```

[Federal Register Volume 76, Number 149 (Wednesday, August 3, 2011)]
[Proposed Rules]
[Pages 46908-46957]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-19313]

[[Page 46907]]

Vol. 76

Wednesday,

No. 149

August 3, 2011

Part II

Department of Homeland Security

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6 CFR Part 31

Ammonium Nitrate Security Program; Proposed Rule

Federal Register / Vol. 76, No. 149 / Wednesday, August 3, 2011 / 
Proposed Rules

[[Page 46908]]

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DEPARTMENT OF HOMELAND SECURITY

Office of the Secretary

6 CFR Part 31

[Docket ID 2008-0076]
RIN 1601-AA52

Ammonium Nitrate Security Program

AGENCY: National Protection and Programs Directorate, DHS

ACTION: Proposed rule; request for comments.

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SUMMARY: This proposed rule would implement anti-terrorism measures to 
better secure the homeland. The Department of Homeland Security would 
regulate the sale and transfer of ammonium nitrate pursuant to section 
563 of the Fiscal Year 2008 Department of Homeland Security 
Appropriations Act with the purpose of preventing the use of ammonium 
nitrate in an act of terrorism. This proposed rule seeks comment on 
both proposed text for such a regulation and on several practical and 
legal issues integral to the development of an Ammonium Nitrate 
Security Program.

DATES: Comments and related material must either be submitted to our 
online docket via http://www.regulations.gov on or before December 1, 
2011 or reach the Docket Management Facility by that date. Comments 
sent to DHS or the Office of Management and Budget (OMB) on collection 
of information must reach DHS or OMB on or before October 3, 2011.

ADDRESSES: You may submit comments, identified by docket number 2008-
0076, by one of the following methods:
     Federal eRulemaking Portal: Follow the instructions at 
http://www.regulations.gov for submitting comments.
     Mail: U.S. Department of Homeland Security, National 
Protection and Programs Directorate, Infrastructure Security Compliance 
Division (NPPD/ISCD), 245 Murray Lane, SW., Mail Stop 0610, Arlington, 
VA 20598-0610.
    To avoid duplication, please use only one of these methods. For 
instructions on submitting comments, see the ``Public Participation'' 
portion of the SUPPLEMENTARY INFORMATION section below.
    Collection of Information Comments: If you have comments on the 
collection of information discussed in section IV.F (``Paperwork 
Reduction Act'') of this Notice of Proposed Rulemaking (NPRM), you may 
submit comments to the DHS as indicated above, and you may also send 
comments to the Office of Information and Regulatory Affairs (OIRA), 
OMB. Comments on the collection of information must reach DHS or OIRA 
on or before October 3, 2011. To ensure that your comments to OIRA are 
received on time, the preferred methods are by e-mail to oira_submission@omb.eop.gov (include the docket number and ``Attention: Desk 
Officer for Department of Homeland Security/NPPD'' in the subject line 
of the e-mail) or fax at 202-395-6566. An alternate, though slower, 
method is by U.S. mail to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, 725 17th Street NW., 
Washington, DC 20503, Attention: Desk Officer for Department of 
Homeland Security/NPPD.

FOR FURTHER INFORMATION CONTACT: Ammonium Nitrate Security Program 
Manager, U.S. Department of Homeland Security, National Protection and 
Programs Directorate, Infrastructure Security Compliance Division 
(NPPD/ISCD), 245 Murray Lane, SW., Mail Stop 0610, Arlington, VA 20598-
0610, telephone number (703) 235-5263.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Public Participation
II. Background: Overview of Subtitle J and Associated Regulatory 
Development Activities
    A. Subtitle J
    B. October 2008 Report to Congress
    C. Advance Notice of Proposed Rulemaking
    D. Research Efforts and Findings
    1. Security Hazards Presented by Use of Ammonium Nitrate
    2. Detonability of Ammonium Nitrate
    3. Federal Regulations Addressing Ammonium Nitrate
    a. Chemical Facility Anti-Terrorism Standards
    b. U.S. Coast Guard Maritime Security Regulations
    c. Transportation Security Administration
    d. Bureau of Alcohol, Tobacco, Firearms and Explosives
    e. Department of Transportation Hazardous Materials Regulations
    f. Department of Commerce
    4. State Regulations Addressing Ammonium Nitrate
    5. Voluntary Programs Addressing Ammonium Nitrate
III. Discussion of Proposed Rule: Implementing Subtitle J
    A. Ammonium Nitrate Subject to Subtitle J Requirements
    1. Mixture Requirement
    2. Threshold Weight and Individual Products Exemptions
    3. Explosives Exemption
    B. Requirements for the Registration of AN Sellers and AN 
Purchasers
    1. Overview
    2. Who Must Register
    3. Registering AN Sellers
    4. Registering AN Facility Representatives
    5. Registering a Designated AN Facility POC
    6. Summary of AN Facility Personnel Registration Proposals
    7. Registering AN Purchasers
    8. Federal/State/Tribal/Local Government-Owned Entities That Are 
AN Facilities or AN Purchasers
    9. Registration Process
    10. Initial Applications
    11. Applicant Vetting Process
    12. Notification of Approval or Denial
    13. Revocation of Registration Numbers
    14. Appealing Registration Denials and Registration Revocations
    15. Registration Updates and Expiration
    16. Initial Six-Month Registration Period
    C. Purchaser Verification Activities
    1. Overview
    2. Manner of Sale or Transfer of Ammonium Nitrate
    3. Required Verification Activities
    4. Verification of the Currency and Authenticity of a 
Prospective AN Purchaser's AN Registered User Number
    5. Verification of a Prospective AN Purchaser's Identity When 
the AN Purchaser Opts Not To Use An Agent
    6. Verification of a Prospective AN Purchaser's Identity When 
the AN Purchaser Opts To Use An Agent
    7. For Sales Involving Agents, Verification That the Agent Is 
Acting on Behalf of the AN Purchaser
    8. Verification of the Agent's Identity Based on the Visual 
Check of the Agent's Photo Identification
    9. Timing of Verification Activities
    10. Departmental Role in Verification Process
    11. Purchaser Verification Portal
    12. Purchaser Verification Call Center
    13. Purchaser Verification Portal and Call Center
    14. Suspicious Purchases and Attempted Purchases of Ammonium 
Nitrate
    D. Recordkeeping
    1. Overview
    2. Entities Responsible for Keeping Records
    3. Records To Be Kept
    4. Length of Retention of Records
    5. Format and Storage of Records
    E. Reporting of Theft or Loss of Ammonium Nitrate
    1. Overview
    2. Who Must Report Theft or Loss
    3. Level of Theft or Loss Warranting Reporting
    4. Process for Reporting Theft or Loss
    F. Inspections and Audits
    G. Guidance Materials and Posters
    H. Civil Penalties, Civil Penalty Adjudications, and Civil 
Penalty Appeals
    I. Consultation Requirements
    J. Delegation of Authority
IV. Regulatory Analyses
    A. Executive Order 12866 and Executive Order 13563: Regulatory 
Planning and Review
    1. Cost Impacts
    2. Benefits of the Ammonium Nitrate Security Program
    B. Regulatory Flexibility Act

[[Page 46909]]

    1. Reasons for and Objectives of the Proposed Rule
    2. Affected Small Business Population and Estimated Impact of 
Compliance
    3. Number of Small Entities That Purchase Ammonium Nitrate
    4. Number of Small Entities That Sell Ammonium Nitrate
    5. Alternatives Considered
    6. Average Costs per AN Facility
    7. Identification of Duplication, Overlap and Conflict With 
Other Federal Rules
    C. Executive Order 13132: Federalism
    D. Unfunded Mandates Reform Act
    E. National Environmental Policy Act
    F. Paperwork Reduction Act
    G. International Trade Impact Assessment

Abbreviations and Terms Used in This Document

AN Ammonium Nitrate
ANFO Ammonium Nitrate/Fuel Oil
ANPRM Advance Notice of Proposed Rulemaking
ATF Bureau of Alcohol, Tobacco, Firearms, and Explosives
ATSA Aviation and Transportation Security Act
CFATS Chemical Facility Anti-Terrorism Standards
CFR Code of Federal Regulations
COI Chemical of Interest
CVI Chemical-terrorism Vulnerability Information
DHS Department of Homeland Security
DOT Department of Transportation
EAR Export Administration Regulations
FBI Federal Bureau of Investigation
FR Federal Register
HMR Hazardous Materials Regulations
HMT Hazardous Materials Table
IED Improvised Explosive Device
IRFA Initial Regulatory Flexibility Analysis
MTSA Maritime Transportation Security Act
NAICS North American Industrial Classification System
NPRM Notice of Proposed Rulemaking
PCII Protected Critical Infrastructure Information
PHMSA Pipeline and Hazardous Materials Safety Administration
POC Point of Contact
QATT Qualified Anti-Terrorism Technology
RFA Regulatory Flexibility Act
SAFETY Support Anti-Terrorism By Fostering Effective Technologies
SBA Small Business Administration
SORN System of Records Notice
SSI Sensitive Security Information
TSA Transportation Security Administration
TSDB Terrorist Screening Database
TWIC Transportation Worker Identification Credential
UMRA Unfunded Mandates Reform Act
USC United States Code
USCG United States Coast Guard
USDA United States Department of Agriculture
VSL Value per Statistical Life

I. Public Participation

    Interested persons are invited to participate in this rulemaking by 
submitting written data, views, or arguments on all aspects of this 
NPRM. The Department of Homeland Security (DHS or the Department) also 
invites comments that relate to the economic, environmental, or 
federalism effects that may result from this NPRM. Comments that will 
provide the most assistance to the Department in developing this 
proposed rule will refer to a specific provision of the NPRM or the 
Secure Handling of Ammonium Nitrate provisions in the Homeland Security 
Act, as amended, explain the reason for any comments, and include other 
information or authority that supports such comments.
    Submission of Sensitive Information: Do not submit comments that 
include trade secrets, confidential commercial or financial 
information, Chemical-terrorism Vulnerability Information (CVI), 
Protected Critical Infrastructure Information (PCII), or Sensitive 
Security Information (SSI) to the public regulatory docket. Please 
submit such comments separately from other comments on the proposed 
rule. Comments containing this type of information should be 
appropriately marked as containing such information and submitted by 
mail to the following address: U.S. Department of Homeland Security, 
National Protection and Programs Directorate, Infrastructure Security 
Compliance Division (NPPD/ISCD), 245 Murray Lane, SW., Mail Stop 0610, 
Arlington, VA 20598-0610.
    Upon receipt of such comments, DHS will not place the comments in 
the public docket and will handle them in accordance with applicable 
safeguards and restrictions on access. DHS will hold them in a separate 
file to which the public does not have access, and place a note in the 
public docket that DHS has received such materials from the commenter. 
If DHS receives a request to examine or copy this information, DHS will 
treat it as any other request under the Freedom of Information Act 
(FOIA), 5 U.S.C. 552, and the Department's FOIA regulation found in 
Part 5 of Title 6 of the Code of Federal Regulations (CFR).
    Instructions: All submissions must include the agency name and 
docket number for this rulemaking. All comments received will be posted 
without change to http://www.regulations.gov, including any personal 
information provided.
    Docket: For access to the docket to read background documents or 
comments received, go to http://www.regulations.gov.

II. Background: Overview of Subtitle J and Associated Regulatory 
Development Activities

A. Subtitle J

    Section 563 of the Fiscal Year 2008 Department of Homeland Security 
Appropriations Act amends the Homeland Security Act of 2002 and directs 
DHS 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.'' See Public Law 110-161, 
Division E (2007). Section 563 amends the Homeland Security Act of 2002 
(6 U.S.C. 361 et seq.) by adding in a new Subtitle J--Secure Handling 
of Ammonium Nitrate, sections 899A-899J (to be codified from 6 U.S.C. 
488 to 6 U.S.C. 488i). All references to 6 U.S.C. 488-488i throughout 
this document refer to the corresponding sections in the Homeland 
Security Act of 2002, as amended by section 563 of the Fiscal Year 2008 
Department of Homeland Security Appropriations Act. All references to 
``Subtitle J'' throughout this document refer to Subtitle J of the 
Homeland Security Act of 2002, as created by the Fiscal Year 2008 
Department of Homeland Security Appropriations Act.
    Pursuant to Subtitle J, the Department must develop regulations 
that require, at a minimum, the following activities:
     Registration Applications: Certain ammonium nitrate 
sellers and prospective ammonium nitrate purchasers must apply for 
ammonium nitrate (AN) registration numbers from DHS in order to sell, 
transfer, and/or purchase ammonium nitrate. See 6 U.S.C. 488a(c) and 6 
U.S.C. 488a(d).
     Terrorist Screening Database Checks: The Department must 
use identifying information of each prospective applicant to conduct a 
check against identifying information that appears in the Terrorist 
Screening Database (TSDB). See 6 U.S.C. 488a(i)(2)(A).
     Registration Numbers: The Department generally must issue 
an ammonium nitrate registration number or deny the registration of an 
applicant within 72 hours of receipt of each ammonium nitrate seller's 
or ammonium nitrate purchaser's complete registration application. See 
6 U.S.C. 488a(i)(3)(A).
     Purchaser Verification Activities: At the point of sale, 
ammonium nitrate sellers must verify each potential ammonium nitrate 
purchaser's identity and registration to purchase ammonium nitrate 
pursuant to procedures

[[Page 46910]]

established by the Department. See 6 U.S.C. 488a(e)(2)(D).
     Recordkeeping: All ammonium nitrate facilities must keep 
records of sales or transfers of ammonium nitrate for at least two 
years after each transaction. See 6 U.S.C. 488a(e)(1) and 6 U.S.C. 
488a(e)(2).
     Reporting Theft or Loss of Ammonium Nitrate: Certain 
ammonium nitrate sellers must report the theft or loss of ammonium 
nitrate to Federal authorities within one calendar day of discovery of 
theft or loss. See 6 U.S.C. 488d.
     Inspections and Audits: The Department must conduct or 
oversee regulatory compliance inspections and audits of ammonium 
nitrate facilities' records, monitor compliance with the requirements 
of Subtitle J, and deter or prevent misappropriation of ammonium 
nitrate for use in terrorist acts. See 6 U.S.C. 488b.
     Guidance Materials and Posters: The Department must 
develop guidance materials that set forth procedures for appealing 
denial of an application for an ammonium nitrate registration number, 
guidance materials that help ammonium nitrate facilities identify 
suspicious ammonium nitrate purchases or attempted purchases or 
transfers, and posters providing information on sellers' record-keeping 
responsibilities and on the penalties for violating requirements under 
the Department's ammonium nitrate program. See 6 U.S.C. 488a(i)(4)(c) 
and 6 U.S.C. 488c(c).
     Establishing Threshold Percentage of Ammonium Nitrate in a 
Mixture: The Department must establish a threshold percentage of 
ammonium nitrate in a mixture for that mixture to be regulated under 
the Department's ammonium nitrate program. See 6 U.S.C. 488a(b).
     Appeals and Penalties: The Department must establish an 
expedited appeals process for applicants denied ammonium nitrate 
registration numbers, as well as an appeals process for individuals 
assessed civil penalties for violating the rules promulgated under 
Subtitle J. See 6 U.S.C. 488a(i)(4) and 6 U.S.C. 488e(d).

B. October 2008 Report to Congress

    In an Explanatory Statement accompanying section 563 of the Fiscal 
Year 2008 Department of Homeland Security Appropriations Act the 
Chairman of the House Committee on Appropriations indicated a desire 
for the Department's National Protection and Programs Directorate to 
``provide a plan to implement [Subtitle J], including analysis of the 
resources required to do so, and a proposal for reallocating funding 
within the National Protection and Programs Directorate for doing so.'' 
See Explanatory Statement Submitted by Mr. Obey, Chairman of the House 
Committee on Appropriations, Regarding the Consolidated Appropriations 
Amendment of the House of Representatives to the Senate Amendment to 
H.R. 2764, 153 Cong. Rec. H15741, H16092 (2007), available at http://www.gpo.gov/fdsys/pkg/CREC-2007-12-17/pdf/CREC-2007-12-17-bk2.pdf. In 
October 2008, the Department submitted to Congress a report in response 
to this Explanatory Statement, outlining possible approaches to 
implementing Subtitle J and the potential costs associated with each 
approach. The Department's report to Congress has aided in evaluating 
many of the approaches contained in this NPRM. The Department's report 
can be found in the docket for this NPRM, which is available at http://www.regulations.gov.

C. Advance Notice of Proposed Rulemaking

    DHS published an Advance Notice of Proposed Rulemaking (ANPRM) 
titled ``Secure Handling of Ammonium Nitrate Program'' on October 29, 
2008. See 73 FR 64280. The ANPRM solicited public comment on the 
following specific issues:
     Comments regarding submission of registration applications 
(e.g., whether applications should be submitted electronically or in 
paper form; whether applications should be available only through DHS 
or through Local Cooperative Extension offices or at United States Post 
Offices);
     Comments regarding the technical capabilities (e.g., 
access to computers; access to the Internet; average level of computing 
skills; frequency of use of integrated Information Technology systems) 
of ammonium nitrate manufacturers, distributors, sellers, and end-
users;
     Comments regarding DHS distribution of ammonium nitrate 
registration letters or certificates (e.g., whether DHS should use e-
mail or regular mail);
     Comments regarding a verification process for 
registrations and ammonium nitrate purchases, including methods for 
verifying the identity of any ammonium nitrate purchaser, as well as 
the identity of designated agents purchasing ammonium nitrate on behalf 
of registered ammonium nitrate purchasers;
     Comments on the detonability of ammonium nitrate at 
certain concentrations, including research being conducted concerning 
the detonability of ammonium nitrate;
     Comments on how likely ammonium nitrate fertilizer users 
would be to use an alternative fertilizer that is potentially less 
detonable, such as Sulf-N[supreg] 26 Fertilizer Process and Product 
(ammonium sulfate nitrate fertilizer) which DHS recently Designated as 
a Qualified Anti-Terrorism Technology (QATT) pursuant to 6 U.S.C. 441-
444 (the Support Anti-terrorism by Fostering Effective Technologies Act 
of 2002, or SAFETY Act). See http://www.safetyact.gov;
     Comments on how best to conduct or oversee regulatory 
compliance inspections and audits of ammonium nitrate facilities' 
records to ensure that regulated ammonium nitrate facilities are 
properly maintaining records, to monitor compliance with the 
requirements of Subtitle J, and to deter or prevent misappropriation of 
ammonium nitrate for use in terrorist acts;
     Comments on the economic impacts (both long-term and 
short-term, quantifiable and qualitative) of the implementation of 
Subtitle J, including potential impacts on State, local, and tribal 
governments of the United States; potential impacts on agri-business, 
including ammonium nitrate manufacturers, importers, packagers, 
distributors, retailers, and end-users including farmers (e.g., whether 
current ammonium nitrate purchasers would likely reduce their ammonium 
nitrate purchases as a result of a new regulatory regime); and 
potential impacts on small businesses;
     Comments on the monetary and other costs anticipated to be 
incurred by U.S. citizens and others as a result of the new compliance 
requirements, such as the costs in time and money that an individual 
may incur to obtain an ammonium nitrate registration number. These 
costs may or may not be quantifiable and may include actual monetary 
outlays, transitional costs incurred to obtain alternative documents, 
and the costs that will be incurred in connection with potential delays 
at the point of sale;
     Comments on a possible fee structure to address some or 
all of the costs of this new program, such as registration, TSDB 
checks, and issuance of ammonium nitrate registration numbers;
     Comments on the benefits of this rulemaking;
     Comments on any alternative methods of complying with 
Subtitle J; and
     Comments on the best methods or processes for interacting 
with state and local governments regarding ammonium nitrate security.

[[Page 46911]]

    See 73 FR 64280, 64281, section IV--Questions for Commenters.

    DHS received comments from 33 organizations and individuals. The 
majority of the submissions, 20, were from private companies and trade 
associations, including associations affiliated with the farming, 
explosives, and mining industries. Three universities provided 
comments, as did three government agencies. Six individuals, including 
one farmer, also submitted comments.
    The topics addressed by the commenters covered a wide range of 
issues. The two issues that received the most attention were the 
registration process and the feasibility of using substances other than 
ammonium nitrate in agricultural operations. DHS received 15 comments 
concerning the registration process; all 15 commenters wanted the 
registration process to be as simple and straightforward as possible. 
Some commenters stated that if a registration process were to be 
implemented, then a registrant should receive his/her approval from DHS 
within 72 hours. The commenters expressed differing views on the 
technological capabilities of the regulated community. Some argued that 
computer use was sufficiently common for the entire process to be 
automated through an Internet-based portal. As articulated by these 
comments, an online process would be fast, inexpensive, and could be 
structured to allow individuals to apply from their homes or places of 
business. Others argued that computers are not common enough among 
ammonium nitrate users, who would either be forced to travel to 
different locations to register or to invest in computers. This second 
group of commenters believed that registration through an Internet-
based portal would constitute an unjustified burden.
    Many commenters believed that regulating ammonium nitrate and not 
other types of fertilizer will cause a decrease in ammonium nitrate 
usage because of an expected rise in its cost. There was no agreement 
on the degree to which the cost of ammonium nitrate use would change, 
but multiple commenters indicated that cost would be passed along the 
supply chain until it ultimately reaches end-users. If the cost of 
ammonium nitrate were to go up, commenters hypothesized that ammonium 
nitrate alternatives may become preferable. Some comments suggested 
that continued ammonium nitrate use is based on historical ammonium 
nitrate use and that using an alternative would have no noticeable 
effect on operations. Others argued the opposite, stating that 
alternative fertilizers would not serve the needs of certain crops 
equally well. Commenters from certain States where ammonium nitrate is 
regularly used in agricultural operations indicated that ammonium 
nitrate is the best choice for nitrogen application for certain crops. 
Other commenters, however, asserted that viable alternatives exist with 
respect to the majority of crops for which ammonium nitrate currently 
is used as a fertilizer.
    There was a general consensus among commenters regarding the need 
to avoid duplication of other Federal licensing, regulatory, and 
inspection programs. Commenters stated that to be registered under the 
ammonium nitrate program could be unnecessary for individuals already 
registered under related regulatory programs covering ammonium nitrate 
use, such as DHS's Chemical Facility Anti-Terrorism Standards (CFATS), 
Department of Transportation (DOT) hazardous materials regulations, and 
Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) regulations. 
These commenters noted that ATF's inspection process also could be used 
for ammonium nitrate inspections under this program to minimize 
inconvenience to ammonium nitrate users.
    A number of commenters indicated that some ammonium nitrate is 
normally lost as bulk ammonium nitrate moves through the supply chain. 
Commenters noted, for example, that equipment used for transporting 
bulk ammonium nitrate, such as hoppers, bins, and railcars are not 
shift-proof, resulting in incidental spillage of ammonium nitrate 
prills, which are the small, bead-like pellets of ammonium nitrate 
typically used in the manufacturing, transportation, and bulk use of 
ammonium nitrate. Additionally, commenters noted that there is normally 
loss during movement throughout the supply chain due to melting or 
solidification of ammonium nitrate prills based on nothing more than 
ambient temperature and humidity. For instance, commenters noted that 
in a 90-ton railcar shipment, it is not unusual for these phenomena to 
result in loss of 200-500 pounds of ammonium nitrate. This may result 
because ammonium nitrate is hygroscopic in nature (i.e., it readily 
absorbs moisture). When ammonium nitrate prills come into contact with 
ambient moisture in the air, the prills may cake or meld together, 
which can simultaneously increase the overall mass of bulk ammonium 
nitrate while reducing its overall volume. These properties cause 
significant difficulty in accounting for ammonium nitrate on a fine 
scale. Consequently, these commenters stated that DHS should not 
require ammonium nitrate users to report losses of magnitudes normally 
encountered during ammonium nitrate use and transport.
    Several commenters addressed the threshold quantity or percentage 
composition of ammonium nitrate triggering regulation under this 
program. The universities that commented on the ANPRM addressed the use 
of ammonium nitrate in scientific research, while other commenters 
addressed the use of ammonium nitrate as a component of cold packs. 
These commenters stated that the quantities of ammonium nitrate used in 
scientific research and in cold pack manufacturing are so small that 
persons conducting scientific research or purchasing and selling cold 
packs should not be subjected to a rigorous regulatory scheme. Several 
commenters also recommended that DHS should exempt mixtures containing 
ammonium nitrate that ATF classified ``explosives.''
    In developing this NPRM, DHS carefully considered all public 
comments submitted in response to the ANPRM. DHS will respond to the 
issues raised therein when responding to the comments received on this 
NPRM.

D. Research Efforts and Findings

    In support of the effort to develop regulations to implement 
Subtitle J, the Department has examined and considered research into a 
variety of topics including the security hazards presented by the use 
of ammonium nitrate; its detonability; existing Federal and State 
ammonium nitrate programs; and voluntary security programs. In the 
course of conducting this research, the Department reviewed numerous 
materials, including, but not limited to, the following:
     A. Bauer, R.D. Heater & J.H. Paterson, Queen's Univ. 
Mining Eng'g Dep't, The Sensitivity of Ammonium Nitrate Melts and 
Solutions to Projectile Impact (1981).
     A. King & A. Bauer, Queen's Univ. Mining Eng'g Dep't, 
Shock Initiation Characteristics of Ammonium Nitrate (1980).
     R.W. Van Dolah, F.C. Gibson & J.N. Murphy, U.S. Dep't of 
Interior, Bureau of Mines, Further Studies on Sympathetic Detonation, 
Report of Investigations 6903 (1966).
     R.W. Van Dolah, F.C. Gibson & J.N. Murphy, U.S. Dep't of 
Interior, Bureau of Mines, Sympathetic Detonation of Ammonium Nitrate 
and Ammonium Nitrate-Fuel Oil, Report of Investigations 6746 (1966).

[[Page 46912]]

     J.J. Burns, G.S. Scott, G.W. Jones & Bernard Lewis, U.S. 
Dep't of Interior, Bureau of Mines, Investigations on the Explosibility 
of Ammonium Nitrate, Report of Investigations 4994 (1953).
    Information about these materials can be found in the docket for 
this NPRM. The Department seeks public comment on whether or not there 
are additional studies or other research materials the Department 
should consider in support of the development of the final regulations 
as well as any copies of such studies or research materials.
1. Security Hazards Presented by Use of Ammonium Nitrate
    Ammonium nitrate is a chemical that exists in multiple 
concentrations and physical forms, and different concentrations and 
forms have different security implications. In the United States, the 
principal uses for ammonium nitrate are as a fertilizer or as part of 
an explosive mixture. Ammonium nitrate can be sensitized (made more 
sensitive to shocks, and thus easier to detonate) with the addition of 
organic material. One common example is when fertilizer-grade ammonium 
nitrate is mixed with fuel oil and creates an explosive mixture known 
as Ammonium Nitrate/Fuel Oil (ANFO). The fuel oil acts as an energy 
source. Both ammonium nitrate fertilizers and ANFO have been misused in 
acts of terrorism to cause catastrophic damage to human health, safety, 
national security, the economy, and critical infrastructure.
    Nationwide, fertilizer-grade ammonium nitrate is commonly used in 
agricultural operations and the chemical and explosives industries. See 
A. King & A. Bauer, 4. Due to its availability in small-scale packaging 
(e.g., 50-pound bags), ammonium nitrate is susceptible to theft and 
misuse in making improvised explosive devices (IEDs).
    Over the years, ammonium nitrate has been used as an explosives 
component in terrorist attacks, both domestically and internationally. 
The 1995 Murrah Federal Building attack in Oklahoma City claimed the 
lives of 168 individuals and demonstrated how ammonium nitrate could be 
misused to perpetrate deadly terrorist attacks. See Oklahoma City 
National Memorial, A Look at the Numbers, http://www.oklahomacitynationalmemorial.org/secondary.php?section=5&catid=145&id=83 (last visited Aug. 11, 2010). 
The Provisional Irish Republican Army also used ammonium nitrate as 
part of its London bombing campaign in the early 1980s. See Boyce 
Rensberger, Ammonium Nitrate Explosives Are Simple, Easily Made, Widely 
Used in Industry, Wash. Post, Apr. 21, 1995, at A28. 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. See Corky Siemaszko, 
Wtc Chemicals In Kenya Blast (Aug. 14, 1998), http://www.nydailynews.com/archives/news/1998/08/14/1998-08-14_wtc_chemicals_in_kenya_blast.html (last visited May 11, 2011). 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. See Lauren Johnston, 
CBSNews.com, Fertilizer Used in Terror Bombs (Apr. 14, 2004), http://www.cbsnews.com/stories/2004/04/14/world/main611898.shtml (last visited 
Aug. 11, 2010). 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 (see Steve 
Schippert, Threats Watch, Canada Raid Breaks Cell: 3 Tons of Explosives 
Found (June 3, 2006), http://threatswatch.org/inbrief/2006/06/canada-raid-breaks-cell-3-tons/ (last visited Aug. 11, 2010)), England (see 
BBC News, Ammonium Nitrate `Easy to Find' (Mar. 30, 2004), http://news.bbc.co.uk/2/hi/uk_news/3582921.stm (last visited Aug. 11, 2010)), 
and the Philippines (see U.S. Dep't of State, Office of the Coordinator 
for Counterterrorism, Country Reports on Terrorism 2005, p. 78).
2. Detonability of Ammonium Nitrate
    It is understood that under proper conditions pure (unblended) 
ammonium nitrate is detonable. Making reliable explosives from ammonium 
nitrate is simplified through the addition of a fuel component with 
which it can react. In addition, though rare, accidental explosions 
have occurred during the manufacture, storage, and transport of 
ammonium nitrate. See J.J. Burns, G.S. Scott, G.W. Jones & Bernard 
Lewis, 1. Despite the explosive hazard presented by ammonium nitrate, 
however, it has been successfully and safely used for decades as a 
fertilizer. See R.W. Van Dolah, F.C. Gibson & J.N. Murphy; Report of 
Investigations 6746, 2. There is little scientific consensus about the 
critical diameter of an explosive required for detonation and the size 
of the conventional explosive charge (i.e., booster) necessary to 
detonate unblended ammonium nitrate. These questions about detonability 
all receive research attention today, and have also received research 
attention in the past. See A. Bauer, R.D. Heater & J.H. Paterson, 1, 5 
(1981). Preliminary results of ongoing research suggest that unblended 
ammonium nitrate can be difficult to detonate with any reliability. To 
date, terrorists typically have employed combinations of ammonium 
nitrate and fuel oil when utilizing ammonium nitrate in terrorist 
attacks.
    To better understand the detonability of ammonium nitrate and its 
use in explosives, the Department reviewed, and considered the results 
of, a study conducted by Sandia National Laboratory. Due to the 
detailed nature of its content and findings, however, this study, which 
is ``For Official Use Only,'' is not available to the public. The 
Department has also consulted with the Federal Bureau of 
Investigation's (FBI) Explosives Unit. This consultation helped the 
Department to understand the detonability of unblended ammonium 
nitrate, the detonability of ammonium nitrate mixtures, and the role 
ammonium nitrate plays in IED construction and terror-related 
activities.
    The Department seeks public comment on the detonability of ammonium 
nitrate.
