees.

The Department also proposes that, for purposes of these regulations, the definition of “AN

Facility Representative” be broad enough to include not only individuals who own all or

part of a n AN F acility, but also any non

- owner AN Facility employee or contractor

designated to act on be half of a n AN F acility for purposes of compliance with this

regulation. Thus, for purposes of the proposed regulation, a n AN F acility would be allowed

to designate as an “AN Facility Representative” an individual without any ownership in the

AN F acility, s uch as, possibly, a site manager, sales manager, or corporate officer, to meet

the “owner” registration requirements.

The Department proposes that every AN Facility must register at least one AN Facility

Representative, but may register as many AN Facilit y Representatives as it deems

appropriate. Whether or not a n AN F acility seeks registration of any additional AN Facility

Representatives is entirely discretionary. The Department also proposes that while a n AN

F acility must have at least one registered AN Facility Representative, whether or not a n AN

F acility seeks registration of any additional AN Sellers who are not AN Facility

Representatives is entirely discretionary.

While the Department’s proposal does not preclude the registration of multiple AN F acility

Representatives for a single AN Facility, each AN Facility will be required to designate a

single AN Facility Representative to act as the primary point of contact with the

Department on behalf of the AN F acility. This individual will be referred to as the

“Designated AN Facility POC.” The Designated AN Facility POC will be the individual

responsible for contacts with the Department regarding regulatory activities, such as the

scheduling of inspections.

An individual registering as an AN Facility Representative will be expected to provide the

name of and contact information for the Designated AN Facility POC for each AN F acility on

behalf of which he/she is registering. Please n ote that a single individual may serve as an

AN Facility Representativ e and/or Designated AN Facility POC for multiple AN Facilities.

### 29 In dividuals can register for more than one class and the Department expects that many

will. For the purpose of this analysis, however, the Departmen t assumes that AN

Purchasers and AN Sellers will be unique individuals.

The Department recognizes that some AN Facilities may be owned by State or local

government entities. DHS invites comments about this kind of entity to assist in evaluating

the burden on other government entities These AN Fa cilities would be required to comply

with the provisions of this proposed rule.

The estimated number of AN Purchasers and AN Sellers is based in large part on

discussions between the Department and members of multiple agricultural fertilizer and

explosive industry associations, who represent a cross

- section of many of the industry

segments most likely to be covered by these regulations. These estimates also are based on

discussions between the Department and various State officials (e.g., State plant food

control officials) responsible for overseeing ammonium nitrate use within their respective

State s. The Department welcomes comment on the size of the regulated population.

Table 9 estimates the number of purchasers of ammonium nitrate that will apply for an AN

Registered User Number. For the purpose of this analysis, it is assumed that each

establishment will have more than one person apply for an AN Registered User Number.

The Department assumes that farms, mines, golf courses, landscaping and landscaping

services will register two people at each establishment. Larger businesses and businesses

engaged in reselling or distributing ammonium nitrate are assumed to have three

applicants per establishment. The Department welcomes comment on the number of AN

Pur chasers and the number of AN Registered Users per establishment.

### 30 **Table 9** 

**. AN Purchasers** 

Number of

establishments Number of individual

applicant s Average

number of AN

Registered

Users per

establishment

(C) (A) (B) (A x C) (B x C)

Low High Low High

Agricultural sector

Fertilizer mixers 400 600 1,200 1,800 3

Farm wholesalers/ co

- ops 500 1,000 1,500 3,000 3

Retail garden centers 500 2,500 1,500 7,500 3

Fertilizer applicators 500 1,000 1,500 3,000 3

Farms 50,000 75,000 100,000 150,000 2

Golf courses 6,000 12,000 12,000 24,000 2

Landscaping services 4,500 9,000 9,000 18,000 2

Explosives Sector

Explosives distributors 500 1,000 1,500 3,000 3

Blasting services 250 500 750 1,500 3

Mines 1,750 3,500 3,500 7,000 2

Other

Laboratory supply 50 100 150 300 3

Total AN Purchasers 64,950 106,200 132,600 219,100 n/a

### 31 Table 10 estimates the number of AN Sellers. Many AN Sellers are also AN Purchasers due

to their “middle position” in the supply chain. The Department assumes that most

businesses will have five AN Registered Users at each establishment. Manufacturers of

a mmonium nitrate fertilizer and explosives are assumed to have ten AN Sellers at each

establishment, while fertilizer applications are assumed to have three registered AN Sellers

at each establishment. The Department welcomes comment on the number of AN Sel lers

and the assumptions regarding the number of AN Registered Users per establishment.

**Table 10** 

**. AN Sellers** 

Number of

establishments Number of

individual applicant s Average

number of AN

Registered

Users per

establishment

(C) (A) (B) (A x C) (B x C)

Low High Low High

AN fertilizer manufacturers 26 26 260 260 10

AN explosives manufacturers 10 10 100 100 10

Fertilizer mixers 400 600 2,000 3,000 5

Explosives distributors 500 1,000 2,500 5,000 5

Farm wholesalers/ co

- ops 500 1,000 2,500 5,000 5

Retail garden centers 500 2,500 2,500 12,500 5

Fertilizer applicators 500 1,000 1,500 3,000 3

Laboratory supply 50 100 250 500 5

Total AN Sellers 2,486 6,236 11,610 29,360 n/a



## 7. Registration of AN Sellers and AN P urchasers

In order to legally sell or transfer ammonium nitrate, individuals, including those acting on

behalf of a business enterprise, must first register with the Department to receive an AN

Registered User Number.

The Department proposes r egistering to become an AN Seller (including designation as an

AN Facility Representative or Designated AN Facility POC) , will be done through an online

web portal (the “AN User Registration Portal”) developed by the Departm ent and made

available via the I nternet

. T he Department preliminarily has decided that this will be the

only available means of registration, and that alternate registration application processes

will not be available. The Department will check the applicant ’s personal information

against the TSDB and may deny the applicant an AN Registered User Number if their

information matches information contained i n the TSDB.

### 32 An individual may choose to register for multiple categories. Transporters of AN will

register in one or more catego ries based upon the three different possible business

relationship in their transactions. Based on the category(s) selected, the individual will be

asked to provide answers to a series of questions, including, at a minimum, the following

statutorily requi red information: name; address; telephone number; and, for AN

Purchasers, the intended use of the ammonium nitrate

.

OMB Circular A

- 4 directs agencies to consider alternative regulatory approaches; however,

the Circular also affords agencies considerable f lexibility to specify the number and type of

alternatives that should be fully analyzed according to the formal principles of Executive

Order 12866. In this case, the Department used this discretion to define a set of alternative

approaches that reflected the most relevant policy choices made for this rulemaking.

The Department briefly considered having a paper

- based registration system. This may

have lowered costs for some applicants who will have to travel to use a computer with

Internet access. Paper

- ba sed registration introduces opportunities for transcribing errors

and subsequent delays in receiving an AN Registered User Number. It would be difficult to

assure that AN Registered User Numbers could be generated within the 72 hour window

because of the d elay with mail and/or fax. Once DHS determined the paper option would

not comply with the maximum response time, no further consideration or develop ment of

the concept was pursued. Also, the Department has had success with the Chemical Security

Assessment Tool (CSAT) system for Top

- Screen under CFATS and expects the regulated

community will find the AN Registration Portal to be equally easy to navigate.

Tables 11 and 12 present the cost of registration activities for AN Purchasers for both the

low and hig h population estimates. To estimate the cost of the time to register for an AN

Registered User Number, the Department has assumed that individuals equivalent to a

“purchasing manager” will undergo the application process. An average hourly wage at the

50 th 

### percentile plus benefits is assumed for each industry. To estimate the cost of

individual’s time registering for an AN Registered User Number, the Department has

applied a loaded average hourly rate. Hourly rates represent the 5 0 th 

### percentile hourly

rat es published by the Bureau of Labor Statistics (BLS) , Occupational Employment and

Wage estimates (May 200 8. 26



### According to the U.S. Department of Agriculture ( USDA ) , approximately 60 % of crop farms

have Internet access

. 27

26 All wage rate information with links to BLS data is provided in table form in Appendix B. 

### Thus, the Department assumes that in the agricultural sector,

27 Sources: “Farm Computer Usage and Ownership,” United States Department of Agriculture National

Agricultural Statistics

### 33 approximately 6 0% of farms have computers with Internet access. For this portion of the

population , the time to apply for an AN Registered User Number is limited to the time to

access the website, provide the required informatio n, check their e

- mail for registration

confirmation, and record their AN Registered User Number

. For the 4 0% of farms without

computers with Internet access, the Department assumes that these AN P urchasers will

travel a short distance public library , or ot her location where access to the Internet is

available to apply for an AN Registered User Number. Further, the Department assumes

that for applicants without Internet access , two trips will be required; one to complete the

AN Registered User Number application

, and a second trip after 72 hours to retrieve the e

mail containing the AN Registered User Number. The Department assumes that the round

trip distance is 50 miles per trip 28 

### and has used the IRS mileage rate of $ 0.55 per mile

. 29



### The Department as sumes the total extra time for each trip will average approximately one

hour each way plus 1 hour for Internet access and registration for a total of 6 hours per

farm registration. By multiplying 50 miles times two trips times $0.55 per mile totals $55

per individual for the mileage for the two trips associated with applying for and receiving

an AN Registered User Number. Because of the minimal time and effort it takes to apply for

and receive an AN Registered User Number, the Department believes this appro ach to be a

cost

- effective way to prevent ammonium nitrate misappropriation. DHS recognizes that in

some instances farmers may be unaware of the requirements to have a registration

number to make an Am m onium Nitrate purchase. These individuals would incu r the

opportunity cost of time to travel to make their purchase, but would not be able to

complete their purchase in that trip. In order to calculate the opportunity cost of these

missed purchases , we first need to determine how much of the regulated popul ation might

be unaware of the requirements of this regulation. DHS was unable to find a study that was

highly specific to the population being regulated by thus r ule; h owever, DHS did consult

two papers 30

Service, August 2009, p. 1. As retrieved at 

### that addressed regulatory non

- compliance due to lack of knowledge of the

http://usda.mannlib.cornell.edu/usda/current/FarmComp/FarmComp

- 08

- 14

- 2009.pdf

on 7/22/ 2010

28 DHS is using an average of one way distance of 25 miles based upon: “In the 2004 Agricultural Resource

Management Survey, a joint effort by ERS and USDA’s National Agricultural Statistics Service, farmers were asked

how far they travel to purchase most of their farm inputs and equipment. Farmers were also asked the distance to the

nearest town (the average was 8.3 miles) and nearest city of more than 10,000 people (the average was 24.2 miles).”

USDA, Economic Research Service using data from USDA’ s Agricultural Resource Management Survey, 2004 Phase III, Version 1,

summarized in Amber Waves, June 10, 2010, retrieved at http://www.ers.usda.gov/AmberWav es/June10/PDF/FarmExpenditures.pdf on

07/22/2010

29 http://www.irs.gov/formspubs/article/0,,id=178004,00.html . IRS lists the data currency as “ Page Last

Reviewed or Updated: January 07, 2010 ”

30 EPA/CMA Root Cause Analysis Pilot Project: An Industry Sur

- vey” EPA 305 R 99 001) at

http://www.epa.gov/compliance/resources/publications/assistance/sectors/rootcaus eanalysis.pdf?bcsi_scan_1CFAD6D

3D20A37D6=0&bcsi_scan_filename=rootcauseanalysis.pdf (27% p14); and Use of Random Response to Estimate Angler

Noncompliance with Fishing Regulations North American Journal of Fisheries Management Volume 15, Issue 4, 1995,

Pag es 721

- 731 Authors: D. I. Schilla; P. A. Klinea at

https://research.idfg.idaho.gov/Fisheries%20Research%20Reports/Res

Schilil1996%20Use%20of%20Random%20Response%20to%20Estimate%20Angler%20Noncompliance%20With%20Fi

### 34 requirements. For the purpose of this analysis , DHS considered the likely differences in the

effectiveness of the planned outreach program and the very likely difference that farmer s

with internet have more access to information. DHS considered the available information

and used the average of the two papers at the high end

, 25% noncompliance for farmers

without internet

. For farmers with internet DHS believes the requirements wi ll be much

better known. As a starting point for public comment, DHS has used one quarter of the

upper estimate average or 6.5% for the farmers with internet.

DHS assumes farmers attempting to make a purchase that do not have registration

numbers will proceed directly to a public internet access point and register. For those

farmers without internet, an a dditional 30 minutes was added o nto their time to account

for the opportunity cost of the missed purchase. Table 11 below provides the weighted

ave rage time for all farmers without internet which includes the additional 30 minutes that

25% of the farmers will need.

For farmers with internet, DHS assumes one additional trip for the 6.5 % of the farmers that

w ere unable to make the purchase and went home to register. The opportunity cost of this

additional trip includes the estimated 2 hours to drive to and from the store ( 6.5 % * 60,000

farmers * 2 hours) as well as the mileage cost (25% * 60,000 farmers * $.55/mile * 50

miles). The time for the ad ditional trip for 6.5 % of the farmers with internet has been

added in to the total amount of time for all farmers with internet to register and divided by

the total population to arrive at a weighted average registration time. These additional

opportunity costs have been included in Table 11 below.

Business es have a higher Internet penetration rate and usually are in close proximity to

other businesses or public Internet access. Therefore, DHS has not adjusted other

estimates for the opportunity cost o f the missed purchase.

**Table 11** 

**. Cost of Registration Activities for AN Purchasers** 

**– Low Population Estimate**  *****

Number of

Applicants Loaded

Hourly

Wage

-
Purchasing

Agents* Hours

required to

register for

AN

Registered

User

Number Total

Hours Cost of Time

to apply for

AN

Registered

User

Number

($) Travel

Mileage

Cost

($) Total

Registration

Cost

($)

A B C AxC AxBxC D (AxBxC)+D

shing%20Regulations.pdf (pp 721, 725, and 726: 29% noncompliance * 75% accidental = 22%) Ave raging 22% and the

27% yields 25% Additionally different sampled populations had noncompliance rates from .4% to 28% )

### 35 Fertilizer mixers 1,200 39 0.5 600 24,000 n/a 24,000

Farm wholesalers/co

ops 1,500 32 0.5 750 24,000 n/a 24,000

Retail garden centers 1,500 16 0.5 750 12,000 n/a 12,000

Fertilizer applicators 1,500 40 0.5 750 30,000 n/a 30,000

Farms w/ Internet

access 60,000 41 0.6

37,500 1,539,000 412,500

1,951,500

Farms w/o Internet

access 40,000 41 6.5 260,000 10,670,000 2,200,000 12,870,000

Golf courses 12,000 25 0.5 6,000 150,000 n/a 150,000

Landscaping services 9,000 28 0.5 4,500 128,000 n/a 128,000

Explosives distributors 1,500 39 0.5 750 29,000 n/a 29,000

Blasting services 750 38 0.5 375 14,000 n/a 14,000

Mines 3,500 36 0.5 1,750 63,000 n/a 63,000

Laboratory supply 150 39 0.5 75 3,000 n/a 3,000

Total 132,600 n/a n/a 313,800 11,557,000 2,612,500 15,298,500

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.

### 36 **Table 12** 

**. Cost of**  **Registration Activities for AN Purchasers**

**– High Population Estimate**  *****

Number of

Applicants Loaded

Hourly

Wage

-
Purchasing

Agents* Hours

required to

register for

AN

Registered

User

Number Total

Hours Cost of Time

to apply for

AN

Registered

User

Number

($ ) Travel

Mileage

Cost

($) Total

Registration

Cost

($)

A B C AxC AxBxC D (AxBxC)+D

Fertilizer mixers 1,800 39 0.5 900 35,000 n/a 35,000

Farm wholesalers/co

- ops 3,000 32 0.5 1,500 47,000 n/a 47,000

Retail garden centers 7,500 16 0.5 3,750 61,000 n/a 61,000

Fertilizer applicators 3,000 40 0.5 1,500 61,000 n/a 61,000

Farms w/ Internet access 90,000 41 0.6 56,250 2,308,000 618,750 2,926,750

Farms w/o Internet access 60,000 41 6.5 390,000 16,005,000 3,300,000 19,305,000

Golf courses 24,000 25 0.5 12,000 301,000 n/a 301,000

Landscaping services 18,000 28 0.5 9,000 255,000 n/a 255,000

Explosives distributors 3,000 39 0.5 1,500 58,000 n/a 58,000

Blasting services 1,500 38 0.5 750 29,000 n/a 29,000

Mines 7,000 36 0.5 3,500 126,000 n/a 126,000

Laboratory supply 300 39 0.5 150 6,000 n/a 6,000

Total 219,100 n/a n/a 480,800 19,292,000 3,918,750 23,210,750

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.



### While not required by this proposed rule , AN P urchasers may wish to register their agents

with the Department of Homeland Security through the secure User Number Registration

Portal . The pre

- registration of agents is assumed to take 15 minutes (0.25 hours) for each

AN Purchaser that pre

- registers agents, including the time to log into the system and

update the AN Registered User Number’s record to include the names of his/her agents.

The submission of an agent’s name would simply be for ease of point of sale transactions,

not for vetting against the TSDB. The agent’s name is simply stored in the AN Purchaser

Verification Portal to facilitate transactions involving a AN Purchaser’s reg ular agent. As

discussed in Section 7

- Point of Sale transactions, an oral confirmation (via telephone or in

person) may be required when a transaction involves an agent that is not pre

- registered

with the Department. When a pre

- registered agent appears a t an AN Facility to take

possession of ammonium nitrate on behalf of a registered AN Purchaser, the agent’s name

will be linked to the AN Registered User Number of the AN Purchaser and the time

consuming process of obtaining a verbal confirmation is avoide d. The Department assumes

that 25% of AN Purchasers will register one or more agents. Tables 13 and 14 present the

costs related to pre

- registering agents.

**Table 13**  **. Cost of Pre**

**- Registering Agents** 

**– Low Population Estimate** *

### 37 Numbe r of AN

Purchasers that will

Pre

- Register Agents Loaded Hourly

Wage

- Purchasing

Agents Hours

Required to

Pre

- Register

Agents Total Hours to

Pre

- Register

Agents Cost of Time to

Pre

- Register

Agents

A B C AxC AxBxC

Fertilizer mixers 300 39 0.25 75 $3,000

Farm wholesalers/co

- ops 375 32 0.25 94 $3,000

Retail garden centers 375 16 0.25 94 $2,000

Fertilizer applicators 375 40 0.25 94 $ 4 ,000

Farms 25000 41 0.25 6250 $256,000

Golf courses 3000 25 0.25 750 $19,000

Landscaping services 2250 28 0.25 563 $16,000

Explosives distributors 375 39 0.25 94 $4,000

Blasting services 187.5 38 0.25 47 $2,000

Mines 875 36 0.25 219 $8,000

Laboratory supply 37.5 39 0.25 9

-

Total 33,150 n/a n/a 8,289 $31 7 ,000


### * Wage rate information is fully explained in A ppendix B. Rounding may affect totals.

**Table 14** 

**. Cost of Pre** 

**- Registering Agents** 

**– High Population Estimate** 

Number of AN

Purchasers that

will Pre

Register Agents Loaded Hourly

Wage

-
Purchasing

Agents* Hours

Required to

Pre

- Register

Agents Total Hours

to Pre

Register

Agents Cost of Time

to Pre

Register

Agents

A B C AxC AxBxC

Fertilizer mixers 450 39 0.25 113 $4,000

Farm wholesalers/co

- ops 750 32 0.25 188 $6,000

Retail garden centers 1,875 16 0.25 469 $8,000

Fertilizer applicators 750 40 0.25 188 $ 8 ,000

Farms 37,500 41 0.25 9,375 $ 385 ,000

Golf courses 6,000 25 0.25 1,500 $38,000

Landscaping services 4,500 28 0.25 1,125 $32,000

Explosives distributors 750 39 0.25 188 $7,000

Blasting services 375 38 0.25 94 $4,000

Mines 1,750 36 0.25 438 $16,000

Laboratory supply 75 39 0.25 19 $1,000

Total 54,775 n/a n/a 13,697 $ 5 09 ,000

* Wage rate information is fully explained in Appendix B. Rounding may affect totals



### .

Tables 15 and 16 present the costs for registration activities of AN Sellers at the low and

high population. The Department proposes requiring each AN Facility to register one and

only one Designated AN Facility POC , while an AN Facility may register as many AN Sellers

as it chooses. For the purpose of estimating the cost of their time, the Department assumes

that the Designated AN Facility POC is an individual equivalent to a Sales Manager, and AN

Sellers are indivi duals who are equivalent to “sales representatives.”