3. Federal Regulations Addressing Ammonium Nitrate
    In developing this proposed rule, DHS reviewed other Federal 
regulations that cover portions of the ammonium nitrate supply chain or 
deal with identity verification; a number of these other regulations 
are discussed below. DHS examined these regulations for potential 
overlap with the proposed Ammonium Nitrate Security Program. In 
developing this NPRM, the Department collaborated with many of its 
Federal security partners in an attempt to harmonize this proposed rule 
with other regulatory regimes.
a. Chemical Facility Anti-Terrorism Standards
    In addition to the authority granted to DHS by Subtitle J, the 
Department had authority under section 550 of the Homeland Security 
Appropriations Act of 2007, Pub. L. 109-295, to issue regulations 
governing the security of high-risk chemical facilities. Under that 
authority, the Department promulgated an interim final rule titled the 
Chemical Facility Anti-Terrorism Standards (CFATS), 6 CFR part 27. See 
72 FR 17688 (April 9, 2007). Under CFATS, the Department regulates the 
security of high-risk chemical facilities, including high-risk chemical 
facilities that possess ammonium nitrate.
    To help the Department identify high-risk chemical facilities under 
CFATS,

[[Page 46913]]

the Department adopted a list of chemicals of interest (COI) as 
Appendix A to CFATS. See 72 FR 65396 (November 20, 2007). Any chemical 
facility that possesses any COI at or above the applicable screening 
threshold quantity specified in Appendix A for that COI must complete 
and submit to DHS certain consequence-based information via an online 
tool called the Chemical Security Assessment Tool Top-Screen. Any 
chemical facility preliminarily determined to be high-risk after DHS 
review of the chemical facility's Top-Screen must then meet additional 
security-related requirements under CFATS. Due to the risks ammonium 
nitrate may pose if either (1) exploded on-site, or (2) stolen or 
diverted to produce IEDs, ammonium nitrate (in both explosive and 
specified fertilizer forms) is one of over 300 COI that DHS listed in 
Appendix A to CFATS. See 72 FR 65407-65408, 65410.
    Although Subtitle J and CFATS share a goal of preventing terrorism 
risks associated with ammonium nitrate, the scopes and methods of 
regulation under Subtitle J and CFATS are very different. The CFATS 
rule--which addresses hundreds of chemicals in addition to ammonium 
nitrate--is directed at the security of high-risk chemical facilities. 
The CFATS rule does not, however, impose any limitations on the sale or 
transfer of ammonium nitrate. By contrast, Subtitle J does not address 
the physical security of ammonium nitrate facilities but does impose 
certain conditions on the sale or transfer of ammonium nitrate (e.g., 
requiring that ammonium nitrate may only be transferred between 
registered ammonium nitrate sellers and registered ammonium nitrate 
purchasers (or purchasers' agents)).
    In developing the rule required by Subtitle J, DHS intends to draw 
on information gained under the CFATS program about ammonium nitrate, 
and will work to ensure that CFATS and the new Subtitle J program 
complement each other. For additional discussion of the CFATS program's 
interaction with the proposed ammonium nitrate rule, see section 
III.A.1 of this NPRM.
b. U.S. Coast Guard Maritime Security Regulations
    The U.S. Coast Guard (USCG) regulates ammonium nitrate under 
multiple programs. Under the Maritime Transportation Security Act 
(MTSA), 46 U.S.C. 70101 et seq., USCG has authority to regulate 
security both aboard maritime vessels and at facilities located in, 
under, or adjacent to any waters subject to the jurisdiction of the 
United States. Through its MTSA regulations, USCG regulates the 
security of vessels transporting ammonium nitrate, as well as the 
security of certain facilities that store, manufacture, use, or 
distribute ammonium nitrate. In addition, USCG regulates the 
transportation of ammonium nitrate, and the loading or unloading of 
ammonium nitrate from vessels at any waterfront facility. See 33 CFR 
part 126 (regulating the handling of ammonium nitrate at waterfront 
facilities, and establishing penalties for handling ammonium nitrate 
without a permit); 46 CFR 148.01-7 (regulating the bulk shipment of 
ammonium nitrate).
    USCG has also designated as a ``Certain Dangerous Cargo'' any 
ammonium nitrate that is not certain dangerous cargo residue. See 33 
CFR 160.204. Based on this designation, each vessel carrying ammonium 
nitrate on bodies of water other than certain portions of inland rivers 
must submit a Notice of Arrival prior to arrival in port. See 33 CFR 
part 160, subpart C. The Notice of Arrival must contain certain 
information, including the name of the vessel's owner and operator, the 
names of the last five ports or places visited, the amount of ammonium 
nitrate on board, and information pertaining to each crewmember aboard. 
See 33 CFR 160.206. Owners and operators of U.S.-flagged vessels 
carrying ammonium nitrate in bulk must have, and must operate in 
compliance with, USCG-approved vessel security plans. See 33 CFR 
104.410. Likewise, owners and operators of facilities that receive 
vessels carrying ammonium nitrate in bulk must have and operate in 
compliance with USCG-approved facility security plans. See 33 CFR 
105.410.
c. Transportation Security Administration
    The Transportation Security Administration (TSA) has broad 
authority over security of all modes of transportation. These 
authorities are found primarily in the Aviation and Transportation 
Security Act of 2001 (ATSA), Public Law 107-71, which regulates the 
transportation of cargo, including ammonium nitrate. ATSA broadly 
allows TSA to ``exercise * * * powers, relating to transportation 
security as [TSA] considers appropriate.'' See 49 U.S.C. 114. TSA 
exercises its authority under ATSA in part by performing threat 
assessments on truck drivers who must receive Hazardous Materials 
Endorsements in order to be authorized to transport ammonium nitrate.
d. Bureau of Alcohol, Tobacco, Firearms, and Explosives
    ATF, a principal law enforcement agency within the U.S. Department 
of Justice, is dedicated to preventing terrorism, reducing violent 
crime, and protecting our nation. Among its authorities, under 27 CFR 
part 555, ATF is responsible for regulating the use of explosives, 
which are defined by inclusion in ATF's annual List of Explosive 
Materials, ATF Publication 5400.8. See 75 FR 1085 (Jan. 8, 2010) 
(notice of annual list). While ATF does not consider ammonium nitrate 
an explosive, ammonium nitrate explosive mixtures and ANFO are included 
in ATF's list of explosive materials. ATF regulations require that no 
person, other than a licensee or permittee, knowingly transport or 
receive any explosive material (including ANFO). See 27 CFR 555.26(a). 
Section III.A.3 of this NPRM discusses the interaction of ATF 
regulations with the proposed ammonium nitrate rule.
e. Department of Transportation Hazardous Materials Regulations
    The Federal Hazardous Materials Transportation Law (Federal Hazmat 
Law, 49 U.S.C. 5101 et seq.) authorizes the Secretary of Transportation 
to ``prescribe regulations for the safe transportation, including 
security, of hazardous material in intrastate, interstate, and foreign 
commerce.'' The Secretary of Transportation has delegated this 
authority to Pipeline and Hazardous Materials Safety Administration 
(PHMSA). PHMSA, through its Hazardous Materials Regulations (HMR; 49 
CFR Parts 171-180), prescribes transportation requirements for 
hazardous materials, including ammonium nitrate.
    The Hazardous Materials Table (HMT; 49 CFR 172.101) lists several 
shipping descriptions for ammonium nitrate and ammonium nitrate 
mixtures or solutions. These descriptions vary based on the properties 
of the particular ammonium nitrate at issue. As such, a shipment of 
ammonium nitrate may be classed and regulated as a Division 1.1D 
explosive, Division 5.1 oxidizer, or Class 9 miscellaneous hazardous 
material. For transport in commerce these materials must comply with 
all applicable HMR requirements (e.g., packaging, shipping papers, 
marking, labeling, placarding, security plans, emergency response 
information, training, etc.).
f. Department of Commerce
    Under the Export Administration Regulations (EAR), the U.S. 
Department

[[Page 46914]]

of Commerce's Bureau of Industry and Security regulates the export and 
re-export of ammonium nitrate. A ``re-export'' is the shipment or 
transmission of an item subject to the EAR from one foreign country 
(i.e., a country other than the United States) to another foreign 
country. A re-export also occurs when there is release of technology or 
software subject to the EAR to a foreign national outside the United 
States. See 15 CFR 734.2, and 15 CFR part 772 (definition of ``re-
export'').
    Specifically, under the EAR, licensees are authorized to export or 
re-export ammonium nitrate only to certain countries listed in the EAR, 
and consistent with the terms of the issued export license. See 15 CFR 
742.6 and 15 CFR 747.3. Under the EAR, ammonium nitrate is defined to 
include fertilizers and fertilizer blends containing more than 15% by 
weight ammonium nitrate, except liquid fertilizers (containing any 
amount of ammonium nitrate) or dry fertilizers which contain less than 
15% by weight ammonium nitrate. See 15 CFR part 774, Supplement 1 for 
item-specific export licensing information. Individuals involved in the 
domestic sale or transfer of ammonium nitrate, as defined by DHS, at 
U.S.-based exporters of ammonium nitrate would be required to register 
with the Department under the proposed Ammonium Nitrate Security 
Program.
4. State Regulations Addressing Ammonium Nitrate
    Virtually all 50 States regulate ammonium nitrate in some manner, 
based on its use either as a fertilizer, an explosive, or both. 
Although not in universal agreement, relevant State regulations 
typically define ammonium nitrate as an ammonium and nitrate mixture 
containing not less than 33 percent nitrate; require purchasers and 
sellers of ammonium nitrate to register with a governing State body; 
and require sellers of ammonium nitrate to maintain records of sales of 
ammonium nitrate for at least two years. Many State regulations grant 
State officials both the authority to inspect facilities possessing or 
distributing ammonium nitrate and the authority to fine or otherwise 
penalize facilities or individuals who fail to comply with regulations 
concerning ammonium nitrate.
5. Voluntary Programs Addressing Ammonium Nitrate
    In addition to efforts required by existing Federal and State 
regulations, many producers, distributors, and users of ammonium 
nitrate have undertaken voluntary efforts to secure the ammonium 
nitrate supply chain. Chief among these voluntary efforts is the 
``America's Security Begins With You'' program. This program is a 
voluntary ``know-your-customer'' program developed jointly by the ATF 
and members of the fertilizer industry following the 1995 attack on the 
Alfred P. Murrah Federal Building in Oklahoma City. The Department 
believes that, in many instances, voluntary programs already in place 
can serve as good building blocks for meeting regulatory requirements. 
The Department seeks comments providing details on voluntary programs 
related to ammonium nitrate security and how they could potentially be 
leveraged by ammonium nitrate users to meet the requirements of the 
proposed rule.

III. Discussion of Proposed Rule: Implementing Subtitle J

    What follows is a discussion of the approach DHS is proposing to 
take in implementing Subtitle J. Where appropriate, potential 
alternative approaches are also discussed. DHS welcomes public comment 
on the proposed rule, and also on potential alternative approaches.
    The cost to the public of this proposed rule ranges from $300 
million to $1.041 billion over 10 years at a 7% discount rate. The 
primary estimate is the mean which is $671 million. For comparison, at 
a 3% discount rate, the cost of the proposed rule ranges from $364 
million to $1.3 billion with a primary (mean) estimate of $814 million. 
The average annualized cost for the program ranges from $43 million to 
$148 million (with a mean of $85 million), also employing a 7% discount 
rate. The following two tables present the summary discounted total and 
annualized costs for the rule.

                                      OMB Accounting Statement of Annualized Costs and Benefits Program Years 1-10)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      3 Percent discount rate                         7 Percent discount rate
                                                         -----------------------------------------------------------------------------------------------
                                                              Primary         Minimum         Maximum         Primary         Minimum         Maximum
                                                             estimate        estimate        estimate        estimate        estimate        estimate
                                                            (millions)      (millions)      (millions)      (millions)      (millions)      (millions)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Costs
Annualized Monetized Costs..............................           $95.4           $42.7          $148.1           $95.5           $42.7          $148.2
Benefits
                                                         -----------------------------------------------------------------------------------------------
Qualitative (un-quantified) Benefits....................                 Reduced vulnerability to terrorist attack using ammonium nitrate.
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                         Summary of Costs ($ Millions, 7 Percent Discount Rate)--by Program Year
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Audits/
                                           Registration       Appeals      Point of sale   Recordkeeping    inspections    Federal costs   * Total cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
PY1.....................................            18.9             0.1            67.5             6.2             0.4             9.8           102.7
PY2.....................................             4.4             0.0            62.6             4.4             0.4             6.5            78.2
PY3.....................................             4.3             0.0            58.4             4.1             0.4             6.0            73.2
PY4.....................................             4.2             0.0            54.7             3.8             0.4             5.7            68.7
PY5.....................................             4.2             0.0            51.1             3.6             0.3             5.3            64.4
PY6.....................................             8.9             0.0            48.1             3.4             0.3             5.1            65.8
PY7.....................................             6.8             0.0            44.6             3.1             0.3             4.7            59.5
PY8.....................................             6.7             0.0            41.7             3.0             0.3             4.4            56.0
PY9.....................................             6.6             0.0            39.0             2.8             0.2             4.2            52.6
PY10....................................             6.5             0.0            36.4             2.6             0.2             3.9            49.5
                                         ---------------------------------------------------------------------------------------------------------------
    Total...............................            71.3             0.1           503.8            36.8             3.0            55.3           670.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Reporting of Thefts rounds to zero in individual years and are omitted from this table but included in the total and regulatory analysis.

[[Page 46915]]

    DHS also conducted a break-even analysis that examines the required 
reduction in the potential frequency of terrorist attacks involving 
ammonium nitrate. The proposed rule would be cost effective if it 
resulted in a reduction in attack frequency by at least one attack the 
size of the Oklahoma City bombing (which occurred 16 years ago) per 14 
years. For discussion of this analysis, and for explanation of other 
cost calculations, please see section IV of this NPRM, which discusses 
various regulatory analyses conducted by DHS.

A. Ammonium Nitrate Subject to Subtitle J Requirements (See Section 
31.105 of the Proposed Rule)

    This section will address the definition of ammonium nitrate. 
Congress has defined ammonium nitrate for purposes of Subtitle J to 
include ``solid ammonium nitrate that is chiefly the ammonium salt of 
nitric acid and contains not less than 33 percent nitrogen by weight.'' 
See 6 U.S.C. 488(1)(A). DHS proposes to use this definition of solid 
ammonium nitrate in section 31.105 of the proposed rule.
    Also included in the definition of ammonium nitrate for purposes of 
Subtitle J is ``any mixture containing a percentage of ammonium nitrate 
that is equal to or greater than the percentage determined by [DHS].'' 
See 6 U.S.C. 488(1)(B). In establishing this mixture percentage for 
purposes of Subtitle J, the Department was required to consult with the 
heads of appropriate Federal departments and agencies, including the 
Secretary of Agriculture, and to provide notice and an opportunity for 
comment. See 6 U.S.C. 488a(b). That consultation is discussed below.
    This section will also discuss the Department's consideration of a 
minimum threshold amount of ammonium nitrate that would have to change 
hands as part of a sale or transfer before that sale or transfer 
(including the individuals participating in the transaction) would be 
subject to Subtitle J's requirements. This section will also discuss 
the Department's discretionary ability to exempt from regulation ``a 
person producing, selling, or purchasing ammonium nitrate exclusively 
for use in the production of an explosive under a license or permit 
issued under chapter 40 of title 18, United States Code.'' See 6 U.S.C. 
488a(f).
1. Mixture Requirement
    Mixtures containing high percentages of ammonium nitrate can be 
effectively used in bomb-making. By proposing to include a mixture 
requirement in the Ammonium Nitrate Security Program, the Department is 
seeking to capture under this rule mixtures that terrorist bomb-makers 
would be most interested in acquiring. To assist in determining an 
appropriate threshold percentage of ammonium nitrate in a mixture for 
purposes of Subtitle J, the Department reviewed multiple detonability 
studies, examined mixture requirements employed by other Federal and 
State regulatory programs, and consulted with a variety of Federal, 
State, and private sector entities. Based on this research and after 
consultation with the FBI's Explosives Unit, the Department proposes to 
define ammonium nitrate in section 31.105 to include any mixture that 
is 30 percent or more ammonium nitrate by weight. By setting the 
mixture requirement at 30 percent, the Department believes the proposed 
rule will capture those ammonium nitrate mixtures that could be most 
effectively used in bomb-making, or that could be most effectively 
retooled or reconfigured for use in bomb-making.
    The Department is aware that this proposed mixture requirement 
differs from the mixture requirements used for ammonium nitrate under 
CFATS. Under CFATS, a mixture containing ammonium nitrate is counted 
towards the screening threshold quantity for ammonium nitrate if 
ammonium nitrate makes up 33 percent or more of the mixture. Therefore, 
this proposed mixture requirement for this rule would apply more 
broadly than the mixture requirement in CFATS; the ammonium nitrate 
mixtures covered under this proposed requirement would include ammonium 
nitrate mixtures containing between 30 and 33 percent ammonium nitrate 
by weight, while CFATS' mixture requirements do not cover mixtures 
containing between 30 and 33 percent ammonium nitrate by weight.
    There are two main reasons for the difference between the CFATS 
approach to ammonium nitrate mixtures and the proposed Ammonium Nitrate 
Security Program approach to mixtures. First, the two mixture 
requirements exist to accomplish different goals. The CFATS mixture 
requirements exist to help the Department identify potentially high-
risk chemical facilities subject to CFATS. The CFATS mixture 
requirements are not an assertion by the Department that only ammonium 
nitrate mixtures containing 33 percent or more ammonium nitrate are 
vulnerable to misuse in acts of terrorism. The proposed Ammonium 
Nitrate Security Program mixture requirement, however, 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 requirement is appropriate for Subtitle J.
    Second, during the development of this proposed rule, the 
Department obtained information from the Department of Justice, 
indicating that under certain circumstances, experiments that have 
shown that mixtures containing as low as 30 percent ammonium nitrate by 
weight can be used as components of viable explosives. This information 
was unavailable to DHS when it wrote and published the CFATS mixture 
requirements. In light of this evidence and the purpose for which the 
Subtitle J mixture requirement is being established, the Department 
believes that setting the proposed mixture requirement at 30 percent 
ammonium nitrate is the correct course of action.
    The Department's proposed mixture requirement would exempt persons 
and entities from coverage under the proposed rule only to the extent 
that they possess or obtain mixtures containing less than 30 percent 
ammonium nitrate by weight. The proposed requirement would not exempt 
persons and entities from coverage to the extent that they possess or 
obtain solid ammonium nitrate which they intend to incorporate into 
ammonium nitrate mixtures. The Department thus proposes that the 
purchase, sale, transfer, or acquisition of solid ammonium nitrate to 
be incorporated into mixtures will be treated the same as the purchase, 
sale, transfer, or acquisition of ammonium nitrate not to be 
incorporated into mixtures.
    The Department is interested in receiving comments on this proposed 
approach, including comments on the Department's proposal to define 
ammonium nitrate to include any mixture that is 30 percent or more 
ammonium nitrate by weight. DHS requests comments addressing the 
appropriateness of this percentage, comments addressing whether it 
would be more appropriate to express this percentage as a percentage of 
mixture weight or as a percentage of mixture volume, and comments 
discussing whether a higher or lower mixture percentage would be more 
appropriate. The Department is also interested in comments addressing 
possible consumer and retail impacts of the proposed mixture 
requirement, and on the detonability of ammonium nitrate and ammonium 
nitrate mixtures of varying percentages.

[[Page 46916]]

2. Threshold Weight and Individual Products Exemptions
    The Department's understanding is that, outside of small sample or 
research quantities, ammonium nitrate is primarily sold either in bulk 
or in pre-packaged bags containing no less than 50 pounds of ammonium 
nitrate. Mixtures that contain small percentages or amounts of ammonium 
nitrate are also found in various retail products, including home and 
garden products (e.g., fertilizer mixtures) and cold packs.
    Under Subtitle J, the Department has authority to regulate 
transactions (and the individuals conducting them) involving any amount 
of ammonium nitrate. The Department is proposing to establish a 
threshold weight to which the regulation would apply, and is 
considering whether the marginal security benefits gained from 
regulating transactions involving de minimis quantities of ammonium 
nitrate are outweighed by the costs of regulating those transactions. 
Similarly, the Department is considering whether the security benefits 
gained from regulating transactions involving products packaged such 
that they are unlikely to be used to make an explosive are outweighed 
by the costs of regulating those transactions. To avoid capturing these 
transactions under its regulatory regime, and to avoid complicating 
ammonium nitrate transactions that may only pose a de minimis security 
risk, the Department is considering applying both a minimum threshold 
weight and an individual products exemption for cold packs to this 
rulemaking.
    The Department is considering establishing a threshold weight 
whereby each transaction would be subject to Subtitle J's regulatory 
requirements only if the transaction involves the sale, transfer, or 
purchase of ammonium nitrate that, in the aggregate, is equal to or 
greater than the threshold weight. Specifically, section 31.105 of the 
proposed rule contains a 25 pound threshold weight. The Department 
believes that this weight is low enough to prevent a bad actor from 
easily acquiring a sufficient quantity of ammonium nitrate to pose a 
terrorist threat. The Department also believes that this weight is high 
enough to avoid capturing small laboratory quantities of ammonium 
nitrate or transactions involving other de minimis quantities of 
ammonium nitrate that are unlikely to be misappropriated for use in a 
terrorist act. The Department believes that such de minimis quantities 
are unlikely to be misappropriated for use in a terrorist act due to 
the large number of transactions in de minimis quantities that would be 
required to accumulate sufficient ammonium nitrate to construct an 
explosive that poses a significant terrorist threat. This threshold 
should also reduce the economic impact of the Ammonium Nitrate Security 
Program by avoiding regulation of those transactions that present de 
minimis security risk.
    In order to determine the utility of this approach, the Department 
solicits comments on the manners in which ammonium nitrate is sold and 
packaged, the manners and frequencies of use of ammonium nitrate in 
small quantities, and the utility of setting a threshold weight. The 
Department additionally requests comments addressing the 
appropriateness of the proposed 25 pound threshold weight. 
Specifically, the Department asks whether another threshold weight, 
such as 5 pounds, 10 pounds, 50 pounds, or another quantity, would 
better achieve the desired results of the proposed rule.
    If the Ammonium Nitrate Security Program does include a threshold 
weight, DHS proposes that the threshold weight would apply to mixtures 
as well as to unblended ammonium nitrate. As such, the proposed rule 
would apply to an ammonium nitrate mixture only if (1) the mixture 
weighs at least the threshold weight, and (2) the mixture contains at 
least 30 percent ammonium nitrate by weight. Both conditions would need 
to be satisfied in order for the proposed rule to apply to a given 
mixture.
    The Department proposes that when applying the threshold weight to 
an ammonium nitrate mixture, the total weight of the mixture should be 
counted, as opposed to just the weight of the ammonium nitrate in the 
mixture. In other words, all ten pounds of a single ten-pound bag (or 
all ten pounds of ten one-pound bags) of fertilizer mixture containing 
30 percent ammonium nitrate by weight would count towards the threshold 
weight, and not just the three pounds which is the weight of the 
ammonium nitrate portion of that mixture. The Department believes this 
approach would be more effective at preventing a bad actor from 
acquiring sufficient quantities of ammonium nitrate than would an 
alternative approach under which only the ammonium nitrate content of a 
mixture is counted towards threshold weight. The Department solicits 
comments on the utility and manner of application of the proposed 
threshold weight to mixtures containing ammonium nitrate.
    In addition to including a threshold weight in the proposed rule, 
the Department is proposing to exempt cold packs containing ammonium 
nitrate from regulation. In section 31.105 of the proposed rule the 
Department proposes to define a ``cold pack'' as a small, commercially-
available package commonly used as a replacement for ice in the 
application of first aid, containing unmixed water and ammonium nitrate 
that, immediately prior to use, can be manipulated to cause the 
comingling of the water and the ammonium nitrate resulting in an 
endothermic reaction that significantly lowers the temperature of the 
package. For the following reasons, DHS does not believe that Congress 
intended the people and facilities buying and selling cold packs to be 
regulated by Subtitle J.
    The Department believes that the security benefits obtained from 
regulating sales and transfers of cold packs would be minimal and 
outweighed by significant impact on the general public. Cold packs 
individually contain extremely small amounts of ammonium nitrate such 
that collecting very large numbers of them would be necessary in order 
to obtain enough ammonium nitrate to produce a dangerous explosive 
device.
    The Department also believes that regulating sales and transfers of 
cold packs would impose substantial economic impacts on the public, 
which would not be justified by the minimal security benefit gained by 
cold packs regulation. Specifically, DHS is concerned that regulation 
of cold packs would have serious and negative impacts on the provision 
of first aid, first responders, and the medical sector generally. These 
substantial impacts would be spread over a large variety of retail 
stores, medical facilities, health care providers, athletic teams, 
regulated industries that require first aid kits containing cold packs, 
and individuals using cold packs for personal first aid purposes. A 
preliminary examination indicates that the potential affected 
populations could easily exceed six million individuals, businesses, 
and organizations or public entities. Complicating the issue is the 
fact that many cold pack manufacturers do not use ammonium nitrate in 
their products--many manufactures assemble cold packs that contain 
other chemicals instead of ammonium nitrate. Cold pack purchasers or 
sellers might not know which chemicals are present in the cold packs 
they obtain, prior to obtaining them, which could complicate their 
abilities to comply with any regulatory requirements.
    For these reasons, the Department does not believe that Congress 
intended cold packs--or the sporting goods stores, recreational 
centers, schools, and other entities that purchase or sell

[[Page 46917]]

them--to be covered under Subtitle J. DHS requests comments describing 
the populations that could be impacted by cold packs regulation, 
including comments discussing those populations' abilities to comply 
with the proposed regulatory requirements.
    The Department's proposed cold packs exemption would exempt persons 
and entities from coverage under the rule only to the extent that they 
purchase, sell, or transfer cold packs containing ammonium nitrate. The 
proposed rule would not exempt persons and entities (such as 
manufacturers of cold packs) from coverage to the extent that they 
purchase or transfer ammonium nitrate which they intend to incorporate 
into cold packs. The Department thus proposes that the purchase, sale, 
transfer, or acquisition of ammonium nitrate to be incorporated into 
cold packs will be treated the same as the purchase, sale, transfer, or 
acquisition of ammonium nitrate not to be incorporated into cold packs.
    The Department solicits comments on these proposed exemptions. The 
Department also solicits comments describing uses for ammonium nitrate 
other than as a fertilizer, a cold packs component, or an explosives 
ingredient. DHS solicits comments on whether any other uses of ammonium 
nitrate warrant exemptions.
3. Explosives Exemption
    The Department has the discretion to exempt from regulation persons 
and facilities producing, selling, transferring, or purchasing ammonium 
nitrate exclusively for use in the production of explosives under a 
license or permit issued under the Federal explosives laws, 18 U.S.C. 
Chapter 40, and associated regulations. See 6 U.S.C. 488a(f).
    ATF is responsible for enforcing federal explosives laws and has 
established regulations for doing so. See 27 CFR Part 555. ATF's 
regulatory authority over a facility or individual licensed to use an 
ammonium nitrate-based explosive is limited to ammonium nitrate that 
(1) has been mixed with a fuel (i.e., ANFO) which is defined in 27 CFR 
555.11 as an ``explosive'' and (2) is contained on ATF's List of 
Explosive Materials. Unblended ammonium nitrate, however, is not 
defined as an explosive under 27 CFR part 555, and thus ATF does not 
regulate ammonium nitrate that has not been mixed with a fuel oil, 
outside of the limited separation distance requirements governing the 
storage of ammonium nitrate when stored in the vicinity of other high 
explosives and blasting agents, as set forth in 27 CFR 555.220. This is 
the case even where unblended ammonium nitrate is being produced, 
purchased, or stored by a facility regulated by ATF as a manufacturer 
of ANFO. It is also the Department's understanding that facilities 
producing ANFO typically have inventories of ammonium nitrate on hand 
for use in manufacturing ANFO, while entities engaged solely in the re-
sale or purchase of ANFO are unlikely to possess any ammonium nitrate 
other than that which is contained within ANFO mixtures.
    The Department is considering three possible approaches for 
regulating individuals and facilities involved in the production of 
ANFO. These approaches are summarized in the following table, and 
discussed thereafter.

----------------------------------------------------------------------------------------------------------------
                                               Option 1                 Option 2                 Option 3
----------------------------------------------------------------------------------------------------------------
Would DHS opt to exempt individuals    No.....................  Yes....................  Partial Exemption.
 and facilities that purchase, sell,
 or transfer ammonium nitrate solely
 for use in the production of
 explosives?
Brief description of option..........  Ammonium nitrate         Ammonium nitrate         Ammonium nitrate
                                        transactions would be    purchases, sales, or     combined with fuel oil
                                        regulated by DHS         transfers by             (ANFO) would not be
                                        whether or not the       individuals and          regulated by DHS.
                                        ammonium nitrate         facilities solely to
                                        purchased, sold, or      enable use of ammonium
                                        transferred has been     nitrate in the
                                        combined with fuel oil   production of
                                        to create ANFO.          explosives would not
                                                                 be regulated by DHS.
Would DHS regulate ammonium nitrate    Yes....................  No.....................  No.
 mixtures that are ``explosives''
 subject to ATF regulation (i.e.,
 ANFO)?
What duplication would result from     Individuals and          Individuals and          Certain facilities
 this option?                           facilities would be      facilities regulated     (e.g., those that
                                        subject to regulation    by ATF under the         produce ANFO) would be
                                        by both DHS under        Federal explosives       subject to both DHS
                                        Subtitle J and ATF       laws would not be        and ATF regulations.
                                        under the Federal        regulated by DHS. No
                                        explosives laws.         duplication would
                                                                 result.
What gaps would result from this       No gaps in coverage of   Could create a           Compromise approach
 option?                                ammonium nitrate as it   considerable gap in      closes gaps in
                                        moves through the        regulatory coverage      security of the
                                        supply chain.            throughout the           ammonium nitrate
                                                                 ammonium nitrate         supply chain.
                                                                 supply chain, as ATF
                                                                 regulations apply
                                                                 solely to ANFO and not
                                                                 the ammonium nitrate
                                                                 used to create it.
----------------------------------------------------------------------------------------------------------------

    The first option is to apply the final rule implementing Subtitle J 
to individuals and facilities that purchase, sell, or transfer ammonium 
nitrate for use in the production of explosives. Under this approach, 
such individuals and facilities would be subject to regulation by both 
DHS under Subtitle J and ATF under the Federal explosives laws. By not 
exempting ammonium nitrate used in explosives from coverage, DHS would 
be treating all individuals and facilities 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 captured under DHS'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

[[Page 46918]]

combined with fuel oil to create ANFO. The major disadvantage of not 
exempting ammonium nitrate used in explosives is that individuals and 
facilities who purchase, sell, or transfer ammonium nitrate for the 
purpose of manufacturing explosives would be subject to potentially 
duplicative regulatory requirements, including two sets of licensing 
requirements, two sets of recordkeeping requirements, two sets of point 
of sale requirements, and inspections by both ATF and DHS. In response 
to the October 29, 2008 ANPRM, some commenters expressed concern over 
these potentially repetitive regulatory requirements.
    The second option is to entirely exempt from Subtitle J 
requirements facilities and persons that purchase, sell, or transfer 
ammonium nitrate solely for use in the production of explosives, as 
they are already regulated by ATF. In this model, facilities and 
persons that are licensed by ATF to mix ammonium nitrate with fuel to 
create ANFO, but that do not purchase, sell, or transfer ammonium 
nitrate for other purposes and do not perform ammonium nitrate 
application services, would not be subject to the rule implementing 
Subtitle J. The primary advantage of this approach is that it would 
prevent potentially duplicative regulatory requirements from applying 
to ammonium nitrate facilities and individuals that are already subject 
to ATF regulations. This approach, 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. For example, facilities that produce 
ammonium nitrate to sell to manufacturers of ANFO but who themselves do 
not produce ANFO would be subject to neither ATF nor DHS regulation 
under this approach. Similarly, stores of ammonium nitrate at 
facilities producing ANFO would not be subject to any regulatory 
requirements (e.g., recordkeeping requirements, reporting of theft or 
loss requirements) by DHS or ATF under this approach. This would create 
regulatory gaps in the ammonium nitrate supply chain which could be 
exploited by terrorists.