### 38 **Table 15** 

**. Cost of Registration Activities for AN**  **Sellers**

**– Low**  **Population Estimate** *****

No. of

AN Seller

Owners/

POC Other AN

Seller

Applicant s Total

Number of

Applicant s Loaded

Hourly

Wage

–

Sales

Manager Loaded

hourly

Wage

-

Sales

Rep. Hours

required to

apply for AN

Registered

User

Number Total Hours Total

Registration

Cost

A B A+B C D E (AxE)+(BxE) (AxExC)+

(BxExD)

AN fertilizer manuf. 26 234 260 61 52 0.5 137 7,000

AN explosives manuf. 10 90 100 74 54 0.5 53 3,000

Fertilizer mixers 400 1,600 2,000 61 52 0.5 1050 56,000

Explosives distributors 500 2,000 2,500 73 47 0.6 1375 72,000

Farm wholes./co

- ops 500 2,000 2,500 63 38 0.6 1438 62,000

Retail garden centers 500 2,000 2,500 44 32 0.6 1438 50,000

Fertilizer applicators 500 1,000 1,500 87 36 0.6 863 46,000

Laboratory supply 50 200 250 73 47 0.5 131 7,000

Total 2,486 9,124 11,610 n/a n/a n/a 6,485 303,000

* Wage rate information is fully explained in Appendix B. Rounding may affect totals



### .

**Table 16** 

**. Cost of Registration Activities for AN Sellers** 

**– High Population Estimate** 

No. of

AN Seller

Owners/

POC Other AN

Seller

Applicant s Total

Number of

Applicant s Loaded

Hourly

Wage

-

Sales

Manager Loaded

hourly

Wage

-

Sales

Rep. Hours

required to

apply for AN

Registered

User

Number Total Hours Total

Registration

Cost

A B A+B C D E (AxE)+(BxE) (AxExC)+

(BxExD)

AN fertilizer manuf. 26 234 260 $61 $52 0.5 137 7,000

AN explosives manuf. 10 90 100 $74 $54 0.5 53 3,000

Fertilizer mixers 600 2,400 3000 $61 $52 0.5 1,575 85,000

Explosives distributors 1,000 4,000 5000 $73 $47 0.6 2,750 144,000

Farm wholes./co

- ops 1,000 4,000 5000 $63 $38 0.6 2,875 124,000

Retail garden centers 2,500 10,000 12500 $44 $32 0.6 7,188 248,000

Fertilizer applicators 1,000 2,000 3000 $87 $36 0.6 1,725 91,000

Laboratory supply 100 400 500 $73 $47 0.5 263 14,000

Total 6,236 23,124 29,360 n/a n/a n/a 16,564 716,000

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.

### 39 Tables 1 7 and 1 8 summarize the cost of registration activities for the low and high

population estimates as detailed in Tables 11

- 16. The individual agent is not a registrant

but providing the purchasers provision of the information as part of the registration or

update process is a part of the costs of registering. Therefore t he pre

- registration of agents

is a registration activity that is included in summary calculations from this point forward.

**Table 17** 

**. Summary Cost of Registration Activities** 

**– Initial Year,**  **Low Population Estimate**

Total

Number of

Applicants /

Activities Total

Hours Travel Cost Total

Registration

Cost

AN Purchaser Registration 132,600 313,800 2,612,500 15,298,500

Pre

- Registration of AN Agents 33,150 8,289 n/a 317,000

AN Seller Registration 11,610 6,485 n/a 304,000

Total AN Purchasers and Sellers 177,360 328,574 2,612,500 15,919,500



### Table **18**

**. Summary Cost of Registration Activities** 

**– Initial Year,**  **High Population Estimate**

Total Number

of Applicants /

Activities Total

Hours Travel Cost Total

Registration

Cost

AN Purchaser Registration 219,100 480,800 3,918,750 23,210,750

AN Purchasers Pre

- Registering Agents 54,775 13,697 n/a 509,000

AN Seller Registration 29,360 16,564 n/a 740,000

Total AN Purchasers and Sellers 303,235 511,061 3,918,750 24,459,750



### Table 19 presents the Department’s assumptions regarding patterns in registration

activity . Based upon DHS program staff industry knowledge and the conversations with

industry described elsewhere, the Department assume s that new entrants will apply for AN

Registered User Numbers at a rate of 20% of the total registered user population per

year 31

31 When individuals move between employers, their existing registration number remains valid at the new employer.

Because of this pro vision, many “new” employees will already have numbers in the system. As in all aspects of the

evaluation, DHS invites comments on these assumptions. 

### . In addition, the Department assumes 5% of applicants will update their information

in a given year. Both updating and renewing an AN Registration are assumed to take 30

minutes, the same amount of time as an initial AN Registration. Following the five

- year

registration period, the Department assumes 15% of AN Registered Users will leave the

program (i.e., not renew after five years ). The timely rene wal of an AN Registered User

Number will allow the user to keep the same number. An applicant may renew his/her AN

Registered User Number within 60 days before its expiration. After one year beyond the

expiration of the AN Registered User Number, the appli cant will be required to submit a

new application and will receive a new AN Registered User Number.

### 40 **Table 19** 

**. Assumptions Regarding Growth in Registrations** 

New Entrants 20%

Updated Information 5%

Leaving Program (not renewing) 15%

* Note: These averages apply against different base amounts therefore cannot be

summed for a net percentage. Details are provided in the next two charts



### Table 20 presents the total registration activity costs by program year. Each AN Registered

User Number is valid for five

years. For purposes of this Regulatory Assessment, the Department assumes all AN

Purchasers and AN Sellers will register during the first year of implementation.

**Table 20** 

**. Total Registration**  **Activity Costs**  **by Program Year**

Registration

Activities

Low Population Total Registration

Cost

- Low

Population Registration Activities

High Population Total Registration

Cost

- High

Population

PY1 177,360 $15,918,500 303,235 $24,435,750

PY2 44,340 $3,979,600 75,809 $6,108,938

PY3 46,557 $4,178,600 79,599 $6,414,384

PY4 48,885 $4,387,500 83,579 $6,735,104

PY5 51,329 $4,606,900 87,758 $7,071,859

PY6 116,589 $10,464,200 199,334 $16,063,031

PY7 95,814 $8,599,600 163,815 $13,200,820

PY8 100,605 $9,029,600 172,006 $13,860,861

PY9 105,635 $9,481,000 180,606 $14,553,904

PY10 110,917 $9,955,100 189,637 $15,281,600

Total 898,032 $80,600,600 1,535,379 $123,726,251

### 41 

## Appeals

Individuals denied an AN Registered User Number

, or whose AN Registered User Number

has been revoked by the Department have the opportunity to appeal. The Department

proposes to fulfill this requirement by permitting each person to request copies of the

materials on which denial or revocation was based, and to file statements explaining why

he/she believes that he/she has been inappropriately denied regi stration and containing

any applicable supporting evidence, to be reviewed by the Department. These proposed

appeals procedures are based, in part, on appeals procedures the Department offers as part

of the TWIC and HME programs. Specifically, the Departme nt proposes that a person may

initiate an appeal by filing a written Request for Materials requesting copies of the

materials on which denial or revocation was based within 60 days of the date of denial or

revocation. Upon review of those releasable materi als, the appellant will have 60 days to

file a Request for Appeal containing the rationale or information upon which he/she

disputes the Department’s denial or revocation determination. A fter reviewing this

rationale or information , the Department will ser ve the appellant with a Final

Determination of the Department’s resolution of his/her appeal.

It is difficult to estimate the number of individuals that may be found to be a potential

security threat. Strictly for purposes of this analysis , we will assum e approximately 0.2 % of

workers may be disqualified based on their TSDB vett ing results. Of these, DHS assumes

95% will appeal. The remaining 5% may be discouraged and will not seek an appeal. DHS

assumes the time it will take to prepare the needed paperwo rk to request the appeal, if

necessary, would take a n average of 6 hours to complete

. As discussed previously, DHS

assumes a weighted average loaded hourly wage rate of $ 16

- $42 per hour based on the

5 0th percentile hourly wage for AN Purchasers. For AN Sellers, the weighted average

loaded hourly wage rate ranges from $64

- $86. The costs of appeals are presented in Tables

2 1 through 24.

### 42 **Table 21** 

**. Cost of Appeals for AN Purchasers** 

**– Initial Year,**  **Low Population Estimate** *****

Number of

Applicant s DQ Rate % of

Applicants

that Appeal No. of

Hours

per

Appeal Loaded

hourly

Wage

-
Prchsng

.

Agent Total

Number of

Appeals Total Cost of

Appeals

A B C D E AxBxC AxBxCxDxE

Fertilizer mixers 1,200 0.20% 95% 6 $39 2 500

Farm wholesalers/co

- ops 1,500 0.20% 95% 6 $32 3 600

Retail garden centers 1,500 0.20% 95% 6 $16 3 300

Fertilizer applicators 1,500 0.20% 95% 6 $ 40 3 500

Farms with Internet access 50,000 0.20% 95% 6 $41 95 23,400

Farms w/o Internet access 50,000 0.20% 95% 6 $41 95 23,400

Golf courses 12,000 0.20% 95% 6 $25 23 3,500

Landscaping services 9,000 0.20% 95% 6 $28 17 2,900

Explosives distributors 1,500 0.20% 95% 6 $39 3 700

Blasting services 750 0.20% 95% 6 $38 1 200

Mines 3,500 0.20% 95% 6 $36 7 1,500

Laboratory supply 150 0.20% 95% 6 $39 0 0

Total 132,600 n/a n/a n/a n/a 252 57,500

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.



### Table **22**

**. Cost of Appeals for AN Purchasers** 

**– Initial Year,**  **High Population Estimate** *****

Number of

Applicant s DQ Rate % of

Applicants

that

Appeal No. of

Hours

per

Appeal Loaded

hourly Wage

- Prchsng

.

Agent Total

Number

of

Appeals Total Cost

of Appeals

A B C D E AxBxC AxBxCxDxE

Fertilizer mixers 1,800 0.20% 95% 6 $39 3 700

Farm wholesalers/co

- ops 3,000 0.20% 95% 6 $32 6 1,100

Retail garden centers 7,500 0.20% 95% 6 $16 14 1,400

Fertilizer applicators 3,000 0.20% 95% 6 40 6 1, 5 00

Farms with Internet access 90,000 0.20% 95% 6 $41 171 42,100

Farms w/o Internet access 60,000 0.20% 95% 6 $41 114 28,100

Golf courses 24,000 0.20% 95% 6 $25 46 6,900

Landscaping services 18,000 0.20% 95% 6 $28 34 5,800

Explosives distributors 3,000 0.20% 95% 6 $39 6 1,400

Blasting services 1,500 0.20% 95% 6 $38 3 700

Mines 7,000 0.20% 95% 6 $36 13 2,800

Laboratory supply 300 0.20% 95% 6 $39 1 200

Total 219,100 n/a n/a n/a n/a 417 92, 7 00

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.

### 43 **Table 23** 

**. Cost of Appeals for AN Sellers** 

**– Initial Year,**  **Low Population Estimate** *****

Number

of

Applicant s DQ

Rate % of

Applicants

that

Appeal No. of

Hours

per

Appeal Loaded

hourly

Wage

-

Sales

Rep. Total

Number

of

Appeals Total Cost

of Appeals

A B C D E AxBxC AxBxCxDxE

AN fertilizer manuf. 260 0.20% 95% 6 52 0 $0

AN explosives manuf. 100 0.20% 95% 6 54 0 $0

Fertilizer mixers 2,000 0.20% 95% 6 52 4 $1,200

Explosives distributors 2,500 0.20% 95% 6 47 5 $1,400

Farm wholesalers/co

ops 2,500 0.20% 95% 6 38 5 $1,200

Retail garden centers 2,500 0.20% 95% 6 32 5 $1,000

Fertilizer applicators 1,500 0.20% 95% 6 36 3 $600

Laboratory supply 250 0.20% 95% 6 47 0 $0

Total 11,610 n/a n/a n/a n/a 22 $5,400

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.



### Table **24**

**. Cost of Appeals for AN**  **Sellers**

**– Initial Year, High**  **Population Estimate** *****

Number

of

Applicant s DQ

Rate % of

Applicants

that

Appeal No. of

Hours

per

Appeal Loaded

hourly

Wage

-

Sales

Rep. Total

Number

of

Appeals Total Cost

of Appeals

A B C D E AxBxC AxBxCxDxE

AN fertilizer manuf. 260 0.20% 95% 6 52 0 $0

AN explosives manuf. 100 0.20% 95% 6 54 0 $0

Fertilizer mixers 3,000 0.20% 95% 6 52 6 $1,900

Explosives distributors 5,000 0.20% 95% 6 47 10 $2,800

Farm wholesalers/co

ops 5,000 0.20% 95% 6 38 10 $2,300

Retail garden centers 12,500 0.20% 95% 6 32 24 $4,600

Fertilizer applicators 3,000 0.20% 95% 6 36 6 $1,300

Laboratory supply 500 0.20% 95% 6 47 1 $300

Total 29,360 n/a n/a n/a n/a 57 $13,200

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.



### The costs of appeals by program year are presented below. The Department assumes that

the number of new entrants into the system is 20% per year and 5% of applicants will

update their information in a given year. By year 4, the Department assumes 15% of

applicants will leave the program. The annual changes combined with the ma ss registration

### 44 in the beginning which is good for five years results in peaks beginning every five years

thereafter. The cost appeals by program year are detailed in Table 25.

**Table 25** 

**. Cost of Appeals by Program Year** 

Total App eals Cost

-
Low Population Total Appeals

Cost

- High

Population

PY1 $63,100 $105,900

PY2 $15,900 $26,600

PY3 $16,600 $27,900

PY4 $17,500 $29,300

PY5 $18,400 $30,800

PY6 $41,700 $69,700

PY7 $34,300 $57,400

PY8 $35,900 $60,100

PY9 $37,800 $63,200

PY10 $39,600 $66,400

Total $320,800 $537,300



## 8. Point of Sale A ctivities

O nly AN P urchasers with valid AN Registered User N umbers may purchase ammonium

nitrate. AN Facilities must refuse to sell or transfer ammonium nitrate to prospective AN

P urchasers who are not validly registered. The “point of sale” is the point at which the

possession of ammonium nitrate is transferred from an AN Facility to an AN Purchaser or

his/her agent pursuant to a sale or transfer of ammonium nitrate

.

AN Facilities must refuse to sell or transfer ammonium nitrate to prospective AN

P urchasers unable to satisfactorily prove their identities at the point of sale. AN Facilities

must also record certain identity information at the point of sale. Further, DHS is required

to encourage AN F acilities to exercise caution in selling or transferring ammonium nitrate

under suspicious circumstances, and to take other precautionary measures designed to

prevent the misappropriation of ammonium nitrate. AN S ellers should deny a sale or

transfer of ammonium nitrate under “suspicious” circumstances and are encouraged to

contact law enforcement officials in the event of a “suspicious” ammonium nitrate

transaction or attempted transaction.

As mentioned previously, the Department is aware that ammonium nitrate transactions

occur in a variety of formats and that there may be a time lag between when the

ammonium nitrate is ordered and when it is ultimately transferred. All of the verification

activities must occur before the AN Seller transfers possession of ammonium nitrate to the

### 45 prospective AN Purchaser or an agent acting on the prospective AN Purchaser’s behalf.

Outside of that requirement, the time at which the AN S eller performs the verification

activities is entirely within the discretion of the AN Seller. For instance, in a situation where

the AN Purchaser places an advance order for ammonium nitrate to be picked up at a later

date, the AN Seller may perform these activities at the time of sale or at the time of transfer

of possession. Similarly, for transactions in which the prospective AN Purchaser intends to

use an agent on his or her behalf, the identity verification activities can occur

simultaneously (e.g., w hen the prospective AN Purchaser places the order; when the agent

arrives to take possession of the ammonium nitrate ), or can be done separately (e.g.,

verifying the identity and AN Registered User Number of the prospective AN Purchaser

when the order is p laced and verifying the agent’s identity immediately prior to transfer of

possession). At least 12 states already have a similar process in place which reduces the

expected burden due to this proposed regulation.

Based upon the DHS staff industry exper ience, the Department has identified three

principal transaction formats commonly used to sell or transfer ammonium nitrate :

1. T he AN Purchaser appears at the AN Facility and takes possession of the ammonium

nitrate from the AN Seller directly

. Based upon D HS program industry knowledge,

DHS believes that sales models will resemble other commercial purchases with

order information provided to a customer service representative separate from the

payment or verification step which allows the purchaser to minimiz e delay. For this

reason, DHS has shown the opportunity cost of this delay as similar to a merchant

credit card or check transaction (calculations and costs shown in at the end of this

section) ;

2. T he AN Purchaser places an advanced order either in person o r through other

means (e.g., via telephone; online), and the AN Seller delivers the ammonium nitrate

to the AN Purchaser; or

3. T he AN Purchaser places a n advanced order either in person or through other

means (e.g., via telephone; online), and an a gent acti ng on behalf of the AN

Purchaser takes possession of the ammonium nitrate from the AN Seller.

T he Department is proposing to require that an AN Seller perform the following specific

verification activities for each sale or transfer of ammonium nitrate :

1. Verification of a prospective AN Purchaser’s identity (based on the prospective AN

P urchaser’s AN Registered User Number application information);

2. Verification of the currency and accuracy of the prospective AN Purchaser’s AN

Registered User Number;

### 46 3. Visual check of the photo identification of the individual taking possession of

ammonium nitrate (either the AN Purchaser or his/her agent); and

4. If an agent is used, verification that the agent is acting on the approved AN

Purchaser’s behalf.



## Verification of AN Purchaser’s Identity

The AN Seller must verify the prospective AN Purchaser’s identity as required by the

Department . The manner of verification of a prospective AN Purchaser’s identity varies

depending on whether or not the AN Purchaser has opted to use an agent. If the AN

Purchaser opted not to use an agent, then the AN Seller verifies the AN Purchaser’s identity

based upon the visual check of the AN Purchaser’s photo identification. If the AN Purchaser

opted to use an agent, then the AN Seller verifies the AN Purchaser’s identity by submitting

certain information provided by the AN Purchaser to the Department for comparison

against information contained in the AN Purchaser’s AN Registered User Number

application.

In the event a prospective AN Purchaser’ s uses an agent to complete the transaction, the

AN Seller must also verify both (1) the agent’s identity based upon a visual check of the

agent’s photo identification, and (2) that the agent is acting on the approved AN

Purchaser’s behalf.



## Verification o f AN Purchaser’s Registered User Number

In order to bolster the effectiveness of AN Registered User Numbers in preventing the

misappropriation of ammonium nitrate, the Department proposes that the AN Seller will be

required to verify the authenticity and currency of a prospective AN Purchaser’s AN

Registered User Number prior to completing transfer of ammonium nitrate. This will be

done in the same manner as the verification of the prospective AN Purchaser’s identity

against information contained in the pr ospective AN P urchaser’s AN Registered User

Number Application (i.e., through either the Purchaser Verification Portal or the Purchaser

Verification Call Center).

To provide sellers of ammonium nitrate with the ability to check the accuracy and currency

o f a prospective AN P urchaser AN R egistered U ser N umber, the Department is considering

several approaches:

**•** Purchaser Verification Portal (an Internet

- based application)

**•** Purchaser V erification Call Center

**•** Combination of both the Internet

- based verification portal and the call center.

### 47 Purchaser Verification Portal

The first option is to create a secure purchaser verification web portal (“Purchaser

Verification Portal”) through which AN S ellers can submit information to the Department

that will allow the Department to confirm or deny for the AN S eller the prospective AN

P urchaser’s right to purchase or possess ammonium nitrate

. The Department proposes

making the Purchaser Verification Port al available via the Internet to registered AN S ellers

only, who will be asked to provide their AN R egistered U ser N umber and authenticate

themselves (enter a password or answer a series of security questions) to gain access to

the portal. Upon accessing t he portal, the AN S eller will enter into the system, at a

minimum, the prospective AN P urchaser’s name and AN Registered User Number

. To help

strengthen the purchaser identification process, facilitate the performance of compliance

audits and inspections, and better prevent the misappropriation or use of ammonium

nitrate in an act of terrorism, the Department is considering requiring the AN Seller to

enter additional information into the portal, such as the quantity of ammonium nitrate

being purchased and t he prospective AN P urchaser’s proposed use of the ammonium

nitrate

.

The Department anticipates that the confirmation or denial notice resulting from the web

verification process will typically be sent to and received by the seller much like how

merchants receive approval or denial notices prior to authorizing purchases via credit card.

To support recordkeeping requirements, the Department is considering providing to the

AN Seller, along with its web verification notice, confirmation and/or printable web

v erification notice record receipt.

To be able to use the Purchaser Verification Portal, an AN Seller must have a computer and

an Internet connection. DHS assumes the majority of AN F acilities already have this

equipment in order to conduct business. Table 26 provides a description of assumptions by

industry and cost component 32



### . For the purpose of this analysis, DHS assumes a percentage

of AN F acilities will require the purchase of a computer and the installation and

maintenance of a second phone line to be used for point of sale AN P urchaser verification.

DHS assumes a standard computer and printer can be purchased for $1,000

. 33

32 The Impact of Broadband Speed and Price on Small Business Columbia Telecommunications Corporation for

SBA Office of Advocacy. . Vol. under contract number SBAHQ

- 09

- C

- 0050., 2010. ; page 33

. Approximately 94%

of businesses responding to the survey use computers, including 95% of metro businesses and 90% of rural

business es. DHS applied the report percentages to the seller population to determine how many would need to

make the purchases. 

### According to

33 http://www.dell.com.

### 48 the Federal Communications Commission the average installation cost for a business phone

line is $100

, and the average annual cost of maintaining a business phone line is $600 per

year

. 34 

### The Department assumes that businesses will purchase a new computer and printer

every five years as equipment becomes obsolete.