    The third option would exempt from regulation ammonium nitrate 
mixtures that are ``explosives'' subject to ATF regulation (i.e., 
ANFO). DHS is proposing this option in section 31.305 of the proposed 
rule. 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 all Subtitle J 
requirements and would be subject solely to ATF regulation. Individuals 
producing ANFO, however, would be subject to the Subtitle J 
requirements, as they, by necessity, possess ammonium nitrate (which 
they possess as unblended ammonium nitrate before combining it with 
fuel oil to make ANFO). This approach recognizes both the fact that ATF 
already regulates ANFO, as well as the fact that ATF's jurisdiction is 
limited such that ATF does not regulate the ammonium nitrate used by 
facilities to make ANFO. Through this compromise approach, individuals 
and entities whose ammonium nitrate-related operations are already 
regulated by ATF are spared the duplicative DHS oversight that would 
result from the first option (discussed above), while gaps in security 
of the ammonium nitrate supply chain that would be created by the 
second option (discussed above) are avoided. The primary drawback of 
this approach is that it would make certain facilities (e.g., those 
that produce ANFO) subject to both DHS and ATF regulations. To minimize 
this impact, the Department and ATF currently are discussing ways to 
coordinate inspections and other compliance activities for these 
ammonium nitrate facilities, and will work together to ensure that 
there is minimal duplication of effort or burden caused by this 
approach, if adopted.
    The Department welcomes comments on this proposed approach to 
ammonium nitrate produced, bought, sold, or transferred exclusively for 
the purpose of producing explosives. The Department also welcomes 
comments on any other exemptions that it should consider.

B. Requirements for the Registration of AN Sellers and AN Purchasers 
(See Sections 31.200-31.250 of the Proposed Rule)

1. Overview
    Pursuant to 6 U.S.C. 488a(c), 6 U.S.C. 488a(d), 6 U.S.C. 
488e(a)(3)(A), and 6 U.S.C. 488e(a)(3)(B), the Department must 
establish a process by which persons owning or operating ``AN 
Facilities'' and persons intending to purchase ammonium nitrate must 
register with the Department. Section 31.105 of the proposed rule 
defines an ``AN Facility'' as any person or entity that produces, 
sells, or otherwise transfers ownership of, or provides application 
services for, ammonium nitrate. The Department proposes to define 
``application services'' in section 31.105 as the physical deposit of 
fertilizer onto turf, fields, crops, or other agricultural property, 
where these services are provided by an individual or entity other than 
the person or entity owning or operating the property upon which the 
fertilizer is deposited. The Department is interested in receiving 
comments on these definitions, as well as all other definitions 
included in the proposed rule.
    The proposed registration process would include conducting a check 
of appropriate identifying information of any person seeking to 
register against identifying information that appears in the Terrorist 
Screening Database. Accordingly, prospective applicants would be 
required to provide specific identifying information to the Department. 
Appearance in the TSDB is grounds for denial of a registration number 
(an ``AN Registered User Number''). In section 31.220(a)(1) of the 
proposed rule, the Department proposes to develop an online web portal 
through which individuals will apply for AN Registered User Numbers. 
The Department proposes that AN Registered User Numbers will be 
disseminated to successful applicants via e-mail or through the DHS web 
portal. The Department also proposes in section 31.235 to make AN 
Registered User Numbers valid for a period of five years. Additional 
proposals on who would be required to register and on various aspects 
of the registration process are discussed in the following paragraphs. 
The Department seeks public comment on its proposed registration 
methodology, on other methods the Department may consider for 
registration, and on the length of time registration numbers should 
remain valid.
2. Who Must Register
    6 U.S.C. 488a(c)(1)(A) and 6 U.S.C. 488e(a)(3)(B) require owners 
and operators of AN Facilities (including facilities that provide 
ammonium nitrate application services) to register with the Department. 
For the reasons provided below, the Department proposes in section 
31.200 that any person who may individually perform a sale or transfer 
of ammonium nitrate on behalf of an AN Facility would be required to 
register as an owner or operator. Registered AN Facility personnel 
(whether owners or operators) involved with sales, transfers, or 
provision of application services are collectively referred to in the 
proposed rule as ``AN Sellers,'' of which ``AN Facility 
Representatives'' and ``Designated AN Facility Points of Contact 
(POCs)'' are subsets that have special responsibilities under the 
proposed rule. ``AN Facility Representatives'' are any AN Facility

[[Page 46919]]

personnel, be they owners or operators, designated to act on behalf of 
an AN Facility for purposes of compliance with this rule. A 
``Designated AN Facility POC'' is the AN Facility Representative 
designated by an AN Facility to act as the primary point of contact 
with the Department on behalf of the AN Facility for purposes of 
compliance with this rule.
    6 U.S.C. 488a(d) and 6 U.S.C. 488e(a)(3)(A) also require anyone who 
intends to purchase ammonium nitrate to register with the Department. 
The proposed rule refers to these individuals as ``AN Purchasers.''
    Additional details on the registration of AN Sellers, AN Facility 
Representatives, Designated AN Facility POCs, and AN Purchasers follow. 
The Department welcomes public comment on the usefulness of these 
registration categories.
    DHS also welcomes public comment discussing other potential 
registration categories. DHS is interested in comments addressing the 
benefits and costs of potentially registering organizations in addition 
to the registration of individual persons. The Department's proposed 
rule would require only the registration of individual persons, 
although DHS is interested in receiving comments addressing what 
benefits and costs, if any, there would be in requiring registration of 
organizations involved in ammonium nitrate sales, transfers, or 
application services. DHS is interested in receiving comments 
addressing which types of organizations (if any) should register--
organizations affiliated with AN Facilities, organizations affiliated 
with AN Purchasers, both, or neither. The Department also invites 
comments addressing organizational structures, and whether different 
registration requirements should apply to organizations with different 
ownership, governance, or operational structures. The Department also 
seeks comments discussing potential ways in which organizational 
registration could take place.
3. Registering AN Sellers
    6 U.S.C. 488a(c)(1)(A) and 6 U.S.C. 488e(a)(3)(B) require persons 
who own and persons who operate AN Facilities to register with the 
Department. DHS believes that Subtitle J's registration requirements 
for AN Facility personnel will be satisfied if AN Facilities designate 
AN Sellers, AN Facility Representatives, and/or Designated AN Facility 
POCs to register and perform the sale, transfer, and application 
service responsibilities discussed elsewhere in this NPRM. The 
Department proposes to require only those owners and operators actually 
involved in sales, transfers, or application services to register. DHS 
is also considering, however, whether Subtitle J requires all owners to 
register. DHS welcomes comments on this issue and the benefits and 
costs imposed by a registration requirement for various types of 
owners. We understand that some would consider it overly burdensome to 
require all owners or operators of AN Facilities to register, because 
not all owners or operators are involved in or have influence over 
their organizations' ammonium nitrate operations, and because not all 
owners or operators have the capability to cause ammonium nitrate 
misappropriation.
    Some AN Facilities, such as those owned by large companies, may 
have many persons who could be considered owners under 6 U.S.C. 
488a(c)(1)(A) and 6 U.S.C. 488e(a)(3)(B). The Department requests 
comment on who should be required to register to fulfill Subtitle J's 
owner registration requirements for these types of facilities. DHS also 
requests comment describing how registration of various owners would or 
would not fulfill the objective of Subtitle J--``to prevent the 
misappropriation or use of ammonium nitrate in an act of terrorism.'' 
See 6 U.S.C. 488a(a).
    The Department is also interested in obtaining more information 
about individuals who operate (but do not own) AN Facilities, 
particularly at AN Facilities where owners themselves are not involved 
in day-to-day operations and do not personally sell, transfer, or 
perform application services for ammonium nitrate. Operators include 
employees or other persons who could act on behalf of a facility in 
conducting sales and transfers, such as sales clerks, cashiers, sales 
managers, and persons who provide ammonium nitrate transportation 
services (e.g., delivery truck drivers) or application services. 
Enabling operator registration is consistent with the Department's 
authority under 6 U.S.C. 488a(a) and 6 U.S.C. 488e(a)(3)(B), and is 
necessary in order to ensure that persons with the ability to sell, 
transfer, or provide application services for ammonium nitrate are not 
terrorists. DHS welcomes comments on which operators involved in the 
sale and transfer of ammonium nitrate, or involved in ammonium nitrate 
application services, should be required and why they should be 
required to register with the Department.
    In light of the Department's understanding of the roles of AN 
Facility owners and operators, DHS is proposing that several categories 
of individuals register as ``AN Sellers'':
    (1) Any individual who has an ownership interest in an AN Facility 
may register as an AN Seller.
    (2) Any individual designated to act on behalf of an AN Facility 
for purposes of compliance with this regulation would be required to 
register as an AN Seller, such as, possibly, a site manager, sales 
manager, or corporate officer.
    (3) Any individual involved in the sale or transfer of ammonium 
nitrate on behalf of an AN Facility would be required to register as an 
AN Seller, such as a sales clerk or cashier.
    (4) Any individual performing ammonium nitrate application services 
on behalf of an AN Facility would be required to register as an AN 
Seller.
DHS proposes that every sale, transfer, or provision of ammonium 
nitrate application services would have to be conducted by a registered 
individual (or by multiple registered individuals). Accordingly, while 
every AN Facility will be required to have at least one AN Seller 
registered with the Department, not every individual with job at an AN 
Facility would have to register to be an AN Seller. These proposals 
would largely give AN Facilities the flexibility to seek registration 
of and to conduct business with the personnel of their choosing, while 
also ensuring that all sales, transfers, and application services are 
conducted by individuals who have been vetted by and registered with 
the Department.
    DHS is proposing that within the category of AN Sellers there be a 
subcategory of individuals called ``AN Facility Representatives.'' The 
qualifications and responsibilities of AN Facility Representatives will 
be discussed in the following section. AN Sellers who are not AN 
Facility Representatives would have authority to perform all of the 
regulatory activities that owners or operators must perform pursuant to 
Subtitle J (e.g., verifying the identities of prospective AN 
Purchasers, recording the details of completed sales, and handing over 
possession of ammonium nitrate to approved AN Purchasers), but would 
not be responsible for ensuring that other AN Facility personnel are 
following the Department's regulations. For a description of 
permissible responsibilities of AN Sellers, refer to section 31.210 of 
the proposed rule.
    The Department proposes that every AN Facility would have to have 
at least one registered AN Seller (i.e., the Designated AN Facility 
POC), but may seek the registration of as many other AN Facility 
Representatives and AN Sellers as it deems appropriate. The

[[Page 46920]]

Department proposes that whether or not an AN Facility seeks 
registration of more than a single person will be discretionary.
    In section 31.220(c)(3), the Department proposes that each person 
registering as an AN Seller, AN Facility Representative, or Designated 
AN Facility POC will be expected to provide information identifying all 
AN Facilities at which he/she will perform sales or transfers of 
ammonium nitrate, or on behalf of which he/she will perform application 
services. In section 31.220(b), the Department proposes that a single 
individual may serve as an AN Seller for multiple AN Facilities.
4. Registering AN Facility Representatives
    The Department recognizes that not all AN Sellers will have 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 regulations. In light of this, in 
section 31.215(b), 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 AN 
Facilities, but also any non-owner AN Facility operators, employees, or 
contractors designated to act on behalf of an AN Facility for purposes 
of compliance with this proposed rule. Thus, for purposes of the 
proposed rule, an AN Facility would be allowed to designate as an AN 
Facility Representative an individual without any ownership in the AN 
Facility, such as, possibly, a site manager, sales manager, or 
corporate officer, to meet the ``owner'' and ``operator'' registration 
requirements of Subtitle J.
    In section 31.215(b), the Department proposes that every AN 
Facility would have to have at least one AN Facility Representative 
registered on its behalf, but may have as many AN Facility 
Representatives registered on its behalf as it deems appropriate. 
Whether or not an AN Facility seeks registration of any additional AN 
Facility Representatives is entirely discretionary. The Department also 
proposes that while an AN Facility would have to have at least one 
registered AN Facility Representative, whether or not an AN Facility 
seeks registration of any additional AN Sellers who are not AN Facility 
Representatives is entirely discretionary. Under the Department's 
proposed approach, an AN Facility may decide that it is most cost-
effective to register only AN Facility Representatives; however, in 
that case, AN Facility Representatives would have to be able to perform 
all applicable regulatory compliance activities in this rule.
    While the Department's proposal does not preclude the registration 
of multiple AN Facility 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 Facility. This individual will be 
referred to as the ``Designated AN Facility POC.'' The qualifications 
and responsibilities of Designated AN Facility POCs will be discussed 
in the following section.
    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 Facility on behalf of which he/
she is registering. Please note that a single individual may serve as 
an AN Facility Representative for multiple AN Facilities.
5. Registering a Designated AN Facility POC
    In section 31.215(a) of the proposed rule, the Department proposes 
requiring each AN Facility to designate a single AN Facility 
Representative to act as the primary point of contact with the 
Department on behalf of the AN Facility. The Department proposes that 
the Designated AN Facility POC will be the individual who is 
responsible for contacts with the Department regarding regulatory 
activities, such as the scheduling of inspections under sections 31.500 
and 31.505 of the proposed rule. The Department proposes that the 
Designated AN Facility POC will have this point-of-contact 
responsibility in addition to all other AN Facility Representative 
responsibilities.
    Please note that a single individual may serve as a Designated AN 
Facility POC for multiple AN Facilities.
6. Summary of AN Facility Personnel Registration Proposals
    In summary, the Department is proposing that any individual working 
at or for an AN Facility that performs sales or transfers of ammonium 
nitrate, or that performs ammonium nitrate application services, would 
have to register with the Department. Sales, transfers, or application 
services may only be performed by an individual who successfully 
registers with the Department and is granted an AN Registered User 
Number as an AN Seller (or AN Facility Representative or Designated AN 
Facility POC, as both AN Facility Representatives and Designated AN 
Facility POCs are subsets of AN Sellers). An AN Facility may have as 
many or as few registered AN Sellers as it deems fit, and would be 
required to have at least one registered AN Facility Representative.
    AN Facility Representatives have several responsibilities that AN 
Sellers who are not AN Facility Representatives do not have (i.e., 
responsibilities for ensuring an AN Facility's holistic compliance with 
Subtitle J requirements). Each AN Facility would be required to 
designate a single AN Facility Representative to be that facility's 
Designated AN Facility POC, who will serve as the facility's primary 
point of contact with the Department.
    The Department welcomes comments on the propriety and effectiveness 
of this proposed approach, including comments that address the 
following issues:
     The ownership and management structures of AN Facilities;
     The proposed qualifications for being an AN Facility 
Representative, including whether individuals who do not own all or 
part of an AN Facility should be able to register as AN Facility 
Representatives;
     The proposed regulatory compliance responsibilities of AN 
Sellers and AN Facility Representatives, which will be described in 
further detail throughout the remainder of this NPRM;
     Whether or not proof of ownership (for owners) or proof of 
delegation of authority from company ownership or management (for non-
owners) should be required for individuals registering as AN Facility 
Representatives; and
     The proposal that not all AN Facility owners or operators 
should be required to register.
    The Department also welcomes comments on potential alternative 
approaches. Several such alternative approaches follow:
     Permitting only individuals who own all or part of an AN 
Facility to

[[Page 46921]]

register, and requiring those individuals to perform all applicable 
regulatory compliance activities, such as verifying AN Purchasers' AN 
Registered User Numbers and identities (as described in sections 31.300 
and 31.305 of the proposed rule); or
     Permitting only AN Facility Representatives to register, 
but allowing any facility personnel to conduct ammonium nitrate sales, 
transactions, and application services; or
     Permitting only AN Facility Representatives to register, 
but allowing non-registered facility personnel whose names have been 
provided to the Department to be involved in ammonium nitrate sales, 
transactions, and application services.
7. Registering AN Purchasers
    6 U.S.C. 488a(d) and 6 U.S.C. 488e(a)(3)(A) require any individual 
who intends to purchase or acquire ammonium nitrate to register with 
the Department. Specifically, the Department proposes in section 31.205 
to require that each individual person attempting to purchase or 
acquire ammonium nitrate from an AN Facility would be required to 
register with the Department. Whether that person is the owner of the 
purchasing entity or simply an employee thereof, the Department 
proposes to require that person to have a valid AN Registered User 
Number. Moreover, whether a purchasing entity would want to have a 
single individual complete all purchases or have multiple individuals 
with purchasing authority would be within that entity's discretion, but 
the Department would require any individual attempting to purchase 
ammonium nitrate to be registered before an AN Facility would be 
authorized to sell ammonium nitrate to him/her. This is necessary to 
ensure that each individual taking ownership of ammonium nitrate has 
been vetted before obtaining ammonium nitrate. The Department welcomes 
public comment on this proposed approach.
    The Department also proposes that it will not require persons 
receiving ammonium nitrate application services to register as AN 
Purchasers. The Department does not believe that Subtitle J requires 
registration and TSDB vetting of owners/operators of agricultural 
property who receive application services, as long as those individuals 
do not otherwise qualify for registration under this proposed rule.\1\ 
DHS does not believe that ammonium nitrate fertilizer is likely to be 
misappropriated for use in acts of terrorism after it has been applied 
to agricultural property. The Department welcomes public comment on 
this conclusion.
---------------------------------------------------------------------------

    \1\ If an owner or operator receives and possesses ammonium 
nitrate for any length of time before it is applied as fertilizer to 
his/her agricultural property, he/she would qualify as an AN 
Purchaser under the Department's proposed rule. Such an owner or 
operator would have to register with DHS as an AN Purchaser, would 
have to be screened against the TSDB, and would have to fulfill the 
other proposed obligations of AN Purchasers as described elsewhere 
in this NPRM.
---------------------------------------------------------------------------

8. Federal/State/Tribal/Local Government-Owned Entities That Are AN 
Facilities or AN Purchasers
    While the Department does not believe that many Federal, State, 
tribal, or local governmentally-owned entities engage in the sale, 
transfer, or purchase of ammonium nitrate, the Department believes that 
some such entities do. In Subtitle J, Congress did not exempt from 
regulation AN Facilities that are owned by, or AN Purchasers who work 
for, Federal, State, tribal, or local governments. Accordingly, the 
Department is proposing to treat such entities like any other AN 
Facilities or AN Purchasers, and is proposing to require them to comply 
with all applicable regulatory requirements. The Department solicits 
comments on the existence of governmentally-owned entities engaged in 
the sale, transfer, or purchase of ammonium nitrate; on the existence 
of government-owned entities that provide application services; 
examples of such entities; and whether or not such entities should 
receive special treatment under the Ammonium Nitrate Security Program.
9. Registration Process
    The Department is proposing that each applicant for an AN 
Registered User Number would be required to register as a Designated AN 
Facility POC, AN Facility Representative, AN Seller, and/or AN 
Purchaser through an online Web portal (the ``AN User Registration 
Portal'') developed by the Department and made available via the 
Internet. Proposed procedures for applying for an AN Registered User 
Number and registering as a Designated AN Facility POC, AN Facility 
Representative, AN Seller, and/or AN Purchaser can be found in section 
31.220 of the proposed rule. (This NPRM refers to applicants who have 
successfully registered under these proposed procedures as ``registered 
users.'')
    One alternative to Internet-only registration is to add a phone 
registration option to the current Internet option. This alternative 
would provide both an online Web portal and phone-based registration 
system. Applicants could choose between Web portal registration and 
phone registration--DHS would accept either if it implemented this 
alternative. Under this alternative, DHS could accept registration 
applications over the phone, vet applicants against the TSDB (as 
described in section III.B.11 of this NPRM), and subsequently mail 
applicants paper letters containing registration numbers or 
registration denials. DHS could also potentially provide each applicant 
with the option of receiving a call, conveying registration results or 
registration status, prior to receipt of a paper letter in the mail. 
Calls could be provided to enable applicants to learn their statuses 
prior to receiving letters in the mail.
    Although DHS is proposing Internet-only registration at this time, 
the Department invites public comments addressing the above alternative 
registration approach, and any other alternative registration 
approaches that commenters believe would enable applicants and DHS to 
efficiently carry out their respective registration obligations. 
Specifically, DHS is interested in identifying alternative approaches 
to the Internet that would allow DHS to meet its statutory requirements 
to, ``to the extent practicable, issue or deny registration numbers 
under [Subtitle J] not later than 72 hours after the time [DHS] 
receives a complete registration application, unless [DHS] determines, 
in the interest of national security, that additional time is necessary 
to review an application[,]'' and to ``notify a person seeking to 
register with the Department [* * *] of the status of the application 
of that person not later than 72 hours after the time [DHS] receives a 
complete registration application.'' See 6 U.S.C. 488a(i)(3). The 
Department will consider and examine alternatives suggested in public 
comments in assessing whether to require online registration in the 
final rule. DHS is particularly interested in receiving public comments 
addressing the business and economic impacts that various registration 
alternatives would have on the regulated community, including the costs 
and benefits of the various alternatives on individual registration 
applicants. Because it is proposing to implement an online registration 
system, DHS requests comments addressing the level of access to the 
Internet that registration applicants currently have, comments 
addressing the level of access applicants anticipate having in the 
future, and

[[Page 46922]]

comments addressing how registration applicants who do not have 
readily-accessible Internet access could obtain the access necessary to 
register online. DHS specifically requests information, data, and/or 
studies pertaining to the regulated community's access to the Internet. 
The Department will consider any data or studies received on any 
aspects of registration or on any alternatives, as well as other 
comments, and if appropriate, modify the registration system proposed 
in this NPRM.
    While not every potential applicant may have personal access to the 
Internet, the Internet is widely available, such as at public libraries 
or in other public buildings. AN Facilities are also welcome, but not 
required, to provide Internet access to potential applicants. The 
Department believes that there are significant benefits to an online 
approach. The benefits to applicants, registered users, and the 
Department of an online approach include: (1) Quicker response from the 
Department, thereby minimizing the time during which an applicant or 
registered user would not be able to purchase, sell, or transfer 
ammonium nitrate, or perform ammonium nitrate application services; (2) 
ability for an applicant or registered user to access, view, update, 
and manage his/her personally identifiable information; and (3) ability 
for a registered user to easily renew his/her AN Registered User Number 
once it has expired. Additional benefits of online registration, and 
description of rationales for online registration, follow.
    As described in section III.B.11 of this NPRM, DHS proposes to vet 
registration applicants against the TSDB as part of the Ammonium 
Nitrate Security Program. Accurate TSDB vetting depends upon DHS 
obtaining accurate information from registration applicants. Because 
TSDB vetting results or submissions of inaccurate or improper 
registration information to DHS could lead to registration denials or 
revocations (as described in sections III.B.12 and 13 of this NPRM), 
preventing individuals from being able to access ammonium nitrate and 
thus impacting their livelihoods, DHS believes that it should implement 
the most accurate registration system possible. DHS believes that 
implementing an online registration system would reduce the risk of 
human error in submission and transcription of registration 
information, as compared to the phone-in registration alternative 
mentioned above or as compared to mail-in or other possible 
registration alternatives. DHS is seeking comment on this assumption. 
DHS also believes that implementing an online registration system would 
reduce the risks of lost paperwork or misdirected mail, both by 
registration applicants and by DHS, which would be inherent in any 
alternative registration systems relying on mailed correspondence or 
paper forms. While allowing registration over the phone would eliminate 
the potential loss of mailed paper forms by registration applicants, it 
would not entirely eliminate the potential for some paper letters from 
DHS containing registration numbers or registration denials to be lost. 
DHS thus believes that an online registration system is likely to be 
the most accurate registration system possible; it would be less prone 
to the types of errors identified above than alternative registration 
systems. DHS seeks comments on how errors could be reduced through 
alternative registration systems.
    DHS proposes Internet-only registration because Subtitle J directs 
the Department to ``establish procedures to efficiently receive 
applications for registration numbers.'' See 6 U.S.C. 488a(i)(1)(A). A 
major goal of Subtitle J is to expedite and streamline the registration 
and regulatory compliance processes that are part of the Ammonium 
Nitrate Security Program. See, e.g., 6 U.S.C. 488a(i)(3)(A) (directing 
DHS to, ``to the extent practicable, issue or deny registration numbers 
under [Subtitle J] not later than 72 hours after the time [DHS] 
receives a complete registration application [* * *]''); 6 U.S.C. 
488a(i)(1)(A) (directing DHS to ``promptly issue or deny'' registration 
numbers (emphasis added)); 6 U.S.C. 488a(i)(1)(B) (directing DHS to 
structure the program to maximize the number of registration applicants 
that apply for registration soon after implementation of the program); 
6 U.S.C. 488a(i)(3)(B) (directing DHS to notify registration applicants 
whenever there are delays in processing registration applications); and 
6 U.S.C. 488a(i)(4)(A) (directing DHS to create an expedited appeals 
process for individuals whose registration applications are denied). 
Implementing an online registration system would not only enable DHS to 
return registration results to applicants over the Internet within the 
72-hour timeframe set forth in 6 U.S.C. 488a(i)(3)(A), it would also 
enable DHS to return registration results to applicants faster than 
under any of the other possible registration alternatives, thereby best 
achieving the goal of expediting registration that underlies Subtitle 
J. The Department proposes the Internet-only approach because mail 
processing times, delays associated with transcribing phoned-in 
registrations, and delays associated with generating and processing 
paper forms mailed to or from DHS would slow DHS's responses to 
registration applications. For these reasons, a phone-in or mail-in 
registration alternative would not expedite registration in comparison 
to online registration. However, DHS seeks comment on whether or not 
possible registration delays would be preferable to the burdens of 
having to access public computers that would be imposed by an Internet-
only registration approach on individuals without readily-accessible 
Internet access. DHS is also seeking comments on other ways in which 
these burdens might be mitigated for those without readily-accessible 
Internet access.
    DHS acknowledges that the proposed Internet-only registration 
procedures, if finalized, would impose costs and burden on regulated 
members of the public. Online registration would likely be more 
burdensome for individuals without readily-accessible access to the 
Internet than for others. Subtitle J, however, specifies that persons 
do not need to be registered to purchase, sell, transfer, or receive 
ammonium nitrate until six months after the issuance of the final rule 
implementing the Ammonium Nitrate Security Program. See 6 U.S.C. 
488e(e). DHS believes that this six-month period will provide a 
sufficient opportunity for those without readily-accessible Internet 
access to obtain the brief Internet access necessary to register with 
the Department. The period of time between issuance of a final rule and 
implementation of the registration requirement (i.e., that individuals 
possess AN Registered User Numbers) should minimize burden or business 
disruption felt by registration applicants. Nevertheless, the 
Department seeks comments on the likely burdens (in terms of time and 
expense) on those who would need to access public computers in order to 
register online. DHS also seeks comments on any additional costs 
incurred besides those associated with registration.
    In Subtitle J, 6 U.S.C. 488a(i)(1)(B) additionally directs the 
Department to take steps to maximize the number of registration 
applications that are submitted and processed during the six months 
following the issuance of the final rule. In order to accomplish this, 
the Department intends to engage in a concerted outreach effort both 
immediately before and immediately after the release of the final rule 
in an

[[Page 46923]]

effort to raise awareness of Subtitle J's registration requirements and 
the process for completing them. The Department welcomes public 
comments on both potential outreach targets and other steps the 
Department can take to maximize the number of registration applications 
that are submitted and processed during the initial six-month 
registration period.
    The Department's proposal would require online registration, but 
would not mandate what sort of Internet access registration applicants 
must obtain in order to complete the registration process. As mentioned 
previously, registration applicants could use public computers and 
internet connections, or computers and Internet connections provided by 
AN Facilities, in order to register if they do not have access to 
personal computers and the internet. DHS recognizes that use of public 
computers or unsecured Internet connections can increase privacy risks 
and risks of loss of sensitive personal data. The Department has 
published a Privacy Impact Assessment concurrently with publication of 
this NPRM addressing these risks, and also addressing other privacy 
risks and safeguards relevant to the Ammonium Nitrate Security Program. 
The Department's Ammonium Nitrate Security Program Privacy Impact 
Assessment can be found online, at http://www.dhs.gov/privacy. DHS 
encourages members of the public to read the Privacy Impact Assessment, 
and submit comments on this NPRM regarding the risks and safeguards 
that is addresses. The Department is particularly interested in 
receiving comments addressing privacy risks associated with use of 
public computers or unsecured internet connections as part of the 
proposed registration process, and comments addressing how DHS and 
registration applicants can protect personal information and sensitive 
information transmitted online.
    In summary, the Department proposes that registration applications 
be collected only though an online web portal. The Department seeks 
public comments on this proposed Internet-only approach, and on 
potential alternative approaches. DHS will consider alternatives 
submitted in selecting which type of registration system to implement 
as part of the final rule.
10. Initial Applications
    Upon accessing the AN User Registration Portal, DHS proposes in 
section 31.220(c)(1) that each applicant will be asked a series of 
questions designed to allow the Department to vet the individual 
against the TSDB, and to subsequently enable point of sale 
verifications. The Department is proposing in section 31.220(c)(1) that 
each applicant provide his/her name, address, telephone number, photo 
identification document type, photo identification document issuing 
entity, photo identification document number, place of birth, date of 
birth, citizenship, and gender, along with any other information deemed 
necessary by the Department to carry out TSDB vetting.
    To ensure that appropriate user roles are assigned to each AN 
Registered User Number, DHS proposes in section 31.220(b) that each 
applicant would also be asked to declare his/her ammonium nitrate user 
status in general terms (i.e., AN Seller; AN Facility Representative; 
Designated AN Facility POC; AN Purchaser). In section 31.220(b), the 
Department proposes to allow an applicant the ability to register as 
both an AN Seller and an AN Purchaser. The Department is interested in 
receiving comments on the utility of this proposal.
    The Department is also proposing in section 31.220(c)(3) that each 
AN Seller, AN Facility Representative, and Designated AN Facility POC 
would be required to submit information identifying all AN Facilities 
at or for which he/she serves as an AN Seller, AN Facility 
Representative, or Designated AN Facility POC.
    Under section 31.220(c)(1) of the proposed rule the Department may 
also collect information necessary to enable it to verify applicants' 
enrollments in other TSDB vetting programs. The Department is 
considering exercising its authority under 6 U.S.C. 488a(i)(6)(A) to 
recognize the results of equivalent TSDB vetting conducted on 
applicants enrolled in other appropriate DHS programs where possible. 
This approach would limit the number of instances in which different 
DHS programs may vet the same applicant against the TSDB. The 
Department would appreciate comments regarding whether or not this or 
other information would be worthwhile to collect, and regarding the 
burden on the regulated community of such collection. The Department 
also welcomes public comment on the totality of this proposed 
registration application process, including public comment discussing 
potential alternative processes.
    Pursuant to the Privacy Act, 5 U.S.C. 552a(e)(3), DHS intends to 
provide notice to individuals submitting information to DHS through the 
AN User Registration Portal about the authority for DHS's collection of 
application information, the purposes for collecting application 
information, the uses of application information, and the impacts on 
individuals by providing or failing to provide application information. 
DHS expects to provide this notice electronically, within the AN User 
Registration Portal.
11. Applicant Vetting Process
    In section 31.225, the Department proposes to vet applicants 
against the TSDB and/or verify each applicant's enrollment in a 
Department program that conducts equivalent TSDB vetting prior to 
issuing him/her an AN Registered User Number. See 6 U.S.C. 
488a(i)(2)(A) (requiring TSDB vetting). Under section 31.230(b)(1) of 
the proposed rule, applicants whose identifying information appears in 
the TSDB may be denied AN Registered User Numbers. See 6 U.S.C. 
488a(i)(2)(B). Each applicant who applies for an AN Registered User 
Number will be vetted against the TSDB before being approved to 
purchase, sell, transfer, or provide application services for ammonium 
nitrate.
    The Department is aware that some applicants may have already been 
vetted against the TSDB as part of other DHS programs prior to 
submission of their AN Registered User Number applications. Sections 
31.220 and 31.230 of the proposed rule would enable, but would not 
require, DHS to recognize the results of TSDB vetting completed by 
other DHS programs as part of AN Registered User Number application 
reviews. The Department is interested in receiving comments on the 
utility of this proposal.
    The Department welcomes public comment on the means by which it 
proposes to accomplish vetting, and on any other aspects of the 
proposed approach to vetting applicants for AN Registered User Numbers. 
At a date after publication of the Ammonium Nitrate Security Program 
NPRM in the Federal Register, but prior to final rule implementation, 
the Department will publish in the Federal Register both a System of 
Records Notice (SORN) for the Ammonium Nitrate Security Program and a 
separate Notice of Proposed Rulemaking proposing to exempt the Ammonium 
Nitrate Security Program from certain Privacy Act requirements. The 
Department will also publish, on the Department's Web site, a Privacy 
Impact Assessment. In these documents the Department will outline the 
potential privacy impacts of the proposed rule, including the privacy 
impacts of the vetting process and the circumstances under which DHS 
intends to share information collected

[[Page 46924]]

under the Ammonium Nitrate Security Program with Federal law 
enforcement agencies as a part of law enforcement investigations into 
terrorist ties of applicants for AN Registered User Numbers.
12. Notification of Approval or Denial
    Consistent with 6 U.S.C. 488a(i)(3)(A) and 6 U.S.C. 488a(i)(3)(B), 
to the extent practicable, the Department intends to approve or deny 
each application for an AN Registered User Number, and to issue each AN 
Registered User Number, not later than 72 hours after the time the 
Department receives a complete application. The Department may deny an 
applicant an AN Registered User Number if that applicant's name or 
identifying information appears in the TSDB. See 6 U.S.C. 
488a(i)(2)(B). The Department proposes in section 31.230(c) to provide 
notification of registration application approval or denial to each 
applicant electronically.
    If a registration application is approved, the notification of such 
approval will contain a unique AN Registered User Number assigned to 
the applicant. The Department is considering including in the 
notification issued to each successful applicant a certificate 
including the AN Registered User Number that he/she can print and keep 
as part of his/her records and use to facilitate the AN Purchaser 
verification process.
    The Department welcomes public comment on the efficiency and 
sufficiency of notifying applicants of AN Registered User Number 
approvals and denials via e-mail or other electronic means, and also 
welcomes public comment addressing potential alternative means for 
providing such notice, such as notification via telephone or letter. 
The Department also welcomes public comment addressing the appropriate 
contents of registration approvals and denials.
    The Department intends to issue or deny AN Registered User Numbers 
within 72 hours of application, as required by Subtitle J. See 6 U.S.C. 
488a(i)(3). When this is not practicable, or when the Department 
determines in the interest of national security that additional time is 
needed to review an application, the Department proposes to provide 
notice of delay to applicants whose registration determinations are 
delayed in the same manner as approvals or denials will be issued, as 
stated in section 31.230(e) of the proposed rule. The Department 
welcomes public comment on the efficiency, sufficiency, costs and 
benefits of this manner of providing notice of delay, and also welcomes 
public comment addressing potential alternative means of providing such 
notice.
13. Revocation of Registration Numbers
    Under section 31.245 of the proposed rule, the Department proposes 
to revoke an individual's AN Registered User Number upon determining 
that it is in the interest of national security to revoke that AN 
Registered User Number based on the results of the activities described 
in section 31.225 of the proposed rule, or that the AN Registered User 
holding that AN Registered User Number obtained it by submitting 
fraudulent or false information. See 6 U.S.C. 488a(i)(7)(A). To support 
these determinations, in section 31.225(b) the Department proposes to 
recurrently vet individuals who have previously been issued AN 
Registered User Numbers. See 6 U.S.C. 488a(i)(7)(A). As appropriate, 
before revoking an individual's AN Registered User Number, the 
Department must provide notice to the individual, and after the 
revocation of the AN Registered User Number, the Department must 
provide the affected individual an opportunity to appeal. See 6 U.S.C. 
488a(i)(7)(B). In sections 31.245(b) and (c), DHS proposes that 
notification of revocation will be provided to each affected individual 
in writing, along with instructions on the process for appealing the 
Department's revocation decision. The appellate process will mirror 
that provided to individuals whose initial applications for AN 
Registered User Numbers are denied, as described below in the following 
section and in section 31.250 of the proposed rule. The Department 
welcomes public comment on the efficiency and sufficiency of this 
method of providing notice of revocation and on the proposed appeals 
process, and also welcomes public comment on potential alternative 
means for either.
14. Appealing Registration Denials and Registration Revocations
    This section discusses proposed appeal procedures for persons 
denied AN Registered User Numbers and for persons whose AN Registered 
User Numbers are revoked under Subtitle J. These procedures can be 
found in section 31.250 of the proposed rule. A later section of this 
NPRM, section III.H, discusses proposed adjudication and appeal 
procedures for persons and entities issued civil penalties by the 
Department under Subtitle J. These two sets of procedures are mutually 
exclusive; the Department proposes that registration and revocation 
appeals will be governed only by the appeals mechanisms described in 
this section of this NPRM, while civil penalty adjudications and 
appeals will be governed only by the mechanisms described in section 
III.H of this NPRM.
    The reason for this mutual exclusivity is because registration 
denials and revocations are fundamentally different from imposition of 
civil penalties under the Department's proposed rule. Under the 
Department's proposal, individuals or other entities will only be 
issued civil penalties for violating the rules of the Ammonium Nitrate 
Security Program. Individuals or other entities will not be issued 
civil penalties for having their registrations denied or revoked. 
Adjudication or appeal of civil penalties will thus involve assessment 
of whether or not individuals or other entities have violated the final 
Ammonium Nitrate Security Program rules. On the other hand, appeal of 
denial or revocation of registration numbers will involve review of the 
completeness and accuracy of registration applications, and review of 
TSDB vetting results and national security interests if applicable. The 
appeal procedures listed in this section of the NPRM are intended to 
enable reviews of registration application denials and revocations of 
registration numbers, while the adjudication and appeal procedures 
listed in section III.H are intended to enable reviews of civil 
penalties and of alleged regulatory violations.
    Subtitle J requires the Department to afford persons denied AN 
Registered User Numbers, and persons whose AN Registered User Numbers 
are revoked, the opportunity to appeal such denials and revocations in 
an expedited manner. See 6 U.S.C. 488a(i)(4). 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 registration 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 Transportation Worker Identification 
Credential (TWIC) and Hazardous Materials Endorsement (HME) programs. 
See 49 CFR 1515.9(a)-(b); 49 CFR 1515.5.
    Specifically, the Department proposes that, after having received 
an ammonium nitrate registration denial or revocation, 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. The 
Department proposes to

[[Page 46925]]

require that each Request for Materials be submitted to the Department 
within 60 days of the date of denial or revocation.
    The Department proposes that after the receipt of a Request for 
Materials, it will send the appellant a DHS Response containing copies 
of the releasable materials upon which denial or revocation was based. 
DHS will not include any classified information in this DHS Response 
nor will it include any other information or material protected from 
disclosure under law, although as appropriate it will include 
unclassified summaries of classified evidence supporting denial or 
revocation. The Department proposes that it will serve its DHS Response 
on the appellant within 60 days of Request for Materials receipt, 
unless additional time is required in the interest of national 
security.
    Upon review of those releasable materials, the Department proposes 
that an appellant may reply to the Department with a Request for Appeal 
containing the rationale or information upon which he/she disputes the 
Department's denial or revocation determination. The Department 
proposes that an appellant will have 60 days from the date of the 
Department's Response in which to file such rationale or information. 
The Department proposes that after reviewing this rationale or 
information, it will serve the appellant with a Final Determination of 
the Department's resolution of his/her appeal. The Department proposes 
that it will perform this service within 72 hours of Request for Appeal 
receipt, to the extent practicable, as required by 6 U.S.C. 
488a(i)(4)(A)(ii).
    For good cause shown, the Department additionally proposes to grant 
appellants extensions of the 60-day appeals submission periods 
mentioned above. This will afford appellants the necessary time in 
which to work with other government agencies to correct records and 
materials contributing to the Department's denial/revocation 
determinations when those records and materials contain incorrect or 
outdated information.
    The Department welcomes public comment on this appeals mechanism, 
and also welcomes public comment on potential alternative appeals 
mechanisms.
15. Registration Updates and Expiration
    Under Subtitle J, DHS may require registrants to update 
registration information submitted to DHS ``as appropriate.'' See 6 
U.S.C. 488a(6)(b). Pursuant to this authority, section 31.220(a)(2) 
proposes to require registration applicants and AN Registered Users to 
update submitted information within 30 days of a change to any of the 
information submitted as part of the application (e.g., name, address). 
An applicant or AN Registered User would be able to update his/her 
information through the proposed AN User Registration Portal. DHS seeks 
public comment on its proposed approach to updating registration 
information, including how often and under what circumstances to 
require registrants to update the information submitted to DHS as part 
of registration. DHS also requests public comments on potential 
alternative approaches to requiring registration information to be 
updated through the proposed AN User Registration Portal, including 
comments on the feasibility and practicality of allowing updates to be 
accomplished over the telephone or through the mail.
    The Department proposes in section 31.235 of the proposed rule to 
make each AN Registered User Number issued under Subtitle J valid for 
five years after the date of issuance (unless revoked before expiration 
pursuant to 6 U.S.C. 488a(i)(7)). Under this proposal, the Department 
expects many applicants to apply to renew their AN Registered User 
Numbers every five years.
    In proposing five years as the duration of each AN Registered User 
Number, the Department is seeking to balance the benefits of requiring 
renewals against the burdens to both the regulated community and the 
Department of the renewal process. As part of its evaluation of 
potential expiration and renewal processes, the Department has 
considered the expiration/renewal schedules for ATF's Federal 
Explosives Regulations (three years), for DHS programs that conduct 
TSDB vetting (e.g., five years for TSA's TWIC program and five years 
for U.S. Customs and Border Protection's Trusted Traveler programs), 
and for various State ammonium nitrate licensing regulations (generally 
one year). The Department believes that the five-year renewal cycle for 
AN Registered User Numbers is appropriate because it will minimize the 
burden on the regulated community, in comparison to screening programs 
with shorter renewal cycles. Additionally, a five-year validity period 
aligns with DHS's practice of recurrently vetting information against 
the TSDB for five years as part of certain transportation and critical 
infrastructure security programs.
    The Department proposes in section 31.240 to allow each AN 
Registered User to apply for a five-year extension of his/her AN 
Registered User Number via the proposed AN User Registration Portal 
anytime beginning 60 days prior to the expiration of his/her AN 
Registered User Number through one year after the expiration of his/her 
AN Registered User Number. After completion of the renewal process, 
each renewed AN Registered User Number will be valid for an additional 
five years. To facilitate this, the Department intends to maintain an 
AN Registered User's registration application information for a period 
of one year following the expiration of his/her AN Registered User 
Number. If an individual fails to renew his/her AN Registered User 
Number within one year of its expiration, the AN Registered User Number 
will be permanently retired. Such an individual will need to apply for 
a new AN Registered User Number to purchase, sell, transfer, or provide 
application services for ammonium nitrate after his/her initial AN 
Register User Number has been permanently retired.
    The Department seeks public comment on this proposed approach, 
including the utility, benefits, and costs of requiring re-registration 
of ammonium nitrate users in general, and on the proposed five-year 
time period in particular.
16. Initial Six-Month Registration Period
    6 U.S.C. 488e(e) specifies that persons do not need to be 
registered to purchase, sell, transfer, or receive ammonium nitrate 
until six months after the issuance of the final rule implementing 
Subtitle J. 6 U.S.C. 488a(i)(1)(B) directs the Department to take steps 
to maximize the number of registration applications that are submitted 
and processed during the six months following the issuance of the final 
rule. In order to accomplish this, the Department intends to engage in 
a concerted outreach effort both immediately prior to and immediately 
following the release of the final rule in an effort to raise awareness 
of Subtitle J's registration requirements and the process for 
completing them. The Department welcomes suggestions on both potential 
outreach targets and other steps the Department can take to maximize 
the number of registration applications that are submitted and 
processed during the initial six-month registration period.

C. Purchaser Verification Activities (See Sections 31.300-31.310 of the 
Proposed Rule)

1. Overview
    Subtitle J specifies that only individuals with valid AN Registered

[[Page 46926]]

User Numbers may purchase ammonium nitrate, and that AN Sellers would 
be required to refuse to sell ammonium nitrate to prospective AN 
Purchasers who do not possess valid AN Registered User Numbers. See 6 
U.S.C. 488e(a)(2) and 6 U.S.C. 488e(a)(3). To this end, AN Sellers 
would be required to verify that each prospective AN Purchaser has a 
valid (i.e., current and authentic) AN Registered User Number prior to 
transfer of ammonium nitrate. Subtitle J also requires AN Sellers to 
verify each prospective AN Purchaser's identity prior to transfer of 
ammonium nitrate to that prospective AN Purchaser. See 6 U.S.C. 
488a(e)(2)(D). DHS therefore proposes to require that an AN Facility 
refuse to sell or transfer ammonium nitrate to a prospective AN 
Purchaser whose identity or AN Registered User Number the AN Seller is 
unable to verify. These proposed requirements can be found in section 
31.300 of the proposed rule, and are further discussed throughout the 
remainder of section III.C of this NPRM.
    In addition to verifying the identity and AN Registered User Number 
of a prospective AN Purchaser, if an AN Purchaser whose identity and AN 
Registered User Number has been verified uses an agent on his or her 
behalf at the point of sale, the AN Seller must also verify the 
identity of the agent. See 6 U.S.C. 488a(e)(2)(D). Identity 
verification of AN Purchasers (and, where applicable, their agents) by 
AN Sellers is to occur in accordance with procedures proposed in 
section 31.300.
    AN Facilities would also be required to record certain information 
regarding prospective AN Purchasers (and, if applicable, the agents 
acting on their behalves) for each sale or transfer as part of Subtitle 
J's recordkeeping requirements. See 6 U.S.C. 488a(e)(2).
2. Manner of Sale or Transfer of Ammonium Nitrate
    The Department is aware that the ways in which sales and transfers 
of ammonium nitrate are conducted can vary by AN Facility, and that 
differences in ammonium nitrate transaction protocols could impact the 
timing and performance of identity verification and other required 
point of sale activities. Through conversations with industry, the 
Department has identified three principal transaction formats commonly 
used to sell or transfer ammonium nitrate: (1) The AN Purchaser appears 
at an AN Facility and takes possession of ammonium nitrate from the AN 
Seller directly; (2) the AN Purchaser places an advanced order either 
in person or through other means (e.g., telephone, online), and the AN 
Seller delivers ammonium nitrate to the AN Purchaser; or (3) the AN 
Purchaser places an advanced order either in person or through other 
means (e.g., telephone, online), and an agent acting on behalf of the 
AN Purchaser takes possession of the ammonium nitrate from the AN 
Seller. Other transaction formats are also possible.
    In addition to the aforementioned approaches to transferring 
possession of ammonium nitrate as part of a sale or transfer, depending 
on the financial arrangements entered into between an AN Facility and 
an AN Purchaser, the payment of funds or other services in exchange for 
ammonium nitrate may occur prior to, concurrent with, or after the 
actual transfer of possession of ammonium nitrate.
    The Department is interested in comments regarding the frequency of 
these various modes of delivery and payment, as well as any other 
transactional formats that are used to sell or transfer ammonium 
nitrate.
    The verification activities described in section III.C of this NPRM 
are required for each sale or transfer of ammonium nitrate. The 
Department seeks comments on its proposed definition of ``transfer,'' 
including what should be considered a transfer subject to Subtitle J. 
For purposes of this rule, the Department is proposing that 
``transfer'' of ammonium nitrate be defined generally as ``[t]he 
transfer of possession or ownership of ammonium nitrate from one person 
or entity to another person or entity for use outside of the AN 
Facility from which the ammonium nitrate is being transferred. 
Transfers of ammonium nitrate include transfers of possession or 
ownership that occur as part of sales and other business or commercial 
transactions, and also include transfers of possession or ownership 
that are not part of sales or other business or commercial 
transactions. The physical deposit of fertilizer onto turf, fields, 
crops, or other agricultural property is not a transfer of ammonium 
nitrate.'' Elaboration on this definition follows.
    The Department is aware that transaction protocols may be different 
for sales or transfers that occur as part of imports or exports of 
ammonium nitrate than for purely domestic sales or transfers. As part 
of this proposed rule, DHS proposes to regulate all ammonium nitrate 
transfers that occur within the United States. As such, DHS would 
require the verification and recordkeeping activities described below 
whenever possession of ammonium nitrate changes hands inside the United 
States. For example, if an individual brings ammonium nitrate into the 
country and transfers possession of it to another person within the 
United States, the verification and recordkeeping activities described 
below would be required. Similarly, if an individual in the United 
States transfers possession of ammonium nitrate to another person who 
intends to export that ammonium nitrate, the verification and 
recordkeeping activities described below would be required. 
Verification and recordkeeping would not be required, however, if an 
individual transports ammonium nitrate out of the country as long as 
there is no transfer of possession of the ammonium nitrate when it is 
inside the United States. Likewise, verification and recordkeeping 
would not be required if an individual brings ammonium nitrate into the 
country as long as there was no transfer of possession of that ammonium 
nitrate when it is inside the United States. DHS seeks comments on this 
proposal, on the methods of conducting ammonium nitrate imports and 
exports, and on any potential alternative treatments of imported or 
exported ammonium nitrate.
    When ammonium nitrate is used or moved within a single AN Facility, 
or when possession of ammonium nitrate changes within a single AN 
Facility but that ammonium nitrate does not leave the AN Facility, the 
verification activities described below are not required. The reason 
for this is that, under Subtitle J, DHS is authorized only to regulate 
sales, transfers, and application services; how ammonium nitrate is 
stored, used, or processed within the confines of individual AN 
Facilities is not the subject of Subtitle J. As such, persons using or 
moving ammonium nitrate within an AN Facility, or obtaining possession 
of ammonium nitrate for use within the same AN Facility, would not need 
to be registered with DHS.
    The application of ammonium nitrate fertilizer to property by an 
application service would not be regulated as a transfer under the 
Department's proposal. The Department does not believe that ammonium 
nitrate fertilizer is likely to be misused in acts of terrorism after 
it has been applied to agricultural property. Accordingly, farmers and 
other persons who have ammonium nitrate fertilizer spread on their 
agricultural property do not need to register with the Department, nor 
do their identities need to be verified by AN Sellers prior to their 
receipt of

[[Page 46927]]

application services.\2\ Pursuant to the Department's proposal, 
however, transfer of ammonium nitrate from an AN Facility to a separate 
application service would be regulated. Regulation of application 
services is required under Subtitle J. See 6 U.S.C. 488(2). 
Specifically, the Department believes that regulation of transfers to 
application services is necessary in order to ensure that terrorists 
cannot easily obtain ammonium nitrate by infiltrating, posing as, or 
working for application services. The Department seeks comments on 
these proposals, and is particularly interested in comments discussing 
interactions between AN Facilities, application services, and ammonium 
nitrate end users.
---------------------------------------------------------------------------

    \2\ Persons who perform application services, however, must be 
registered with DHS under the proposed rule. For elaboration on this 
registration requirement, see section 31.210(c) of the proposed rule 
and see sections III.B.2 and 3 of this NPRM.
---------------------------------------------------------------------------

    Persons who transport ammonium nitrate from one AN Facility to a 
delivery location outside that AN Facility (e.g., truck drivers) 
conduct regulated transfers under this proposed rule, regardless of 
whether the AN Facility and delivery location are owned or operated by 
the same business or organization, and are therefore subject to this 
regulation. Ammonium nitrate transportation would be regulated in three 
ways under the proposed rule, depending upon particular transporters' 
relationships with AN Facilities or AN Purchasers. Any particular 
transportation would have to be regulated pursuant to one (and only 
one) of the three options listed immediately below.\3\
---------------------------------------------------------------------------

    \3\ Transporters of ammonium nitrate can also be subject to 
other Federal and State regulations regarding the transportation of 
hazardous materials. Registration and compliance with DHS's proposed 
Ammonium Nitrate Security Program would not relieve transporters of 
duties or registration requirements under USCG, TSA, or DOT rules, 
or under other Federal or State programs. See sections II.D.3 and 
II.D.4 of this document for descriptions of other select rules and 
programs.
---------------------------------------------------------------------------

    (1) Transporters who are the agents of AN Purchasers. Any person 
possessing valid photo identification could transport ammonium nitrate 
from an AN Facility to an AN Purchaser, pursuant to the Department's 
proposed rules for ``AN Agents'' as described in sections III.C.4 
through III.C.9 of this NPRM. ``AN Agent'' transporters would not need 
to be registered with or vetted by DHS. Any AN Purchaser to which an 
``AN Agent'' transporter delivers ammonium nitrate, however, would need 
to be registered with and vetted by the Department. Similarly, any AN 
Seller from whom an ``AN Agent'' transporter obtains ammonium nitrate 
(i.e., any AN Seller who provides ammonium nitrate to be loaded into an 
``AN Agent'' transporter's truck or other vehicle) would need to be 
registered with and vetted by the Department.
    Before an ``AN Agent'' transporter can pick up or obtain possession 
of ammonium nitrate (i.e., before it can be loaded into his/her truck 
or other vehicle), his/her identity would need to be verified by the AN 
Facility from which he/she seeks to pick up ammonium nitrate, as 
described in sections III.C.8 and III.C.9 of this NPRM. Before an ``AN 
Agent'' transporter can pick up ammonium nitrate, the AN Facility from 
which he/she seeks to pick it up would also need to verify that he/she 
has legitimately been asked to serve as an ``AN Agent'' by a registered 
AN Purchaser. See sections III.C.7 and III.C.9 of this NPRM. Before an 
``AN Agent'' transporter can pick up ammonium nitrate, the AN Facility 
from which he/she seeks to pick it up would also need to verify that 
the AN Purchaser to whom the ``AN Agent'' transporter plans to deliver 
the ammonium nitrate is properly registered with DHS. See sections 
III.C.4, 6, and 9 of this NPRM.
    Under this proposed rule, an ``AN Agent'' transporter would not 
need to perform any identity verification or registration verification 
on the AN Purchaser to whom he/she delivers ammonium nitrate. 
Similarly, ``AN Agent'' transporters would not need to maintain any 
records or paperwork under this proposed rule.
    (2) Transporters who work for AN Facilities. Transporters could 
work for or deliver ammonium nitrate on behalf of AN Facilities, and 
could register under the Department's proposed rules as AN Sellers for 
those facilities. See section III.B.3 of this NPRM. Transporters who 
register as AN Sellers would be vetted against the TSDB. See sections 
III.B.10 and III.B.11 of this NPRM.
    Once registered as an AN Seller on behalf of a particular AN 
Facility, a transporter could pick up or obtain possession of ammonium 
nitrate from that AN Facility (i.e., it could be loaded into his/her 
truck or other vehicle at that AN Facility) without having to undergo 
the identity verification or AN Registered User Number verification 
activities described in sections III.C.3 through III.C.9 of this NPRM. 
Before a transporter who is registered as an AN Seller delivers or 
drops off ammonium nitrate to an AN Purchaser, however, he/she (or 
other registered employees of the AN Facility with which he/she is 
associated) would have to conduct registration verification and 
identification verification on the AN Purchaser receiving the ammonium 
nitrate. See sections III.C.3 through III.C.9 of this NPRM. The AN 
Facility with which the transporter is associated would also have to 
maintain records of the transporter's delivery. See section III.D of 
this NPRM.
    (3) Independent transporters. Transporters who fit into neither of 
the previous two categories would be regulated as both AN Purchasers 
and AN Sellers under the Department's proposed rule. As such, they 
would have to register with the Department and be vetted against the 
TSDB. See sections III.B.10 and III.B.11 of this NPRM. Any AN Seller 
from whom an independent transporter picks up or obtains ammonium 
nitrate (i.e., any AN Seller who provides ammonium nitrate to be loaded 
into the independent transporter's truck or other vehicle) would also 
need to be registered with and vetted by the Department. Similarly, any 
AN Purchaser to whom an independent transporter delivers ammonium 
nitrate would also need to be registered with and vetted by the 
Department.
    Independent transporters would need to be registered as AN 
Purchasers in order to pick up or obtain ammonium nitrate (i.e., in 
order to have it loaded into their trucks or other vehicles). Before an 
independent transporter can pick up or obtain possession of ammonium 
nitrate (i.e., before it can be loaded into his/her truck or other 
vehicle), his/her identity would need to be verified and his/her AN 
Registered User Number would need to be verified by the AN Facility 
from which he/she seeks to pick up or obtain ammonium nitrate. See 
sections III.C.4, III.C.5, and III.C.9 of this NPRM.
    Independent transporters would also need to be registered as AN 
Sellers in order to deliver ammonium nitrate to other AN Purchasers. 
Before an independent transporter delivers or drops off ammonium 
nitrate to an AN Purchaser, he/she (or other employees registered on 
behalf of his/her organization) would have to conduct a registration 
verification and identity verification on the AN Purchaser receiving 
the ammonium nitrate. See sections III.C.3 through III.C.9 of this 
NPRM. The AN Facility with which the independent transporter is 
associated would also have to maintain records of the transporter's 
delivery. See section III.D of this NPRM.
    The Department is interested in comments addressing coverage of 
truck drivers and other transporters of ammonium nitrate. The 
Department is particularly interested in comments

[[Page 46928]]

addressing transporters' relationships to AN Facilities and AN 
Purchasers, and addressing transporters' abilities to perform the 
activities required of regulated persons. The Department specifically 
requests comments addressing the three types of transportation 
arrangements described above, including comments discussing whether any 
particular types of transportation arrangements should be exempt from 
proposed regulatory requirements, and if so, discussing why particular 
transportation arrangements should be exempt.
    DHS proposes that transportation of ammonium nitrate where 
possession moves between different AN Facilities or other locations 
would be regulated as a transfer. Both of these types of transfers 
would require all the registration, verification, and recordkeeping 
activities required of transfers elsewhere in this NPRM. A person 
delivering ammonium nitrate from one AN Facility to another location 
would be regulated as part of one of the three transporter categories 
listed above, regardless of whether that person's delivery location is 
part of the same company or business as the AN Facility from which he/
she obtains the ammonium nitrate transported.
    By proposing to require that transportation between related 
business entities qualifies as a regulated transfer of ammonium 
nitrate, DHS would ensure that all entities from which transportation 
of ammonium nitrate originates have AN Registered Users on staff who 
are screened for terrorist ties who can be responsible for carrying out 
the security requirements of Subtitle J. Likewise, by proposing to 
require that transportation between related business entities qualifies 
as a regulated transfer of ammonium nitrate, DHS would also ensure that 
all entities receiving shipments of ammonium nitrate have AN Registered 
Users on staff who are screened for terrorist ties and who can be 
responsible for carrying out the security requirements of Subtitle J. 
Similarly, by proposing to require that transportation between related 
business entities qualifies as a regulated transfer of ammonium 
nitrate, DHS would also ensure that intra-company transportation of 
ammonium nitrate is conducted by AN Registered Users or ``AN Agents.'' 
These features of the Department's proposed rule would help to ensure 
that persons screened for terrorist ties (or their agents) would be 
responsible for a given company's or business's ammonium nitrate during 
times when that ammonium nitrate might be most vulnerable to 
misappropriation.
    The Department seeks comments on the proposal that transportation 
of ammonium nitrate would be regulated where possession moves between 
different locations but where ownership is not transferred (i.e., where 
transfer takes place within a single corporate entity). DHS realizes, 
however, that this proposal could have a significant impact on 
businesses with multiple locations, and that it might not increase 
ammonium nitrate security for every AN Facility or entity to which it 
would apply. Accordingly, the Department seeks comments on this 
proposal. DHS also seeks comments suggesting alternative ways in which 
Subtitle J's requirements regarding the regulation of ammonium nitrate 
transfers could be achieved. The Department is interested in comments 
generally describing the organizational structures and transportation 
needs of the companies or other entities owning or operating AN 
Facilities, and in comments addressing whether transportation between 
locations owned or operated under the same corporate structure should 
be exempt from coverage under the Ammonium Nitrate Security Program.
3. Required Verification Activities
    Based on statutory requirements and the Department's understanding 
of the ways in which sales and transfers of ammonium nitrate typically 
occur, the Department is proposing to require that an AN Seller perform 
the specific verification activities discussed below for each sale or 
transfer of ammonium nitrate.
    The AN Seller would always be required to verify the currency and 
authenticity of the prospective AN Purchaser's AN Registered User 
Number.
    The AN Seller would be required to verify the prospective AN 
Purchaser's identity as specified by DHS. The manner of verification of 
a prospective AN Purchaser's identity would vary depending on whether 
or not the AN Purchaser has opted to use an agent (an ``AN Agent'') to 
procure ammonium nitrate for him/her. 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 that a prospective AN Purchaser uses an agent to 
complete the transaction, the AN Seller would also be required to 
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.
    Each of these required verification activities is described in 
greater detail in the following sections of the NPRM. Although the 
Department proposes to require these verification activities for sales 
and transfers of ammonium nitrate, DHS proposes not to require these 
verification activities prior to provision of ammonium nitrate 
application services. The Department seeks comments on its proposal not 
to require verification activities prior to provision of ammonium 
nitrate application services.
4. Verification of the Currency and Authenticity of a Prospective AN 
Purchaser's AN Registered User Number
    In order to bolster the effectiveness of AN Registered User Numbers 
in preventing the misappropriation of ammonium nitrate, DHS proposes 
that the AN Seller will be required to verify the currency and 
authenticity of a prospective AN Purchaser's AN Registered User Number 
prior to completing a sale or transfer of ammonium nitrate. DHS 
proposes in section 31.305(a) to provide each AN Seller the capability 
to verify the currency and authenticity of a prospective AN Purchaser's 
AN Registered User Number either electronically through a web portal 
designed by the Department (the ``Purchaser Verification Portal'') or 
telephonically through a call center maintained by the Department (the 
``Purchaser Verification Call Center''). The Department proposes in 
section 31.305(a)(3) to compare the prospective AN Purchaser's name and 
AN Registered User Number, which a prospective AN Purchaser would be 
required to provide an AN Seller for submission to DHS, to information 
contained in the Department's AN Registered User database, and to 
provide rapid confirmation or rejection of the prospective AN 
Purchaser's information to the AN Seller via the same mechanism (i.e., 
the Purchaser Verification Portal or the Purchaser Verification Call 
Center). This approach provides a reasonable degree of confidence as to 
the currency and authenticity of the AN Purchaser's AN Registered User 
Number. Both the proposed Purchaser Verification Portal and the 
proposed Purchaser Verification Call Center are described in greater 
detail below.

[[Page 46929]]

    Verification of a prospective AN Purchaser's AN Registered User 
Number would be required regardless of whether or not the AN Purchaser 
opts to use an agent on his or her behalf to take possession of 
ammonium nitrate.