Purchaser Verification Call Center

The second opt ion the Department is considering is the creation of a Purchaser Verification

Call Center to perform verification of a n AN P urchaser’s AN Registered User Number. Via

the call center, the AN S eller would dial a toll

- free number to connect via telephone to t he

Department

. Once connected to the Department , the AN S eller would talk to a person or be

led through a series of telephone tree menus. During the phone call, the AN Seller would be

expected to provide, at a minimum, the prospective AN P urchaser’s name a nd AN

Registered User Number . An option being considered would have AN Sellers provide

information regarding quantities being transferred and other data that would allow the

Department to monitor the accuracy of records during AN F acility inspections. The

operator or automated telephone system would enter the information provided into the

Department’s Registered User database system, wait for electronic confirmation, and then

provide verbal confirmation to the caller along with a D epartment confirmation for that

specific transaction

.

A call center may be preferable to a web portal, as presumably all AN Sellers have

telephones, while not all AN Sellers have computers with Internet access, particularly at the

point of sale. There are some pot ential disadvantages, though, including the likelihood that

the call center approach would take more time per transaction than the web portal

approach; if manned at all, the call center potentially would only be manned during specific

times (e.g., regular business hours); and it would be significantly more costly for the

government to establish and operate a call center.

For the purpose of this analysis, the Department assumes that some AN Sellers will install a

dedicated phone line to handle ammonium nit rate verification activities. The average

installation cost for a business phone line is $100 and the average annual cost of

maintaining a business phone line is $600 per year

. 35

34 Federal Communications Commission, Reference Book of Rates, Price Indices, and Household Expenditures

for T elephone Service (2008). http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC

- 292593A1.pdf

. The

Internet market and pricing is constantly changing. Very low cost dialup still exists while testimony before the FCC
put broadband costs around $36/month. The $600 per year is likely to be a conservative cost estimate as the

$36/month equates to $432/month. The testimony is available at

http://www.ustelecom.org/uploadedFiles/Issues/Filings/USTelecom

- CITI

- Comments.pdf

.

35 Federal Communications Commission, Reference Book of Rates, Price Indices, and Household Expenditures

for Telephone Serv ice (2008). http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC

- 292593A1.pdf

### 49 Purchaser Verification Portal and Call Center

The third approach DHS is cons idering is providing both the Internet

- based verification

portal and a call center. The advantage of this alternative is that all AN F acilities would be

accommodated

– those with telephone access only and those with Internet access who find

the verificatio n web portal option more efficient. However, this approach would be the

most costly of the alternatives for the government to establish and operat e but is the

method in the costing of the primary alternative.



## Visual Check of Photo ID

DHS also proposes th at the AN Seller must verify, by performing a visual check of an

identification document such as a driver’s license or passport, the identity of the individual

(either the prospective AN Purchaser or an AN A gent acting on his/her behalf) who will be

taking possession of ammonium nitrate from the AN Seller at the completion of the sale or

transfer. The Department proposes using the definition of “identification document”

similar to that used by the Department’s Secure Flight Program, 49 CFR 1560.3, to establ ish

what qualifies as an acceptable form of identification for this verification process.

Specifically, the Department proposes defining “identification document” as: “ Any of the

following documents containing a unique document number: ( a ) A n unexpired passport

issued by a foreign government which contains a photograph; or ( b ) A n unexpired

document issued by a U.S. Federal, State, or tribal government that includes the following

information for the person : ( 1 ) full name; ( 2 ) date of birth; and ( 3 ) photog raph; or (3) S uch

other documents that the Department may designate as valid identification documents. ”



## Creation of the Transaction Record

For each sale or transfer of ammonium nitrate, the AN Seller must record

, among other

things, the name, address, telephone number, and AN Registered User N umber issued to

the purchaser of ammonium nitrate; if applicable, must record the name, address, and

telephone number of an agent acting on behalf of the registered AN P urchaser at the point

of sale; and must record the date of sale or transfer and the quantity of ammonium nitrate

sold. In addition, the AN S eller may be required to record the DHS confirmation and photo

identification document number

. The Department allows some flexibility regardi ng how

these records are stored. These records could be stored electronically or on paper, either as

an amendment to a sales invoice or with a log book similar to the one many pharmacies use

to record information on sales of certain regulated medicines. S ome states with the same

requirement have recommended the information be recorded directly on the retained

### 50 invoice copy. If the Department decides to use a Purchaser Verification Portal online, it

may require that t he confirmation that appears on the screen be printed and attached to

other paper records. The Department assumes that each transaction will take five minutes

to complete (or 0.083 hours) for transactions using the web

- based Purchaser Verification

Portal. Each transaction is assumed to take six minutes (0.10 hours) when the call center is

used. The additional minute for the call center option factors in additional time to use a

phone tree menu and the relative awkwardness of using a telephone keypad vs. computer

keyboard. In addition to the p er transaction costs, the Department assumes each AN

F acility will spend one hour each year to train each registered AN S eller to conduct

compliant ammonium nitrate transactions.

The Department recognizes that some AN F acilities may choose to integrate th is process

into their existing point of sale systems. Because electronic records are not required,

estimates to retrofit existing point of sale and other accounting/billing software to capture

ammonium nitrate transactions are not presented in this analysi s. The Department

welcomes comments on these costs.

Tables 2 6 and 2 7 present the assumptions regarding how many AN Seller Facilities will

have a computer with Internet access required to use the web

- based Purchaser Verification

Portal and the costs associ ated with purchasing a computer, printer, and bringing in an

extra phone line. Based upon the SBA Office of Advocacy (2010) report just mention ed

,
DHS assumed that only a handful of ammonium nitrate manufacturers, mixers, and

laboratory supply businesses (5%) will require the purchase of a new computer and the

installation of an extra phone line. The Department assumes 10 % of explosives distributors

and 15 % of farm wholesalers/ co

- ops and retail garden centers will require the additional

equipment.

**Table 26** 

**. Physical Costs for Web Portal** 

**- B**  **ased Point of Sale Activities**

**– Low Population** 

**Estimate**

Number of

AN Facilities % without

computer &

phone Initial

Installation

Cost Computer &

Printer Annual Cost

of Phone

Line Total Initi al

Cost Total Annual

Cost

A B C D E AxBx(C+D+E) AxBxE

AN fertilizer manuf. 26 5% 100 1,000 600 2,200 800

AN explosives manuf. 10 5% 100 1,000 600 900 300

Fertilizer mixers 400 5% 100 1,000 600 34,000 12,000

Explosives distributors 500 10% 100 1,000 600 85,000 30,000

Farm wholesalers/co

ops 500 15% 100 1,000 600 127,500 45,000

Retail garden centers 500 15% 100 1,000 600 127,500 45,000

500 15% 100 1,000 600 127,500 45,000

Laboratory supply 50 5% 100 1,000 600 4,300 1,500

### 51 Total 2,486 n/a n/a n/a n/a $508,900 $179,600



### Table **27**

**. Physical Costs for Web Portal** 

**- B**  **ased Point of Sale Activities**

**– High Population** 

**Estimate**

Number of

AN Facilities % without

computer &

phone Initial

Installation

Cost Computer &

Printer Annual Cost

of Phone

Line Total Initial

Cost Total Annual

Cost

A B C D E AxBx(C+D+E) AxBxE

AN fertilizer manuf. 26 5% 100 1,000 600 2,200 800

AN explosives manuf. 10 5% 100 1,000 600 900 300

Fertilizer mixers 600 5% 100 1,000 600 51,000 18,000

Explosives distributors 1000 10% 100 1,000 600 170,000 60,000

Farm wholesalers/co

ops 1000 15% 100 1,000 600 255,000 90,000

Retail garden centers 2500 15% 100 1,000 600 637,500 225,000

1000 15% 100 1,000 600 255,000 90,000

Laboratory supply 100 5% 100 1,000 600 8,500 3,000

Total 6,236 n/a n/a n/a n/a $1,380,100 $487,100



### Table 2 8 presents DHS estimates of the total hours per year spent on point of sale activities

using the web

- based AN Verification Portal. DHS assumes that all the point of sale activities

and transaction record creation will take five minutes per transaction (or 0.083 hours).

Further, DHS assumes that the number of annual transactions per AN F acility to be

between 1,000 and 5,000 per year based on discussions with the fertil izer and explosives

industries and State plant food control officials

. 36 

### The total number of annual ammonium

nitrate transactions at all points in the supply chain range from 5 million to 30 million. DHS

welcomes comment on the number of transactions.

**Tabl e**  **28**

**. Web Portal** 

**- based Seller Transaction and Labor Cost by Industry, Low Population** 

**(First Year)**

Number of

AN

Facilities Number of

Transactions

per Facility Total

Number of

Transactions Estimated

Total Annual

Hours

(5 minutes/60

minutes/hr *

transactions) Loaded hourly

Wage

- Sales

Representative

$ Annual Cost

of

Compliance

$ Avg Cost/

Transaction

A B C = A x B D = 5/60 * C E F = D x E G = F / C

Ammonium

nitrate fertilizer

manufacturers 26 1,000 26,000 2,167 52 112,400 4.32

36 There is a dearth of information on the number of transactions that occur in the ammonium nitrate supply

chain. Some AN Facilities may have relatively few transactions during a given year while others may be

involved in a high number of transactions. The number of transactions drive s the point of sale costs and thus,

the cost of the program. DHS has assumed a broad range to capture the potential variation in this variable and

s eeks comment on these assumptions.

### 52 AN explosives

manufacturers 10 1,000 10,000 833 54 45,400 4.54

Fertilizer mixers 400 1,000 400,000 33,333 52 1,728,700 4.32

Explosives

distributors 500 2,500 1,250,000 104,167 47 4,917,700 3.93

Farm

wholesalers/coop

s 500 2,500 1,250,000 104,167 38 3,996,900 3.20

Retail garden

centers 500 2,500 1,250,000 104,167 32 3,331,300 2.67

Fertilizer

applicators 500 2,500 1,250,000 104,167 36 3,752,100 3.00

Laboratory supply 50 1,000 50,000 4,167 47 196,700 3.93

Total 2,486 n/a 5,486,000 457,168 n/a 18,081,200 3.30

Average 2,207 184 3.30

* Wage rate information is fully explained in Appendix B.



### Tables 29 and 3 0 present the labor costs for web portal

- based point of sale activities for the

low and high population estimates. AN S ellers engaged in day

- to

- day sales are assumed to

be equivalent to a sales representative

.

**Table 29** 

**. Web Portal** 

**- b**  **ased Seller Transaction and Labor Cost by Industry,**

**High Population Estimate** 

Number of

AN Facilities Number of

Transactions

per Facility Total

Number of

Transactions Estimated

Total Annual

Hours

(5 minutes/60

minutes/hr *

transactions) Loaded

hourly Wage

- Sales Rep

$ Annual

Cost of

Compliance

$ Avg Cost/

Transaction

A B C = A x B D = 5/60 * C E F = D x E G =

F / C

Ammonium nitrate

fertilizer manufacturers 26 2,500 65,000 5,417 52 280,900 4.32

AN explosives

manufacturers 10 2,500 25,000 2,083 54 113,500 4.54

Fertilizer mixers 600 2,500 1,500,000 125,000 52 6,482,500 4.32

Explosives distributors 1,000 5,000 5,000,000 416,667 47 19,670,800 3.93

Farm

wholesalers/coops 1,000 5,000 5,000,000 416,667 38 15,987,500 3.20

Retail garden centers 2,500 5,000 12,500,000 1,041,667 32 33,312,500 2.67

Fertilizer applicators 1,000 5,000 5,000,000 416,667 36 15,008,300 3.00

Laboratory supply 100 2,500 250,000 20,833 47 983,500 3.93

Total 6,236 n/a 29,340,000 2,445,001 n/a 91,839,500 3.13

Average 4,705 392 3.13

* Wage rate information is fully explained in Appendix B.

### 53 In lieu of ( or in addition to ) the web

- based portal, the Department is also considering a call

center

- based system to verify AN P urchasers’ AN Registered User Number s

. All activities

conducted with the web

- based portal (including verification of an AN Registered User

Number, checks of pre

- registered agents, etc.) could be conducted telephonically via the

call center. Table 3 0 estimates the total hours spent on point of sale activities under the call

center option. DHS estimates it will take six minutes per transaction (0.10 hours) to obtain

and record verification via a call center.

**Table 30**  **.Call Cent er** 

**- Based Transactions for**  **Point of Sale Activities (Hours Spent)** 

Number of

Transactions per AN

Facility Hours per

T ransaction Hours Spent on POS

Transactions per Year

Low High Low High

A B C AxC BxC

AN fertilizer manufacturers 1,000 2,500 0.1 100 250

AN explosives manufacturers 1,000 2,500 0.1 100 250

Fertilizer mixers 1,000 2,500 0.1 100 250

Explosives distributors 2,500 5,000 0.1 250 500

Farm wholesalers/ co

- ops 2,500 5,000 0.1 250 500

Retail garden centers 2,500 5,000 0.1 250 500

Fertilizer applicators 2,500 5,000 0.1 250 500

Laboratory supply 1,000 2,500 0.1 100 250



### Tables 31 and 32 present the labor costs for call center

- based point of sale activities for the

low and high population estimates. AN Sellers engaged in day

- to

- day sales are assumed to

be equivalent to a sales representative. These estimates are presented for comparison

purposes.

**Table 31** 

**. Labor Costs for**  **Call Center**

**- Based**  **Point of Sale Activities**

**– Low Populati**  **on**

**Estimate**

Number

of AN

Facilities Estimated

Annual

Hours Estimated Total

Annual Hours Loaded hourly

Wage

- Sales

Representative Annual Cost of

Compliance

A B AxB C AxBxC

AN fertilizer manuf. 26 100 2,600 52 $134,800

AN explosives manuf. 10 100 1,000 54 $54,500

Fertilizer mixers 400 100 40,000 52 $2,074,400

Explosives distributors 500 250 125,000 47 $5,901,300

Farm wholesalers/co

- ops 500 250 125,000 38 $4,796,300

Retail garden centers 500 250 125,000 32 $3,997,500

Fertilizer applicators 500 250 125,000 36 $4,502,500

Laboratory supply 50 100 5,000 47 $236,100

Total 2,486 n/a 548,600 n/a $21,697,400

### 54 * Wage rate information is fully explained in Appendix B.



### Table **32**

**. Labor Costs for Call Center** 

**- B**  **ased Point of Sale Activities** 

**– High Population** 

**Estimate**

Number

of AN

Facilities Estimated

Annual

Hours Estimated Total

Annual Hours Loaded hourly

Wage

- Sales

Representative Annual Cost of

Compliance

A B AxB C AxBxC

AN fertilizer manuf. 26 250 6,500 52 $337,100

AN explosives

manuf. 10 250 2,500 54 $136,200

Fertilizer mixers 600 250 150,000 52 $7,779,000

Explosives

distributors 1,000 500 500,000 47 $23,605,000

Farm

wholes alers/co

- ops 1,000 500 500,000 38 $19,185,000

Retail garden

centers 2,500 500 1,250,000 32 $39,975,000

Fertilizer applicators 1,000 500 500,000 36 $18,010,000

Laboratory supply 100 250 25,000 47 $1,180,300

Total 6,236 n/a 2,934,000 n/a $110,207,600

* Wage rate information is fully explained in Appendix B.



## Agent Verification

An agent is a person obtaining possession of ammonium nitrate on behalf of an AN

Purchaser. Because agents are not required to apply for and present an AN Registered User

Number, measures must be taken to confirm that the agent who is taking possession of

ammonium nitrate has been authorized to do so by the AN Purchaser. The Department

proposes three options to verify the identity of AN Purchaser’s agents.

1. Requiring AN Purchasers to submit the names of their agents to the Department via

the User Number Registration Portal, and requiring the AN Seller to confirm with

the Department , prior to transferring possession of the ammonium nitrate, that the

prospective AN Purchaser has submitted the name of the agent to the Department ;

2. Requiri ng the AN Seller to orally confirm with the AN Purchaser prior to each sale or

transfer that the agent is acting on behalf of the AN Purchaser;

3. A combination of the first two options, where an AN Seller check s with the

Department to see if the prospective AN Purchaser has submitted the name of the

agent to the Department and, the AN Seller verbally confirm s with the prospective

AN Purchaser that the agent is acting on his/her behalf.

### 55 Based on discussions with industry, the Department assumes about 20% of am monium

nitrate transactions will involve an agent. For the purposes of analysis, the Department

assumes that 25% of agent transactions (5% of the total transactions) will require verbal

confirmation. The AN Seller must confirm with the AN Purchaser that th e agent is acting on

the AN Purchaser’s behalf prior to the transfer of ammonium nitrate to the agent. Each

agent verification is assumed to take 10 minutes. The Department assumes the remaining

75% of transactions involving agents will use an agent that h as been pre

- registered with

the Department, and thus, will not require verbal confirmation. The costs of pre

registration of agents by AN Purchasers are discussed in Section 6

- Registration Activities.

Tables 33 and 34 present the costs associated with verifying agents.

**Table 33** 

**. Labor Costs for**  **Agent Verification**

**– Low**  **Population Estimate** *****

Number

of AN

Facilities 5% of

Transactions

per AN

Facility Hours per

verification

(10

minutes) Hours Spent

on POS

Agent

Verifications

per Year Loaded hourly

Wage

- Sales

Representative Annual Cost

of Agent

Verification

A B C BxC D AxBxCxD

AN fertilizer manuf. 26 50 0.2 8.3 $52 11,200

AN explosives manuf. 10 50 0.2 8.3 $54 4,500

Fertilizer mixers 400 50 0.2 8.3 $52 172,900

Explosives distributors 500 125 0.2 20.8 $47 491,800

Farm wholesale/co

ops 500 125 0.2 20.8 $38 399,700

Retail garden centers 500 125 0.2 20.8 $32 333,100

Fertilizer applicators 500 125 0.2 20.8 $36 375,200

Laboratory supply 50 50 0.2 8.3 $47 19,700

Total 2,486 n/a n/a n/a n/a 1,808,100

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.

### 56 **Table 34** 

**. Labor Costs for**  **Agent Verification**

**– High**  **Population Estimate** *****

Number

of AN

Facilities 5% of

Transactions

per AN

Facility Hours per

verification

10

minutes) Hours Spent

on POS

Agent

Verifications

per Year Loaded hourly

Wage

- Sales

Representative Annual Cost

of Agent

Verification

A B C BxC D AxBxCxD

AN fertilizer manuf. 26 125 0.2 20.8 $52 28,100

AN explosives manuf. 10 125 0.2 20.8 $54 11,300

Fertilizer mixers 600 125 0.2 20.8 $52 648,300

Explosives distributors 1000 250 0.2 41.7 $47 1,967,100

Farm wholesale/co

ops 1000 250 0.2 41.7 $38 1,598,800

Retail garden centers 2500 250 0.2 41.7 $32 3,331,300

Fertilizer applicators 1000 250 0.2 41.7 $36 1,500,800

Laboratory supply 100 125 0.2 20.8 $47 98,400

Total 6,236 n/a n/a n/a n/a 9,184,100

* Wage rate information is fully explained in Appendix B. Rounding may affect totals.

### 57 T ables 35 to 36 present the total costs by program year for web portal

- based point of sale

activities.

**Table 35** 

**. Total Costs for Web Portal** 

**- B**  **ased Point of Sale Activities by Program Year**

**– Low** 

**Population Estimate ($)** 

Computer and

Phone Line Labor Costs

(Transactions) Agent

Verification Purchaser

Opportunity

Cost Total

Annual

Costs

PY1 508,900 18,081,000 1,808,100 3,488,500 23,886,500

PY2 179,600 18,081,000 1,808,100 3,488,500 23,557,200

PY3 179,600 18,081,000 1,808,100 3,488,500 23,557,200

PY4 179,600 18,081,000 1,808,100 3,488,500 23,557,200

PY5 179,600 18,081,000 1,808,100 3,488,500 23,557,200

PY6 508,900 18,081,000 1,808,100 3,488,500 23,886,500

PY7 179,600 18,081,000 1,808,100 3,488,500 23,557,200

PY8 179,600 18,081,000 1,808,100 3,488,500 23,557,200

PY9 179,600 18,081,000 1,808,100 3,488,500 23,557,200

PY10 179,600 18,081,000 1,808,100 3,488,500 23,557,200

Total 2,454,600 180,810,000 18,081,000 34,885,000 236,230,600

### 58 **Table 36** 

**. Total Costs for**  **Web Portal**

**- Based**  **Point of Sale Activities by Program Year** 

**– High** 

**Population Estimate ($)** 

Computer and

Phone Line Labor Costs

(Transactions) Agent

Verification Purchaser

Opportunity

Cost Total Annual

Costs

PY1 1,380,100 91,839,600 9,184,000 18,112,900 120,516,600

PY2 487,100 91,839,600 9,184,000 18,112,900 119,623,600

PY3 487,100 91,839,600 9,184,000 18,112,900 119,623,600

PY4 487,100 91,839,600 9,184,000 18,112,900 119,623,600

PY5 487,100 91,839,600 9,184,000 18,112,900 119,623,600

PY6 1,380,100 91,839,600 9,184,000 18,112,900 120,516,600

PY7 487,100 91,839,600 9,184,000 18,112,900 119,623,600

PY8 487,100 91,839,600 9,184,000 18,112,900 119,623,600

PY9 487,100 91,839,600 9,184,000 18,112,900 119,623,600

PY10 487,100 91,839,600 9,184,000 18,112,900 119,623,600

Total 6,657,000 918,396,000 91,840,000 181,129,000 1,198,022,000



### Tables 37 and 38 present the total costs by program year for call center

- based point of sale

activities.

**Table 37** 

**. Total Costs for**  **Call Center**

**- Based**  **Point of Sale Activities by Program Year** 

**– Low** 

**Population Estimate ($)** 

Labor Costs

(Transactions) Agent

Verification Total

Annual Costs

PY1 21,697,200 1,808,100 23,505,300

PY2 21,697,200 1,808,100 23,505,300

PY3 21,697,200 1,808,100 23,505,300

PY4 21,697,200 1,808,100 23,505,300

PY5 21,697,200 1,808,100 23,505,300

PY6 21,697,200 1,808,100 23,505,300

PY7 21,697,200 1,808,100 23,505,300

PY8 21,697,200 1,808,100 23,505,300

PY9 21,697,200 1,808,100 23,505,300

PY10 21,697,200 1,808,100 23,505,300

Total 216,972,000 18,081,000 235,053,000



### Table **38**

**. Total Costs for**  **Call Center**

**- Based**  **Point of Sale Activities by Program Year** 

**– High** 

**Population Estimate ($)** 

Labor Costs

(Transactions) Agent Verification Total Annual Costs

### 59 PY1 110,207,500 9,184,000 119,391,500

PY2 110,207,500 9,184,000 119,391,500

PY3 110,207,500 9,184,000 119,391,500

PY4 110,207,500 9,184,000 119,391,500

PY5 110,207,500 9,184,000 119,391,500

PY6 110,207,500 9,184,000 119,391,500

PY7 110,207,500 9,184,000 119,391,500

PY8 110,207,500 9,184,000 119,391,500

PY9 110,207,500 9,184,000 119,391,500

PY10 110,207,500 9,184,000 119,391,500

Total 1,102,075,000 91,840,000 1,193,915,000



## Opportunity Cost

Whether the seller utilizes a web

- based portal, the call center option, or some combination,

the purchaser will likely have some additional time added to the transaction purchase. As

described at the beginning of this section (Point of Sale Activities) any increase in time is an

opportunity cost to the purchaser. Based upon the Department ’s estimate that the average

increase will resemble a credit card or check verification, the Department has used an

estimate of an average of 6 0 seconds (. 0 17 hrs) for each transaction times the number of

transactions times the average loaded wage rate from Appendix B. DHS believes most

transactions will resemble existing commercial order fulfillment with orders being place in

advance such that th e purchaser contact time for information exchange will be minimal,

perhaps almost as quick as a normal credit card transaction. Additionally, as previously

mentioned, 12 states already require the same basic information except for the registration

number DHS is proposing. The following table shows the calculations of this marginal cost.

**Table 39**  **. Point of Sale Opportunity**  **Costs (First Year Detail and Yrs 1** 

**- 10)** 

First Year Detail Total

Number of

Transactions

(A) Hrs/

Transaction

(B) Total Hours

(C=A*B) Weighted

Average

Wage Rate

(D: From

Appendix

B) Purchaser

Opportunity

Cost

(E=C*D) Avg Cost/

T ransaction

(F=E/A)

Low Estimate 5,486,700 0.017 91,445 $38.15 $3,488,523 $0.64

High Estimate 29,342,486 0.017 489,041 $37.04 $18,112,934 $0.62

### 60 

## 9. Recordkeeping

The Department requires that AN Facilities maintain records of each ammonium nitrate

sale or transfer that include among other elements :

**•** Date of sale or transfer;

**•** Quantity of ammonium nitrate sold or transferred;

**•** Name, address, telephone number, AN Registered User Number, and passport or

photo identification document number of the AN Purchaser purchas ing or taking

possession of the ammonium nitrate sold or transfer red;

**•** If an AN Agent purchase s or takes possession of ammonium nitrate, name, address,

telephone number, and passport or driver’s license number of the AN Agent

purchas ing or taking possession of the ammonium nitrate sold or transferred; and

**•** Confirmation r eceived from the Department as part of the notification proce ss

described in 6 CFR 31.305(a ) ( 4 ) and 6 CFR 31.310(a ) ( 4)

.

The records generated at the point of sale must be kept on file for two years. These record s

could be stored electronically or on pap er, in any format the seller chooses, for example as

an amendment to a sales invoice or with a log book similar to the one many pharmacies use

to record information on sales of certain regulated medicines. The cost of creating the

transaction record is inc luded in the cost of point of sale activities. The Department

requires that these records be protected by reasonable actions. Recent point of sale records

can be kept out of public view in an employee

- only area.

For the purpose of this analysis, the Depar tment assumes that all AN Facilities will

purchase a locked filing cabinet to maintain records at a cost of $350 each. 37 

### In addition,

AN Facilities that use paper records will also incur the cost of additional paper and printer

ink/toner. The department ass umes an additional box of paper ($50) and additional

printer ink/toner supplies ($200). 38



### The Department assumes an administrative or office worker will spend 48 hours per year

(four hours per month) maintaining records, such as filing, binding, etc. The a verage loaded

hourly wage at the 50 th 

### percentile ranges from $17 to $24 per hour.

The Department also considered requiring maintaining records in encrypted electronic

files. This would have placed a significant burden on the regulated community with litt le

gain in the security of the records. Rather, the Department is allowing the regulated

37 http://www.staples.com.

38 http://www.staples.com.

### 61 community to maintain their records either electronically or on paper as long as

reasonable actions are taken to protect the information.

The Department also considered requiring AN Facilities to keep more detailed transaction

records, including information on the number of acres treated (for agricultural consumers).

AN Purchasers are under no obligation to maintain records proposed in thi s rule

. Tables

40

- 45 show the costs for paper

- based recordkeeping, the primary estimate.

**Table 40** 

**. Physical Costs for**  **Paper**

**- Based**  **Recordkeeping**

**– Low Population Estimate** 

Number

of AN

Facilities Locked

filing

cabinet Paper &

Toner Initial Cost Annual

Cost Total

Initial

Cost Total

Annual

Cost

A B C B+C C Ax(B+C) AxC

AN fertilizer manuf. 26 350 250 600 250 15,600 6,500

AN explosives manuf. 10 350 250 600 250 6,000 2,500

Fertilizer mixers 400 350 250 600 250 240,000 100,000

Explosives distributors 500 350 250 600 250 300,000 125,000

Farm wholesalers/ co

- ops 500 350 250 600 250 300,000 125,000

Retail garden centers 500 350 250 600 250 300,000 125,000

Fertilizer applicators 500 350 250 600 250 300,000 125,000

Laboratory supply 50 350 250 600 250 30,000 12,500

Total 2,486 350 250 600 250 1,491,600 621,500

### 62 **Table 41** 

**. Physical Costs for**  **Paper**

**- Based**  **Recordkeeping**

**– High Population Estimate** 

Number

of AN

Facilities Locked

filing

cabinet Paper &

Toner Initial Cost Annual

Cost Total

Initial

Cost Total

Annual

Cost

A B C B+C C Ax(B+C) AxC

AN fertilizer manuf. 26 350 250 600 250 15,600 6,500

AN explosives manuf. 10 350 250 600 250 6,000 2,500

Fertilizer mixers 600 350 250 600 250 360,000 150,000

Explosives distributors 1,000 350 250 600 250 600,000 250,000

Farm wholesalers/ co

- ops 1,000 350 250 600 250 600,000 250,000

Retail garden centers 2,500 350 250 600 250 1,500,000 625,000

Fertilizer applicators 1,000 350 250 600 250 600,000 250,000

Laboratory supply 100 350 250 600 250 60,000 25,000

Total 6,236 350 250 600 250 3,741,600 1,559,000



### Table **42 . Labor**  **Costs for Paper** 

**- Based**  **Recordkeeping**

**– Low Population Estimate** 

Number of

AN Facilities Average loaded

hourly wage

-

Office &

administrative

support services Hours per AN

F acility spent

on

recordkeeping Total cost for

recordkeeping

A B C AxBxC

AN fertilizer manufacturers 26 $22 48 27,500

AN explosives manufacturers 10 $24 48 11,400

Fertilizer mixers 400 $22 48 423,200

Explosives distributors 500 $22 48 534,200

Farm wholesalers/co

- ops 500 $18 48 442,100

Ret ail garden centers 500 $17 48 403,400

Fertilizer applicators 500 $17 48 417,100

Laboratory supply 50 $22 48 53,400

Total 2,486 n/a n/a 2,312,300

* Wage rate information is fully explained in Appendix B.

### 63 **Table 43**  **. Labor Costs for**  **Paper**

**- Based**  **Recordkeeping**

**– High**  **Population Estimate**

Number of

AN Facilities Average loaded

hourly wage

-

Office &

administrative

support services* Hours per AN

F acility spent

on

recordkeeping Total cost for

recordkeeping

A B C AxBxC

AN fertilizer manufacturers 26 $22 48 27,500

AN explosives manufacturers 10 $24 48 11,400

Fertilizer mixers 600 $22 48 634,800

Explosives distributors 1,000 $22 48 1,068,500

Farm wholesalers/co

- ops 1,000 $18 48 884,200

Retail garden centers 2,500 $17 48 2,017,200

Fertilizer applicators 1,000 $17 48 834,200

Laboratory supply 100 $22 48 106,800

Total 6,236 n/a n/a 5,584,600

* Wage rate information is fully explained in Appendix B.



### Table **44**

**. Total Costs for Paper** 

**- B**  **ased Recordkeeping**

**– Low Population Estimate** 

Physical costs

for

recordkeeping Labor costs for

recordkeeping Total cost for

time for

recordkeeping

PY1 1,491,600 2,312,400 3,804,000

PY2 621,500 2,312,400 2,933,900

PY3 621,500 2,312,400 2,933,900

PY4 621,500 2,312,400 2,933,900

PY5 621,500 2,312,400 2,933,900

PY6 621,500 2,312,400 2,933,900

PY7 621,500 2,312,400 2,933,900

PY8 621,500 2,312,400 2,933,900

PY9 621,500 2,312,400 2,933,900

PY10 621,500 2,312,400 2,933,900

Total 7,085,100 23,124,000 30,209,100

### 64 **Table 45**  **. Total Costs for Paper**

**- Based Recordkeeping** 

**– High**  **Population Estimate**

Physical costs

for

recordkeeping Labor costs for

recordkeeping Total cost for

time for

recordkeeping

PY1 3,741,600 5,584,600 9,326,200

PY2 1,559,000 5,584,600 7,143,600

PY3 1,559,000 5,584,600 7,143,600

PY4 1,559,000 5,584,600 7,143,600

PY5 1,559,000 5,584,600 7,143,600

PY6 1,559,000 5,584,600 7,143,600

PY7 1,559,000 5,584,600 7,143,600

PY8 1,559,000 5,584,600 7,143,600

PY9 1,559,000 5,584,600 7,143,600

PY10 1,559,000 5,584,600 7,143,600

Total 17,772,600 55,846,000 73,618,600



### Alternatively, although it is not required, businesses may keep their records electronically.

Under this scenario, DHS assumes that a small number of businesses will need to purchase

a computer loaded with basic spreadsheet software. Additionally, there may be a larger

time commitment to updating records and inputting data into a spreadsheet. Therefore,

DHS estimates six hours per month to maintain electronic records. Tables 4 6 to 5 1 present

the costs associated with the alternative electronic

- based recordkeeping.

**Table 46** 

**. Physical Costs for**  **Electronic**

**- Based**  **Recordkeeping**

**– Low Population Estimate** 

Number of

AN Facilities % without

computer Computer &

Printer Initial Cost Annual

Maintenance

(10% of total )

A B C D=AxBxC .1 * D

AN fertilizer manufacturers 26 5% 1,000 1,300 130

AN explosives manufacturers 10 5% 1,000 500 50

Fertilizer mixers 400 5% 1,000 20,000 2,000

Explosives distributors 500 10% 1,000 50,000 5,000

Farm wholesalers/co

- ops 500 15% 1,000 75,000 7,500

Retail garden centers 500 15% 1,000 75,000 7,500

Fertilizer applicators 500 15% 1,000 75,000 7,500

Laboratory supply 50 5% 1,000 2,500 250

Total 2,486 n/a n/a 299,300 29,930

### 65 **Table 47** 

**. Physical Costs for**  **Electronic**

**- Based**  **Recordkeeping**

**– High Population Estimate** 

Number

of AN

Facilities %

without

computer Computer

& Printer Initial

Cost Annual

Maintenance

(10% of

total )

A B C D= AxBxC .1 * D

AN fertilizer manufacturers 26 5% 1000 1,300 130



### AN explosives manufacturers 10 5% 1000 500 50



### Fertilizer mixers 600 5% 1000 30,000 3,000



### Explosives distributors 1000 10% 1000 100,000 10,000



### Farm wholesalers/co

- ops 1000 15% 1000 150,000 15,000



### Retail garden centers 2500 15% 1000 375,000 37,500



### Fertilizer applicators 1000 15% 1000 150,000 15,000



### Laboratory supply 100 5% 1000 5,000 500



### Total 6,236 n/a n/a 811,800 81,180



### Table **48 . Labor**  **Costs for Electronic** 

**- Based**  **Recordkeeping**

**– Low**  **Population Estimate**

Number of

AN

Facilities Average loaded

hourly wage

-

Office &

administrative

support services* Hours per AN

F acility spent

on

recordkeeping Total cost for

recordkeeping

A B C AxBxC

AN fertilizer manufacturers 26 22 72 41,259

AN explosives manufacturers 10 24 72 17,107

Fertilizer mixers 400 22 72 634,752

Explosives distributors 500 22 72 801,360

Farm wholesalers/co

- ops 500 18 72 663,120

Retail garden centers 500 17 72 605,160

Fertilizer applicators 500 17 72 625,680

Laboratory supply 50 22 72 80,136

Total 2,486 n/a n/a 3,468,574

* Wage rate information is fully explained in Appendix B.

### 66 **Table 49**  **. Labor Costs for**  **Electronic**

**- Based**  **Recordkeeping**

**– High**  **Population Estimate**

Number of

AN Facilit ies Average loaded

hourly wage

-

Office &

administrative

support services * Hours per AN

F acility spent

on

recordkeeping Total cost for

recordkeeping

A B C AxBxC

AN fertilizer manufacturers 26 22.04 72 41,259

AN explosives manufacturers 10 23.76 72 17,107

Fertilizer mixers 600 22.04 72 952,128

Explosives distributors 1,000 22.26 72 1,602,720

Farm wholesalers/ co

- ops 1,000 18.42 72 1,326,240

Retail garden centers 2,500 16.81 72 3,025,800

Fertilizer applicators 1,000 17.38 72 1,251,360

Laboratory supply 100 22.26 72 160,272

Total 6,236 n/a n/a 8,376,886

* Wage rate information is fully explained in Appendix B.



### Table **50**

**. Total Costs for Electronic** 

**- Based Recordkeeping** 

**– Low**  **Population Estimate**

Physical costs

for

recordkeeping Labor costs for

recordkeeping Total cost for time

for recordkeeping

PY1 299,300 3,468,574 3,767,874



### PY2 29,930 3,468,574 3,498,504



### PY3 29,930 3,468,574 3,498,504



### PY4 29,930 3,468,574 3,498,504



### PY5 29,930 3,468,574 3,498,504



### PY6 299,300 3,468,574 3,767,874



### PY7 29,930 3,468,574 3,498,504



### PY8 29,930 3,468,574 3,498,504



### PY9 29,930 3,468,574 3,498,504



### PY10 29,930 3,468,574 3,498,504



### Total 838,040 34,685,741 35,523,781

### 67 **Table 51** 

**. Total Costs for Electronic** 

**- B**  **ased Recordkeeping**

**– High Population Estimate** 

Physical costs for

recordkeeping Labor costs for

recordkeeping Total cost for time for

recordkeeping

PY1 811,800 8,376,886 9,188,686

PY2 81,180 8,376,886 8,458,066

PY3 81,180 8,376,886 8,458,066

PY4 81,180 8,376,886 8,458,066

PY5 81,180 8,376,886 8,458,066

PY6 811,800 8,376,886 9,188,686

PY7 81,180 8,376,886 8,458,066

PY8 81,180 8,376,886 8,458,066

PY9 81,180 8,376,886 8,458,066

PY10 81,180 8,376,886 8,458,066

Total 2,273,040 83,768,861 86,041,901



## 10. Reporting Theft and/or Loss

Any AN Facility Representative who has knowledge of theft or unexplained loss of

ammonium nitrate is required to report such theft or loss to Federal law enforcement

authorities within 24 hours of the time at which knowledge of theft or loss is acquired

. The

Department additionally encourages all other individuals who have possession or control

over ammonium nitrate (be they AN Sellers, AN Purchasers, any agents acting on their

behalf, or any other individuals) similarly to report any theft or unexplained loss of

ammonium nitrate that they become aware of.

Any time an AN Facility Representative or any other individu al employed by an AN Facility

encounters a situation where they believe a theft of ammonium nitrate has occurred, the

AN Facility Representative is responsible for ensuring that the theft is reported using the

procedures described below. Determining when t o report a loss, however, is not as

straightforward a proposition, as for bulk ammonium nitrate (as opposed to packaged or

bagged ammonium nitrate ), it is not atypical for small percentages of ammonium nitrate to

be “lost” as part of normal industrial and shipping business practices. While individually,

such losses may tend to be de minimis, in the aggregate, they may amount to large amounts

of lost ammonium nitrate

. The Department seeks not to unduly burden individuals

involved in the manufacturing, storag e, transportation, or use of bulk ammonium nitrate

, but on the other hand does seek to impose loss reporting requirements which will aid the

Federal government in preventing terrorist misappropriation of ammonium nitrate

. Accordingly, the Department is pro posing to require the AN Facility Representative to

report any loss of ammonium nitrate they become aware of to ATF when the loss deviates

### 68 from the amount of loss that typically occurs during routine production, storage,

transportation, or use of the ammon ium nitrate . Because of ATF’s unique explosives

related law enforcement mission, the Department is proposing allowing ATF to take the

lead on investigating theft or loss of ammonium nitrate . If this occurs, the Department will

coordinate with ATF to ensure proper tracking and coordination of reported ammonium

nitrate thefts and losses

.

Thefts and losses of ammonium nitrate are to be reported to ATF by telephoning a

nationwide toll free number, followed up with submission to ATF of a completed paper

form detailing the incident. The Department would work with ATF to determine the

appropriate information to be reported and proper template for a form specific to

reporting the theft or loss of ammonium nitrate

. While there is no statutory requirement

for AN Fa cility Representatives or other registered individuals who have knowledge of a

theft or unexplained loss to report such incidents to local law enforcement, the Department

encourages AN F acilities and individuals to do so in addition to reporting the theft or loss

to ATF.

Because of the seriousness of theft or loss of ammonium nitrate , the total time to report a

theft or loss is assumed to include 1.8 hours of an inventory manager plus one hour of the

general manager. This includes the time for the reporter to organize useful details for law

enforcement and conduct a brief investigation. There will likely be additional time for a

more thorough follow

- up investigation. Strictly for purposes of this analysis, the

Department assumes that 2% of AN Facilities wil l report loss or theft once per year.

### 69 Table 5 2 shows the number of theft and loss reports expected to be generated in a typical

year.

**Table 52**  **. Estimated Number of Theft/Loss Reports Generated**

AN Facility Owners % of AN Facilities

reporting

theft/loss Annual Number of

Theft/Loss Reports

Generated

Low High Low High

A B C AxC BxC

AN fertilizer manufacturers 26 26 2.0% 0.5 0.5

AN explosives manufacturers 10 10 2.0% 0.2 0.2

Fertilizer mixers 400 600 2.0% 8 12

Explosives distributors 500 1,000 2.0% 10 20

Farm wholesalers/co

- ops 500 1,000 2.0% 10 20

Retail garden centers 500 2,500 2.0% 10 50

Fertilizer applicators 500 1,000 2.0% 10 20

Laboratory supply 50 100 2.0% 1 2

Total 2,486 6,236 n/a 50 125



### Tables 5 3 through 5 5 present the costs for reporting theft and loss.

**Table 53** 

**. Costs for Reporting Theft and Loss** 

**– Low Population**  **Estimate**

Annual

Number of

Reports Total Hours

for

Inventory

Manager

(1.8 hours

per report) Average

loaded hourly

wage

-

Transportation

, storage, &

dist mgr* Total

Hours for

General

Manager

(1.0 hour

per

report) Average

loaded

hourly

wage

-

General

Manager Total cost

A Ax1.8 B Ax1.0 C (1.8AxB)+(AxC)

AN fertilizer

manufacturers 0.5 0.9 47 0.5 61 76

AN explosives

manufacturers 0.2 0.4 52 0.2 74 34

Fertilizer mixers 8 14.4 47 8 61 1166

Explosives distributors 10 18.0 52 10 73 1661

Farm wholesalers/co

- ops 10 18.0 48 10 63 1486

Retail garden centers 10 18.0 47 10 44 1294

Fertilizer applicators 10 18.0 45 10 87 1671

Laboratory supply 1 1.8 52 1 73 166

Total 50 89.5 n/a n/a 7,554

* Wage rate information is fully explained in Appendix B.