5. Verification of a Prospective AN Purchaser's Identity When the AN 
Purchaser Opts Not To Use an Agent
    Consistent with 6 U.S.C. 488a(e)(2)(D), the Department proposes 
that the AN Seller will be required to verify the prospective AN 
Purchaser's identity. If the AN Purchaser opts not to use an agent, DHS 
proposes in section 31.305(b) that the AN Seller would be required to 
verify, by performing a visual check of a photo identification document 
such as a driver's license or passport, the identity of the AN 
Purchaser no later than when the AN Purchaser directly takes possession 
of ammonium nitrate from the AN Seller at the completion of the sale or 
transfer.
    The Department proposes using a definition of ``photo 
identification document'' similar to the definition used by the 
Department's Secure Flight Program, to establish what qualifies as an 
acceptable form of identification for this verification process. 
Specifically, in section 31.105, the Department proposes defining 
``photo identification document'' as ``[a]ny of the following documents 
containing a unique document number: (1) An unexpired passport issued 
by a foreign government which contains a photograph; or (2) An 
unexpired document issued by a U.S. Federal, State, or tribal 
government that includes the following information for the person: (i) 
Full name; (ii) date of birth; and (iii) photograph; or (3) Such other 
documents that the Department may designate as valid identification 
documents.'' Cf. 49 CFR 1560.3. The Department also assumes that each 
AN Purchaser and each AN Agent will possess a photo identification 
document. The Department seeks comments on this proposed requirement 
and assumption, including comment on the forms of identification that 
should be acceptable for purposes of the visual identification 
verification check.
6. Verification of a Prospective AN Purchaser's Identity When the AN 
Purchaser Opts to Use an Agent
    Consistent with 6 U.S.C. 488a(e)(2)(D), the Department proposes in 
section 31.310(a) that the AN Seller will be required to verify the 
prospective AN Purchaser's identity with DHS when the prospective AN 
Purchaser chooses to use an agent to take possession of ammonium 
nitrate. Specifically, before completing a sale or transfer of ammonium 
nitrate the AN Seller would have to provide certain prospective AN 
Purchaser information (e.g., name; photo identification document 
number; AN Registered User Number) to DHS either electronically through 
the Purchaser Verification Portal or telephonically through the 
Purchaser Verification Call Center. The Department proposes to compare 
this information, which a prospective AN Purchaser would be required to 
provide to an AN Seller for submission to the Department, to 
information contained in the Department's AN Registered User Database. 
The Department would provide rapid confirmation or rejection of the 
prospective AN Purchaser's information to the AN Seller via the same 
mechanism (i.e., the Purchaser Verification Portal or the Purchaser 
Verification Call Center). The Department believes that this 
confirmation or rejection would take about the same amount of time as 
it takes merchants to receive credit card authorizations at retail 
stores.
    This approach would enable use of an agent when it is not possible 
to verify the identity of the AN Purchaser in person (i.e., by 
conducting a visual inspection of the photo identification of the AN 
Purchaser and comparing the photo identification with the AN Purchaser 
physically present). The Department seeks comments on this approach, 
including comments addressing whether AN Purchasers would be likely to 
provide identity verification information to AN Sellers themselves 
(e.g., by providing this information to AN Sellers over the telephone), 
or whether AN Purchasers would be likely to ask their agents to provide 
this information to AN Sellers in person. DHS also seeks comments on 
the advisability, costs, and benefits of enabling agents to provide AN 
Purchasers' identity verification information directly to AN Sellers, 
and seeks comments on possible alternative methods that could be 
employed to verify AN Purchasers' identities in sales or transfers 
involving AN Agents.
    Both the proposed Purchaser Verification Portal and the proposed 
Purchaser Verification Call Center are described in greater detail 
below.
7. For Sales Involving Agents, Verification That the Agent Is Acting on 
Behalf of the AN Purchaser
    Subtitle J limits registration and vetting requirements to AN 
Purchasers, and does not extend registration and vetting requirements 
to the agents of AN Purchasers. See 6 U.S.C. 488a(d) and 6 U.S.C. 
488a(e). In order to help minimize the likelihood that agents would be 
used to circumvent the intentions of Subtitle J, 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 of ammonium nitrate to that agent. To 
accomplish this, the Department is considering various approaches:
    (1) Requiring AN Purchasers to submit the names of their agents to 
DHS via the AN User Registration Portal, and requiring the AN Seller to 
confirm with DHS, prior to transferring possession of ammonium nitrate 
to an agent, that the name of that agent has been previously submitted 
to DHS by the relevant AN Purchaser.
    (2) Requiring the AN Seller to orally confirm with the prospective 
AN Purchaser prior to each transfer of ammonium nitrate that the agent 
is acting on behalf of the AN Purchaser.
    (3) Allowing both options, whereby an AN Seller first should check 
with DHS to see if the prospective AN Purchaser has submitted the name 
of the agent to DHS. If not, then the AN Seller would be required to 
orally confirm with the prospective AN Purchaser that the agent is 
acting on his/her behalf. DHS proposes this third approach in section 
31.310(b) of the proposed rule.
    Under the first approach, each AN Purchaser would be required to 
provide to DHS the names of any agents that might act on his/her behalf 
at the point of sale. AN Purchasers would submit names of agents to DHS 
via the AN User Registration Portal. An AN Purchaser could submit an 
agent's name when he/she applies for an AN Registered 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 Purchaser at the point of sale. This verification 
would occur through the same mechanism that is used for the other 
prospective AN Purchaser identity verification activities (i.e., the 
Purchaser Verification Portal or the Purchaser Verification Call 
Center). Note, however, that agent information that the AN Purchases 
and AN Sellers provided to the Department would not be vetted against 
the TSDB or otherwise checked by the Department; rather, it would 
simply be maintained in the AN Registered User Database as a data field 
linked to the AN Purchaser for use in the agent verification process.

[[Page 46930]]

    Under the second approach, the Department would require an AN 
Seller to verify with the prospective AN Purchaser that the agent is 
actually acting on behalf of the prospective AN Purchaser for each 
specific transaction. Much like the other verification activities 
contained in the proposed rule, this could occur at the time the 
prospective AN Purchaser places the order, when the agent arrives to 
take possession of ammonium 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. Note, if this approach 
were adopted, the Department would propose requiring this confirmation 
to occur 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 receive this verification orally (e.g., in 
person, telephonically) from the prospective AN Purchaser.
    The third approach--the option the Department proposes to use in 
this NPRM--is a combination of the first two approaches. Specifically, 
AN Purchasers would be expected to provide the Department with the 
names of their agent(s), and an AN Seller would be expected to 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 first approach 
under which a sale cannot occur unless the agent's name has been 
provided to the Department by the prospective AN Purchaser, this third 
option would allow the AN Seller to complete a sale or transfer after 
either (1) verifying that the agent has been designated by the 
prospective AN Purchaser through the 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 the sale or transfer at issue. 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, the Department proposes this third 
approach.
    If DHS implements either the first approach or the third approach 
in an Ammonium Nitrate Security Program final rule, the Department will 
construct the AN User Registration Portal such that AN Purchasers could 
submit the names of their agents to DHS through that portal. If so, DHS 
would require AN Purchasers to notify agents that their names could be 
submitted to DHS in this manner. DHS seeks public comment on how such 
notification should be carried out, if the Department implements either 
the first approach or the third approach.
    The Department seeks comment on the benefits, costs, economic 
impacts, and practicality of all these approaches, as well as any 
potential alternate approaches for verifying that an AN Agent is acting 
on behalf of a prospective AN Purchaser.
8. Verification of the Agent's Identity Based on the Visual Check of 
the Agent's Photo Identification
    Consistent with 6 U.S.C. 488a(e)(2)(D), DHS proposes in section 
31.310(c)(1) that the AN Seller would be required to verify, by 
performing a visual check of a photo identification document such as a 
driver's license or passport, the identity of the agent taking 
possession of ammonium nitrate from the AN Seller at the completion of 
a sale or transfer. This visual check would mirror the process and 
requirements used by the AN Seller when performing a visual check on an 
AN Purchaser, when an AN Purchaser takes possession of ammonium 
nitrate.
9. Timing of Verification Activities
    All of the aforementioned verification activities would be required 
to occur before the AN Seller transfers possession of ammonium nitrate 
to the prospective AN Purchaser or the agent acting on the prospective 
AN Purchaser's behalf. Outside of that requirement, the time at which 
the AN Seller performs the verification activities would be 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.
    The proposed rule would regulate all transfers of ammonium nitrate, 
including both transfers that involve payments or sales, and transfers 
that do not involve payments or sales. Note that AN Sellers may 
transfer possession of ammonium nitrate to AN Purchasers or their 
agents only after the verification activities discussed above have been 
completed. Payment for transfer of possession may happen at any time, 
either before or after verification activities have been completed.
10. Departmental Role in Verification Process
    As part of the verification process, the Department proposes to 
require AN Sellers to provide the Department with sufficient 
information to verify (1) the currency and authenticity of prospective 
AN Purchasers' AN Registered User Numbers, and (2) prospective AN 
Purchasers' identities when AN Purchasers use agents. The Department 
also proposes to enable AN Sellers to verify through DHS, where 
applicable, that prospective AN Purchasers have submitted the names of 
the agents acting on their behalves to the Department. To help AN 
Sellers accomplish this, the Department is considering developing a 
secure AN Purchaser verification web portal (``Purchaser Verification 
Portal'') and a call center (``Purchaser Verification Call Center'') 
through which AN Sellers can submit information to the Department that 
will allow the Department to nearly immediately (1) Verify or disaffirm 
prospective AN Purchasers' AN Registered User Numbers, (2) verify or 
disaffirm prospective AN Purchasers' identities, and, where applicable, 
(3) verify or disaffirm the preapproval of agents.
11. Purchaser Verification Portal
    The first option the Department is considering is to develop a 
Purchaser Verification Portal that would be available via the Internet 
to registered AN Sellers only. To gain access to the portal, AN sellers 
would be asked to provide their AN Registered User Number, a password, 
and potentially other identifying information. The Department proposes 
in sections 31.305 and 31.310 that, upon accessing the portal, an AN 
Seller would enter into the system, at a minimum, the prospective AN 
Purchaser's name and AN Registered User Number to verify the 
prospective AN Purchaser's AN Registered User Number. If the 
prospective AN Purchaser uses an agent, then the AN Seller would enter 
into the system the prospective AN Purchaser's photo identification 
document number (along with additional photo identification document 
information, such as type of photo identification document, and photo 
identification document issuing entity), to aid in verifying the 
prospective AN Purchaser's identity. This information

[[Page 46931]]

should allow the Department to verify for the AN Seller that the 
prospective AN Purchaser is who he/she claims to be and that he/she 
possesses a valid AN Registered User Number. The Department is 
interested in receiving comments on the information it proposes to 
collect for AN Purchaser verification purposes, including specific 
comments on potential photo identification document numbers that the 
Department may collect, such as driver's license or passport numbers.
    The Department considered requiring individuals' Social Security 
Numbers in lieu of photo identification document numbers. The 
Department believes, however, that photo identification document 
numbers are preferable to Social Security Numbers for two significant 
reasons. First, photo identification document numbers are typically 
contained on physical identification cards that include photographs 
that could be visually checked by AN Sellers. Second, use of photo 
identification document numbers would minimize the potential privacy 
impact on AN Purchasers of having to share their Social Security 
Numbers. The Department seeks comments on the costs and benefits of 
Social Security Number use.
    The Department is also considering requiring AN Sellers to enter 
additional information into the Purchaser Verification Portal, such as 
each quantity of ammonium nitrate sold or transferred and each 
prospective AN Purchaser's proposed use of the ammonium nitrate to be 
procured. Such additional information could help strengthen the AN 
Purchaser identification process and facilitate the performance of 
compliance audits and inspections, and would generally help to prevent 
the misappropriation or use of ammonium nitrate in acts of terrorism. 
Comments on the utility of collecting additional information, as well 
as the types of information that it may be worthwhile for the 
Department to collect, are welcome.
    The Department proposes that information entered into the Purchaser 
Verification Portal will be transmitted to the Department which, upon 
receipt, will check the information against the AN Registered User 
records maintained by the Department. The Department would 
electronically notify the AN Seller of the result once the Department 
(1) verifies or disaffirms the prospective AN Purchaser's identity 
(i.e., determines whether the identifying information provided matches 
the information submitted in the prospective AN Purchaser's AN 
Registered User Number application), if appropriate, (2) verifies that 
the prospective AN Purchaser's AN Registered User Number is current and 
authentic (i.e., matches the AN Registered User Number assigned to the 
prospective AN Purchaser), and (3) verifies that the prospective AN 
Purchaser has listed his/her agent with the Department as authorized to 
act on his/her behalf, if appropriate.
    To support recordkeeping requirements, the Department is 
considering providing to the AN Seller, along with its web verification 
notice, a confirmation number and/or printable web verification notice 
record receipt. For recordkeeping requirements, see sections III.C.4-8. 
Comments on the utility, benefits, and costs of providing either a 
confirmation number or printable record receipt via the Purchaser 
Verification Portal are welcome.
    The Department proposes that if the Department notified an AN 
Seller that the identity and AN Registered User Number of a prospective 
AN Purchaser were verified, then the AN Seller would proceed with the 
second portion of the identity verification--a visual check of the 
identification document of the individual taking possession of the 
ammonium nitrate (i.e., the AN Purchaser or, where applicable, his or 
her agent).
    If the Department were to discover that either (1) the prospective 
AN Purchaser's identity does not match the information of record for 
the given AN Registered User Number, or (2) the AN Registered User 
Number provided by the prospective AN Purchaser is not current and 
authentic, then the Department would issue a notice to the AN Seller 
indicating that the sale or transfer of ammonium nitrate to the 
prospective AN Purchaser is not authorized. The Department anticipates 
that the confirmation or denial notice resulting from the web 
verification process will typically be sent to and received by the AN 
Seller quickly, much like how merchants receive approval or denial 
notices prior to authorizing purchases via credit card.
    As mentioned earlier, the Department is aware that sales and 
transfers of ammonium nitrate occur in many different ways, and that AN 
Facilities' varying ammonium nitrate sales procedures can impact the 
timing and performance of verification activities. Depending on the 
structure of the transaction, the manner in which the AN Seller goes 
about verifying the prospective AN Purchaser's identity, AN Registered 
User Number, and use of an agent may vary. In all cases, DHS proposes 
that the AN Seller will complete these verifications prior to 
transferring possession of ammonium nitrate.
    The Department welcomes public comment on the overall 
effectiveness, propriety, benefits, and costs of these Purchaser 
Verification Portal identity and registration verification mechanisms, 
and also welcomes public comment on or suggestion of potential 
alternative methods for identity and registration verification.
12. Purchaser Verification Call Center
    The second option the Department is considering is to develop a 
Purchaser Verification Call Center. The overall principle behind a call 
center verification system is similar to the principle behind the 
Purchaser Verification Portal--that is, a prospective AN Purchaser's 
identity (for sales involving an agent) and possession of a current and 
authentic AN Registered User Number could be verified quickly prior to 
the transfer of possession of ammonium nitrate through use of a call 
center verification system. Under this approach, AN Sellers would 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 call, each AN Seller would be expected to 
provide, at a minimum, his/her name, his/her AN Registered User Number, 
and the prospective AN Purchaser's name, AN Registered User Number, 
and, for sales involving an agent, the AN Purchaser's photo 
identification document number. The Department is also considering 
requiring or enabling AN Sellers to provide additional information, 
such as the quantity and intended use of the ammonium nitrate being 
sold or transferred. 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 confirmation number for 
that specific transaction.
    A call center may be preferable to a web portal, as presumably all 
AN Facilities have telephones while not all AN Facilities have 
computers with Internet access, particularly at the point of sale. 
There are some potential disadvantages, though, including the 
likelihood that 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.

[[Page 46932]]

13. Purchaser Verification Portal and Call Center
    A third option is for the Department to establish both a Purchaser 
Verification Portal and a Purchaser Verification Call Center. This is 
the approach the Department is proposing in sections 31.305 and 31.310. 
This approach is identical to the Purchaser Verification Portal option 
described above, integrated with the Purchaser Verification Call Center 
option. 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. This approach, however, would be the most costly 
of the alternatives for the Department to establish and operate.
    As indicated in sections 31.305 and 31.310 of the proposed rule, 
DHS proposes that as part of the verification processes described in 
section III.C of this NPRM, AN Purchasers and/or AN Agents will be 
required to provide information to AN Facilities in order to enable use 
of the Purchaser Verification Portal or the Purchaser Verification Call 
Center. DHS will require AN Facilities to notify the AN Purchasers and 
AN Agents providing this information about why it is collected. DHS 
will also require AN Facilities to notify AN Purchasers and AN Agents 
that the information they provide may be shared with DHS. DHS seeks 
public comment on how such notifications should be carried out.
    The Department welcomes public comment on the overall effectiveness 
and propriety of these alternative identity and registration 
verification mechanisms, and also welcomes public comment on or 
suggestion of potential alternative methods for identity and 
registration verification.
14. Suspicious Purchases and Attempted Purchases of Ammonium Nitrate
    Subtitle J encourages AN Sellers to be wary of suspicious purchases 
and attempted purchases of ammonium nitrate. See 6 U.S.C. 488c(c)(1) 
and 6 U.S.C. 488f. To this end, Subtitle J encourages AN Sellers to 
exercise their commercial rights to deny the sale or transfer of 
ammonium nitrate to prospective AN Purchasers when prospective AN 
Purchasers attempt to purchase ammonium nitrate under ``suspicious'' 
circumstances. See 6 U.S.C. 488f. Furthermore, Subtitle J encourages AN 
Sellers to contact law enforcement entities, as appropriate, in 
response to ``suspicious'' purchases or ``suspicious'' attempted 
purchases. See 6 U.S.C. 488c(c)(1)(A). Moreover, Subtitle J provides 
that if an AN Seller refuses to sell or transfer ammonium nitrate to 
any person, or in good faith discloses to the Department or appropriate 
law enforcement authorities the actual or attempted purchase or 
transfer of ammonium nitrate, based on a reasonable belief that the 
person seeking to purchase or transfer ammonium nitrate may use the 
ammonium nitrate to create an explosive device to be employed in an act 
of terrorism or for another unlawful purpose, the AN Seller shall not 
be liable in any civil action relating to that refusal to sell or that 
disclosure. See 6 U.S.C. 488f(a).
    To assist AN Sellers in determining what a ``suspicious'' 
circumstance is and what appropriate responsive actions are, Subtitle J 
requires the Department to issue guidance addressing ``suspicious'' 
circumstances. See 6 U.S.C. 488c(c)(1). The Department will issue such 
guidance, along with other statutorily required guidance, along with 
the final rule implementing the Ammonium Nitrate Security Program. The 
Department welcomes public comment on topics to be addressed in this 
guidance, including comment on ``suspicious'' purchases and attempted 
purchases. The Department also welcomes public comment on the formats 
in which its guidance materials should be published and the means of 
dissemination of guidance materials.

D. Recordkeeping (See Sections 31.315 and 31.515 of the Proposed Rule)

1. Overview
    Pursuant to Subtitle J, AN Facilities must maintain records of each 
sale or transfer of ammonium nitrate for a two-year period beginning on 
the date of that sale or transfer. See 6 U.S.C. 488a(e)(1). AN 
Facilities must take reasonable actions to ensure the protection of the 
information included in such records. See 6 U.S.C. 488a(e)(3). 6 U.S.C. 
488b authorizes DHS to inspect and audit AN Facility records for the 
purpose of monitoring compliance with Subtitle J or for the purpose of 
deterring or preventing the misappropriation or use of ammonium nitrate 
in acts of terrorism.
2. Entities Responsible for Keeping Records
    Pursuant to Subtitle J and section 31.315(a) of the proposed rule, 
AN Facility Representatives must ensure that records of each sale or 
transfer of ammonium nitrate are maintained. See 6 U.S.C. 488a(e)(1). 
As discussed above, the Department is aware that there are many types 
of facilities selling or transferring ammonium nitrate, including but 
not limited to corporations, partnerships, cooperatives, and sole 
proprietorships. For many of these organizational forms, it may not be 
reasonable to expect an AN Facility Representative to be engaged in or 
have direct oversight over recordkeeping at the AN Facility. In 
recognition of this, the Department is proposing that while a 
facility's AN Facility Representative or Representatives would be 
responsible for their AN Facility's compliance with the proposed rule's 
recordkeeping requirements, any facility employee, regardless of 
whether or not he/she is a registered AN Seller, could perform 
recordkeeping activities on behalf of the facility. The Department, 
however, is proposing in sections 31.315(d) and (e) to require each AN 
Facility Representative to ensure that his/her facility maintains 
records in compliance with the rule. DHS welcomes public comment on the 
propriety and effect of this proposal.
    AN Purchasers are under no obligation to maintain records pursuant 
to Subtitle J.
3. Records To Be Kept
    For each sale or transfer of ammonium nitrate, the Department is 
proposing in section 31.315(a) of the proposed rule to require that the 
records kept by the AN Facility include the date of sale/transfer; form 
and amount of payment; quantity of ammonium nitrate sold/transferred; 
type of packaging; delivery location; the name, address, telephone 
number, AN Registered User Number, and photo identification document 
information of the AN Purchaser to whom it was sold/transferred; and, 
if the AN Purchaser uses an agent at the point of sale, the name, 
address, telephone number, and photo identification document 
information of the agent acting on behalf of the AN Purchaser.
    In addition to keeping records containing the information listed 
above, DHS proposes to require AN Facilities to maintain records 
related to the verification of a prospective AN Purchaser AN Registered 
User Number's currency and authenticity, and verification of a 
prospective AN Purchaser's and (where applicable) agent's identity. 
These requirements are discussed in sections 31.315(a)(8) and (9) of 
the proposed rule. Such requirements are important to allow the 
Department to monitor compliance under the regulations, to deter or

[[Page 46933]]

prevent the misappropriation or use of ammonium nitrate in acts of 
terrorism, and to support the investigation of reported theft or loss 
of ammonium nitrate. The Department welcomes comment on the benefits 
and costs of maintaining records regarding the AN Purchaser (and, where 
applicable, agent) verification process.
    In addition to the proposed records requirements discussed above, 
the Department also is considering requiring AN Facilities to keep 
photocopies of each individual AN Purchaser's or agent's photo 
identification document and/or printouts of the Department's electronic 
verification of the authenticity and currency of each individual's AN 
Registered User Number (if the Department decides to use the Purchaser 
Verification Portal). The Department is interested in receiving public 
comment regarding what types of records should be considered adequate 
records for the purpose of showing completed verification activities, 
as well as what the costs and benefits of generating and maintaining 
these records would be.
    In addition to transaction records and verification records, there 
are a variety of other records that may be necessary for AN Facilities 
to maintain in order to support compliance monitoring by the 
Department. These include: (1) Maintenance by each AN Facility of 
copies of the AN Registered User Number certificates of the AN Facility 
Representatives, Designated AN Facility POC, and/or all other AN 
Sellers employed by the facility (note, this presumes that the 
Department does in fact decide to issue approved applicants 
certificates along with their AN Registered User Numbers); (2) copies 
of reports of theft or loss made to the Federal Government pursuant to 
Subtitle J; (3) any reports showing the reconciliation of sales/
transfers and inventory; and (4) any orders or other correspondence 
issued by the Department to an AN Facility regarding activities 
regulated by Subtitle J. These records all may have value in monitoring 
compliance with the regulations or in deterring or preventing the 
misappropriation or use of ammonium nitrate in acts of terrorism. The 
Department is considering requiring AN Facilities to maintain these 
records, and welcomes public comment on the value of each and the costs 
associated with each.
    As indicated in sections 31.315(b) and (c) of the proposed rule, 
DHS proposes that as part of ammonium nitrate sales or transfers AN 
Purchasers and/or AN Agents will be required to provide some of the 
information listed in this section of the NPRM to AN Facilities in 
order to enable facility recordkeeping. DHS will require AN Facility 
personnel to notify the AN Purchasers and AN Agents providing this 
information about why it is collected. DHS will also require AN 
Facility personnel to notify AN Purchasers and AN Agents that the 
information they provide may be shared with DHS. DHS seeks public 
comment on how such notifications should be carried out.
4. Length of Retention of Records
    Subtitle J provides that each record of sale or transfer of 
ammonium nitrate must be maintained by the relevant AN Facility for at 
least two years from the date of the transaction that generates that 
record. See 6 U.S.C. 488a(e)(1)(A). For consistency purposes, in 
section 31.315(d) of the proposed rule the Department proposes that an 
AN Facility would be required to maintain for two years all records 
required under this rule. The Department seeks comments on this 
proposal.
5. Format and Storage of Records
    Pursuant to 6 U.S.C. 488a(e)(3), and as proposed in section 
31.315(e), an AN Facility must take ``reasonable actions'' to ensure 
protection of the information included in records maintained pursuant 
to Subtitle J. Subtitle J, however, does not explicitly prescribe any 
format or storage requirements. In an effort to minimize the burden on 
regulated AN Facilities and to provide flexibility to allow AN 
Facilities to leverage existing recordkeeping efforts to meet this 
regulatory requirement, the Department proposes allowing AN Facilities 
to choose methods of records storage for themselves. The Department is 
considering, however, providing AN Facilities the capability to create 
and maintain appropriate records in the web-based Purchaser 
Verification Portal. This would give AN Facilities the opportunity to 
use the portal to store their records, but would not require them to do 
so. The Department welcomes comments on this proposal.
    DHS proposes that AN Facilities be allowed to maintain records in 
paper or electronic format, and that AN Facilities may use whatever 
template or form they choose for individual records. An AN Facility 
simply would be required to ensure that its records contain all of the 
data required by the final rule implementing the Ammonium Nitrate 
Security Program, and to make the records available for inspection by 
DHS officials as described in section 31.515 of the proposed rule. DHS 
proposes that each AN Facility be required to make records available 
within the specified timeframes, and to take reasonable actions to 
protect the records. The Department proposes allowing an AN Facility to 
maintain records onsite or offsite, so long as the records are made 
available for inspection when DHS inspectors arrive for inspections 
where the AN Facility has received prior notice of the inspection or 
within four hours of inspectors' arrivals for unannounced inspections.
    The Department also proposes giving AN Facilities flexibility to 
determine what constitutes ``reasonable actions'' for ensuring the 
protection of records, and is considering defining ``reasonable 
actions'' as actions commensurate with the actions that an AN Facility 
would take to secure sensitive or confidential business records. 
Typical actions could include storage in locked file cabinets for paper 
recordkeeping or password-protecting files for electronic 
recordkeeping.
    The Department welcomes public comment on the proposed record 
formatting options, security standards, and production timeframes, as 
well as any potential alternative approaches or additional requirements 
the Department should consider.

E. Reporting of Theft or Loss of Ammonium Nitrate (See Sections 31.400-
31.405 of the Proposed Rule)

1. Overview
    Pursuant to Subtitle J, 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. See 6 U.S.C. 488d. The Department additionally encourages all 
other individuals who have possession of or control over ammonium 
nitrate to report any thefts or unexplained losses of ammonium nitrate 
of which they become aware. Voluntary reporting is provided for in 
section 31.405(b) of the proposed rule.
2. Who Must Report Theft or Loss
    Although any employee at an AN Facility may report a theft or loss 
of ammonium nitrate, DHS proposes in section 31.400 that it will be the 
responsibility of each facility's AN Facility Representatives to ensure 
that theft or loss from the facility is reported in a timely fashion. 
Additionally, while there is no legal requirement for AN Purchasers or 
agents acting on their behalf to report thefts or unexplained losses of 
ammonium nitrate, the Department encourages them to do so

[[Page 46934]]

using the same procedures that AN Facility personnel would use.
3. Level of Theft or Loss Warranting Reporting
    Any time an AN Facility Representative or any other individual 
employed by an AN Facility comes to believe that a theft of ammonium 
nitrate has occurred, AN Facility Representatives would be responsible 
for ensuring that that theft is reported using the procedures set forth 
in section 31.400. Determining when to report a loss, however, is not 
as straightforward a proposition, because it is typical for small 
percentages of bulk ammonium nitrate to be ``lost'' as part of normal 
bulk ammonium nitrate 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, storage, transportation, or use of bulk ammonium 
nitrate, but on the other hand does seek to impose loss reporting 
requirements which will aid in preventing misappropriation of ammonium 
nitrate. Accordingly, the Department proposes to require that AN 
Facility Representatives ensure that losses of ammonium nitrate from 
their facilities be reported using the procedures described below when 
those losses deviate from the amount of loss that typically occurs 
during routine production, storage, transportation, or use of ammonium 
nitrate.
    The Department seeks public comment on its proposed approach to 
defining the circumstances under which a theft or loss would be 
required to be reported and whether the theft/loss reporting 
requirements should apply only to theft or loss of ammonium nitrate 
above a minimum threshold amount. If a minimum threshold amount should 
apply, the Department is also interested in receiving comments 
addressing the level at which this amount should be set. The Department 
is particularly interested in public comments addressing how theft/loss 
reporting requirements should vary, if at all, based on AN Facility 
business size or other AN Facility business characteristics.
4. Process for Reporting Theft or Loss
    The Department proposes in section 31.405(a) to require reporting 
of theft/loss to ATF. The Department will coordinate with ATF to ensure 
proper tracking and coordination of reported ammonium nitrate thefts 
and losses; however, ATF, not the Department, will conduct appropriate 
law enforcement actions in response to theft/loss reporting, due to 
ATF's unique explosives-related law enforcement mission.
    The Department welcomes public comment on this proposal to leverage 
ATF's theft/loss reporting and response capabilities, and welcomes 
public comment on potential alternative reporting mechanisms. The 
Department also welcomes public comment on the information to be 
required as part of each theft/loss report. The Department proposes to 
require that each theft/loss report be made to ATF in a manner 
prescribed by DHS after consultation with ATF, and contain information 
similar to that currently required by ATF for reports of theft or loss 
of explosives. This likely would involve modified versions of the 
process and tools established by ATF in support of the ATF regulations 
regarding the reporting of theft or loss of explosive materials. See 
generally 27 CFR 555.30. ATF requires reporting of the theft or loss of 
explosives by telephoning a nationwide toll free number, followed up 
with submission to ATF of a completed form detailing the incident. The 
Department would work with ATF to determine the appropriate information 
to be reported and the proper template for a form specific to reporting 
the theft or loss of ammonium nitrate. The Department welcomes public 
comment on this proposed approach for reporting theft and loss of 
ammonium nitrate, and also welcomes public comment addressing any 
potential alternative approaches or additional requirements the 
Department should consider.
    Although there is no statutory requirement for AN Facility 
Representatives or other registered individuals who have knowledge of 
thefts or unexplained losses to report such incidents to local law 
enforcement, the Department encourages AN Facilities and individuals to 
do so in addition to reporting the theft or loss to ATF.

F. Inspections and Audits (See Sections 31.500-31.515 of the Proposed 
Rule)

    Subtitle J states that DHS ``shall establish a process for the 
periodic inspection and auditing of the records maintained by owners of 
ammonium nitrate facilities for the purpose of monitoring compliance * 
* * or for the purpose of deterring or preventing the misappropriation 
or use of ammonium nitrate in an act of terrorism.'' See 6 U.S.C. 488b. 
As part of these inspections and audits, the Department proposes to 
inspect and audit the records required to be maintained under the 
``recordkeeping'' requirements of the final rule implementing the 
Ammonium Nitrate Security Program. (See section III.D of this NPRM for 
discussion of proposed recordkeeping requirements.) The Department 
welcomes public comment on the types of records and other items or 
activities it should review during inspections or audits.
    The Department proposes to conduct inspections at AN Facilities 
and/or any other locations where records subject to the inspection/
audit requirements are located. The Department also proposes that it 
conduct inspections during AN Facilities' regular business hours except 
when warranted by exigent circumstances. The Department welcomes public 
comment on inspections, including comments addressing how often 
inspections should be undertaken.