### 70 **Table 54** 

**. Costs for Reporting Theft and Loss** 

**– High**  **Population Estimate** 

Annual

Number of

Reports Total Hours

for

Inventory

Manager

(1.8 hours

per report) Average

loaded hourly

wage

-

Transportation

, storage, & dist

mgr* Total

Hours

for

General

Manager

(1.0 hour

per

report) Average

loaded

hourly

wage

-

General

Manager Total cost

A Ax1.8 B Ax1.0 C (1.8AxB)+(AxC)

AN fertilizer

manufacturers 0.5 0.9 47 0.52 61 76

AN explosives

manufacturers 0.2 0.4 52 0.2 74 34

Fertilizer mixers 12 21.6 47 12 61 1,749

Explosives distributors 20 36.0 52 20 73 3,323

Farm wholesalers/co

ops 20 36.0 48 20 63 2,971

Retail garden centers 50 90.0 47 50 44 6,470

Fertilizer applicators 20 36.0 45 20 87 3,343

Laboratory supply 2 3.6 52 2 73 332

Total 125 224.0 n/a 125 n/a 18,297

* Wage rate information is fully explained in Appendix B.



### Table **55**

**. Annual Costs for Reporting Theft and Loss** 

Low Population High population

PY1 7,556 19,143

PY2 7,556 19,143

PY3 7,556 19,143

PY4 7,556 19,143

PY5 7,556 19,143

PY6 7,556 19,143

PY7 7,556 19,143

PY8 7,556 19,143

PY9 7,556 19,143

PY10 7,556 19,143

Total 75,556 191,428

### 71 

## 11. Audits and I nspections

The proposed rule requires AN Facilities to undergo an inspection or audit of their records

to evaluate their compliance with the ammonium nitrate rules. This includes a review of all

records maintained as part of the recordkeeping requirements for point of sale

transactions. Further, the Department is considering inspecting documents relating to the

identities and registration status of persons selling, transferring, and/or purchasing

ammonium nitrate

. For this analysis, it is assumed that 25 % of AN Facilities will be

audited/inspected per year. Thus, about 500

- 1,300 inspections/ audits would be pe rformed

each year. Generally speaking, DHS inspectors will give AN Facilities a minimum of 24

hours notice prior to an audit/inspection. Preparation for an inspection/audit will take two

hours of both an AN F acility M anager (or equivalent position) and a c lerical person

. The

audits could take less than an hour for a small business to a full day for a larger volume

business , but on average, each audit is assumed to take four hours to complete. During the

day of the audit/inspection, the Department assumes an other four hours for both the AN

Facility Manager and a clerical person who will be on hand to retrieve the records and be

available to answer questions of the auditor. Thus, each inspection is expected to require a

total of six hours of each the AN Facili ty Manager and a clerical person. The average loaded

hourly wage for the AN Facility Manager ranges from $47

- $52 and the average loaded

hourly wage for the clerical person ranges from $17

- $24

.

### 72 Tables 5 6 to 5 8 present the costs associated with preparin g for and undergoing audits and

inspections.

**Table 56** 

**. Cost of Audits/Inspections** 

**– Low Population Estimate** 

AN Facilities %

Receiving

Inspection Hours of

inspection Loaded hourly

wage

-

Transportation

, storage, &

dist mgr* Loaded hourly

wage

- Office &

administrative

support

services Total Cost

per

Inspection Total Cost

of Audits/

Inspections

A B C D E Cx(D+E) AxBxCx

(D+E)

AN fertilizer

manuf. 26 25% 6 47 22 415 2,696

AN explosives

manuf. 10 25% 6 52 24 455 1,138

Fertilizer mixers 400 25% 6 47 22 415 41,484

Explosives

distributors 500 25% 6 52 22 446 55,703

Farm wholesalers/

co

- ops 500 25% 6 48 18 397 49,673

Retail garden

centers 500 25% 6 47 17 384 48,008

Fertilizer

applicators 500 25% 6 45 17 372 46,538

Laboratory supply 50 25% 6 52 22 446 5,570

Total 2,486 n/a n/a n/a n/a n/a 250,809

* Wage rate information is fully explained in Appendix B.

### 73 **Table 57** 

**. Cost of Audits/Inspections** 

**– High Population Estimate** 

AN

Facilities %

Receiving

Inspection Hours of

inspection Loaded hourly

wage

-

Transportation

, storage, &

dist mgr* Loaded hourly

wage

- Office &

administrative

support services Total

Cost

per

Inspecti

on Total Cost of

Audits/

Inspections

A B C D E Cx (D+E

) AxBxCx

(D+E)

AN fertilizer manuf. 26 25% 6 47 22 415 2,696

AN explosives manuf. 10 25% 6 52 24 455 1,138

Fertilizer mixers 600 25% 6 47 22 415 62,226

Explosives distributors 1000 25% 6 52 22 446 111,405

Farm wholesalers/

co

- ops 1000 25% 6

48 18 397 99,345

Retail garden centers 2500 25% 6 47 17 384 240,038

Fertilizer applicators 1000 25% 6 45 17 372 93,075

Laboratory supply 100 25% 6 52 22 446 11,141

Total 6,236 n/a n/a n/a n/a n/a 621,064

* Wage rate information is fully explained in Appendix B.



### Table **58**

**. Cost of Inspections/Audits** 

Low

Population

Estimate High

Population

Estimate

PY1 250,809 621,064



### PY2 250,809 621,064



### PY3 250,809 621,064



### PY4 250,809 621,064



### PY5 250,809 621,064



### PY6 250,809 621,064



### PY7 250,809 621,064



### PY8 250,809 621,064



### PY9 250,809 621,064



### PY10 250,809 621,064



### Total 2,508,088 6,210,635



## 12. Federal Costs

The federal government will incur cost to create, staff, and maintain the infrastructure the

rule implementation will require. A number of the costs are fairly constant over time after

initial startup and certain costs are dependent upon the number of vetting transactions

### 74 that occur in a year. The first group of costs relate to the web

- portal, the purchaser

verification portal, e lectronic records database, theft report support, inspection and audit,

the help desk, and various TSA support costs. The various vetting costs vary with the

annual vetting transactions. Tables 59

- 60 reflect these fixed level costs for 10 years of the

p rogram and are made up of the following types of costs:

Registration Web

- Portal Costs

The annual registration web

- portal costs include: (1) Operating and Maintenance (O&M)

costs estimated at $750,000; and (2) the associated management and coordination cos ts

for the web

- portal activity estimated at $165,900. (i.e., the fully loaded cost of employing

one government employee at the GS

- 14 level).

Purchaser Verification Portal Costs

The annual Purchaser Verification Portal costs include: (1) Operating and Main tenance

(O&M) costs estimated at $750

, 000 and (2) the associated management and coordination

costs for the web

- portal activity estimated at $165,900 (i.e., the fully loaded cost of

employing one government employee at the GS

- 14 level).

Electronic Recordkeeping Database Web

- Portal

The annual Electronic Recordkeeping Database web

- portal costs include: (1) Operating and

Maintenance (O&M) costs estimated at $750

, 000 and (2) the associated management and

coordination costs for the web

- portal activity es timated at $165,900 (i.e., the fully loaded

cost of employing one government employee at the GS

- 14 level).

Reporting Theft and Loss

Funds to support the ATF activities associated with theft and loss reporting are estimated

to be $250,000.

Inspections & A udits

The associated management and coordination costs for the information collected due to

Inspections & Audits are equivalent to the fully loaded cost of employing two government

employees at the GS

- 14 level and are estimated to be $331,800.

Ammonium Ni trate Helpdesk Costs

Based upon historical experience, the annual cost to implement and manage a helpdesk is

estimated to be $2,400,000.

TSA Support Costs

### 75 In addition to the vetting, TSA will charge the program for TSA program support, startup

capital , O& M, and match resolution. These costs are $3.2 million for the first year and

$$1.4 million for out years.

**Table 59** 

**. Federal Costs System and Support, Fixed Level,**  **All Population s** 

Web Registration Portal Purchaser Verification

Portal Electronic Records

Database Portal

Startup

and O&M

(A) Portal

Manager

(B) Portal

Manager
(C) O&M (D) Portal

Manager

(E) O&M (F)

PY1 1,500,000 165,900 165,900 750,000 165,900 750,000

PY2 750,000 165,900 165,900 750,000 165,900 750,000

PY3 750,000 165,900 165,900 750,000 165,900 750,000

PY4 750,000 165,900 165,900 750,000 165,900 750,000

PY5 750,000 165,900 165,900 750,000 165,900 750,000

PY6 750,000 165,900 165,900 750,000 165,900 750,000

PY7 750,000 165,900 165,900 750,000 165,900 750,000

PY8 750,000 165,900 165,900 750,000 165,900 750,000

PY9 750,000 165,900 165,900 750,000 165,900 750,000

PY10 750,000 165,900 165,900 750,000 165,900 750,000

Total 8,250,000 1,659,000 1,659,000 7,500,000 1,659,000 7,500,000



### Table **60**

**. Federal Costs System and Support, Fixed Level,**  **All Population s (cont’d)** 

Theft

Report

Processing
(G) Inspection

and Audits

(H) Help Desk

(I) TSA

Support

Costs (J) SubTotal System and

Support Costs

(Sum of Table 58 and

59 A

- K)

PY1 250,000 331,800 2,400,000 3,167,689 9,647,189

PY2 250,000 331,800 2,400,000 1,418,235 7,147,735

PY3 250,000 331,800 2,400,000 1,418,235 7,147,735

PY4 250,000 331,800 2,400,000 1,418,235 7,147,735

PY5 250,000 331,800 2,400,000 1,418,235 7,147,735

PY6 250,000 331,800 2,400,000 1,418,235 7,147,735

PY7 250,000 331,800 2,400,000 1,418,235 7,147,735

PY8 250,000 331,800 2,400,000 1,418,235 7,147,735

PY9 250,000 331,800 2,400,000 1,418,235 7,147,735

PY10 250,000 331,800 2,400,000 1,418,235 7,147,735

Total 2,500,000 3,318,000 24,000,000 15,931,804 73,976,804



### Tables 61

- 63 show the annual transactions times the cost/transaction for the annual

vetting cost for low, high, and mean population scenarios.

**Table 61**  **.Federal Vetting and Total Costs, Low Population Scenario**

### 76 New Vetting

Transactions Cost /

Transaction Vetting Cost Subtotal from

Detailed

Federal

Tables Total Federal

Costs

PY1 144,210 3.97 572,514 9,647,189 10,219,703

PY2 36,053 3.97 143,128 7,147,735 7,290,863

PY3 37,855 3.97 150,285 7,147,735 7,298,020

PY4 39,748 3.97 157,799 7,147,735 7,305,534

PY5 41,735 3.97 165,689 7,147,735 7,313,424

PY6 94,798 3.97 376,346 7,147,735 7,524,081

PY7 77,906 3.97 309,287 7,147,735 7,457,022

PY8 81,801 3.97 324,751 7,147,735 7,472,486

PY9 85,891 3.97 340,988 7,147,735 7,488,723

PY10 90,186 3.97 358,038 7,147,735 7,505,773

Total 730,183 3.97 2,898,825 73,976,804 76,875,629



### Table **62 . Federal Vetting and Total Costs,**  **High Population Scenario**

New Vetting

Transactions Cost /

Transaction Vetting Cost Subtotal from

Detailed Federal

Tables Total Federal

Costs

PY1 248,460 3.97 986,386 9,647,189 10,633,575

PY2 62,115 3.97 246,597 7,147,735 7,394,332

PY3 65,221 3.97 258,926 7,147,735 7,406,661

PY4 68,482 3.97 271,873 7,147,735 7,419,608

PY5 71,906 3.97 285,466 7,147,735 7,433,201

PY6 163,327 3.97 648,409 7,147,735 7,796,144

PY7 134,224 3.97 532,871 7,147,735 7,680,606

PY8 140,936 3.97 559,515 7,147,735 7,707,250

PY9 147,982 3.97 587,490 7,147,735 7,735,225

PY10 155,382 3.97 616,865 7,147,735 7,764,600

Total 1,258,035 3.97 4,994,398 73,976,804 78,971,202



### Table **63 .Federal Vetting and Total Costs, Mean Population**  **Scenario**

New Vetting

Transactions Cost /

Transaction Vetting Cost Subtotal from

Detailed Federal

Tables Total Federal

Costs

PY1 196,335 3.97 779,450 9,647,189 10,426,639

PY2 49,084 3.97 194,862 7,147,735 7,342,597

PY3 51,538 3.97 204,606 7,147,735 7,352,341

PY4 54,115 3.97 214,836 7,147,735 7,362,571

PY5 56,821 3.97 225,578 7,147,735 7,373,313

PY6 129,062 3.97 512,378 7,147,735 7,660,113

PY7 106,065 3.97 421,079 7,147,735 7,568,814

PY8 111,368 3.97 442,133 7,147,735 7,589,868

PY9 116,937 3.97 464,239 7,147,735 7,611,974

PY10 122,784 3.97 487,451 7,147,735 7,635,186

Total 994,109 3.97 3,946,612 73,976,804 77,923,416

### 77 

## 1 3 . Total Costs

Tables 64 to 72 detail the total costs by program year of this proposed rule. The

undiscounted 10 year costs range from $433 million for the low population/low

transactions scenario to $1.5 billion for the high population/high transactions scenario.

Similarly, we have provided estimates of the total costs for the proposed rule at discount

rates of 7% and 3%. The average costs by type of AN Facility and program element for this

proposed rule are presented in Section 1 4

– Initial Regulatory Flexibility Analysis in Tables

79 through 83.