    Generally speaking, the Department will provide an AN Facility, via 
its Designated AN Facility POC, with a minimum of 24 hours notice prior 
to conducting an inspection or audit, as proposed in section 31.505(a). 
The Department, however, proposes to reserve the right to conduct 
audits or inspections without prior notice when warranted by exigent 
circumstances or when delay in conducting an inspection might be 
seriously detrimental to security, as described in sections 
31.505(a)(1) and (2). Such inspections, conducted without prior notice, 
will require approval by a supervisory manager at DHS.
    The Department has also considered not providing notice prior to 
conducting inspections or audits in order to align with inspections 
processes carried out by other agencies, such as ATF. The Department 
welcomes comments addressing how much notice, if any, should be 
provided to AN Facilities prior to inspections or audits, including 
comments addressing whether the Department should align its notice 
procedures with ATF's (or with any other entity's) notice procedures.
    When prior notice of an inspection has been provided to an AN 
Facility, DHS expects that the facility will have all records required 
to be maintained by this rule available for review/inspection/audit at 
the time of arrival of inspectors, as proposed in section 31.515(a). In 
cases where the Department has initiated an inspection or audit without 
giving an AN Facility prior notice, the facility will be expected to 
make all records required to be maintained by the final ammonium 
nitrate rule available to inspectors within four hours of receipt of an 
inspector request to review/inspect/

[[Page 46935]]

audit such records, as proposed in section 31.515(b).
    Inspections and audits would be conducted by DHS personnel or by 
other Federal, State, local, or tribal government personnel authorized 
to perform AN Facility inspections pursuant to this rule. The 
Department may conduct remote inspections and audits in addition to in-
person inspections and audits, as proposed in sections 31.500(b), 
31.505(b), and 31.515(c)-(d). The Department welcomes comments and 
suggestions as to when a remote inspection would be reasonable, cost 
effective, and of benefit to AN Facilities or the Department.

G. Guidance Materials and Posters

    Under Subtitle J, the Department is required to develop and provide 
to members of the regulated community several types of guidance 
documents and materials. First, 6 U.S.C. 488a(i)(4)(C) requires the 
Department to issue to any individual who is denied an AN Registered 
User Number guidance on the procedures for appealing that denial. 
Second, 6 U.S.C. 488c(c)(1) requires the Department to make available 
to owners of AN Facilities guidance on the identification of suspicious 
ammonium nitrate purchases, transfers, attempted purchases, and 
attempted transfers, as well as guidance on appropriate actions to be 
taken by AN Facilities with respect to such suspicious activities. 
Additionally, 6 U.S.C. 488c(c)(3) requires the Department to make 
available materials suitable for posting at locations where ammonium 
nitrate is sold that notify prospective AN Purchasers of Subtitle J's 
recordkeeping requirements and the penalties for violating those 
requirements.
    As the procedures and requirements that will be detailed in these 
materials are to a large degree dependent on the final rule for 
Subtitle J, the Department is still gathering information, input, and 
data, which it will use to assist in developing these guidance 
materials and posters. It is the Department's intent to work with the 
regulated community to determine appropriate content and means of 
dissemination for these guidance materials and posters. The Department 
welcomes comments from the public on these matters.

H. Civil Penalties, Civil Penalty Adjudications, and Civil Penalty 
Appeals (See Sections 31.600-31.735 of the Proposed Rule)

    This section discusses proposed requirements for adjudication and 
appeal procedures for the issuance and assessment of civil penalties by 
the Department under Subtitle J. An earlier section of this NPRM, 
section III.B.14, discusses proposed appeal rights and procedures for 
persons denied AN Registered User Numbers and for persons whose AN 
Registered User Numbers are revoked under Subtitle J. These two sets of 
procedures are mutually exclusive; the Department proposes that civil 
penalty adjudications and appeals would be governed only by the 
mechanisms described in this section, while registration and revocation 
appeals would be governed only by the appeals mechanisms described in 
section III.B of this NPRM.
    The reason for this mutual exclusivity is because registration 
denials and revocations are fundamentally different from imposition of 
civil penalties under the Department's proposed rule. Under the 
Department's proposal, individuals or other entities will only be 
issued civil penalties for violating the rules of the Ammonium Nitrate 
Security Program. Individuals or other entities will not be issued 
civil penalties for having their registrations denied or revoked. 
Adjudication or appeal of civil penalties will thus involve assessment 
of whether or not individuals or other entities have violated the final 
Ammonium Nitrate Security Program rules. On the other hand, appeal of 
denial or revocation of registration numbers will involve review of the 
completeness and accuracy of registration applications, and review of 
TSDB vetting results and national security interests if applicable. The 
adjudication and appeal procedures listed in this section of the NPRM 
are intended to enable reviews of civil penalties and of alleged 
regulatory violations, while the appeal procedures listed in section 
III.B are intended to enable reviews of registration application 
denials and revocations of registration numbers.
    The Department is authorized to assess civil penalties against 
persons violating the rules promulgated under Subtitle J. See 6 U.S.C. 
488e(b). In section 31.600, the Department proposes that, upon becoming 
aware of regulatory violations, the Department would authorize and 
order civil penalties of up to $50,000 per regulatory violation against 
violating persons and entities much in the same way as the CFATS rules 
enable it to authorize and order civil penalties against chemical 
facilities violating CFATS. Specifically, the Department proposes to 
issue Orders Assessing Civil Penalty against persons (and, as 
appropriate, against entities owning or operating AN Facilities) for 
violating these rules. The Department proposes in section 31.700(a) 
that subject persons/entities shall have the option of initiating 
adjudicatory proceedings to challenge the propriety of the Department's 
determinations. The Department also proposes in section 31.735(a) that 
subject persons/entities may appeal adverse adjudication decisions. The 
Department welcomes public comment on these mechanisms, and welcomes 
suggestions of possible alternatives or modifications to them.
    Subtitle J requires the Department to consider a number of factors 
in issuing and setting the amounts of civil penalties against persons 
violating Subtitle J and its implementing regulations. See 6 U.S.C. 
488e(c). The Department proposes to consider the factors listed in 
section 31.605, among other factors as justice requires, in issuing and 
setting the amounts of civil penalties. The Department welcomes public 
comment on additional factors that it should consider in issuing and 
setting civil penalties, and also welcomes public comment on the size 
of the civil penalties it should issue for different types of 
regulatory violations.
    Subtitle J also requires the Department to afford each person 
potentially subject to civil penalties the opportunity to defend 
himself in an administrative hearing to be held ``in the county, 
parish, or incorporated city of residence of that person.'' See 6 
U.S.C. 488e(d). As such, the Department proposes in section 31.725(b) 
to conduct all hearings and adjudications in the counties, parishes, or 
incorporated cities of residence of the persons or entities seeking 
those hearings and adjudications, unless those persons or entities 
waive this right. The Department believes that it may be more 
expeditious, from time to time, for the Department and for subject 
persons to conduct hearings and adjudications elsewhere, or to conduct 
them via teleconferencing or videoconferencing, and accordingly thinks 
it economical to all to offer subject persons this option. The 
Department welcomes public comment on the efficiency of allowing 
subject persons to waive the statutory right to local hearing and 
adjudication.

I. Consultation Requirements

    6 U.S.C. 488a(g) requires the Department to ``consult with the 
Secretary of Agriculture, States, and appropriate private sector 
entities, to ensure that the access of agricultural producers to 
ammonium nitrate is not unduly burdened.'' Similarly, 6 U.S.C. 488a(b) 
requires the Department to consult ``with the heads of appropriate 
Federal departments and agencies (including the Secretary of 
Agriculture)'' when establishing a threshold

[[Page 46936]]

percentage for ammonium nitrate in a substance. Finally, in 6 U.S.C. 
488a(i)(4)(B), Congress directed the Department to consult with 
appropriate stakeholders when developing the process for appealing the 
denial of an application for an AN Registered User Number.
    During the development of this NPRM, the Department has identified 
relevant points of contact for consultation purposes within numerous 
Federal, State, and private sector entities. For example, the U.S. 
Department of Agriculture (USDA) assisted the Department with gaining a 
better understanding of the potentially affected population, and with 
understanding how agricultural users acquire and use ammonium nitrate. 
The Explosives Unit at the FBI provided substantial insight into the 
detonability of ammonium nitrate and mixtures containing ammonium 
nitrate. The Office of Enforcement Programs and Services at ATF 
outlined how ATF regulates ammonium nitrate and ammonium nitrate 
explosive mixtures as well as how ATF manages the reporting of theft or 
loss of explosives. The Department also met with State fertilizer 
control officials from over a dozen States who provided significant 
insight into how ammonium nitrate is used within their States and how 
they currently regulate ammonium nitrate. The Department also held 
listening sessions with numerous industry associations representing 
members of the likely regulated community, as well as with individual 
producers, distributors, and users of ammonium nitrate.
    Subsequent to the release of this NPRM, the Department will 
continue to consult with Federal, State, and private sector entities as 
it develops the final rule. The Department intends to hold meetings, 
open to the public and to Federal and State government entities, at 
various locations across the country in order to further consult with 
ammonium nitrate stakeholders. The Department intends to publish the 
dates, times, and locations of these public meetings in the Federal 
Register.

J. Delegation of Authority

    The Department may enter into cooperative agreements with USDA or 
any State department of agriculture to carry out certain provisions of 
Subtitle J. See 6 U.S.C. 488c(a)(1). Subtitle J 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 of 
select portions of Subtitle J, ``if the Secretary [of Homeland 
Security] determines that the State is capable of satisfactorily 
carrying out such functions.'' See 6 U.S.C. 488c(b)(2). If the 
Department delegates any functions to a State, ``subject to the 
availability of appropriations * * * the Secretary shall provide to 
that State sufficient funds to carry out the delegated functions.'' See 
6 U.S.C. 488c(b)(3).
    In regards to delegation of its authority to individual States, the 
Department proposes the following process: If a State is interested in 
performing the administration and enforcement activities required by 
Subtitle J, the governor of the State would submit a written request to 
the Department asking for delegation of those authorities and 
articulating the State's ability to ``satisfactorily carry out such 
functions.'' See 6 U.S.C. 488c(b)(2). Upon receipt of the request, the 
Department would evaluate whether the State is ``capable of 
satisfactorily carrying out such functions'' and, upon completion of 
the evaluation, would 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.

IV. Regulatory Analyses

    Changes to Federal regulations must undergo several economic 
analyses. First, Executive Order 12866, as supplemented by Executive 
Order 13563, Regulatory Planning and Review (58 FR 51735, October 4, 
1993; 76 FR 18134, January 18, 2011), directs each Federal agency to 
propose or adopt a regulation only upon a reasoned determination that 
the benefits of the intended regulation justify its costs. Second, the 
Regulatory Flexibility Act of 1980 (5 U.S.C. 601 et seq., as amended by 
the Small Business Regulatory Enforcement Fairness Act of 1996) 
requires agencies to consider the economic impact of regulatory changes 
on small entities. Third, the Trade Agreements Act (19 U.S.C. 2531-
2533) prohibits agencies from setting standards that create unnecessary 
obstacles to assess the effect of regulatory changes on foreign 
commerce of the United States. In developing U.S. standards, the Trade 
Agreements Act requires agencies to consider international trade 
standards where appropriate, as the basis of U.S. standards. Fourth, 
the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires 
agencies to prepare a written assessment of the costs, benefits, and 
other effects of proposed or final rules that include a Federal mandate 
likely to result in the expenditure by State, local, or tribal 
governments, in the aggregate, or by the private sector, of $100 
million or more annually (adjusted for inflation).

A. Executive Order 12866 and Executive Order 13563: Regulatory Planning 
and Review

    This proposed rule is an economically significant regulatory action 
under Executive Order 12866 as supplemented by Executive Order 13563, 
because it could result in the expenditure of over $100 million in any 
one year. Accordingly, this proposed rule has been reviewed by the 
Office of Management and Budget (OMB). The OMB Circular A-4 Accounting 
statement is included in the separate Regulatory Assessment.
    A Regulatory Assessment, which more thoroughly explains the 
assumptions used to generate the estimated costs and benefits of this 
proposed rule, is available in the docket as indicated under the 
ADDRESSES section. Interested persons are invited to provide comment on 
all aspects of the Regulatory Assessment. Comments that will provide 
the most assistance to the Department with the rulemaking include the 
economic impact (both long-term and short-term, quantifiable and 
qualitative) of the implementation of Subtitle J; the monetary and 
other costs anticipated to be incurred by AN Facility Representatives, 
AN Sellers, AN Purchasers, and anyone else potentially impacted by 
Subtitle J, any distributional effects on U.S. citizens; and the 
security benefits of the rulemaking.
    Comments containing trade secrets, confidential commercial or 
financial information, CVI, or SSI should be appropriately marked and 
submitted per the directions in section I of this NPRM (Public 
Participation) above.
1. Cost Impacts
    DHS estimates the number of entities that purchase ammonium nitrate 
to range from 64,950 to 106,200. These entities include farms, 
fertilizer mixers, farm supply wholesalers and co-ops, golf courses, 
landscaping services, explosives distributors, mines, retail garden 
centers, and lab supply wholesalers. The Department estimates between 
2,486 and 6,236 entities sell ammonium nitrate, many of which also 
purchase ammonium nitrate as well. Entities that sell ammonium nitrate 
include ammonium nitrate fertilizer and explosive manufacturers, 
fertilizer mixers, farm supply wholesalers and co-ops, retail garden 
centers, explosives distributors, fertilizer applicator

[[Page 46937]]

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 64,986 to 106,236 (including overlap between the categories).
    The cost of the Ammonium Nitrate Security Program ranges from $300 
million to $1.041 billion 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 $364.2 
million to $1.3 billion with a primary (mean) estimate of $814 million. 
The average annualized cost for the program ranges from $43 million to 
$148 million (with a mean of $96 million), also employing a 7% discount 
rate. The largest cost component of the proposed rule is related to the 
point of sale. The point of sale activities account for approximately 
55% to 80% of the total program cost. This is followed by registration 
activities, recordkeeping, inspections/audits, and reporting theft/
loss.
2. Benefits of the Ammonium Nitrate Security Program
    This rule will help secure the nation's supply of ammonium nitrate. 
According to a U.S. Department of Justice report, ``[t]he 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 building 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 registered 6.0 on the Richter scale.'' See 
``Responding to Terrorism Victims: 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.usdoj.gov/ovc/publications/infores/respterrorism/executive.html and http://www.ojp.usdoj.gov/ovc/publications/infores/respterrorism/chap1.html. 
The attack, which occurred 16 years ago, killed 168 people (167 
individuals were killed by the explosion and 1 additional death of an 
emergency worker occurred during the rescue and recovery operation) and 
an additional 592 people suffered non-fatal injuries. 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 382-387available at: http://jama.ama-assn.org/cgi/reprint/276/5/382; http://jama.ama-assn.org/cgi/content/abstract/276/5/382 (estimates 
of injuries differ by source; DHS used the detailed JAMA article as it 
was based on survey and interview data and has thorough documentation).
    There are several key benefits of the Ammonium Nitrate Security 
Program proposed rule:
     The Ammonium Nitrate Security Program will standardize and 
build upon successful industry ``know your customer'' initiatives and 
state regulations to prevent the misappropriation of ammonium nitrate.
     The Ammonium Nitrate Security Program will provide timely, 
accurate vetting of persons wishing to possess and transfer ammonium 
nitrate. By requiring individuals to be vetted against the TSDB, known 
bad actors may be stopped from legally purchasing ammonium nitrate.
     The Ammonium Nitrate Security Program will allow AN 
Sellers to identify non-authorized persons and requires them to deny 
sale of ammonium nitrate to these persons. By complying with the point 
of sale requirements to verify the accuracy and currency of a potential 
AN Purchaser's AN Registered User Number and an inspection of his/her 
photo identification document, AN Sellers will have the knowledge to 
allow or deny sale of ammonium nitrate.
     The Ammonium Nitrate Security Program will eliminate gaps 
in Federal oversight of ammonium nitrate supplies used in explosives 
manufacturing.
    To better inform the comparison of the costs of implementing the 
ammonium nitrate program in the proposed rule with the benefits to 
homeland security it will afford due to reduced risk of successful 
terror attack involving ammonium nitrate, DHS performed a break-even 
analysis. In this break-even analysis, DHS compared the annualized 
costs of the proposed rule to the expected benefits of preventing an 
ammonium nitrate based terrorist attack, such as the attack on the 
Murrah federal building. In order to estimate the impact of this attack 
in dollar terms, DHS must assume a value per statistical life (VSL). 
The Department emphasizes this VSL is not an estimate of what a 
particular life may be worth, but is only an estimate what one would be 
willing to pay to receive a reduction in mortality risk. The Department 
is assuming a VSL of $6 million, which is equivalent to saying someone 
is willing to pay $6 to receive a one-in-a-million reduction in the 
risk of death or $60 to receive a one-in-a-one-hundred-thousand 
reduction in the risk of death.
    Applying the $6 million VSL to the 168 deaths from the Murrah 
attack plus the cost of other expenditures that are directly related to 
the attack (such as the cost of replacing the Murrah Building), DHS 
estimates the cost to society of the Murrah attack to be approximately 
of $1.35 billion (2010 dollars). As this proposed rule is expected to 
cost society approximately $95.5 million annually, this proposed rule 
would be cost effective if it prevented one terrorist attack similar to 
the Murrah building attack every 14.1 years ($1.35 billion attack cost/
$95.5 million annual rulemaking cost). See the Regulatory Assessment in 
the public docket for more information on this break-even analysis.
    In addition to reducing the possibility of an ammonium nitrate-
based terrorist attack, promulgating this rulemaking provides the 
benefit of allowing DHS to comply with the law. Subtitle J states the 
``Secretary shall regulate the sale and transfer of ammonium nitrate by 
an ammonium nitrate facility [hellip]to prevent the misappropriation or 
use of ammonium nitrate in an act of terrorism.'' Section II.A of this 
preamble provides a more detailed background discussion of the 
regulatory requirements expressly contained in Subtitle J, such as the 
registration requirement for certain ammonium nitrate sellers and 
purchasers. DHS believes this rulemaking allows the Department to 
comply with the regulatory requirements of Subtitle J.

B. Regulatory Flexibility Act

    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

[[Page 46938]]

range of small entities, including small businesses, not-for-profit 
organizations, and small governmental jurisdictions. Although DHS does 
not believe the proposed rule will have a significant economic impact 
on a substantial number of small entities, the agency has prepared an 
Initial Regulatory Flexibility Analysis (IRFA) for public review and 
comment. DHS requests comments on this IRFA and the potential impacts 
of the proposed rule on small entities. Below is a summary of the IRFA.
1. Reasons for and Objectives of the Proposed Rule
    Reason for the Proposed Rule. Section 563 of the Fiscal Year 2008 
Department of Homeland Security Appropriations Act amends the Homeland 
Security Act of 2002 and provides DHS 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.'' For additional information on the 
security hazards presented by the use of ammonium nitrate, see sections 
II.D.1 and 2 of this preamble.
    Objective of the Proposed Rule. This proposed rule aims to prohibit 
a known or suspected terrorist from purchasing or legally acquiring 
ammonium nitrate from an AN Facility. Additionally, only individuals 
favorably vetted by the Department will be able to legally acquire 
ammonium nitrate above the threshold level proposed by this rule.
2. Affected Small Business Population and Estimated Impact of 
Compliance
    At this time, DHS's preliminary estimate of the number of 
establishments that either sell, purchase, or sell and purchase 
ammonium nitrate that will be covered by the Ammonium Nitrate Security 
Program rules range from 64,986 to 106,236 facilities. This estimate is 
DHS'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. During the ANPRM, DHS did not receive any information on small 
nonprofits or small governmental jurisdictions that might be directly 
regulated by this rule. However, some of the entity types identified in 
the analysis of purchasers are similar to activities that could be 
conducted by small nonprofits or small governmental jurisdictions. DHS 
believes impacts on small nonprofits or small governmental 
jurisdictions would be similar as any other purchaser in this analysis. 
DHS invites comments from any small nonprofit or small governmental 
jurisdiction that believes it is being directly regulated by this rule. 
After AN Sellers and AN Purchasers register with DHS there will be a 
better understanding of how many and which specific AN Facilities will 
be subject to the requirements under the Ammonium Nitrate Security 
Program. Consequently, without the benefit of having the AN Registered 
User Number results, it is very difficult to know which AN Facilities 
will have to undergo the burden of verifying AN Registered User 
Numbers, and maintaining records of transactions involving ammonium 
nitrate. In addition, the Department has offered some degree of 
flexibility when choosing the method of verifying AN Registered User 
Numbers and maintaining records. DHS expects that AN Facilities will 
take full advantage of this flexibility in order to minimize the cost 
of this proposed rule to their operations.
3. Number of Small Entities That Purchase Ammonium Nitrate
    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 agricultural products sold (excluding 
government payments). The next table 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. Comments are requested concerning the provided information.

 Number of U.S. Farms by the Market Value of Agricultural Products Sold
                                 [2007]
------------------------------------------------------------------------
   Market value of agricultural
         products sold ($)           Number of farms    Percent 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).

    The next two tables show the primary North American Industrial 
Classification System (NAICS) codes, descriptions and SBA definitions 
for small entities that purchase ammonium nitrate. This comparison 
shows that the majority of businesses likely to purchase ammonium 
nitrate are small entities.

[[Page 46939]]

     Primary NAICS Codes, Descriptions and Definitions for Small Entities That May Purchase Ammonium Nitrate
                                                [Employee size] *
----------------------------------------------------------------------------------------------------------------
                                                         Establishments by employee size
                               ---------------------------------------------------------------------------------
     NAICS        Description                                                           (Subtotal)   $10
                                   mill       mill       mill    $1-5 mill     mill       $10 mill        mill
----------------------------------------------------------------------------------------------------------------
213113.......  Support                 47         98         38        101         16             300         46
                services for
                Coal Mining.
               % of total.....        14%        28%        11%        29%         5%             87%        13%
213114.......  Support                 19         26         14         20  .........              79        104
                services for
                Metal Mining.
               % of total.....        10%        14%         8%        11%         0%             43%        57%
213115.......  Support                 24         47         17         40          8             136         15
                services for
                Nonmetallic
                Mining.
               % of total.....        16%        31%        11%        26%         5%             89%        10%
44422........  Nursery, Garden      1,872      5,004      2,675      3,941        830          14,322      3,461
                Center, and
                Farm Supply
                Stores.
               % of total.....        11%        28%        15%        22%         5%             81%        20%
56173........  Landscaping         23,993     36,446      6,935      5,095        490          72,959      1,249
                Services.
               % of total.....        32%        49%         9%         7%         1%             98%         1%
71391........  Golf Courses &       1,172      3,802      2,041      3,333        588          10,936        906
                Country Clubs.
               % of total.....        10%        32%        17%        28%         5%             92%         7%
----------------------------------------------------------------------------------------------------------------
* Totals may be affected by rounding.

4. Number of Small Entities That Sell Ammonium Nitrate
    In addition to regulating AN Purchasers, the proposed rule places 
additional burdens on entities that sell ammonium nitrate. These 
additional burdens include registration for AN Registered User Number, 
verifying AN Purchasers' AN Registered User Number and photo ID at the 
point of sale, maintaining records of point of sale transactions for 
two years and reporting theft and loss of AN. AN Facilities that are in 
the middle of the supply chain from manufacturer to end-use consumer 
both sell and purchase ammonium nitrate. The primary NAICS codes, 
descriptions, and definitions (both employee size and revenues) for 
small entities that sell ammonium nitrate are shown in the next two 
tables. The SBA classifies the majority of these AN Facilities as small 
entities.

       Primary NAICS Codes, Descriptions and Definitions for Small Entities That May Sell Ammonium Nitrate
                                                [Employee size] *
----------------------------------------------------------------------------------------------------------------
                                                         Establishments by employee size
                               ---------------------------------------------------------------------------------
     NAICS        Description                                                           (Subtotal)   $10
    NAICS        Description      Seller/Week...............................               42.4               90.5               66.5
Transactions/Purchaser/Week............................                1.6                5.3                3.5
Seller Cost/Transaction ($)............................                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 call, 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 then 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 AN 
purchases.
3. Purchaser Verification Portal and Call Center
    The Department proposes to establish both a Purchaser Verification 
Portal and a Purchaser Verification Call Center. See section III.C.13. 
This approach is identical to the Purchaser 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-effective 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 Facilities have telephones while not all 
AN Facilities 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 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 Applicants
    The Department must communicate with applicants throughout the 
registration process. The Department considered two alternatives to 
communicating with applicants: (1) communication by U.S. Mail, and (2) 
communication by electronic means. The Department proposes to 
communicate with applicants by electronic means.
1. U.S. Mail
    The U.S. Mail could act as the communication medium between the 
Department and the regulated community. If the U.S. Mail were chosen as 
the communication mechanism, the Ammonium Nitrate Security Program 
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. The costs 
to the Department, however, would be more substantial. The Department 
would have to hire or devote staff to process incoming correspondence.
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 assumes that most applicants have Internet access 
with one exception. Based upon information from the USDA, approximately 
60% of farms have Internet access. Thus, DHS assumes that in the 
agricultural sector, approximately 60% of farms have computers with 
Internet access. The Department therefore estimated that 40% of these 
individuals will have to travel a short distance to public library, or 
other location where access to the Internet is available to apply for 
an AN Registered User Number. Further, 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 User Registration 
Number. 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 IRS mileage rate of $0.55 per mile. 
DHS assumes the total extra time for each trip will average 
approximately one hour each way. Each trip will include an additional 
hour for the Internet access and registration. Multiplying 50 miles 
times two trips times $0.55 per mile totals $55 per individual for the 
two trips associated

[[Page 46943]]

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 the full evaluation. Because of the 
minimal time and effort it 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 U.S. Mail as the primary medium 
for communication; 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 Department 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 U.S. Mail.
d. Reporting Theft or Loss
    The Department considered two alternatives pursuant to Subtitle J, 
which requires an AN Facility Representative who has knowledge of theft 
or unexplained loss of ammonium nitrate 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 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 AN. Because of the seriousness of theft or loss of 
AN, the total time to report a theft or loss is assumed to include two 
hours each for an inventory manager and sales person, 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 
Department assumes that two percent of AN Facilities and AN Purchasers 
will report loss or theft once per year. Based on these assumptions, 
there will be 88 reports of theft or loss annually, at a total annual 
cost to industry of $13,350.
1. ATF Reporting
    One of the many responsibilities of ATF is regulating the use of 
explosives. Because pure ammonium nitrate does not fall within the 
scope of the statutory definition of ``explosives'' set forth at 18 
U.S.C. 841(d), it is not subject to ATF's controls on importation, 
manufacture, distribution or storage; however, ammonium nitrate 
explosive mixtures and 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 and facsimile and 
provide the pertinent information. 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 DHS 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 DHS would be minimal. 
The costs to the Department would be greater than when compared to the 
ATF reporting requirement. DHS would be required to create and 
establish the theft/loss reporting policies, procedures, and 
infrastructure.
    The Department is proposing to require reporting of theft/loss to 
ATF. See section III.E of this preamble. ATF already possesses the 
unique experience in collecting and responding to the theft/loss of 
explosive related materials. Additionally, DHS wishes to avoid 
duplicative efforts at the Federal level.
e. Recordkeeping
    The Department considered two options to maintain records: (1) 
Mandatory use of a central electronic database, and (2) the flexibility 
to maintain records in paper format or in electronic format. The 
Department proposes allowing AN Facilities to select the method of 
records storage for themselves. See section III.F of this preamble.
    The Department selected this alternative because the burden to 
submit and maintain electronic records in a central database would 
increase the 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.
    The 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 throughout the year, 
and any capital investment costs an AN Facility incurs in acquiring 
equipment to facilitate the safe storage of the AN transaction records.
f. Agents
    The Department considered three options to minimize the likelihood 
that agents are used to circumvent the intentions of Subtitle J. 
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 of ammonium nitrate 
to that agent. To accomplish this, the Department is considering the 
following alternatives:
    1. Requiring AN Purchasers to submit the names of their agents to 
DHS via the AN User Registration Portal, and requiring the AN Seller to 
confirm with DHS, prior to transferring possession of the ammonium 
nitrate, that the prospective AN Purchaser has submitted the name of 
the agent to DHS;
    2. Requiring the AN Seller to orally confirm with the prospective 
AN Purchaser prior to each sale that the agent is acting on behalf of 
the AN Purchaser;
    3. A combination of the first two options, whereby an AN Seller 
first should check with DHS to see if the prospective AN Purchaser has 
submitted the name of the agent to DHS and, if not, then the AN Seller 
must orally confirm with the prospective AN Purchaser that the agent is 
acting on his/her behalf. DHS is proposing this third approach.
    Under the first approach, each AN Purchaser would be required to 
provide to DHS the names of any agents that might act on his/her behalf 
at the point of sale. The AN purchaser would submit names of agents to 
DHS via the AN User Registration Portal. An AN Purchaser could submit 
an agent's name when he/she applies for an AN Registered 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 Purchaser at

[[Page 46944]]

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 Verification 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 in 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 
actually 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 ammonium 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 occur 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 be expected to provide the Department with the names 
of their agent(s), and an AN Seller would be expected to 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 first approach, under 
which a sale 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 the 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. 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 Explosives Regulated by ATF
    Pursuant to Subtitle J, the Department has the discretion to exempt 
from regulation persons producing, selling, or purchasing ammonium 
nitrate exclusively for use in the production of explosives under a 
license or permit issued under the Federal 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. The Department is proposing to exempt from regulation 
ammonium nitrate mixtures that are ``explosives'' subject to ATF 
regulation (i.e., ANFO). The Department also considered two other 
approaches. The first option is to apply these rules to individuals who 
purchase, sell, or transfer ammonium nitrate for use in the production 
of explosives. The other option considered is to entirely exempt from 
Subtitle J requirements facilities 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 AN Mixtures That 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 all Subtitle J 
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 AN for the 
Production of Explosives
    Under this approach, such individuals would be subject to 
regulation by both DHS under Subtitle J and ATF under the Federal 
explosives laws. By not exempting ammonium nitrate used in explosives, 
DHS would be treating all individuals 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 captured under DHS'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 Facilities to 
regulate.
3. Entirely exempt from Subtitle J requirements 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 Subtitle J requirements, as 
they are already regulated 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 
approach, 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 facilities would not fall under 
the regulation.
    The Department proposes to exempt from all Subtitle J requirements 
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.
6. Average Costs per AN Facility
    The largest cost driver is activities related to the point of sale. 
While variation in cost by 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 average costs per entity that purchases ammonium nitrate are 
presented in the following tables. Both

[[Page 46945]]

the lower and upper bounds of the estimate are provided. In either 
case, the highest cost will be for farms without Internet 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 once every five years. DHS believes for even the smallest 
farms, other businesses, nonprofits, and small jurisdictions that only 
purchase ammonium nitrate, this registration cost does not represent a 
significant economic impact. DHS invites comments on this impact, 
particularly impacts related to the point of sale costs.

       Average Cost per Entity That Purchases Ammonium Nitrate--Low Population/Low Transactions Estimate *
----------------------------------------------------------------------------------------------------------------
                                Purchaser                   Purchase        Total                   Average cost
                              registration   Appeals ($)   opportunity    purchaser     Number of    per entity
                                   ($)                      cost ($)      cost ($)      entities         ($)
----------------------------------------------------------------------------------------------------------------
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.

      Average Cost per Entity That Purchases Ammonium Nitrate--High Population/High Transactions Estimate *
----------------------------------------------------------------------------------------------------------------
                                Purchaser                   Purchase        Total                   Average cost
                              registration   Appeals ($)   opportunity    purchaser     Number of    per entity
                                   ($)                      cost ($)      cost ($)      entities         ($)
----------------------------------------------------------------------------------------------------------------
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 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).