**Table 64** 

**. . Summary of**  **Cost s**  **(Undiscounted $ millions)**

**– Low Population**  **/Low Transactions**

**Estimate** *****

Registration Appeals Point

of

Sale Record

keeping Reporting

Theft/Loss Audits/

Inspections Federal

Costs Total

Cost

PY1 15.9 0.1 23.9 3.8 0.0 0.3 10.2 54.2

PY2 4.0 0.0 23.6 2.9 0.0 0.3 7.3 38.1

PY3 4.2 0.0 23.6 2.9 0.0 0.3 7.3 38.3

PY4 4.4 0.0 23.6 2.9 0.0 0.3 7.3 38.5

PY5 4.6 0.0 23.6 2.9 0.0 0.3 7.3 38.7

PY6 10.5 0.0 23.9 2.9 0.0 0.3 7.5 45.1

PY7 8.6 0.0 23.6 2.9 0.0 0.3 7.5 42.9

PY8 9.0 0.0 23.6 2.9 0.0 0.3 7.5 43.3

PY9 9.5 0.0 23.6 2.9 0.0 0.3 7.5 43.8

PY10 10.0 0.0 23.6 2.9 0.0 0.3 7.5 44.3

Total 80.7 0.1 236.6 29.9 0.0 3.0 76.9 427.2

***** Totals may not sum due to rounding



### Table **65**

**. Summary of**  **Costs ( Undiscounted $ millions)** 

**– Primary Estimate (mean of High and** 

**Low)** *****

Registration Appeals Point of

Sale Record

keeping Reporting

Theft/Loss Audits/

Inspections Federal

Costs Total Cost

PY1 20.2 0.1 72.2 6.6 0.0 0.5 10.4 109.9

PY2 5.1 0.0 71.6 5.0 0.0 0.5 7.4 89.5

PY3 5.3 0.0 71.6 5.0 0.0 0.5 7.4 89.7

PY4 5.6 0.0 71.6 5.0 0.0 0.5 7.4 90.0

PY5 5.9 0.0 71.6 5.0 0.0 0.5 7.4 90.3

PY6 13.3 0.1 72.2 5.0 0.0 0.5 7.7 98.7

PY7 10.9 0.1 71.6 5.0 0.0 0.5 7.6 95.6

PY8 11.5 0.1 71.6 5.0 0.0 0.5 7.6 96.2

PY9 12.1 0.1 71.6 5.0 0.0 0.5 7.6 96.8

PY10 12.7 0.1 71.6 5.0 0.0 0.5 7.7 97.4

Total 102.3 0.4 717.2 51.6 0.0 4.5 77.9 953.8

***** Totals may not sum due to rounding

### 78 **Table 66**  **. Summary of Cost**  **s (Undiscounted $ millions**  **)**

**– High Population**  **/High Transactions**

**Estimate** *****

Registration Appeals Point of

Sale Record

keeping Reporting

Theft/Loss Audits/

Inspections Federal

Costs Total Cost

PY1 24.4 0.1 120.5 9.3 0.0 0.6 10.6 165.5

PY2 6.1 0.0 119.6 7.1 0.0 0.6 7.4 140.8

PY3 6.4 0.0 119.6 7.1 0.0 0.6 7.4 141.1

PY4 6.7 0.0 119.6 7.1 0.0 0.6 7.4 141.4

PY5 7.1 0.0 119.6 7.1 0.0 0.6 7.4 141.8

PY6 16.1 0.1 120.5 7.1 0.0 0.6 7.8 152.2

PY7 13.2 0.1 119.6 7.1 0.0 0.6 7.7 148.3

PY8 13.9 0.1 119.6 7.1 0.0 0.6 7.7 149.0

PY9 14.6 0.1 119.6 7.1 0.0 0.6 7.7 149.7

PY10 15.3 0.1 119.6 7.1 0.0 0.6 7.8 150.5

Total 123.8 0.6 1,197.8 73.2 0.0 6.0 78.9 1,480.3

***** Totals may not sum due to rounding



### Table **67**

**. Summary of**  **Cost s**  **( 7 percent discount rate,**  **$ millions)**

**– Low**  **Population /Low** 

**Transactions Estimate**  *****

Registration Appeals Point of

Sale Record

- keeping Reporting

Theft/Loss Audits/

Inspections Federa l

Costs Total

Cost

PY1 14.9 0.1 22.3 3.6 0.0 0.2 9.6 50.7

PY2 3.5 0.0 20.6 2.6 0.0 0.2 6.4 33.3

PY3 3.4 0.0 19.2 2.4 0.0 0.2 6.0 31.2

PY4 3.3 0.0 18.0 2.2 0.0 0.2 5.6 29.3

PY5 3.3 0.0 16.8 2.1 0.0 0.2 5.2 27.6

PY6 7.0 0.0 15.9 2.0 0.0 0.2 5.0 30.1

PY7 5.4 0.0 14.7 1.8 0.0 0.2 4.6 26.7

PY8 5.3 0.0 13.7 1.7 0.0 0.1 4.3 25.1

PY9 5.2 0.0 12.8 1.6 0.0 0.1 4.1 23.8

PY10 5.1 0.0 12.0 1.5 0.0 0.1 3.8 22.5

Total 56. 2 0. 2 166 21. 4 0. 1 1. 8 54.6 300. 2

***** Totals may not sum due to rounding



### Table **68**

**. Summary of Costs (7 percent discount rate, $ millions)** 

**– Primary**  **Estimate**

**(mean of High and Low)** *****

Registration Appeals Point of

Sale Record

keeping Reporting

Theft/Loss Audits/

Inspections Federal

Costs Total Cost

PY1 18.9 0.1 67.5 6.2 0.0 0.4 9.8 102.7

PY2 4.4 0.0 62.6 4.4 0.0 0.4 6.5 78.2

PY3 4.3 0.0 58.4 4.1 0.0 0.4 6.0 73.2

PY4 4.2 0.0 54.7 3.8 0.0 0.4 5.7 68.7

PY5 4.2 0.0 51.1 3.6 0.0 0.3 5.3 64.4

PY6 8.9 0.0 48.1 3.4 0.0 0.3 5.1 65.8

PY7 6.8 0.0 44.6 3.1 0.0 0.3 4.7 59.5

### 79 PY8 6.7 0.0 41.7 3.0 0.0 0.3 4.4 56.0

PY9 6.6 0.0 39.0 2.8 0.0 0.2 4.2 52.6

PY10 6.5 0.0 36.4 2.6 0.0 0.2 3.9 49.5

Total 71.3 0.1 503.8 36.8 0.0 3.0 55.3 67 0.6

***** Totals may not sum due to rounding



### Table **69**

**. Summary of**  **Cost s**  **( 7 percent discount rate,**  **$ millions)**

**– High**  **Population /High** 

**Transactions Estimate** 

Registratio

n Appeal

s Point of

Sale Record

keeping Reporting

Theft/Loss Audits/

Inspectio

ns Federal

Costs Total

Cost

PY1 22.8 0.1 112.6 8.7 0.0 0.6 9.9 154.7

PY2 5.3 0.0 104.5 6.2 0.0 0.5 6.5 123.0

PY3 5.2 0.0 97.6 5.8 0.0 0.5 6.0 115.1

PY4 5.1 0.0 91.3 5.4 0.0 0.5 5.7 108.0

PY5 5.0 0.0 85.3 5.1 0.0 0.4 5.3 101.1

PY6 10.7 0.0 80.3 4.8 0.0 0.4 5.2 101.4

PY7 8.2 0.0 74.5 4.4 0.0 0.4 4.8 92.3

PY8 8.1 0.0 69.6 4.2 0.0 0.4 4.5 86.8

PY9 7.9 0.0 65.1 3.9 0.0 0.3 4.2 81.4

PY10 7.8 0.0 60.8 3.6 0.0 0.3 3.9 76.4

Tota

l 86. 3 0. 4 841.6 52. 2 0. 1 4. 4 56 1,041

. 0

***** Totals may not sum due to rounding



### Table **70 . Summary of**  **Cost s**  **( 3 percent discount rate,**  **$ millions )** 

**– Low**  **Population /Low** 

**Transactions Estimate**  *****

Registratio

n Appeal

s Point of

Sale Record

keeping Reporting

Theft/Loss Audits/

Inspectio

ns Federal

Costs Total

Cost

PY1 15.5 0.1 23.2 3.7 0.0 0.2 9.9 52.6

PY2 3.8 0.0 22.2 2.8 0.0 0.2 6.9 35.9

PY3 3.8 0.0 21.6 2.7 0.0 0.2 6.7 35

PY4 3.9 0.0 20.9 2.6 0.0 0.2 6.5 34.1

PY5 4.0 0.0 20.3 2.5 0.0 0.2 6.3 33.3

PY6 8.8 0.0 20.0 2.5 0.0 0.2 6.3 37.8

PY7 7.0 0.0 19.2 2.4 0.0 0.2 6.1 34.9

PY8 7.1 0.0 18.6 2.3 0.0 0.2 5.9 34.1

PY9 7.3 0.0 18.1 2.2 0.0 0.2 5.7 33.5

PY10 7.4 0.0 17.5 2.2 0.0 0.2 5.6 32.9

Tota

l 68. 5 0. 3 201. 5 25.9 0. 1 2. 1 65.9 364. 2

***** Totals may not sum due to rounding



### Table **71**

**. Summary of Costs (3 percent discount**  **rate , $**  **millions )** 

**– Primary Estimate (mean** 

**of High and Low)** *****

Registration Appeals Point of

Sale Record

keeping Reporting

Theft/Loss Audits/

Inspections Federal

Costs Total Cost

PY1 19.6 0.1 70.1 6.4 0.0 0.4 10.1 106.7

PY2 4.8 0.0 67.5 4.8 0.0 0.4 7.0 84.4

### 80 PY3 4.9 0.0 65.6 4.6 0.0 0.4 6.8 82.2

PY4 5.0 0.0 63.6 4.5 0.0 0.4 6.6 80.0

PY5 5.1 0.0 61.8 4.4 0.0 0.4 6.4 77.9

PY6 11.2 0.1 60.5 4.3 0.0 0.4 6.4 82.7

PY7 8.9 0.0 58.3 4.1 0.0 0.4 6.2 77.7

PY8 9.0 0.0 56.5 4.0 0.0 0.4 6.0 75.8

PY9 9.3 0.0 54.9 3.9 0.0 0.4 5.8 74.2

PY10 9.4 0.0 53.3 3.8 0.0 0.4 5.7 72.5

Total 86.9 0.2 611.9 44.5 0.0 3.7 66.8 81 4.0

***** Totals may not sum due to rounding



### Table **72 . Summary of**  **Cost s**  **( 3 percent discount rate,**  **$ millions)**

**– High**  **Population /High** 

**Transactions Estimate**  *****

Registratio

n Appeal

s Point of

Sale Record

keeping Reporting

Theft/Loss Audits/

Inspectio

ns Federal

Costs Total

Cost

PY1 23.7 0.1 117.0 9.1 0.0 0.6 10.3 160.8

PY2 5.8 0.0 112.8 6.7 0.0 0.6 7.0 132.9

PY3 5.9 0.0 109.5 6.5 0.0 0.6 6.8 129.3

PY4 6.0 0.0 106.3 6.3 0.0 0.6 6.6 125.8

PY5 6.1 0.0 103.2 6.2 0.0 0.5 6.4 122.4

PY6 13.5 0.1 100.9 6.0 0.0 0.5 6.5 127.5

PY7 10.7 0.0 97.3 5.8 0.0 0.5 6.2 120.5

PY8 10.9 0.0 94.4 5.6 0.0 0.5 6.1 117.5

PY9 11.2 0.0 91.7 5.5 0.0 0.5 5.9 114.8

PY10 11.4 0.0 89.0 5.3 0.0 0.5 5.8 112

Tota

l 105. 1 0. 5 1,022. 0 63. 1 0. 2 5. 3 67.6 1,263. 7

***** Totals may not sum due to rounding



## 1 4 . Initial Regulatory Flexibility Analysis

The Regulatory Flexibility Act of 1980 (RFA) establishes “as a principle of regulatory

issuance that agencies shall endeavor, consistent with the objective of the rule and of

applicable statutes, to fit regulatory and informational requirements to the scale of the

business, organizations, and governmental jurisdictions subject to regulation.'' To achieve

that principle, the RFA requires agencies to consider the potential impacts of their rules on

small entities

. The RFA covers a wide range of small entities, including small businesses,

not

- for

- profit organizations, and small govern mental jurisdictions.

Although the Department does not believe the proposed rule will have a significant

economic impact on a subst antial number of small entities, the agency has prepared an

Initial Regulatory Flexibility Analysis (IRFA) for public revie w and comment. The

### 81 Department requests comments on this IRFA and the potential impacts of the proposed

rule on small entities

.



## Section 1: Reasons for and Objectives of the Proposed Rule

T he FY 2008 Department of Homeland Secu rity Appropriations Act (P.L. 110

- 161) amends

the Homeland Security Act of 2002 and provides the Department with the authority to

“regulate the sale and transfer of ammonium nitrate by an ammonium nitrate facility . . . to

prevent the misappropriation or u se of ammonium nitrate in an act of terrorism.” For

additional information on the security hazards presented by the use of ammonium nitrate,

see Sections II.D.1 & 2 of the preamble. For additional information on the benefits of this

rule, please refer to S ection 3 above. Reason for the Proposed Rule

This proposed rule aims to prohibit a known or suspected terrorist from purchasing or

legally acquiring ammonium nitrate from an ammonium nitrate facility; additionally, only

individuals favorably vetted by the Department will be able to legally acquire ammonium

nitrate. Objective of the Proposed Rule



## S ection 2: Affected Small Business Population and Estimated Impact of Compliance

At this time, the Department’s preliminary estimate of the number of establishments that

either sell, purchase, or sell /transfer and purchase ammonium nitrate that will be cov ered

by this proposed rule range from 64,986 to 106,236 AN F acilities. This estimate is the

Department’s best estimate based on listening sessions with industry representatives and

plant food control officials, consultation with other Federal agencies and departments (e.g.,

USDA), and research across available information provided by industry and governmental

sources. Some of the business types identified in the analysis of purchasers are similar to

activities that could be conducted by nonprofits or small jurisdiction. The Department

believes impacts on nonprofits or small jurisdictions would be the same as any other

purchaser in this analysis. During the advanced notice of proposed rulemaking

, the

Department did not receive any information on nonprofits or small jurisdictions that might

be impacted and invites comments from these entities. After AN Se llers and AN P urchasers

register with the Department there will be a better understanding of how many and which

specific AN facilities will be subject to the requirements under this proposed rule.

Consequently, without the benefit of having the AN Registered User Number results, it is

very difficult to kn ow which AN Facilities will have to undergo the burden of verifying AN

Registered User Numbers, and maintain ing records of ammonium nitrate transactions. In

### 82 addition, the Department has offered some degree of flexibility when choosing the method

of verifying AN Registered User Numbers and maintaining records. The Department

expects that AN Facilities will take f ull a dvantage of this flexibility in order to minimize the

cost of this rule to their operations. These uncertainties make it very difficult to estimate

the extent of the economic impact of this rule on small entities.



## Number of Small Entities that may be AN Purchasers

The Small Business Administration (SBA) classifies farms as a small business if it has

receipts less than $750,000. The USDA Census of Agriculture provides data on the number

of farms by economic class based on the market value of agricultu ral products sold

(excluding government payments). Table 64 shows that 94.5% of farms had receipts of

$0.5 million or less; 97.4% of farms had receipts less than $1.0 million. Thus, it is clear that

the majority of farms are small entities.

### 83 **Table 73** 

**. Number of U.S. Farms by the Market Value of Agricultural Products Sold**  **(2007)**

Market value of

a gricultura l products

sold ($) Number of Farms % of Total

less than $1000 499,880 22.7%

$1000

- $2,499 270,712 12.3%

$2500

- $5,000 246,309 11.2%

$5,000

- $9,999 254,834 11.6%

$10,000

- $24,999 274,274 12.4%

$25,000

- 49,999 163,500 7.4%

$50,000

- $99,999 129,124 5.9%

$100,000

- $249,000 149,049 6.8%

$250,000

- $499,999 96,251 4.4%

$500,000

- $999,999 63,567 2.9%

more than $1,000,000 57,292 2.6%

Total Farms 2 ,204,792 100.0%

Source: 2007 Census of Agriculture, USDA (Table 3

- page

10)



### Tables 74 and 7 5 show the primary North American Industrial Classification System

(NAICS) codes, descriptions and SBA definitions for small entities that are AN Purchasers.

This comparison shows that the majority of businesses likely to be AN Purchasers are small

entities.

**Table 74** 

**. Primary NAICS Codes, Descriptions and Definitions for Small Entities that**  **May Be**

**AN Purchasers**  **( E**  **mployee S**  **ize )**  *****

Establishments by Employee Size

NAICS Description 0

- 4 5

- 9 10

- 19 20

- 99 100

- 499 (Subt otal )

<499 500+

2121 Coal Mining 194 96 100 233 149 772 375

% of total 17% 8% 9% 20% 13% 67% 33%

2122 Metal Mining 131 39 18 26 21 235 72

% of total 43% 13% 6% 8% 7% 77% 23%

2123 Nonmetallic Mineral Mining

and Quarrying 1,434 666 603 877 501 4,081 1,743

% of total 25% 11% 10% 15% 9% 70% 30%

325314 Fertilizer (Mixing Only)

Manufacturing 111 64 56 89 62 382 94

% of total 23% 13% 12% 19% 13% 80% 20%

### 84 424 91 Farm Supplies Merchant

Wholesalers 2,473 983 673 948 765 5,842 1,901

% of total 32% 13% 9% 12% 10% 76% 25%

42 4 69 Other Chemical & Allied

Products Merchant

Wholesalers 3,352 1,155 846 1,082 648 7,083 2,405

% of total 35% 12% 9% 11% 7% 74% 25%

* Totals may be affected by rounding.

### 85 **Table 75** 

**. Primary NAICS Codes, Descriptions and Definitions for Small Entities that**  **May Be**

**AN Purchasers**  **( Sales Size**  **)** *****

Establishments by Sales Size

NAICS Description < $0.1

mill $.1

- 0.5

mill $0.5

- 1 mill $1

- 5

mill $5

- 10

mill (Subtotal)

<$10 mill >$10 mill

213113 Support services

for Coal Mining 47 98 38 101 16 300 46

% of total 14% 28% 11% 29% 5% 87% 13%

213114 Support services

for Metal Mining 19 26 14 20

- 79 104

% of total 10% 14% 8% 11% 0% 43% 57%

213115 Support services

for Nonmetallic

Mining 24 47 17 40 8 136 15

% of total 16% 31% 11% 26% 5% 89% 10%

44422 Nursery, Garden

Center, and Farm

Supply Stores 1,872 5,004 2,675 3,941 830 14,322 3,461

% of total 11% 28% 15% 22% 5% 81% 20%

56173 Landscaping

Services 23,993 36,446 6,935 5,095 490 72,959 1,249

% of total 32% 49% 9% 7% 1% 98% 1%

71391 Golf Courses &

Country Clubs 1,172 3,802 2,041 3,333 588 10,936 906

% of total 10% 32% 17% 28% 5% 92% 7%

* Totals may be affected by rounding.



## Number of Small Entities that may be AN Sellers

In addition to regulating purchasers of ammonium nitrate, the proposed rule places

additional burdens on AN Sellers. These additional burdens include application for AN

Registered User Number, verifying AN Purchasers’ AN Registered User Numbers and photo

I D at the point of sale, maintaining records of point of sale transactions for two years and

reporting theft and loss of ammonium nitrate. AN Facilities that are in the middle of the

supply chain from manufacturer to end

- use consumer are both AN Sellers and AN

Purchasers. Data for each side of the transaction is included in the appropriate seller or

purchaser analysis. Costs to business that are both are likely to be something slightly less

than the sum of the two corresponding amounts for their business. It is likely that some of

the individuals needing registration numbers will conduct both sales and purchase

transactions. To the degree that this happens

, the costs presented here are overstated by

### 86 the number of individuals who only have to go through the registration process once

(subject to renewal and updates)

, rather than having two separate individuals.

Tables 7 6 and 76 show the primary NAICS codes, descriptions and definitions (both

employee size and revenues) for small entities that are AN Sellers. The majority of these AN

Facilities are classified as small entities by the Small Business Administration.

**Table 76** 

**. Primary NAICS Codes, Descriptions and Definitions for Small Entities that**  **May Be**

**AN Sellers ( E**  **mployee Size**  **)** *****

Establishments by Employee Size

NAICS Description 0

- 4 5

- 9 10

- 19 20

- 99 100

- 499 (Subt otal )

<499 500+

325311 Nitrogenous Fertilizer

Manufacturing 46 19 23 15 11 114 31

% of total 32% 13% 16% 10% 8% 79% 21%

325314 Fertilizer (Mixing Only)

Manufacturing 111 64 56 89 62 382 94

% of total 23% 13% 12% 19% 13% 80% 20%

32592 Explosives Manufacturing 8 4 10 16 13 51 31

% of total 10% 5% 12% 20% 16% 63% 38%

42291 Farm Supplies Merchant

Wholesalers 2,473 983 673 948 765 5,842 1,901

% of total 32% 13% 9% 12% 10% 76% 25%

42269 Other Chemical and Allied

Products Merchant

Wholesalers 3,352 1,155 846 1,082 648 7,083 2,405

% of total 35% 12% 9% 11% 7% 74% 25%

* Totals may be affected by rounding.

### 87 **Table 77** 

**. Primary NAICS Codes, Descriptions and Definitions for Small Entities that**  **May Be**

**AN Sellers ( S**  **ales S**  **ize)** *****

Establishments by Sales Size

NAICS Description < $0.1

mill $.1

- 0.5

mill $0.5

- 1

mill $1

- 5

mill $5

- 10

mill (Subtotal)

<$10 mill >$10

mill

115112 Soil Preparation,

Planting, and Cultivating 509 992 413 395 30 2,339 86

% of total 21% 41% 17% 16% 1% 96% 4%

44422 Nursery, Garden Center,

and Farm Supply Stores 1,872 5,004 2,675 3,941 830 14,322 3,461

% of total 11% 28% 15% 22% 5% 81% 20%

* Totals may be affected by rounding.



## Alternatives Considered

The Department considered several alternatives when developing this proposed rule. The

alternatives considered were: (1) register individuals applying for an AN Registered User

Number using a paper application (via facsimile or the US mail) ; through a web

- based

portal , or a telephone application process ; (2) verify AN Purchasers through both an

Internet

- based verification portal and call center rather than only a verification portal or

call center; (3) communicate with applicants for an AN Registered User Number through

US Mail rather than only through e

- mail or a secure web

- portal; (4) establish a specific

capability within the Department to receive, process, and respond to reports of theft or loss

rather than leverage a similar capability which already exists with the ATF; (5) require AN

Sellers and AN Facilities to maintain records electronically in a central database provided

by the Department rather than provi ding flexibility to the AN Seller and AN Facility to

maintain their own records either in paper or electronically; (6) require agents to register

with the Department prior to the sale or transfer of ammonium nitrate involving an agent

rather than allow ora l confirmation of the agent with the AN Purchaser on whose behalf the

agent is working; and (7) exempt explosives from this regulation rather than not exempting

them. Each of these alternatives is discussed below.

### 88 A. Registration

B. Verification

C. Communication with Applicants

D. Reporting Theft or Loss

E. Recordkeeping

F. Agents

G. Exemption of Explosives Regulated by ATF

A. Registration

The Department considered using one or more of three potential approaches for AN Seller

and AN Purchaser registration: paper applications submitted via facsimile or US Mail;

electronic applications via a web

- based portal ; or telephone application for a limted

number of applicants. The Department is proposing the use of a web

- based portal

- the “AN

User Registration Portal”

– as the sole mean s for registering to be an AN Purchaser or AN

Seller.

1. Registration through Facsimile or US Mail

Paper registration via facsimile or US Mail would require potential applicants to obtain and

fill out an application form and fax it or mail it to the Departm ent. The Department would

then process the application and communicate the results back to the potential applicant

via facsimile or US Mail.

Registration through facsimile or US Mail would have costs to both the industry and the

Department. For the indust ry, each prospective AN Seller or AN Purchaser applying for an

AN Registered User Number would have to spend approximately 45 minutes reading about

the rule and procedures for registration before completing the registration application. If

the application is paper

- based, the Department assumes it will take each applicant about

15 minutes to complete a paper application, fax or mail it to the Department, and file it for

his or her records. For the Department, supporting paper submission of application

materi als via facsimile or US Mail would require the hiring of staff to manually extract

information from the submitted application form for performance of the TSDB check and

submission into a registered user database maintained by the Department. The paper

appl ication process was not pursued or developed as the Department believes that it would

result in unacceptably lengthy application processing times, and unacceptable delays

between submission of applications and receipt of AN Registered User Numbers.

2. Registr ation through USDA Extension Service Office

### 89 During the ANPRM DHS received the suggestion to consider the USDA extension offices. As

an application method. The USDA provided explanations why this was not feasible; DHS

did not develop the idea beyond the intial concept.

3. Registration through the AN User Registration Portal

Through a Department developed website, potential applicants could apply for an AN

Registered User Number online. With the wide spread availability of the Internet

, applicants could apply from home, a public library, or place o f employment, for instance.

Potential applicants would go to the Department’s website and access the AN User

Registration Portal. There, potential applicants would apply online for an AN Regis tered

User Number and submit their application directly to the Department. The Department

would receive the information, process it, and communicate back to the applicant via e

mail.

Online registration through a Department developed, operated, and mainta ined website

would have costs to both the industry and the Department. Each prospective AN Seller or

AN Purchaser applying for an AN Registration User Number will spend approximately 45

minutes reading about the rule and procedures for registration before completing the

registration application. If the application is online, the Department assumes it will take the

applicant approximately 15 minutes to find the website, enter information, submit it to the

Department, and print and file a copy for his or her records. Both the individual applicant

and government costs are developed in the relavent sections of the evaluation If the

Department is able to leverage CSAT or another existing secure web

- portal, both the initial

development costs and the annual operati ng and maintenance costs likely would be

significantly lowered.

The Department is proposing that registering be done through an online web portal ( s ee

Section B 9). While not every potential applicant may have personal access to the Internet

, the Internet is widely available, and the Department believes that there are significant

benefits to using an online approach. The benefits to both the applicant and the

Department of an online approach include: (1) substantially quicker response from the

Department t hereby minimizing the time during which the applicant would not be able to

purchase or sell /transfer ammonium nitrate; (2) ability for an applicant or registered user

to access, view, update, and manage their personally identifiable information; (3) and

gr eater control over managing their participation

, such as ease in renewing their AN

Registered User Number. The Department proposes that neither paper registration

applications no in person applications at USDA Extension Service Offices be offered.

4. Registr ation via a telephone application process.

### 90 The applicant would contact the AN helpdesk and t he helpdesk o perator would collect all

the information necessary to complete an application for an AN Registered User Number.

The IT system would then route the application as if it were an application through the web

portal. The evaluation of the vetting against the TSDB would be the same.

Once a decision had been made as to whether or not to approve or deny an application the

system would identify the response to be mailed to the applicant. The system would route

the information to a vendor to process the letter. The vendor would print and mail the

letter. The letter would require tracking, signature, certification (i.e., verification of

identi t y), and next day delivery. DHS would also req uire evidence of delivery from th e

vendor. These are required to ensure delivery and receipt of the AN Registered User

Number to the correct individual

.

DHS is not recommending the telephone option but invites public comment on the concept.

The following tables provide information on the costs that vary between the recommended

web

- portal approach and the phone approach

.

**Table 78** 

**. Difference**  **s between alternatives costs**
($ millions, 1 0

- year total costs, 7% Discount)

Web

- portal Phone Option Difference

Registration Costs 71.3 20.3 51.0

Federal Costs 55.3 81.5

- 26.2

All Other Costs 544.0 540.7 3.3

Total Costs 670.6 642.5 28.1



### B. Verification

The Department considered three potential approaches to verify a prospective AN

Purchaser; establishing a web

- based portal (i.e., Purchaser Verification Portal), establishing

a call center, and establishing both capabilities. The Department is proposing to establish

both a web

- based portal and call center.

1. Purchaser Verification Portal

Verifying AN Purchaser status through a web

- portal will have costs to both industry and

the Department. The Department will bear the cost of developing and maintaining the

verification portal and related guidance on its use and proper verification processes.

The cost to industry of this activity is having a computer and access to the Internet

. Beyond

that, cost to the industry is the incremental time spent during an ammonium nitrate

### 91 transaction to verify the identity and AN Registered User Number of the prospective AN

P urchaser. Accordingly, the overall cost would depend on the number of ammonium nitrate

transact ions that occur and the time it takes to perform a simple identity check and enter

basic AN Purchaser information into the web

- portal. Based upon the detailed data in the

evaluation, the following table summarizes the average costs per transaction

.