                                        Average Cost per AN Facility--Low Population/Low Transactions Estimate *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Reg.                    Point of                 Reporting     Audits/       Total      Number of
                                      activities  Appeals ($)   sale  (Web    Record-     theft/loss  inspections  seller cost       AN        Average
                                         ($)                   portal) ($)  keeping ($)      ($)          ($)          ($)       facilities    cost ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
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
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Totals may not add due to rounding.

                                       Average Cost per AN Facility--High Population/High Transactions Estimate *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Reg.                    Point of                 Reporting     Audits/       Total      Number of
                                      activities  Appeals ($)   sale  (Web    Record-     theft/loss  inspections  seller cost       AN        Average
                                         ($)                   portal) ($)  keeping ($)      ($)          ($)          ($)       facilities    cost ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
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

[[Page 46946]]

 
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.

7. 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 of this preamble.

C. Executive Order 13132: Federalism

    Executive Order 13132 requires DHS to develop a process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
To meet this requirement, the Department has, and will continue to, 
consult with State fertilizer control officials, members of the 
American Association of Plant Food Control Officials, and others 
throughout the development of these regulations. Such consultation is 
expressly required by 6 U.S.C. 488a(g). Consultation with the 
aforementioned groups has informed the Department on potential 
regulatory avenues, and on the use and movement of ammonium nitrate 
through its life cycle within the potentially regulated community. 
Additionally, the Department is hereby specifically requesting comments 
from State and local officials on regulatory policies that have 
federalism implications.
    Chief among potential federalism implications is preemption of 
State ammonium nitrate regulations. As discussed in Part II.D of this 
preamble, a number of States currently regulate the security of 
ammonium nitrate. Subtitle J explicitly addresses preemption of such 
regulations, and ``preempts the laws of any State, to the extent that 
such laws are inconsistent with [Subtitle J], except that [Subtitle J] 
shall not preempt any State law that provides additional protection 
against the acquisition of ammonium nitrate by terrorists or the use of 
ammonium nitrate in explosives in acts of terrorism or for other 
illicit purposes, as determined by the [Department].'' See 6 U.S.C. 
488g(b). The Department specifically seeks comment on the interaction 
of the proposed rule with existing State and local laws and 
regulations, including comment on any laws that may be inconsistent 
with Subtitle J and laws that provide additional protections against 
the acquisition of ammonium nitrate or its use in terrorist attacks.

D. Unfunded Mandates Reform Act

    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 requires 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, and tribal governments, in the aggregate, or 
by the private sector. The primary cost estimate for this proposed 
rulemaking would not impose such an unfunded mandate on State, local, 
or tribal governments, but the upper end of the estimate would show an 
unfunded mandate in excess of $100 million (adjusted for inflation) on 
the private sector. The analysis required under Title II of UMRA is 
satisfied by the regulatory impact assessment prepared in conjunction 
with this NPRM.
    The Department recognizes that some AN Facilities of entities that 
purchase ammonium nitrate may be owned by state or local government 
entities. These entities would be required to comply with the 
provisions of this proposed rule.
    Further, under Subtitle J, the Department may enter into 
cooperative agreements with the USDA or any State department of 
agriculture to carry out the provisions of Subtitle J. See 6 U.S.C. 
488c(a)(1). Subtitle J further requires the Department, at the request 
of a governor of a State, to delegate to that State the authority to 
carry out the administration and enforcement of Subtitle J, if the 
Department determines that the State is capable of satisfactorily 
carrying out such functions. See 6 U.S.C. 488c(b)(2). 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. See 6 U.S.C. 488c(b)(3).
    The Department proposes the following process for evaluating 
requests from governors: If a State is interested in performing the 
administration and enforcement activities required by Subtitle J, the 
governor of the State must submit 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 transferred only at the 
request of the state, and only when funding is available, no unfunded 
mandate would be created.

E. National Environmental Policy Act

    The Department has analyzed this proposed rule for purposes of the 
National Environmental Policy Act of 1969 (42 U.S.C. 4321-4347) under 
Department of Homeland Security Directive 023-01--Environmental 
Planning Program, and has concluded that this proposed rule comes 
within Categorical Exclusion A3 ``promulgation of rules * * * (a) of a 
strictly administrative or procedural nature.'' We find no basis for 
believing that there are extraordinary circumstances which would 
require further analysis; however, we invite comment on this 
conclusion.

F. Paperwork Reduction Act

    This NPRM contains collection of information requirements under the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). ``Collection of 
information,'' as defined in 5 CFR 1320.3(c), includes reporting, 
record

[[Page 46947]]

keeping, monitoring, posting, labeling, and other similar actions.
    Subtitle J provides DHS with authority to regulate the sale and 
transfer of ammonium nitrate. This collection will enable the 
Department 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.'' See 6 U.S.C. 488a(a).
    This NPRM introduces a new collection with OMB Control Number 1670-
NEW. The Ammonium Nitrate Security Program information collection has 
eight new instruments: Ammonium Nitrate Registration; Appeals for 
Denial or Revocation of AN Registered User Numbers; Purchaser 
Verification; Ammonium Nitrate Helpdesk; Electronic Recordkeeping 
Database; Reporting Theft and Loss; Adjudication or Appeal of an Order 
Assessing Civil Penalty; and Inspections and Audits.
    This NPRM includes a solicitation for comments for a new 
information collection, 1670-NEW. Any comments submitted will be 
reviewed by DHS and OMB prior to publication of a final rule, and prior 
to OMB approval of this new information collection. This NPRM describes 
the nature of the information collection, the categories of 
respondents, and estimated burdens and costs.
    Under the protections provided by the Paperwork Reduction Act, as 
amended, an agency may not conduct or sponsor, and a person is not 
required to respond to, a collection of information unless it displays 
a valid OMB control number. The Department will begin collecting 
information as soon as an OMB control number is issued, or as soon as 
the mechanism for collecting information is publicly available, or when 
the rule implementing the Ammonium Nitrate Security Program becomes 
effective, whichever is latest.

                             Table 1--Estimates of Annualized Burden Hours and Costs
----------------------------------------------------------------------------------------------------------------
                                                                                                   Total annual
                                     Number of     Responses per    Avg. burden    Total annual     respondent
           Instrument               respondents     respondent     per response     burden (in       cost  (in
                                                                    (in hours)        hours)         dollars)
----------------------------------------------------------------------------------------------------------------
Ammonium Nitrate Registration...         116,800               1            2.02         235,912      11,114,000
Appeals for Denial or Revocation             223               1            6.00           1,336          49,500
 of AN Registered User Numbers..
Purchaser Verification..........           6,236           4,705            0.08       2,445,001      93,262,600
Ammonium Nitrate Helpdesk.......         248,460             119            0.02         551,114      20,680,100
Electronic Recordkeeping                   6,236           4,705            0.02         448,992       8,591,600
 Database.......................
Reporting of Theft & Loss.......             125               1            2.80             349          18,300
Adjudication or Appeal of an        Less Than 10             N/A             N/A             N/A             N/A
 Order Assessing Civil Penalty..
Inspections and Audits..........           1,559               1           12.00          18,708         621,100
----------------------------------------------------------------------------------------------------------------

    Title: Ammonium Nitrate Registration
    Summary of Collection of Information: Information is collected 
through a web-based portal directly from each applicant who wishes to 
apply for an AN Registered User Number. The information collected will 
be used to determine if the applicant is eligible for an AN Registered 
User Number. Specifically, 6 U.S.C. 488a(i)(2)(A) requires the 
Department to conduct a check of identifying information of all 
applicants against identifying information that appears in the TSDB.
    Consistent with 6 U.S.C. 488a(i)(3)(A) and 6 U.S.C. 488a(i)(3)(B), 
to the extent practicable, the Department intends to approve or deny 
each registration application, and to issue each AN Registered User 
Number, not later than 72 hours after the time DHS receives a complete 
registration application. DHS may deny an applicant an AN Registered 
User Number if the TSDB indicates that the applicant may pose a threat 
to national security. See 6 U.S.C. 488a(i)(2)(B).
    As proposed in section 31.215(a), at least one individual who is 
designated to act on behalf of a facility for purposes of compliance 
with this regulation must (1) apply for an AN Registered User Number, 
and (2) register as a Designated AN Facility POC for the AN Facility. 
In addition, sections 31.210 and 31.215 would allow any individual who 
has an ownership interest in an AN Facility; is designated to act on 
behalf of a facility for purposes of compliance with this regulation, 
such as, possibly, a site manager, sales manager, or corporate officer; 
is involved in the sale or transfer of ammonium nitrate at an AN 
Facility, such as a sales clerk or cashier; or performs ammonium 
nitrate application services to register as an AN Seller. Sections 
31.210 and 31.215 would require that any person who individually 
performs a sale or transfer of ammonium nitrate on behalf of an AN 
Facility, or who performs ammonium nitrate application services, must 
be registered. Pursuant to section 31.205 of the proposed rule, any 
person who intends to purchase ammonium nitrate must also be 
registered.
    Use of: The information collected will be used to (1) conduct a 
check of identifying information of applicants against identifying 
information that appears in the TSDB, and (2) issue the Department's 
approval or denial of each registration application.
    Need for Information: The information collected is needed to comply 
with section 563 of the Fiscal Year 2008 Department of Homeland 
Security Appropriations Act, which requires the Department to issue AN 
Registered User Numbers.
    Description of the Respondents: DHS anticipates that there will be 
an average of 116,800 respondents annually.
    Frequency of Response: On occasion.
    Annual Burden Estimate: Each respondent is estimated to have a 
burden of 2.02 hours to register, update, and subsequently renew his/
her AN Registered User Number. The annual hour burden is estimated to 
be 235,912 hours.
    Title: Appeals for Denial or Revocation of AN Registered User 
Numbers.
    Summary of Collection of Information: Individuals who have had 
their AN Registered User Numbers denied or revoked may appeal the 
Department's denials or revocations, pursuant to section 31.250 of the 
proposed rule. Each individual requesting an appeal is required to file 
a Request for Materials, a Request for Appeal, and other filings as 
necessary.
    Use of: The information collected will be used to process appeals.
    Need for Information: The Department needs the collected

[[Page 46948]]

information to ensure that all necessary information is collected in 
order to process appeals and records correction requests.
    Description of the Respondents: DHS anticipates that there will be 
an average of 223 respondents annually.
    Frequency of Response: On occasion.
    Annual Burden Estimate: Each respondent is estimated to have a 
burden of 6 hours to complete the necessary filings. The annual hour 
burden is estimated to be 1,336 hours.
    Title: Purchaser Verification.
    Summary of Collection of Information: AN Sellers will be required 
to conduct verification of AN Purchaser's identities and AN Registered 
User Numbers prior to sales and transfers of ammonium nitrate, as 
required by sections 31.305, 31.310, and 31.315 of the proposed rule. 
Verification will involve the submission to DHS by AN Sellers of 
prospective purchasers' AN Registered User Numbers, of matching 
information (e.g., names and drivers' license numbers) from AN 
Purchasers' photo identification documents, and of the names of AN 
Agents taking possession of ammonium nitrate on behalf of prospective 
purchasers. As part of this information collection AN Sellers will also 
submit information identifying themselves, including their own AN 
Registered User Numbers, to DHS. AN Sellers will submit this 
information to DHS through the Purchaser Verification Portal or the 
Purchaser Verification Call Center. The Purchaser Verification Portal 
or Purchaser Verification Call Center will compare information 
submitted as to each AN Purchaser or AN Seller against the information 
on record for that AN Purchaser or AN Seller.
    Use of: The information collected will be used to conduct 
verification of AN Registered User Numbers and of AN Purchasers' and AN 
Agents' identities, prior to transfer of ammonium nitrate, as required 
by sections 31.305, 31.310, and 31.315 of the proposed rule.
    Need for Information: The Department needs the information to 
verify that ammonium nitrate is only sold or transferred by individuals 
authorized by the Department to individuals authorized by the 
Department.
    Description of the Respondents: DHS anticipates that there will be 
an average of 6,236 respondents annually.
    Frequency of Response: On occasion.
    Annual Burden Estimate: Each respondent is estimated to have a 
burden of 0.08 hours to complete AN Registered User Number 
verification. The annual hour burden is estimated to be 2,445,001 
hours.
    Title: Ammonium Nitrate Helpdesk.
    Summary of Collection of Information: The Ammonium Nitrate Helpdesk 
will respond to questions from industry and the public.
    Use of: The information collected will be used to respond to 
questions from industry and the public.
    Need for Information: The Department needs to collect the 
information from the individuals contacting the Ammonium Nitrate 
Helpdesk to respond to their questions.
    Description of the Respondents: DHS anticipates that there will be 
an average of 248,460 respondents annually.
    Frequency of Response: On occasion.
    Annual Burden Estimate: Each respondent is estimated to have a 
burden of 0.02 hours per AN Helpdesk contact. The annual hour burden is 
estimated to be 551,114 hours.
    Title: Electronic Recordkeeping Database.
    Summary of Collection of Information: To collect information to 
support AN Facilities with the recordkeeping requirements proposed in 
section 31.315 of the proposed rule.
    Use of: The information collected will be used to support AN 
Facilities with the recordkeeping requirements proposed in section 
31.315 of the proposed rule.
    Need for Information: Under section 31.315, AN Facilities would be 
required to keep various records. The use of this recordkeeping 
instrument, however, is voluntary.
    Description of the Respondents: DHS anticipates that there will be 
an average of 6,236 respondents annually.
    Frequency of Response: On occasion.
    Annual Burden Estimate: Each respondent is estimated to have a 
burden of 0.02 hours. The annual hour burden is estimated to be 448,992 
hours.
    Title: Reporting Theft and Loss.
    Summary of Collection of Information: To report a theft or loss of 
ammonium nitrate, an individual would contact ATF. ATF will collect 
information and other details for a report of a theft or loss of 
ammonium nitrate, pursuant to sections 31.400 and 31.405 of the 
proposed rule.
    Use of: The information collected would be used to track and 
potentially respond appropriately to the theft or loss of ammonium 
nitrate.
    Need for Information: The information collected is needed to track 
and potentially respond appropriately to the theft or loss of ammonium 
nitrate.
    Description of the Respondents: DHS anticipates that there will be 
an average of 125 respondents annually.
    Frequency of Response: On occasion.
    Annual Burden Estimate: Each respondent is estimated to have a 
burden of 2.8 hours to complete a theft or loss of ammonium nitrate 
report. The annual hour burden is estimated to be 349 hours.
    Title: Adjudication or Appeal of an Order Assessing Civil Penalty.
    Summary of Collection of Information: Pursuant to section 31.700 of 
the proposed rule, any person or entity against whom an Order Assessing 
Civil Penalty has been issued is entitled to a hearing and 
adjudication, by a Presiding Officer, on any issue of material fact 
relevant to any civil penalty issued against such person or entity. 
Pursuant to section 31.735 of the proposed rule any person or entity 
having received an Initial Decision has the right to appeal.
    Use of: The information collected will be used to conduct hearings, 
adjudications, and appeals.
    Need for Information: The information collected is needed to 
conduct hearings, adjudications, and appeals.
    Description of the Respondents: DHS anticipates that there will be 
fewer than 10 respondents annually.
    Frequency of Response: On occasion.
    Annual Burden Estimate: The Department did not estimate the annual 
burden.
    Title: Inspections and Audits
    Summary of Collection of Information: Pursuant to section 31.500 of 
the proposed rule, the Department is authorized to enter AN Facilities, 
or other locations where records are stored, to inspect and audit the 
records proposed in section 31.315. DHS may also inspect and audit any 
other records that pertain to misappropriation or preventing 
misappropriation of ammonium nitrate, and to inspect and audit any 
other records required by the Assistant Secretary to be maintained 
pursuant to Subtitle J. During an inspection or audit the Department 
may copy such records. DHS may also take original copies of pertinent 
records out of the subject AN Facilities for duplication. DHS may also 
perform remote inspections or audits, and require AN Facilities, AN 
Facility Representatives, and Designated AN Facility POCs to make the 
records available to the Department by facsimile, mail, or e-mail.
    Use of: The information collected will be used to perform 
inspections or audits.
    Need for Information: The information collected is needed to 
perform inspections or audits.
    Description of the Respondents: DHS anticipates that there will be 
an average of 1,559 respondents annually.
    Frequency of Response: On occasion.

[[Page 46949]]

    Annual Burden Estimate: Each respondent is estimated to have a 
burden of 12 hours to prepare for and comply with an inspection or 
audit. The annual hour burden is estimated to be 18,708 hours.

Solicitation of Comments

    As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)), the Department has submitted a copy of the proposed rule to 
OMB for its review of the collections of information. DHS is soliciting 
comments to:
    (1) Evaluate whether the proposed information requirement is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
    (2) Evaluate the accuracy of the agency's estimate of the burden;
    (3) Enhance the quality, utility, and clarity of the information to 
be collected; and
    (4) Minimize the burden of the collection of information on those 
who are to respond, including using appropriate automated, electronic, 
mechanical, or other technological collection techniques or other forms 
of information technology.
    Individuals and organizations may submit comments to DHS or OMB on 
the information collection requirements by October 3, 2011. Direct 
information collection comments to the DHS or OMB addresses listed in 
the ADDRESSES section of this NPRM. A comment is most effective if DHS 
or OMB receives it within 30 days of the publication of this NPRM.

G. 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, importers 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 
counterparts when ammonium nitrate physically changes possession, as a 
part of sales or transfers by ammonium nitrate facilities, within the 
jurisdiction of the United States. Thus, DHS has assessed the potential 
effect of this NPRM and has determined that it would not create 
unnecessary barriers to international trade.
    For the reasons set forth in the preamble, the Department of 
Homeland Security proposes to add Part 31 to Title 6, Code of Federal 
Regulations, to read as follows:

Title 6--Domestic Security

Chapter 1--Department of Homeland Security, Office of the Secretary

PART 31--AMMONIUM NITRATE SECURITY PROGRAM

Subpart A--General
Sec.
31.100 Purpose.
31.105 Definitions.
31.110 Applicability.
31.115 Severability.
Subpart B--Registration of AN Purchasers, AN Sellers, AN Facility 
Representatives, and Designated AN Facility POCs
31.200 Permitted Applicants, Generally.
31.205 Permitted AN Purchasers.
31.210 Permitted AN Sellers.
31.215 AN Facility personnel registration requirements.
31.220 Registration procedures and registration updates.
31.225 AN Registered User number applicant vetting.
31.230 Registration approval and denial.
31.235 Registration expiration.
31.240 Registration extension.
31.245 Registration revocation.
31.250 Appealing registration denial or revocation determination.
Subpart C--Point of Sale Requirements
31.300 General transfer and sale restrictions.
31.305 Verification of AN Purchaser AN Registered User numbers and 
identities--purchases not involving AN Agents.
31.310 Verification of AN Purchaser AN Registered User numbers and 
identities--purchases involving AN Agents.
31.315 Recordkeeping requirements.
Subpart D--Reporting Theft and Loss
31.400 Reporting obligations.
31.405 Reporting.
Subpart E--Inspections and Audits
31.500 Authority.
31.505 Manner of inspections and audits.
31.510 Inspectors.
31.515 Records availability requirements.
Subpart F--Civil Penalties
31.600 Orders Assessing Civil Penalty, generally.
31.605 Setting Civil Penalty amounts.
31.610 Procedures for issuing Orders Assessing Civil Penalty.
Subpart G--Adjudications and Appeals
31.700 Neutral adjudications, generally.
31.705 Appointment of presiding officers.
31.710 Commencement of adjudication proceedings.
31.715 Prohibition on ex parte communications during adjudication.
31.720 Burden of proof.
31.725 Hearing and adjudication procedures.
31.730 Completion of adjudication procedures.
31.735 Appeals.
Subpart H--Other
31.800 State law preemption.

    Authority: Pub. L. 110-161, sec. 563.

Subpart A--General

Sec.  31.100  Purpose.

    The purpose of this part is to enhance the security of the Nation 
by regulating the sale and transfer of ammonium nitrate, and to 
implement Section 563 of the Fiscal Year 2008 Consolidated 
Appropriations Act, Public Law 110-161 (December 26, 2007).

Sec.  31.105  Definitions.

    Ammonium nitrate (AN). (1) Notwithstanding paragraph (2) of this 
definition, ammonium nitrate is--
    (i) Solid ammonium nitrate that is chiefly the ammonium salt of 
nitric acid, that contains not less than 33 percent nitrogen by weight, 
or
    (ii) Any mixture containing 30 percent or more solid ammonium 
nitrate, by weight, that is chiefly the ammonium salt of nitric acid. 
The solid ammonium nitrate in the mixture must contain not less than 33 
percent nitrogen by weight.
    (2) The following are not ammonium nitrate:
    (i) Mixtures containing less than 30 percent ammonium nitrate; or
    (ii) Mixtures classified as ``explosives'' under 27 CFR 555.11; or
    (iii) Ammonium nitrate or mixtures containing ammonium nitrate 
weighing less than 25 pounds; or
    (iv) Cold packs.
    AN Agent. Any person who obtains possession of ammonium nitrate on 
behalf of an AN Purchaser.
    AN Facility. Any person or entity that produces, sells or otherwise 
transfers ownership of, or provides application services for, ammonium 
nitrate.
    AN Facility Representative. Any AN Facility operator, owner, or 
employee who is designated as an AN Facility

[[Page 46950]]

Representative by the subject AN Facility.
    AN Purchaser. Any person, other than an AN Agent, who purchases or 
obtains ammonium nitrate from an AN Facility.
    AN Registered User. A person who possesses a valid AN Registered 
User Number for the purpose(s) of acquiring, possessing, producing, 
purchasing, selling, transferring ownership or possession of, and/or 
providing application services for ammonium nitrate.
    AN Registered User Number. A registered user number issued by the 
Department of Homeland Security under subpart B of this part to a 
person intending to acquire, possess, produce, purchase, sell, transfer 
ownership or possession of, and/or provide application services for 
ammonium nitrate.
    AN Seller. Any person designated as an AN Seller by the AN Facility 
at which he/she works or with which he/she is associated, for the 
purpose(s) of performing sales or transfers of ammonium nitrate or for 
performing certain other regulatory compliance activities under this 
Part.
    Applicant. Any person who has submitted an application for an AN 
Registered User Number for the purpose(s) of acquiring, possessing, 
producing, purchasing, selling, transferring ownership or possession 
of, and/or providing application services for ammonium nitrate.
    Application services. The provision of services related to the 
physical deposit of fertilizer onto turf, fields, crops, or other 
agricultural property, where these services are provided by a person or 
entity other than the person or entity owning or operating the property 
upon which the fertilizer is deposited. The provision of application 
services is not a sale or transfer of ammonium nitrate.
    Assistant Secretary. The Assistant Secretary for Infrastructure 
Protection of the United States Department of Homeland Security, or any 
successors to that position within the Department, or such other 
Department officials as may be designated by the Assistant Secretary to 
act on his/her behalf.
    Cold pack. A small, commercially-available package commonly used as 
a replacement for ice in the application of first aid, containing 
unmixed water and ammonium nitrate that, immediately prior to use, can 
be manipulated to cause the comingling of the water and the ammonium 
nitrate resulting in an endothermic reaction that significantly lowers 
the temperature of the package.
    Department. The United States Department of Homeland Security.
    Designated AN Facility POC. An AN Facility Representative who is 
designated by an AN Facility as that AN Facility's chief point of 
contact (POC) for communications with the Department for purposes of 
compliance with this Part.
    Office of the General Counsel. The Office of the General Counsel of 
the United States Department of Homeland Security.
    Photo identification document. Any of the following documents 
containing a unique document number:
    (1) An unexpired passport issued by a foreign government which 
contains a photograph; or
    (2) An unexpired document issued by a U.S. Federal, State, or 
tribal government that includes the following information for the 
person:
    (i) Full name;
    (ii) Date of birth; and
    (iii) Photograph; or
    (3) Such other documents that the Department may designate as valid 
identification documents.
    Secretary. The Secretary of Homeland Security or such other 
Department officials as may be designated by the Secretary of Homeland 
Security to act on his/her behalf.
    Subtitle J. Subtitle J of the Homeland Security Act of 2002, as 
created by Section 563 of the Fiscal Year 2008 Consolidated 
Appropriations Act, Public Law 110-161 (December 26, 2007).
    Transfer. The transfer of possession or ownership of ammonium 
nitrate from one person or entity to another person or entity for use 
outside of the AN Facility from which the ammonium nitrate is being 
transferred. Transfers of ammonium nitrate include transfers of 
possession or ownership that occur as part of sales and other business 
or commercial transactions, and also include transfers of possession or 
ownership that are not part of sales or other business or commercial 
transactions. The physical deposit of fertilizer onto turf, fields, 
crops, or other agricultural property is not a transfer of ammonium 
nitrate.
    Under Secretary. The Under Secretary for National Protection and 
Programs of the United States Department of Homeland Security, or any 
successors to that position within the Department, or such other 
Department officials as may be designated by the Under Secretary to act 
on his/her behalf.

Sec.  31.110  Applicability.

    This Part applies to any person or entity that possesses, acquires, 
purchases, sells, transfers, or provides application services for 
ammonium nitrate.

Sec.  31.115  Severability.

    If a court finds any portion of this Part to have been promulgated 
without proper authority, the remainder of this Part will remain in 
full effect.

Subpart B--Registration of AN Purchasers, AN Sellers, AN Facility 
Representatives, and Designated AN Facility POCs

Sec.  31.200  Permitted applicants, generally.

    Only persons who intend to acquire, possess, produce, purchase, 
sell, transfer ownership or possession of, and/or provide application 
services for ammonium nitrate may register or attempt to register under 
this Subpart.

Sec.  31.205  Permitted AN Purchasers.

    No person may purchase or take ownership of ammonium nitrate, or 
request that an AN Agent take possession of ammonium nitrate on his/her 
behalf, without a valid AN Purchaser AN Registered User Number issued 
under this Subpart.

Sec.  31.210  Permitted AN Sellers.

    (a) Only persons registered under this Subpart as AN Sellers, AN 
Facility Representatives, or Designated AN Facility POCs may sell or 
transfer possession of ammonium nitrate to any person or entity.
    (b) Only persons registered under this Subpart as AN Sellers, AN 
Facility Representatives, or Designated AN Facility POCs may, as 
required by this Part, verify AN Registered User Numbers of AN 
Purchasers, the identities of AN Purchasers, and the identities of AN 
Agents.
    (c) Only persons registered under this Subpart as AN Sellers, AN 
Facility Representatives, or Designated AN Facility POCs may perform 
ammonium nitrate application services.

Sec.  31.215  AN Facility personnel registration requirements.

    (a) Designated AN Facility POC. (1) Each AN Facility must have one 
Designated AN Facility POC registered on its behalf.
    (2) Only one Designated Facility POC can be registered for each AN 
Facility.
    (b) AN Facility Representatives. Each AN Facility must have at 
least one AN Facility Representative registered on its behalf.
    (c) AN Sellers. Any person affiliated with an AN Facility, who is 
neither a Designated AN Facility POC nor an AN Facility Representative, 
must register under this Subpart as an AN Seller in order to perform 
the activities described in 6 CFR 31.210.

[[Page 46951]]

Sec.  31.220  Registration procedures and registration updates.

    (a) Submission of Application Information. (1) Applications for 
registration under this Subpart must be submitted to the Department 
through an online web portal to be developed by the Department. The web 
address of this online web portal will be announced by the Department 
in a future notice published in the Federal Register.
    (2) Each applicant and AN Registered User must notify the 
Department of any changes to his/her submitted application information, 
within 30 days of any such changes, through the online web portal used 
for registration application.
    (b) Application Information Identifying Type of Applicant. In order 
for an applicant to be considered for registration, he/she must 
identify whether he/she is applying as an AN Seller, AN Facility 
Representative, Designated AN Facility POC, and/or AN Purchaser. An 
applicant may apply for more than one role.
    (c) Application Information--General. (1) In order for an applicant 
to be considered for registration, his/her registration application 
must include his/her name, address, telephone number, photo 
identification document type, photo identification document issuing 
entity, photo identification document number, place of birth, date of 
birth, citizenship, gender, any other information deemed necessary by 
the Department to carry out vetting under 6 CFR 31.225, and, as 
appropriate, any other information deemed necessary by the Department 
to verify the applicant's enrollment in a Department program that 
conducts equivalent TSDB vetting.
    (2) Each AN Purchaser applicant's registration application must 
also include a description of the intended use of the ammonium nitrate 
planned to be purchased or acquired by the applicant.
    (3) Each AN Seller, AN Facility Representative, and Designated AN 
Facility POC must also submit information identifying all AN Facilities 
at or for which he/she will serve as an AN Seller, AN Facility 
Representative, or Designated AN Facility POC.
    (d) Identifying AN Agents. (1) AN Purchasers and AN Purchaser 
applicants may, through the online web portal mentioned in 6 CFR 
31.220(a), identify any AN Agents whom they authorize to obtain 
ammonium nitrate on their behalves.
    (2) When a person named as an AN Agent is no longer authorized to 
obtain ammonium nitrate on behalf of an applicant or AN Purchaser, the 
applicant or AN Purchaser must notify the Department through the online 
web portal within 30 days of the date on which the AN Agent becomes 
unauthorized to obtain ammonium nitrate.

Sec.  31.225  AN Registered User number applicant vetting.

    (a) The Department will vet applicants' identifying information 
against the Terrorist Screening Database (TSDB) and/or verify each 
applicant's enrollment in a Department program that conducts equivalent 
TSDB vetting.
    (b) The Department will compare each AN Registered User's 
identifying information against new and/or updated TSDB records as 
those new and/or updated records become available.

Sec.  31.230  Registration approval and denial.

    (a) Registration approval. The Department will issue AN Registered 
User Numbers based on the results of TSDB vetting and the submission of 
complete registration applications by applicants.
    (b) Registration denial. A registration applicant may be denied an 
AN Registered User Number if:
    (1) Based on TSDB vetting and/or verification of previous TSDB 
vetting results under 6 CFR 31.225, the Assistant Secretary determines 
that it is in the interest of national security to deny the 
registration application; or
    (2) The applicant submits an incomplete registration application; 
or
    (3) Information contained in the registration application is 
fraudulent or false.
    (c) AN Registered User number issuance. The Department will provide 
AN Registered User Numbers to approved applicants by e-mail or by an 
online web portal to be developed by the Department.
    (d) Notice of registration denial. The Assistant Secretary will 
provide Notice of Registration Denial to denied applicants by e-mail or 
by an online web portal to be developed by the Department. This Notice 
will include the date of denial, and will also include instructions 
about how to appeal such a denial pursuant to 6 CFR 31.250.
    (e) Notice of delay. (1) When the Department is unable to approve 
or deny a registration application within 72 hours of receipt, the 
Department will provide Notice of Delay to the applicant by e-mail or 
by an online web portal to be developed by the Department.
    (2) When the Department determines that, in the interest of 
national security, longer than 72 hours is required to review a 
registration application or to issue or deny an AN Registered User 
Number, the Department will provide Notice of Delay to the applicant by 
e-mail or by an online web portal to be developed by the Department.

Sec.  31.235  Registration expiration.

    An AN Registered User Number issued under this subpart expires five 
years after the date it is issued.

Sec.  31.240  Registration extension.

    (a) Extension prior to registration expiration. An AN Registered 
User can apply for an extension of his/her AN Registered User Number 
not more than 60 days before its scheduled expiration.