**Table 79** 

**.** Point of Sale Average Cost Summary*

Low Total Estimate High Total Estimate Mean

Total Pos Annual Costs ($) 23,886,565 120,516,567 72,201,566

Purchaser POS Costs ($) 3,488,523 18,112,934 10,800,728

Seller POS Costs ($) 20,398,042 102,403,633 61,400,837

Transactions 5,486,000 29,340, 000 17,413,000

Sellers 2,486 6,236 4,361

Purchasers 64,950 106,200 85,575

Transactions/Seller/Week 42.4 90.5 66.5

Transactions/Purchaser/Week 1.6 5.3 3.5

Seller Cost/Transaction ($) 3.7 3.5 3.5

Purchaser Cost/Transaction ($) 0.64 0.62 0.62

* Data is for all entities and comes from the detailed evaluation,

particularly Tables 9,10,26

- 29,35

- 36



### 2. Purchaser Verification Call Center

The Department also considered a Purchaser Verification Call Center. Under this approach,

AN Sellers would use a telephone to call a toll

- free phone number established by the

Department where they would either talk to a person or be led through a series of

telephone tree menus. During the phone cal l, the AN Seller would be expected to provide

information about the AN Purchaser. The operator or automated telephone system would

enter the information provided into the Department’s Registered User database system,

wait for electronic confirmation, and t hen provide verbal confirmation to the caller along

with a confirmation number for that specific transaction.

Verifying AN Purchaser status through a call center will have costs to both industry and the

Department. The burden to the industry for the call center option rests upon having a

telephone and the time spent relaying the relevant AN Purchaser information to the call

center. The cost to the Department is the establishment of the call center and potentially

employing staff to standby and field calls regarding ammonium nitrate purchases.

3. Purchaser Verification Portal and Call Center

### 92 The Department proposes to establish both a Purchaser Verification Portal and a Purchaser

Verification Call Center ( s ee Section C 6). This approach is identical to the Pu rchaser

Verification Portal described above, integrated with the Purchaser Verification Call Center

capability. This approach presumably would be the cheapest for the regulated community

as each AN Facility likely would choose to employ the most cost

- effec tive means of

verification; however, it would be the most costly of the alternatives for the Department to

establish and operate as it would bear the costs associated with the development and

maintenance of both a web verification portal and call center.

When creating a manner in which AN Sellers can verify the required information on a

potential ammonium nitrate purchase by an AN Purchaser, the Department found both

advantages and disadvantages to each option considered. A call center may be preferable to

a web

- portal, as presumably all AN Sellers have telephones while not all AN Sellers have

computers with Internet access, particularly at the point of sale. However, there are some

potential disadvantages. For instance, the call center approach would take more time per

transaction than the web portal approach, and that it would be significantly more costly for

the Department to establish and operate a call center. The advantage of this alternative is

that all AN Facilities would be accommodated

– those with telephone access only and those

with both telephone and Internet access who find the verification web portal option more

efficient. As a result, the Department proposes to offer both online and call center options

despite the higher costs to the Department.

C. Communication with A pplicants

The Department must communicate with applicants throughout the registration process.

The Department considered two alternatives to communicating with applicants: (1)

communication by US Mail, and (2) communication by electronic means. The Department

proposes to communicate with applicants by electronic means.

1. US Mail

The US Mail could act as the communication medium between the Department and the

regulated community. If the US Mail was chosen as the communication mechanism the

Ammonium Nitrate Security P rogram would be paper

- based. While there would be some

minimal cost to the industry (e.g. postage). The time to complete paperwork would be

equivalent to the submission of information electronically. T he costs to the Department

, however, would be more substantial. The Department would have to hire or devote staff to

process incoming correspondence.

### 93 2. Electronic Means

The other option for communication could be by electronic means. Program

communication would occur through e

- mail and secure web portals. The cost to the

industry can be broken down to computer and Internet access. The cost to the Department

hinges on developing web portals and databases to securely store information.

The Department assume s that most applicants have Internet access with one exception.

Based upon the USDA, approximately 6 0% of farms have Internet access. Thus, DHS

assumes that in the agricultural sector, approximately 6 0% of farms have computers with

Internet access. The Department therefore estimated that these individuals will have to

travel a short distance to an agricultural extension office, public library, or other location

where access to the Internet is available to apply for an AN Registered User Number.

Furth er, DHS assumes that for applicants without Internet access, two trips will be

required; one to complete the AN Registered User Number application, and a second trip

after 72 hours to retrieve the e

- mail containing the AN Registered User Number. In the vas t

majority of cases, the e

- mail containing the AN User Registration will be sent within an

hour, but to be conservative, the Department has assumed farmers without Internet access

will make two trips. The Department assumes that the round trip distance is 50 miles per

trip and has used the standard IRS mileage rate of $0.55 per mile. The Department assumes

the total extra time for each trip will average approximately one hour each way plus 1 hour

for Internet access and registration for a total of 6 hours p er farm registration. By

multiplying 50 miles times two trips times $0.55 per mile totals $55 per individual for the

mileage for the two trips associated with applying for and receiving an AN Registered User

Number. Additionally, DHS included approximately $1.9 million for farmers who attempt to

make a purchase without knowing about the regulation and must then make one extra trip.

These calculations are detailed in Tables 11 and 12 in Section 7 of this evaluation. Because

of the minimal time and effort i t takes to apply for and receive an AN Registered User

Number, the Department believes this approach to be a cost

- effective way to prevent

misappropriation of ammonium nitrate.

The Department considered using the US Mail as the primary medium for communic ation;

however, the Department ultimately rejected this approach due to the additional time it

would take to notify applicants of their AN Registered User Number. The Department also

cited the significant availability of the Internet . Therefore, the Depart ment is proposing to

use electronic means as the primary medium for communication. Additionally, the

Department believes that electronic communication is more secure and faster than US Mail.

D. Reporting Theft or Loss

### 94 The Department considered two alternat ives for reporting theft or loss to Federal law

enforcement authorities within 24 hours of the time at which knowledge of theft or loss is

acquired. The Department considered requiring an AN Facility Representative to report to

either the Department or ATF. The Department proposes to require reporting of theft/loss

to ATF.

Under either option there is a burden to the industry. The cost to industry of this activity

will be the time to gather details and report the theft or loss of ammonium nitrate . Because

of the seriousness of theft or loss of ammonium nitrate , the total time to report a theft or

loss is assumed to include two hours each for an inventory manager, plus one hour for the

general manager. This includes the time for the reporter to organize useful details for law

enforcement and conduct a brief investigation. There will likely be additional time for a

necessary follow

- up investigation. Strictly for purposes of this analysis, the De partment

assumes that two percent of AN Facilities and AN Purchasers will report loss or theft once

per year. Based on these assumptions, on average there will be 88 reports of theft or loss

annually, at a n average total annual cost to industry of $ 13,350

.

1. ATF Reporting

One of the many responsibilities of ATF is regulating the use of explosives. While ATF does

not consider ammonium nitrate an explosive, ammonium nitrate explosive mixtures and

ammonium nitrate fuel oil explosive s ( ANFO ) are included in ATF ’s list of explosive

materials. ATF has an existing program for reporting the theft or loss of explosives.

Individuals that discover the theft or unexplained loss of ammonium nitrate would contact

ATF by phone or facsimile and provide the pertinent informa tion. The costs to the industry

for reporting to ATF the theft or unexplained loss of ammonium nitrate would be minimal.

The costs to the Department would be minimal as well, unless the Department funded ATF

efforts.

2. DHS Reporting

Similar to ATF’s method for reporting theft or loss of explosives, individuals upon

discovering the theft or unexplained loss of ammonium nitrate would contact DHS. The

costs to the industry for reporting the theft or unexplained loss of ammonium nitrate to the

Department would be minimal. The costs to the Department would be greater than when

compared to the ATF reporting requirement. The Department would be required to create

and establish the theft/loss reporting policies, procedures, and infrastructure.

### 95 The Department is pro posing to require reporting of theft/loss to ATF ( s ee Section E). ATF

already possesses the unique experience in collecting and responding to the theft/loss of

explosive related materials. Additionally, the Department wishes to avoid duplicative

efforts at the Federal level.

E. Recordkeeping

The Department considered two alternatives for maintaining records: (1) mandatory the

use of a central electronic database, and (2) the flexibility to maintain their records in

paper format or in electronic format. The Department proposes allowing AN Facilities to

select the method of records storage for themselves ( s ee Section F).

The Department selected this alternative because the burden to submit and maintain

electronic records in a central database would increase t he burden on the industry without

measurable benefit to the industry. The benefit would be limited to the confidence an AN

Facility would have, that if it maintained its records in a central database, it would meet

Department recordkeeping requirements.

T he costs to industry associated with this alternative are the costs of the time spent during

each transaction collecting and recording the information required under the regulations,

the costs of the time spent on ongoing recordkeeping activities throughou t the year, and

any capital investment costs a n AN F acility incurs in acquiring equipment to facilitate the

safe storage of the ammonium nitrate transaction records.

F. Agents

The Department considered three options to minimize the likelihood that agents a re used

to circumvent the requirements of this proposed rule. Specifically, the Department

believes it is imperative for AN Sellers to ensure that an agent is acting at the direction of a

registered AN Purchaser before the AN Seller transfers possession o f ammonium nitrate to

that agent. To accomplish this, the Department is considering the following alternatives:

**•** Requiring AN Purchasers to submit the names of their agents to the

Department via the AN User Registration Portal, and requiring the AN

Seller to confirm with the Department, prior to transferring possession of

the ammonium nitrate, that the prospective AN Purchaser has submitted

the name of the agent to the Department;

**•** Requiring the AN Seller to orally confirm with the prospective AN

Purchaser p rior to each sale or transfer that the agent is acting on behalf

of the AN Purchaser;

### 96 **•** A combination of the first two options, where an AN Seller first should

checks with the Department to see if the prospective AN Purchaser has

submitted the name of the ag ent to the Department and, if not, than the

AN Seller must verbally confirms with the prospective AN Purchaser that

the agent is acting on his/her behalf.

Under the first approach, each AN Purchaser would be required to provide to the

Department the names of any agents that might act on his/her behalf at the point of sale.

Ag ent names would be submitted by the AN Purchaser to the Department via the AN User

Registration Portal. An AN Purchaser could submit an agent’s name when he/she applies

for an AN Regis tered User Number or at any other time prior to conducting a purchase

involving that agent. Then, prior to transferring possession of ammonium nitrate to an

agent, an AN Seller would need to verify with the Department that the prospective AN

Purchaser has designated the agent as an approved agent to represent the AN P urchaser at

the point of sale. This verification would occur through the same mechanism that is used

for the other prospective AN Purchaser verification activities (i.e., the Purchaser

Verifica tion Portal or the Purchaser Verification Call Center). The agent’s information

provided to the Department by AN Purchasers and AN Sellers would not be vetted against

the TSDB nor otherwise checked by the Department; rather, it would simply be maintained

i n the AN Registered User Database as a data field linked to the AN Purchaser for use in the

agent verification process.

Under the second approach, the Department would require the AN Seller to verify with the

prospective AN Purchaser that the agent is act ually acting on behalf of the prospective AN

Purchaser for each specific transaction. Much like the other verification activities, this

could occur at the time the prospective AN Purchaser places the order, when the agent

arrives to take possession of ammo nium nitrate, or any other time, so long as it occurs

prior to the AN Seller transferring possession of ammonium nitrate to the prospective AN

Purchaser’s agent. If this approach were adopted, the Department would propose requiring

this confirmation to occ ur for each transaction/occurrence in which an agent is taking

possession of ammonium nitrate; a blanket verification of an agent by an AN Purchaser

would not be acceptable. Additionally, as an e

- mail or letter can be easily forged, under this

approach the Department would require that the AN Seller must receive this verification

orally (e.g., in person; telephonically) from the prospective AN Purchaser.

The third approach

– the option the Department is proposing in this NPRM

– is a

combination of the first two approaches. Specifically, AN Purchasers would provide the

Department with the names of their agent(s), and an AN Seller would verify either through

the Purchaser Verification Portal or Purchaser Verification Call Center that the agent

information has been provided by the AN Purchaser to the Department. As opposed to the

### 97 first approach under which a sale or transfer cannot occur unless the agent’s name has

been provided to the Department by the prospective AN Purchaser, under this third option

the AN Seller would be allowed to complete the sale or transfer after either (1) verifying

the agent has been designated by the prospective AN Purchaser in th e Purchaser

Verification Portal or Purchaser Verification Call Center, or (2) orally confirming with the

prospective AN Purchaser that the agent is acting on the prospective AN Purchaser’s behalf

for this individual sale or transfer

. The Department expects that in the majority of cases

this oral confirmation would occur telephonically. This third option has the benefit of

minimizing the point of sale impact of the agent verification process, while allowing a

means for a sale or transfer to be completed even if a prospective AN Purchaser forgets or

is otherwise unable to provide the Department with the agent’s name prior to using the

agent at the point of sale. For these reasons, this third approach is the option proposed by

the Department.

G. Exemption of Expl osives R egulated by ATF

T he Department has the discretion to exempt from regulation persons producing,

selling /transferring , or purchasing ammonium nitrate exclusively for use in the production

of explosives under a license or permit issued under the Fede ral explosives laws, 18 U.S.C.

Chapter 40, and associated regulations. ATF is responsible for enforcing Federal explosives

laws, and has established regulations for doing so. T he Department is proposing to exempt

from regulation ammonium nitrate mixtures t hat are “explosives” subject to ATF regulation

(i.e., ANFO). The Department also considered two other approaches. The first approach is

to apply these rules to individuals who purchase, sell, or transfer ammonium nitrate for use

in the production of explos ives. The second approach considered is to entirely exempt

f acilities and persons that purchase, sell, or transfer ammonium nitrate solely for use in the

production of explosives, as they are already regulated by ATF.

1. Exempt ammonium nitrate mixtures tha t are “explosives” subject to ATF

regulation

Under this approach, entities and individuals that purchase , sell, or transfer ANFO, but who

do not produce ANFO or possess ammonium nitrate for other reasons, would be exempt

from these requirements and would be subject solely to ATF regulation. This approach

minimizes cost to the industry as well as the Department.

2. Regulate individuals who purchase, sell, or transfer ammonium

nitrat e, whether that ammonium nitrate is incorporated into

“explosives” or not

### 98 Under this approach, such individuals would be subject to regulation by both the

Department and ATF under the Federal explosives laws. By not exempting ammonium

nitrate used in explosives, the Department would be treating all individua ls who purchase,

sell, or transfer ammonium nitrate

– whether as part of ANFO mixtures or not

– the same.

This approach would ensure that there are no gaps in coverage of ammonium nitrate as it

moves through the supply chain

– ammonium nitrate would be cap tured under the

Department’s ammonium nitrate program both before and after being combined with fuel

oil to create ANFO, and would be captured under ATF’s regulations after being combined

with fuel oil to create ANFO. There could potentially be heightened costs to the industry

due to potentially duplicative regulation. The costs to the Department would hinge upon a

greater number of AN F acilities to regulate.

3. Entirely exempt facilities and persons that purchase, sell, or

transfer ammonium nitrate solely for use in the production of

explosives

Under this approach facilities and persons that purchase, sell, or transfer ammonium

nitrate solely for use in the production of explosives would be entirely exempt from these

requirements, as they are already regul ated by ATF. In this model, facilities and persons

that are licensed by ATF to mix ammonium nitrate with fuel to create ANFO which do not

purchase , sell, or transfer ammonium nitrate for other purposes would not be subject to

these regulations. This approa ch, however, could create a considerable gap in regulatory

coverage throughout the ammonium nitrate supply chain, as ATF regulations apply solely

to ANFO and not the ammonium nitrate used to create it. The costs to the industry, as well

as the Department, would be low because certain individuals and AN F acilities would not

fall under the regulation.

The Department proposes to exempt entities and individuals that purchase , sell, or transfer

ANFO, but who do not produce ANFO or possess ammonium nitrate for other reasons.

These entities and individuals are regulated by ATF. This approach avoids duplicative

regulation yet it does not create a potential regulatory gap in the ammonium nitrate supply

chain.



## Average Costs per Facility

The largest cost driver is activities related to the point of sale. While variation in cost by AN

Facility is largely driven by the number of point of sale transactions that each AN Facility

conducts, it is helpful to examine the average cost per AN Purchaser and AN Facility. The

av erage costs per AN Purchaser are presented in tables 7 4 and 7 5

. The average costs per

AN Facility are presented in tables 7 6 and 7 7

. Both the lower and upper bounds of the

### 99 estimate are provided. In either case, the highest cost will be for farms without In ternet

access. The cost of compliance to AN Purchasers is the time to apply for an AN Registered

User Number with the Department of Homeland Security and additional time during the

purchase . This registration cost averages $57 to $ 700 on ce every five years

. The

Department believes for even the smallest farms and other businesses that only purchase

ammonium nitrate , this registration cost does not represent a significant economic impact.

The Department invites comments on this impact

.

**Table 80** 

**. Average Cost per AN Purchaser** 

**- Low Population/Low Transactions ** *

Purchaser

Registration Appeals Purchase

Opportunity

Cost Total

Purchaser

Cost Number

of

Facilities Average

Cost per

AN

Purchaser

Farms with Internet

access 2,079,500 28,100 1,674,500 3,782,100 30,000 126

Farms w/o Internet

access 12,998,000 18,700 1,116,300 14,133,000 20,000 707

Golf courses 169,000 3,500 334,900 507,400 6,000 85

Landscaping

services 144,000 2,900 251,200 398,100 4,500 88

Blasting services 16,000 200 14000 30,200 300 121

Mines 71,000 1,500 97,700 170,200 1,800 97

Total 15,477,500 54,900 3,488,500 19,020,900 62,500 304

*Totals may not add due to rounding.

### 100 **Table 81** 

**. .Average Cost per AN Purchaser** 

**- High**  **Population/High Transactions ***

Purchaser

Registration Appeals Purchase

Opportunity

Cost Total

Purchaser

Cost Number

of

Facilities Average

Cost per

AN

Purchaser

Farms with Internet

access 3,119,300 42,100 8,150,800 11,312,200 45,000 251

Farms w/o Internet

access 19,497,500 28,100 5,433,900 24,959,500 30,000 832

Golf courses 339,000 6,900 2,173,600 2,519,500 12,000 210

Landscaping

services 287,000 5,800 1,630,200 1,923,000 9,000 214

Blasting services 33,000 700 90600 124,300 500 249

Mines 142,000 2,800 634,000 778,800 3,500 223

Total 23,417,800 86,400 18,112,900 41,617,100 100,000 416

*Totals may not add due to rounding.



### The average per AN Seller facility cost to comply with the proposed rule ranges from

$6,400 for laboratory suppliers (low population/low transactions scenario) to $23,800 for

an explosives distributor (high population/high transactions scenario ).

**Table 82** 

**. . Average Cost per AN Seller Facility** 

**- Low Population/Low Transactions Estimate** *

Reg.

Activities Appeals Point of Sale

(Web Portal) Record

keeping Reporting

Theft/

Loss Audits/

Inspections Total

Seller Cost Number

of AN

Facilities Average

Cost

AN fert.

Manuf. 8,000 0 125,800 43,100 100 2,700 179,700 0 6,900

AN expl.

manuf. 3,000 0 50,800 17,400 0 1,100 72,400 0 7,200

Fertilizer

mixers 83,000 1,700 1,935,500 663,200 1,100 41,500 2,726,000 400 6,800

Explosives

dist. 102,000 2,100 5,494,500 834,200 1,500 51,600 6,486,000 500 13,000

Farm

whol./co

ops 92,000 1,800 4,524,100 742,100 1,600 52,600 5,414,100 500 10,800

Retail

garden

ctrs. 72,000 1,300 3,791,900 703,400 1,600 49,200 4,619,400 500 9,200

Fertilizer

app. 73,000 1,300 4,254,800 717,100 1,400 50,100 5,097,700 500 10,200

Lab.

Supply 9,000 0 220,700 83,400 100 5,600 318,800 100 6,400

Total 442,000 8,200 20,398,100 3,803,900 7,400 254,400 24,914,100 2,500 10,000

### 101 **Table 83** 

**. Average Cost per AN Facility** 

**- High Population/High Transactions Estimate** 

Reg.

Activities Appeals Point of Sale

(Web Portal) Record

keeping Reporting

Theft/

Loss Audits/

Inspections Total Seller

Cost Number

of AN

Facilities Average

Cost

AN fert.

Manuf. 8,000 0 311,200 43,100 100 2,700 365,100 0 14,000

AN expl.

manuf. 3,000 0 125,700 17,400 0 1,100 147,300 0 14,700

Fertilizer

mixers 123,000 2,600 7,181,800 994,800 1,700 62,200 8,366,000 600 13,900

Explosives

dist. 202,000 4,200 21,807,900 1,668,500 3,100 103,200 23,788,900 1,000 23,800

Farm

whol./co

ops 184,000 3,400 17,841,300 1,484,200 3,200 105,100 19,621,100 1,000 19,600

Retail

garden

ctrs. 357,000 6,000 37,281,300 3,517,200 7,900 246,100 41,415,400 2,500 16,600

Fertilizer

app. 146,000 2,800 16,764,200 1,434,200 2,900 100,100 18,450,200 1,000 18,500

Lab.

Supply 19,000 500 1,090,400 166,800 300 11,100 1,288,200 100 12,900

Total 1,042,000 19,500 102,403,800 9,326,200 19,200 631,600 113,442,200 6,200 18,200

*Totals may not add due to rounding.



## Identification of Duplication, Overlap and Conflict with Other Federal Rules

A thorough discussion of the relationship to other rules is provided earlier in Section II.D

Research Efforts and Findings of the rule preamble.



## 1 5 . International Trade Impact Assessment

The Trade Agreement Act of 1979 prohibits Federal agencies from activities that create

unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic

objectives, such as security, are not considered unnecessary obstacles. The statute also

requires consideration of international standards and, where appropriate, that they be the

basis for U.S . standards. In addition, the general benefits and desirability of free trade

influenced the development of this notice of proposed rulemaking to remove or diminish,

to the extent feasible, barriers to international trade, including both barriers affecting the

export of American goods and services to foreign countries and barriers affecting the

import of foreign goods and services into the United States

.

As entities that purchase or sell ammonium nitrate , or as individual AN Purchasers and AN

Sellers , impo rters and exporters would be required to register with the Department and

comply with the requirements of the NPRM in the same manner as their domestic

### 102 counterparts when ammonium nitrate physically changes possession, as a part of sales or

transfers by amm onium nitrate facilities, within the jurisdiction of the United States. Thus

, the Department has assessed the potential effect of this NPRM and has determined that it

would not create barriers to international trade.



## 1 6 . Unfunded Mandates Reform Act (UMRA )

The Unfunded Mandates Reform Act of 1995 ( UMRA ), enacted as Public Law 104

- 4 on

March 22, 1995, is intended, among other things, to curb the practice of imposing unfunded

Federal mandates on State, local, and tribal governments. Title II of UMRA require s each

Federal agency to prepare a written statement assessing the effects of any Federal mandate

in a proposed or final agency rule that may result in a $100 million or more expenditure

(adjusted annually for inflation) in any one year by State, local, an d tribal governments, in

the aggregate, or by the private sector. Th e primary (i.e., mean) estimate for th is proposed

rulemaking would not impose an unfunded mandate on State, local, or tribal governments,

but the upper end of the estimate would show an un funded mandate in the aggregate

. The

analysis required under Title II of UMRA is satisfied by this regulatory impact assessment

.

The Department recognizes that some AN Sellers or AN Purchasers may be by State or local

government entities. These AN Facilities would be required to comply with the provisions

of this proposed rule.

Further, u nder Subtitle J , the Department may enter into cooperative agreements with the

U.S. Department of Agriculture or any State department of agriculture to carry out the

provisions of this subtitle. The statute

In regards to delegation of its authority to individual State s, the Department proposes the

following process: If a State is interested in performing the administration and

enforcement activities

, the Governor of the State must submi t a written request to the

Department asking for delegation of those authorities. Upon receipt of the request, the

Department will initiate an evaluation to determine if the State is capable of satisfactorily

performing those functions and, upon completion of the evaluation, will provide the State

with a written response informing it of the Department’s determination. In order to make a

fair evaluation, the Department is likely to request information from the State and consult

with the State before a final determination is made. Because the responsibility would be further requires the Department, at the request of a

Governor of a State, to delegate to that State authority to carry out the administration and

enforcement if the Depart ment determines that the State is capable of satisfactorily

carrying out such functions. If the Department delegates any functions to a State, subject to

the availability of appropriations, the Department must provide to the State sufficient funds

to carry out those functions.

### 103 transferred only at the request of the State , and then with funding, no unfunded mandate is

created.

### 104 

## Appendix A

– Population Estimates

This regulatory evaluation makes several assumptions regar ding the number of businesses

potentially impacted by this proposed rule. Below are the details of the sources and

underlying assumptions for each category of the regulated population considered. The

Depar t ment seeks comment on the number of businesses pot entially affected by this

proposed rule. Unless noted otherwise, NAICS specific business populations come directly

from the U.S. Census Statistics of US Business, 2006, US All Industries

, available at

http://www2.census.gov/econ/susb/data/2006/us_6digitnai cs_2006.xls

.

**AMMONIUM NITRATE FOR FERTILIZER**

Farms : According to the U.S. Department of Agriculture, 1,022,036 farms incurred expenses

for Commercial fertilizer, lime, and soil conditioners

. 39 

### Only a fraction of the total use

ammonium nitrate fertilizer. According to the 4/17/09 listening session with plant food

control officials from several State s, roughly 50,000

– 75,000 farms in Missouri and 3,000

farms in Texas were reported to use ammonium nitrate fertilizer. Estimating the average

fertilizer consump tion per farm in those State s and applying to the national totals, DHS

estimates roughly 100,000 to 150,000 farms using ammonium nitrate fertilizer. In a

4/17/09 listening session with plant food control officials from several State s, the

Department heard that nationally, about half of farms were thought to use applicator

services and thus, never take custody of ammonium nitrate fertilizer, thus for this analysis,

the Department assumes 50,000 to 75,000 farms could be impacted by this proposed rule.

Fertilizer applicator services : The Department assumes that about 25% to 50% of NAICS

115112 (soil preparation, planting and cultivating) provide applicator services for

ammonium nitrate. Thus, 500 to 1,000 of these businesses could be impacted by this

proposed rule.

Ammonium nitrate (for fertilizer) : According to SRI Consulting, there were 26

manufacturers of ammonium nitrate fertilizer in 2008.

Fertilizer mixers : According to the Census Bureau

, 40

39 U.S. Department of Agriculture, National Agricultural Statistics Services, 2007 Census of Agriculture (US

data), Table 45. 

### there were 476 businesses engaged in

mixing fertil izers, which is creating formulations of fertilizer materials for specific plant

nutrition purposes. Thus, the Department has assumed a range of 400 to 600 fertilizer

mixers that could be impacted by this proposed rule.

40 NAICS 325314 at Statistics of US Business, 2006 , US All Industries available at

http://www2.census.gov/econ/susb/data/2006/us_6digitnaics_2006.xls

### 105 Farm wholesalers/co

- ops : During the 4/17/09 listening session with plant food control

officials, it was suggested that the number of farm wholesalers/co

- ops selling /transferring

ammonium nitrate fertilizer ranged from 500 to 1,000.

Retail garden centers : Because of the concern regarding th e misappropriation of

ammonium nitrate, State plant food control officials advised the Department that very few,

if any, retail outlets are still in the business of selling straight ammonium nitrate fertilizer.

None of the big home improvement/garden cente r chains carry pure ammonium nitrate.

To include these businesses in the regulatory evaluation, the Department assumes that 500

to as many as 2,500 retail garden centers nationwide sell ammonium nitrate in its pure

form.

Golf courses : According to the Census Bureau

, 41 

### there were nearly 12,000 golf courses and

country clubs (NAICS 71391). The Department assumes that many of these apply

ammonium nitrate fertilizer, thus 6,000 to 12,000 golf courses and country clubs may be

impacted by this proposed rule.

Landscaping services : According to the Census Bureau there were about 90,000

landscaping businesses (NAICS 56173)

. 42 

### Only a fraction of these services apply fertilizer,

and a fraction of those apply ammonium nitrate fertilizer. As a result, the Department

assumes that many of these apply ammonium nitrate fertilizer, thus 4,500 to 9,000 of these

businesses may be impacted by this proposed rule

.

Laboratory supply : The Department assumes that approximately 50

- 100 laboratory

supply wholesalers may stock ammo nium nitrate above the threshold.

**AMMONIUM NITRATE FOR EXPLOSIVES**

Ammonium nitrate (for explosives) manufactures : According to data from the 2002 Census

of Manufacturers, there were approximately 10 manufacturers of low

- density ammonium

nitrate for use in explosives. This was confirmed by members of the Institute of Makers of

Explosives (IME).

Explosives distributors:

41 Statistics of US Business, 2006 

### According to the IME, there are a relatively small number of

explosives distributors that process transactions involving ammonium nitrate. DHS

assumes that 500 to 1,000 explosives distributors could be affected by this proposed rule

.

42 Statistics of US Business, 2006

### 106 Blasting services : A specialized sub

- segment of NAIC S 213113

- 5 (Support Services for

Mining, excluding oil and gas drilling), these businesses are engaged in coming to the mine

site and preparing and detonating explosives, including making ammonium nitrate fuel oil

(ANFO) mixtures. Members of the IME sugges ted that only a fraction of 750 businesses in

NAICS 213113

- 5 was engaged in blasting activities. The Department assumes that 250

- 500

of these businesses could be affected by this proposed rule

.

Mines : According to the Mine Safety and Health Administration ’s Part 50 data, there were

about 7,000 mines. Members of the IME suggested that 50%

- 75% of these mines use

blasting services and thus never take custody of ammonium nitrate. As a result, the

Department assumes 1,750 to 3,500 mines could be impacted by thi s proposed rule.

### 107 

## Appendix B

– Wage Rates

Wage rates for non

- farm workers are readily available from the Bureau of Labor statistics

and our methodology is explained below. Attributing a wage to farm owners or managers is

much more difficult as these wages are specifically excluded from BLS data. The U.S

Department of Agriculture, Economic Research Service (ERS), studies the economic issues

of agriculture. One of the k nown characteristics of farm income, and therefore a wage

proxy, is highly volatile o ver time. Additionally, much of the income may come from off

farm activity. This volatility is explored in the ERS report, Income, Wealth, and the

Economic Well

- Being of Farm Households, Ashok K. Mishra, Hisham S. El

- Osta, Mitchell J.

Morehart , James D. Johnson, and Jeffrey W. Hopkins, Agricultural Economic Report No.

(AER812) 77 pp, July 2002. It is available at

http://www.ers.usda.gov/publications/aer812/aer812.pdf. Because there is no truly

representative wage rate specifically for the farm owners or managers who will be

applying for a n AN Registered User Number, the Department is using an average of the

loaded wage rates for all affected populations.

For non

- farm wages, the wage rates used throughout this analysis reflect the 50 th



### percentil e (median) hourly wage rate for each occupational classification for each industry.

The base hourly wages were pulled from the Bureau of Labor Statistics Occupational

Employment Statistics Survey (May 2008). Wage rates can be retrieved from BLS several

dif ferent ways. Detailed wage tables are available at various NAICS industry level. The

Department used the files that matched the corresponding NAICS level of detail in the

charts below. Those wage rates are available as complete tables at

http://www.bls.gov /oes/oes_dl.htm

, as follows:

National 3

- digit NAICS Industry

- Specific

estimates (1,966 KB) ftp://ftp.bls.gov/pub /special.requests/oes/oesm08in

3.zip

National 4

- digit NAICS Industry

- Specific

estimates (4,397 KB) ftp://ftp.bls.gov/pub/special.requests/oes/oesm08in

4.zip

National 5

- digit NAICS Industry

- Specific

estimates (745 KB) ftp://ftp.bls.gov/pub/special.requests/oes/oesm08in

5.zip



### Where exact data matches were unavailable, wage rates from a similar occupational

classification or aggregate industry were substituted. To reflect a “loaded” wage (including

employer

- paid benefits), each base wage was multiplied by benefit multiplier. BLS reports

employer costs by industry and broad occupational category which provides different

multipliers for different wages. These multipliers are listed below and were retrieved on:

March 30, 2010 from BLS at http://data.bls.gov/cgi

- bin/surveymost for complete data

tables and http://data.bls.gov:8080/PDQ/outside.jsp?survey= cm for menu driven query.

The multiplier is derived for each intersection of occupation and NAICS by dividing total

### 108 compensation by wages and salaries. The values range from 1.32 to 1.54 and are multiplied

times the corresponding wage rate to get a total compensation loaded wage rate. All labor

pricing throughout the evaluation utilizes the corresponding industry and occupation

loaded rate developed below.

**Table 84** 

**. Hourly**  **Wage Rates at 50**  **th** 

### P **ercentile (median)**  **($/hour)**

Industry C ategory NAICS

Code Purchasing

agents,

except

wholesale,

retail, and

farm products Sales

Manager Sales

representatives,

wholesale and

manufacturing,

technical and

scientific

products Transportation,

storage, and

distribution

managers Office and

adm inistrat

ive support

13

- 1023 11

- 1022 41

- 4011 11

- 3071 43

- 0000

Fertilizer applicator services 115100 $27.34 $65.01 $24.36 $30.21 $12.16

Mines 212000 $25.17 $44.33 $29.13 $38.36 $14.78

Blasting services 213000 $24.86 $43.78 $32.36 $38.41 $14.47

AN fertilizer manuf./Fertilizer mixers 325300 $25.51 $45.70 $33.71 $31.85 $15.42

AN explosives manuf. 325900 $24.70 $55.62 $35.40 $35.24 $16.63

Explosives distributors/Laboratory supply 424600 $25.12 $54.35 $33.11 $35.17 $15.58

Farm wholesalers/ co

- ops 424900 $22.17 $46.86 $26.91 $32.33 $12.89

Retail garden centers 444200 $12.30 $33.31 $24.13 $31.92 $11.76

Landscaping 561730 $21.44 $29.84 $23.09 $33.77 $13.29

Golf courses 713900 $18.96 $39.02 $16.19 $35.35 $11.44



### Table **85**

**. Total Compensation/**  **Wage and Salary Multiplier** 

Industry Category NAICS

Code Purchasing

agents,

except

wholesale,

retail, and

farm

products Sales

Manager Sales

representatives

, wholesale and

manufacturing,

technical and

scientific

products Transportation

, storage, and

distribution

managers Office and

administrativ

e support

occupations

13

- 1023 11

- 1022 41

- 4011 11

- 3071 43

- 0000

Fertilizer applicator services 115100 1.48 1.33 1.48 1.48 1.43

Mines 212000 1.43 1.33 1.48 1.48 1.43

Blasting services 213000 1.54 1.33 1.54 1.48 1.43

AN fertilizer manuf./Fertilizer mixers 325300 1.54 1.33 1.54 1.48 1.43

AN explosives manuf. 325900 1.54 1.33 1.54 1.48 1.43

Explosives distributors/Laboratory supply 424600 1.54 1.33 1.43 1.48 1.43

Farm wholesalers/ co

- ops 424900 1.43 1.33 1.43 1.48 1.43

Retail garden centers 444200 1.33 1.33 1.33 1.48 1.43

Landscaping 561730 1.32 1.33 1.32 1.48 1.43

Golf courses 713900 1.32 1.33 1.32 1.48 1.43

### 109 **Table 86**  **. Loaded Wage Rates at**  **5 0**  **th** 

### P **ercentile** **(Hourly wage rate * multiplier)** **($/hour)**

Industry Category NAICS

Code Purchasing

agents,

except

wholesale,

retail, and

farm products Sales

Manager Sales

representatives,

wholesale and

manufacturing,

technical and

scientific

products Transportation,

storage, and

distribution

managers Office and

administrat

ive support

13

- 1023 11

- 1022 41

- 4011 11

- 3071 43

- 0000

Fertilizer applicator services 115100 40.42 86.73 36.02 44.67 17.38

Mines 212000 36.10 59.14 43.07 56.73 21.12

Blasting services 213000 38.24 58.40 49.78 56.80 20.68

AN fertilizer manuf./Fertilizer mixers 325300 39.24 60.97 51.86 47.10 22.04

AN explosives manuf. 325900 38.00 74.20 54.46 52.11 23.76

Explosives distributors/Laboratory supply 424600 38.64 72.51 47.21 52.01 22.26

Farm wholesalers/ co

- ops 424900 31.61 62.51 38.37 47.81 18.42

Retail garden centers 444200 16.30 44.44 31.98 47.20 16.81

Landscaping 561730 28.37 39.81 30.55 49.94 18.99

Golf courses 713900 25.08 52.05 21.42 52.28 16.35



### As discussed at the beginning of this section, the average of rates in Table 7 5 , $41.04 is

used for farm applicants.

**Table 8**  **7 , Calculation**  **of Population Weighted Average Fully loaded Rate for Opportunity cost**

**for purchasers; Low Population**

Industry Category Purchasing

agents, except

wholesale, retail,

and farm

products Registration

Population Share of total C ontribution to

weighted average

13

- 1023

Agricultural sector

Fertilizer mixers 39.24 1,200 0.009 $ 0.36

Farm wholesalers/co

- ops 31.61 1,500 0.011 $ 0.36

Retail garden centers 16.30 1,500 0.011 $ 0.18

Fertilizer applicators 40.42 1,500 0.011 $ 0.46

Farms 41.04 100,000 0.754 $ 30.95

Golf courses 25.08 12,000 0.090 $ 2.27

Landscaping services 28.37 9,000 0.068 $ 1.93

Explosives Sector

Explosives distributors 38.64 1,500 0.011 $ 0.44

Blasting services 38.24 750 0.006 $ 0.22

Mines 36.10 3,500 0.026 $ 0.95

Other

Laboratory supply 38.64 150 0.001 $ 0.04

Total 132,600 1.00 $ 38.15

### 110 **Table 8**  **8**

**, Calculation of Population Weighted Average Fully loaded Rate for Opportunity cost** 

**for purchasers; High**  **Population**

Industry Category Purchasing

agents, except

wholesale, retail,

and farm

products Registration

Population Share of total C ontribution to

weight ed average

13

- 1023

Agricultural sector

Fertilizer mixers 39.24 1,800 0.008 $ 0.32

Farm wholesalers/co

- ops 31.61 3,000 0.014 $ 0.43

Retail garden centers 16.30 7,500 0.034 $ 0.56

Fertilizer applicators 40.42 3,000 0.014 $ 0.55

Farms 41.04 150,000 0.685 $ 28.10

Golf courses 25.08 24,000 0.110 $ 2.75

Landscaping services 28.37 18,000 0.082 $ 2.33

Explosives Sector

Explosives distributors

Blasting services 38.64 3,000 0.014 $ 0.53

Mines 38.24 1,500 0.007 $ 0.26

36.10 7,000 0.032 $ 1.15

Other

Laboratory supply 38.64 300 0.001 $ 0.05

Total 219,100 1.00 $ 37.04

### 111 

## Appendix C

– Computer and Internet Access on US Farms

The question has been raised of whether the potential regulated community for this

proposed rule has sufficient access to the Internet for the purpose of conducting one

- time

online registration. The Department provides the following snapshot as information only.

State specific data is not used in the evaluation. Data from USDA suggests that only slightly

more than half of all farms in the State s likely to be the most affected had access to the

Internet in 2007. Using historical growth rates on the proliferation of Internet access on

farms, about 58% of farms will have Internet access in 2009. For farms without direct

Internet access, however, access to the Internet is generally available in these communities

thr ough other venues, such as State extension offices, public libraries, etc.

According to the 2007 Census of Agriculture (USDA) Volume 1, Table 46 , nationwide, 63%

of farms had computer access and 55% had Internet access. There was considerable

variability between State s with regard to Internet access. Wyoming was the most

“connected” with 75% of farms having Internet access. The least connected State was

Kentucky with 39% of farms with Internet access.

Looking at just the top 15 ammonium nitrate consumin g State s (direct application only),

which combined account for 88.8% of direct application ammonium nitrate consumption,

the median percentage of farms with Internet access was slightly more than half at 52% in

2007. Using data from 2003

- 2007, we project a bout 58% of these farms will have Internet

access in 2009. The table below detail s computer and Internet access by the top 15

ammonium nitrate consuming State s in 2007. Based upon a more recent USDA survey

(

The Department has assumed that 60% of farms will have Internet access. http://usda.mannlib.cornell.edu/usda/current/FarmComp/FarmComp

- 08

- 14

- 2009.pdf )

### 112 **Table 8**  **9**

**. Computer and Internet Access for T**  **op 15 A** 

### mmonium Nitrate **Consuming States,** 

**2007**

Rank State Percent of

Farms with

Computer

Access Percent of

Farms with

Internet

access Consumption of

AN* (short tons

material) % Total US AN

Consumption

1 Missouri 56 % 50 % 221,357 21.0%

2 Alabama 48 % 40 % 123,331 11.7%

3 Tennessee 60 % 52 % 105,246 10.0%

4 Texas 62 % 57 % 89,637 8.5%

5 Mississippi 51 % 41 % 73,150 6.9%

6 Kentucky 50 % 39 % 58,090 5.5%

7 Kansas 68 % 57 % 43,803 4.1%

8 Arkansas 59 % 52 % 37,714 3.6%

9 Georgia 46 % 42 % 35,553 3.4%

10 Oklahoma 55 % 51 % 29,870 2.8%

11 Louisiana 57 % 55 % 28,022 2.7%

12 North Carolina 61 % 55 % 27,384 2.6%

13 Wyoming 82 % 75 % 23,967 2.3%

14 Florida 61 % 55 % 20,611 2.0%

15 Nebraska 66 % 55 % 20,207 1.9%

Top 15 59 % 52 % 937,942 88.8%

Total US 63 % 55 % 1,056,148 100.0%

*Direct application only

Sources: Computer access is available in table 46, Volume 1, of the 2007 U.S. Census of Agriculture available at

http://www.agcensus.usda.gov/Publications/2007/Full_Report/usv1.pdf , p. 619 or

http://www.agcensus.usda.gov/Publications/2007/Full_Report/Volume_1,_Chapter_2_US_State_Level/st99_2_04

6_046.pdf . Phone conversations with two State officials who are a part of Association of American Plant Food

Control Offici als provided the Department with their State information on direct application of ammonium nitrate.

Using their information, application rates were then used to estimate State consumption. Additionally,

"Commercial Fertilizers 2007", The Fertilizer Institu te ( report is not online but is available for order at

http://www.tfi.org/publications/commercialorder.pdf ) provided additional consumption information. The

Department invites comments providing improved data sources.