    (b) Extension after registration expiration. An AN Registered User 
can apply for an extension of his/her AN Registered User Number after 
the expiration date of that AN Registered User Number for up to one 
year from the date of expiration.
    (c) Application for new number after registration expiration of 
more than one year. An AN Registered User with an AN Registered User 
Number that has been expired for more than one year must apply for, and 
obtain, a new AN Registered User Number before engaging in the 
acquisition, purchase, sale, or transfer of ammonium nitrate, or before 
providing ammonium nitrate application services.
    (d) Extension procedures. An AN Registered User can apply for an 
extension of his/her AN Registered User Number by following the 
registration procedures set forth in 6 CFR 31.220. Extensions will be 
issued or denied using the registration issuance and denial procedures 
and criteria set forth in 6 CFR 31.230.

Sec.  31.245  Registration revocation.

    (a) The Assistant Secretary may revoke an AN Registered User Number 
if he/she determines that:
    (1) It is in the interest of national security to revoke that AN 
Registered User Number based on the results of the activities described 
in 6 CFR 31.225; or
    (2) The AN Registered User holding that AN Registered User Number 
obtained it by submitting fraudulent or false information.
    (b) The Assistant Secretary will provide Notice of Revocation to 
each AN Registered User whose AN Registered User Number is revoked. 
Notice of Revocation will be provided prior to the effective date of 
revocation, unless the Assistant Secretary determines that it is in the 
interest of national security to revoke an AN Registered User Number 
prior to or at the same time as provision of Notice of Revocation. 
Notice of Revocation will include both the date on which the subject AN 
Registered User Number is

[[Page 46952]]

to be revoked and the means by which revocation can be appealed.
    (c) Notices of Revocation will be disseminated to subject AN 
Registered Users by e-mail, by an online web portal to be developed by 
the Department, or by other written communication.

Sec.  31.250  Appealing registration denial or revocation 
determination.

    (a) Appealing registration denial. A person whose application for 
registration has been denied may appeal the Assistant Secretary's 
denial of his/her application under this subsection.
    (b) Appealing revocation. A person who has received a Notice of 
Revocation may appeal the Assistant Secretary's revocation 
determination under this subsection.
    (c) Appellant's request for materials. To appeal a denial or 
revocation determination, a person whose registration application is 
denied, or whose AN Registered User Number is revoked, must initiate an 
appeal by filing a Request for Materials with the Office of the General 
Counsel. This Request for Materials must be submitted to the Office of 
the General Counsel within 60 days of the date of denial or revocation.
    (d) The department's response. The Department will serve the 
appellant with copies of the releasable materials upon which denial or 
revocation was based within 60 days of receipt of a Request for 
Materials, unless the Department determines that additional time is 
required in the interest of national security. The Department will not 
include any classified information in this Response, nor will it 
include any other information or material protected from disclosure 
under law. As appropriate, the Department will include in this Response 
unclassified summaries of classified evidence supporting denial or 
revocation.
    (e) Appellant's request for appeal. To appeal the denial or 
revocation, the appellant must serve upon the Office of the General 
Counsel a Request for Appeal within 60 days of service of the 
Department's Response under paragraph (d) of this section. The 
appellant's Request for Appeal must be written and include the 
rationale and information upon which the appellant disputes the basis 
of denial or revocation.
    (f) Correcting materials. The Request for Appeal must include any 
corrections, additions, or clarifications to the materials provided by 
the Department under paragraph (d) of this section if the appellant 
believes that his/her denial or revocation was based on materials or 
information that he/she believes to be erroneous or incomplete.
    (g) Final determination. (1) After reviewing an appellant's Request 
for Appeal, the Department will serve the appellant with a Final 
Determination.
    (2) A Final Determination will be signed by the Under Secretary, 
and will:
    (i) Uphold the denial or revocation; or
    (ii) Reverse the denial or revocation.
    (3) To the extent practicable, the Department will issue a Final 
Determination within 72 hours of receipt of the appellant's Request for 
Appeal, unless the Department determines that additional time is 
required in the interest of national security. The Department will not 
include any classified information in this service, nor will it include 
any other information or material protected from disclosure under law.
    (4) Following a Final Determination reversing a registration 
denial, the Department will issue to the appellant an AN Registered 
User Number as described in 6 CFR 31.230(c).
    (h) Extension of time. For good cause shown, the Department may 
grant an appellant an extension of time to file a Request for Materials 
or Request for Appeal. An appellant's request for an extension of time 
must be in writing and must be received by the Office of the General 
Counsel within a reasonable time before the due date to be extended; or 
an appellant may request an extension after the passing of a due date 
by sending a written request describing why the failure to file within 
the prescribed time limits should be excusable.
    (i) Final agency action. For purposes of judicial review, a Final 
Determination constitutes final agency action by the Department. A 
Notice of Registration Application Denial or a Notice of Registration 
Revocation constitutes final agency action if not timely appealed 
pursuant to this section.

Subpart C--Point of Sale Requirements

Sec.  31.300  General transfer and sale restrictions.

    (a) An AN Facility, AN Seller, AN Facility Representative, or 
Designated AN Facility POC may only transfer possession of ammonium 
nitrate to an AN Purchaser in possession of a valid AN Registered User 
Number issued under subpart B of this part, or to a person acting as an 
authorized AN Agent under this Part.
    (b) An AN Facility, AN Seller, AN Facility Representative, or 
Designated AN Facility POC may only transfer possession of ammonium 
nitrate to an AN Purchaser or AN Agent after verification of his/her 
identity as required by this subpart.
    (c) An AN Facility, AN Seller, AN Facility Representative, or 
Designated AN Facility POC may not transfer possession of ammonium 
nitrate to an AN Agent when such AN Agent is attempting to obtain 
ammonium nitrate on behalf of an AN Purchaser whose registration is 
deficient under this Part.
    (d) An AN Facility, AN Seller, AN Facility Representative, or 
Designated AN Facility POC may only transfer possession of ammonium 
nitrate to an AN Agent after confirming with either the Department or 
the AN Purchaser that the AN Agent is authorized to act on the AN 
Purchaser's behalf.

Sec.  31.305  Verification of AN Registered User Numbers and 
Identities--purchases or transfers not involving AN Agents.

    (a) AN Purchaser electronic or telephonic verification. Prior to 
transferring possession of ammonium nitrate, the AN Seller, AN Facility 
Representative, or Designated AN Facility POC conducting the sale or 
transfer must obtain the unexpired AN Registered User Number and the 
name of the AN Purchaser seeking to take possession of ammonium 
nitrate.
    (1) Prior to transfer, the AN Seller, AN Facility Representative, 
or Designated AN Facility POC conducting the sale or transfer must 
submit this collected information to the Department by telephone or 
through an online web portal to be developed by the Department.
    (2) Prior to transfer, the AN Seller, AN Facility Representative, 
or Designated AN Facility POC conducting the sale or transfer must also 
submit information identifying the AN Facility from which ammonium 
nitrate is being transferred, as well as his/her own name and his/her 
own AN Registered User Number, to the Department by telephone or 
through the online web portal mentioned in 6 CFR 31.305(a)(1).
    (3) Upon receipt of this information, the Department will determine 
whether the information provided indicates that the AN Seller, AN 
Facility Representative, or Designated AN Facility POC submitting this 
information is authorized to sell or transfer ammonium nitrate. The 
Department will also determine whether the information provided 
indicates that the person attempting to purchase or obtain ammonium 
nitrate is authorized under Subpart B of this Part to do so.
    (4) The Department will then notify the AN Seller, AN Facility 
Representative, or Designated AN Facility POC, by telephone or through 
the online web portal mentioned in 6 CFR 31.305(a)(1), of the 
determinations made pursuant to 6 CFR 31.305(a)(3).

[[Page 46953]]

The AN Seller, AN Facility Representative, or Designated AN Facility 
POC may not transfer ammonium nitrate unless and until each of these 
determinations indicates that the Department has authorized the sale or 
transfer.
    (b) AN Purchaser visual verification. Prior to transferring 
possession of ammonium nitrate, the AN Seller, AN Facility 
Representative, or Designated AN Facility POC conducting the sale or 
transfer must examine the photo identification document of the AN 
Purchaser seeking to take possession of ammonium nitrate.
    (1) The photo identification document must contain a photograph of 
the person attempting to take possession of the ammonium nitrate. AN 
Sellers, AN Facility Representatives, or Designated AN Facility POCs 
must not transfer possession of ammonium nitrate to any person unable 
to provide a photo identification document. No AN Purchaser may take 
possession of, or attempt to take possession of, ammonium nitrate 
without presenting a photo identification document.
    (2) The AN Seller, AN Facility Representative, or Designated AN 
Facility POC conducting the sale or transfer must not transfer 
possession of ammonium nitrate unless he/she determines, to the best of 
his/her ability, that the person attempting to take possession of 
ammonium nitrate is the same person as the person who is depicted on 
the examined photo identification document.

Sec.  31.310  Verification of AN Registered User Numbers and 
Identities--purchases or transfers involving AN Agents.

    (a) AN Purchaser electronic or telephonic verification. An AN 
Seller, AN Facility Representative, or Designated AN Facility POC, 
prior to transferring possession of ammonium nitrate to an AN Agent, 
must obtain the name, the unexpired AN Registered User Number, the 
photo identification document type, the photo identification document 
issuing entity, and the photo identification document number of the AN 
Purchaser.
    (1) Prior to transfer, the AN Seller, AN Facility Representative, 
or Designated AN Facility POC conducting the sale or transfer must 
submit this collected information to the Department by telephone or 
through an online web portal to be developed by the Department.
    (2) Prior to transfer, the AN Seller, AN Facility Representative, 
or Designated AN Facility POC conducting the sale or transfer must also 
submit information identifying the AN Facility from which ammonium 
nitrate is being transferred, as well as his/her own name and his/her 
own AN Registered User Number, to the Department by telephone or 
through the online web portal discussed in 6 CFR 31.310(a)(1).
    (3) Upon receipt of this information, the Department will determine 
whether the information provided indicates that the AN Seller, AN 
Facility Representative, or Designated AN Facility POC submitting this 
information is authorized to sell or transfer ammonium nitrate. The 
Department will also determine whether the information provided 
indicates that the AN Purchaser is authorized under Subpart B of this 
Part to purchase or obtain ammonium nitrate. The Department will not 
determine that the AN Purchaser is authorized to purchase or obtain 
ammonium nitrate unless the photo identification document information 
provided matches the photo identification document information 
previously provided by that person to the Department under 6 CFR 
31.220(a)(2) or (c)(1).
    (4) The Department will then notify the AN Seller, AN Facility 
Representative, or Designated AN Facility POC, by telephone or through 
the online web portal mentioned in 6 CFR 31.310(a)(1), of the 
determinations made pursuant to 6 CFR 31.310(a)(3). The AN Seller, AN 
Facility Representative, or Designated AN Facility POC may not transfer 
ammonium nitrate unless and until each of these determinations 
indicates that the Department has authorized the transfer.
    (b) Confirmation of agency. An AN Seller, AN Facility 
Representative, or Designated AN Facility POC, prior to transferring 
possession of ammonium nitrate to an AN Agent, must obtain confirmation 
from the Department or from the AN Purchaser that the AN Agent is 
authorized to act on the AN Purchaser's behalf. This confirmation must 
be obtained in either of two ways:
    (1) By submitting the name of the AN Agent to the Department by 
telephone or through the online web portal mentioned in 6 CFR 
31.310(a)(1). If the named AN Agent has been previously authorized by 
the AN Purchaser to take possession of ammonium nitrate on his/her 
behalf, pursuant to 6 CFR 31.220(d), then the Department will provide a 
notice of confirmation, by telephone or through online web portal, to 
the AN Seller, AN Facility Representative, or Designated AN Facility 
POC making this submission.
    (2) Orally from the AN Purchaser. Oral confirmation may be obtained 
by an AN Seller, AN Facility Representative, or Designated AN Facility 
POC representing the AN Facility conducting the transfer. Such oral 
confirmation must be obtained in person or by telephone, prior to 
transfer of possession to the AN Agent.
    (c) AN Agent visual verification. Prior to transferring possession 
of ammonium nitrate to an AN Agent, an AN Seller, AN Facility 
Representative, or Designated AN Facility POC must examine the photo 
identification document of the AN Agent seeking to take possession of 
ammonium nitrate.
    (1) The photo identification document must contain a photograph of 
the person attempting to take possession of the ammonium nitrate. AN 
Sellers, AN Facility Representatives, or Designated AN Facility POCs 
may not transfer possession of ammonium nitrate to persons unable to 
provide photo identification documents. An AN Agent must not take 
possession of, or attempt to take possession of, ammonium nitrate 
without presenting a photo identification document.
    (2) The AN Seller, AN Facility Representative, or Designated AN 
Facility POC must not transfer possession of ammonium nitrate unless 
he/she determines, to the best of his/her ability, that the person 
attempting to take possession of the ammonium nitrate is the same 
person as the person who is depicted on the examined photo 
identification document, and is the same person as confirmed to be an 
authorized AN Agent under 6 CFR 31.310(b).

Sec.  31.315  Recordkeeping requirements.

    (a) An AN Facility and its AN Facility Representative(s) and 
Designated AN Facility POC must each ensure that the AN Facility 
maintains records pertaining to each sale or transfer of ammonium 
nitrate consisting, at a minimum, of the following:
    (1) Date of sale or transfer;
    (2) Form and amount of payment, if any;
    (3) Quantity of ammonium nitrate sold or transferred;
    (4) Type of packaging of the ammonium nitrate sold or transferred;
    (5) Location where the AN Purchaser, or if applicable AN Agent, 
will take possession of the ammonium nitrate sold or transferred;
    (6) Name, address, telephone number, AN Registered User Number, 
photo identification document type, photo identification document 
issuing entity, and photo identification document number of the AN 
Purchaser purchasing or taking possession of the ammonium nitrate sold 
or transferred;

[[Page 46954]]

    (7) If an AN Agent takes possession of ammonium nitrate, name, 
address, telephone number, photo identification document type, photo 
identification document issuing entity, and photo identification 
document number of the AN Agent taking possession of the ammonium 
nitrate sold or transferred;
    (8) If an AN Agent takes possession of ammonium nitrate, a record 
of the date and means by which confirmation of agency was received 
pursuant to 6 CFR 31.310(b); and
    (9) Confirmation numbers or confirmation records, if any, received 
from the Department as part of the notification processes described in 
6 CFR 31.305(a)(4) and 6 CFR 31.310(a)(4).
    (b) In sales or transfers not involving AN Agents, AN Purchasers 
must provide the information required by 6 CFR 31.315(a)(6) to AN 
Facility personnel prior to transfer of ammonium nitrate. AN 
Facilities, AN Sellers, AN Facility Representatives, and Designated AN 
Facility POCs must not transfer possession of ammonium nitrate to any 
persons failing to provide this information prior to transfer.
    (c) In sales or transfers involving AN Agents, AN Purchasers and/or 
the AN Agents obtaining ammonium nitrate on their behalves must provide 
the information required by 6 CFR 31.315(a)(6) and (7) to AN Facility 
personnel prior to transfer of ammonium nitrate. AN Facilities, AN 
Sellers, AN Facility Representatives, and Designated AN Facility POCs 
must not transfer possession of ammonium nitrate to any AN Agent if 
this information has not been provided prior to transfer.
    (d) An AN Facility and its AN Facility Representative(s) and 
Designated AN Facility POC must each ensure that the AN Facility 
maintains the records required by 6 CFR 31.315(a), as to each sale or 
transfer of ammonium nitrate, for a minimum of two years from the date 
of sale or transfer.
    (e) An AN Facility and its AN Facility Representative(s) and 
Designated AN Facility POC must each take reasonable actions to ensure 
that the AN Facility secures the records required by 6 CFR 31.315(a) 
from damage, theft, and loss.

Subpart D--Reporting Theft and Loss

Sec.  31.400  Reporting obligations.

    (a) Any AN Facility Representative or Designated AN Facility POC 
who has knowledge of the theft or unexplained loss of ammonium nitrate 
must report such theft or loss to the Bureau of Alcohol, Tobacco, 
Firearms and Explosives of the U.S. Department of Justice (ATF), or 
direct other AN Facility personnel to report such theft or loss to ATF, 
as provided in 6 CFR 31.405.
    (b) Each AN Facility and its AN Facility Representative(s) and 
Designated AN Facility POC must ensure that the AN Facility implements 
internal reporting procedures which require all AN Facility 
Representatives, AN Sellers, and other AN Facility personnel (as 
appropriate) to notify the appropriate AN Facility Representative or 
Designated AN Facility POC of any theft or unexplained loss of ammonium 
nitrate, to report such theft or loss directly to ATF, or both.

Sec.  31.405  Reporting.

    (a) General reporting requirements. Persons required to report 
theft or loss under this Subpart must report each theft or loss to ATF 
by telephone and by facsimile, not later than 24 hours after becoming 
aware of such theft or loss. If facsimile is not available, persons 
required to report theft or loss under this Subpart must report each 
theft or loss to ATF by telephone and U.S. mail, not later than 24 
hours after becoming aware of such theft or loss.
    (b) Voluntary reporting. Persons not required to report theft or 
loss under this Subpart may report theft or loss of ammonium nitrate by 
contacting ATF by the same means described in paragraph (a) of this 
section.

Subpart E--Inspections and Audits

Sec.  31.500  Authority.

    (a) On-site inspections and audits. In order to assess compliance 
with the requirements of this part and with the requirements of 
subtitle J, and in order to prevent the misappropriation or use of 
ammonium nitrate in acts of terrorism, authorized Department officials 
may enter AN Facilities, or other locations where records are stored, 
to inspect and audit the records required to be maintained pursuant to 
6 CFR 31.315, to inspect and audit any other records that pertain to 
misappropriation or preventing misappropriation of ammonium nitrate, 
and to inspect and audit any other records required by the Assistant 
Secretary to be maintained pursuant to Subtitle J.
    (b) Remote inspections and audits. In order to assess compliance 
with the requirements of this part and with the requirements of 
subtitle J, and in order to prevent the misappropriation or use of 
ammonium nitrate in acts of terrorism, the Department may require AN 
Facilities, AN Facility Representatives, and Designated AN Facility 
POCs to make the records mentioned in 6 CFR 31.500(a) available to the 
Department by facsimile, mail, or e-mail.

Sec.  31.505  Manner of inspections and audits.

    (a) On-Site inspections and audits. Authorized Department officials 
will conduct on-site inspections and audits at reasonable times and in 
reasonable manners. The Department will provide a minimum of 24 hours 
notice to an AN Facility, if possible through its Designated AN 
Facility POC, before any on-site inspection and audit, except when:
    (1) The Assistant Secretary determines that an on-site inspection 
and audit without such notice is warranted by exigent circumstances and 
approves such on-site inspection and audit; or
    (2) Any delay in conducting an on-site inspection and audit might 
be seriously detrimental to security, and the Assistant Secretary 
determines that an on-site inspection and audit without notice is 
warranted, and approves an Inspector to conduct such on-site inspection 
and audit.
    (b) Remote inspections and audits. Authorized Department officials 
will conduct remote inspections and audits at reasonable times and in 
reasonable manners. The Department will provide a minimum of 24 hours 
notice to an AN Facility, if possible through its Designated AN 
Facility POC, before that AN Facility is required to remotely submit 
records to the Department. The Department may provide less than 24 
hours notice before an AN Facility is required to remotely submit 
records to the Department only when:
    (1) The Assistant Secretary determines that a remote inspection and 
audit without such notice is warranted by exigent circumstances and 
approves such remote inspection and audit; or
    (2) Any delay in conducting a remote inspection and audit might be 
seriously detrimental to security, and the Assistant Secretary 
determines that a remote inspection and audit without notice is 
warranted, and approves an Inspector to conduct such remote inspection 
and audit.

Sec.  31.510  Inspectors.

    (a) Inspections and audits will be conducted by personnel duly 
authorized and designated for that purpose as ``Inspectors'' by the 
Assistant Secretary, or any person who is authorized by the Department 
to perform inspections pursuant to a cooperative agreement or a 
delegation of authority established under subtitle J.

[[Page 46955]]

    (b) An Inspector will, on request, present his or her credentials 
for examination by AN Facility personnel during an on-site inspection 
and audit, but these credentials may not be reproduced or retained by 
any AN Facility, by any AN Facility personnel, by any AN Seller, by any 
AN Facility Representative, or by any Designated AN Facility POC.

Sec.  31.515  Records availability requirements.

    (a) Records availability during on-site inspections and audits for 
which the department has provided at least 24 hours notice. Each AN 
Facility and its AN Facility Representative(s) and Designated AN 
Facility POC must make all records required to be maintained by this 
Part available to Inspectors immediately upon the commencement of an 
on-site inspection and audit. Each AN Facility and its AN Facility 
Representative(s) and Designated AN Facility POC must provide 
Inspectors with the use of photocopiers, computers, and other equipment 
necessary to copy such records, if subject AN Facilities have access to 
such equipment. If Inspectors deem that photocopying or other 
reproduction of records is necessary, but subject AN Facilities do not 
have access to necessary photocopying/reproduction equipment, 
Inspectors must be permitted to take original copies of pertinent 
records out of the subject AN Facilities for duplication and prompt 
return.
    (b) Records availability during on-site inspections and audits for 
which the department has provided less than 24 hours notice. Each AN 
Facility and its AN Facility Representative(s) and Designated AN 
Facility POC must make all records required to be maintained by this 
Part available to Inspectors as quickly as possible upon the 
commencement of an on-site inspection and audit. Each AN Facility and 
its AN Facility Representative(s) and Designated AN Facility POC must 
make such records available, at a maximum, within four hours of the 
commencement of an on-site inspection and audit. Inspectors must be 
provided with the use of photocopiers, computers, and other equipment 
necessary to copy such records, if subject AN Facilities have access to 
such equipment. If Inspectors deem that photocopying or other 
reproduction of records is necessary, but subject AN Facilities do not 
have access to necessary photocopying/reproduction equipment, 
Inspectors must be permitted to take original copies of pertinent 
records out of the subject AN Facilities for duplication and prompt 
return.
    (c) Records availability for remote inspections and audits for 
which the department has provided at least 24 hours notice. Each AN 
Facility and its AN Facility Representative(s) and Designated AN 
Facility POC must remotely submit any and all records requested by the 
Department under this Part to the Department by the time prescribed in 
the Department's notice.
    (d) Records availability for remote inspections and audits for 
which the department has provided less than 24 hours notice. Each AN 
Facility and its AN Facility Representative(s) and Designated AN 
Facility POC must remotely submit all records requested by the 
Department under this Part to the Department as quickly as possible 
after, and in no case more than four hours later than, receipt of the 
Department's notice.

Subpart F--Civil Penalties

Sec.  31.600  Orders Assessing Civil Penalty, generally.

    When the Assistant Secretary determines that any person or entity 
has violated any provision or provisions of this Part, the Assistant 
Secretary may issue an Order Assessing Civil Penalty against such 
person or entity making such person or entity liable to the United 
States for a civil penalty of not more than $50,000 per violation of 
this part.

Sec.  31.605  Setting civil penalty amounts.

    In determining the amount of a civil penalty, the Assistant 
Secretary will consider: The nature and circumstances of the 
violation(s) underlying the civil penalty; the history of prior 
violations by the person or entity determined to have committed the 
violation underlying the civil penalty; the ability to pay of the 
person or entity determined to have committed the violation underlying 
the civil penalty; the ability to continue to do business of the person 
or entity determined to have committed the violation underlying the 
civil penalty; and any other matters that the Assistant Secretary 
determines that justice requires.

Sec.  31.610  Procedures for issuing Orders Assessing Civil Penalty.

    (a) At a minimum, each Order Assessing Civil Penalty will be signed 
by the Assistant Secretary, dated, and include as to each person or 
entity subject to such Order Assessing Civil Penalty:
    (1) The name, address, and (where applicable) AN Registered User 
Number of such person or entity;
    (2) A listing of the provision(s) of this Part alleged to have been 
violated;
    (3) A statement of facts upon which the alleged instances of 
violation are based;
    (4) A statement of the amount of the civil penalty assessed;
    (5) A statement of the date by which such person or entity must pay 
the civil penalty assessed, and a statement of the date by which such 
person or entity may file a Notice for Application for Review pursuant 
to Subpart G of this Part, as an alternative to civil penalty payment;
    (6) A statement of the means by which such person or entity may 
file a Notice for Application for Review pursuant to Subpart G of this 
Part; and
    (7) A statement of the means by which payment may be made.
    (b) The Assistant Secretary may establish procedures for issuance 
of Orders Assessing Civil Penalty.
    (c) Each person or entity subject to an Order Assessing Civil 
Penalty must comply with the terms of such Order Assessing Civil 
Penalty by the date specified in such Order Assessing Civil Penalty 
unless such person or entity has filed a timely Notice for Application 
for Review under Subpart G of this Part.
    (d) An Order Assessing Civil Penalty issued under this section 
becomes a final agency action when the time specified in such Order 
Assessing Civil Penalty to file a Notice for Application for Review has 
passed without such filing.

Subpart G--Adjudications and Appeals

Sec.  31.700  Neutral adjudications, generally.

    (a) Any person or entity against whom an Order Assessing Civil 
Penalty has been issued is entitled to a hearing and adjudication, by a 
Presiding Officer, on any issue of material fact relevant to any civil 
penalty issued against such person or entity under this Part.
    (b) A Presiding Officer will issue an Initial Decision on any 
material issue related to an Order Assessing Civil Penalty before any 
such issue is reviewed on appeal pursuant to 6 CFR 31.735.

Sec.  31.705  Appointment of Presiding Officers.

    (a) Immediately upon the filing of any Notice for Application for 
Review under 6 CFR 31.710, the Secretary shall appoint an attorney, who 
is employed by the Department and who has not performed any 
investigative or prosecutorial function with respect to the matter, to 
act as a neutral adjudications officer or Presiding Officer for the 
compilation of a factual

[[Page 46956]]

record and the recommendation of an Initial Decision for each 
Proceeding.
    (b) Notwithstanding paragraph (a) of this section, the Secretary 
may appoint one or more attorneys who are employed by the Department 
and who do not perform any investigative or prosecutorial function with 
respect to this subpart, to serve generally in the capacity as 
Presiding Officer(s) for such matters pursuant to such procedures as 
the Secretary may hereafter establish.

Sec.  31.710  Commencement of Adjudication Proceedings.

    (a) Any person or entity against whom an Order Assessing Civil 
Penalty has been issued may institute proceedings to review the 
propriety of such civil penalty by filing a Notice for Application for 
Review specifying that such person or entity requests a hearing and 
adjudication.
    (b) Each person or entity requesting a hearing and adjudication 
must serve each Notice for Application for Review and all subsequent 
filings on the Office of the General Counsel.
    (c) Each Notice for Application for Review must be accompanied by 
all appropriate legal memoranda, declarations, affidavits, other 
documents and other evidence supporting the position asserted by the 
person or entity requesting a hearing and adjudication.
    (d) The Assistant Secretary will file and serve a Response, 
accompanied by all appropriate legal memoranda, declarations, 
affidavits, other documents and other evidence supporting the position 
asserted by the Assistant Secretary, within 14 calendar days of the 
filing and service of the Notice for Application for Review and all 
supporting papers.

Sec.  31.715  Prohibition on ex parte communications during 
adjudication.

    (a) At no time after the designation of a Presiding Officer for a 
proceeding and prior to the issuance of a Final Decision on an appeal 
pursuant to 6 CFR 31.735(e) will the designated Presiding Officer, or 
any person who will advise that official in the decision on the matter, 
discuss ex parte the merits of the proceeding with any interested 
person outside the Department, with any Department official who 
performs a prosecutorial or investigative function in such proceeding 
or a factually related proceeding, or with any representative of such 
person.
    (b) If, after the designation of a Presiding Officer and prior to 
the issuance of a Final Decision on an appeal pursuant to 6 CFR 
31.375(e), the designated Presiding Officer, or any person who will 
advise that official in the decision on the matter, receives from or on 
behalf of any party, by means of an ex parte communication, information 
which is relevant to the decision of the matter and to which other 
parties have not had an opportunity to respond, a summary of such 
information will be served on all other parties, who will have an 
opportunity to reply to the ex parte communication within a time set by 
the designated Presiding Officer.
    (c) The consideration of classified or Sensitive But Unclassified 
information or materials pursuant to an in camera procedure does not 
constitute a prohibited ex parte communication for purposes of this 
subpart.

Sec.  31.720  Burden of proof.

    The Assistant Secretary bears the initial burden of proving the 
facts necessary to support the challenged Order Assessing Civil Penalty 
at every proceeding instituted under this subpart.

Sec.  31.725  Hearing and adjudication procedures.

    (a) Following filing and receipt of Notice for Application for 
Review and Response, the assigned Presiding Officer will conduct 
scheduling conferences or issue scheduling orders as appropriate; 
accept or order pre-hearing memoranda, motions, and briefings as 
appropriate; and order discovery as appropriate.
    (b) Any hearing and adjudication will be held as expeditiously as 
possible in the county, parish, or incorporated city of residence of 
the person or entity filing the Notice for Application for Review 
instituting the hearing and adjudication, at a precise location to be 
determined by the assigned Presiding Officer, or, with the consent of 
such person or entity, at any other location conducive to a prompt 
presentation of any necessary testimony or other proceedings.
    (c) Videoconferencing and teleconferencing may be used where 
appropriate at the discretion of the assigned Presiding Officer.
    (d) Each party offering the affirmative testimony of a witness must 
present that testimony by declaration, affidavit, or other sworn 
statement submitted in advance as ordered by the assigned Presiding 
Officer.
    (e) Any witness presented for examination will be asked to testify 
under oath or affirmation.
    (f) The hearing and adjudication will be recorded verbatim.
    (g) A person or entity may appear to be heard on his own behalf or 
through any counsel of his choice.
    (h) A person or entity, individually or through counsel, may offer 
relevant and material information including written direct testimony 
which that person or entity believes should be considered in opposition 
to the Order Assessing Civil Penalty at issue.
    (i) A person or entity, individually or through counsel, may 
conduct cross-examination as may be specifically allowed by the 
assigned Presiding Officer for a full determination of relevant facts.

Sec.  31.730  Completion of adjudication procedures.

    (a) The assigned Presiding Officer will close and certify the 
record of the adjudication promptly upon the completion of the hearing 
and upon the submission of post-hearing briefs, if any are ordered by 
the assigned Presiding Officer.
    (b) The assigned Presiding Officer will issue an Initial Decision 
based on the certified record, and the decision will be subject to 
appeal pursuant to 6 CFR 31.735.
    (c) An Initial Decision will become a final agency action on the 
expiration of the time for an appeal pursuant to 6 CFR 31.735.
    (d) An Initial Decision will specify the time by which the subject 
person or entity must pay the ordered civil penalty, or the Presiding 
Officer's modification of such penalty, if any. Such deadline will be 
stayed, however, during the pendency of any appeal pursuant to 6 CFR 
31.735.

Sec.  31.735  Appeals.

    (a) Right to appeal. The Assistant Secretary, or any person or 
entity having received an Initial Decision under this Subpart, has the 
right to appeal to the Under Secretary acting as a neutral appeals 
officer.
    (b) Procedure for appeals. (1) The Assistant Secretary, or any 
person or entity who has received an Initial Decision under this 
Subpart, may institute an appeal by filing a Notice of Appeal with the 
Office of the General Counsel.
    (2) A Notice of Appeal must be filed within seven calendar days of 
the service of the Presiding Officer's Initial Decision. Where the 
Assistant Secretary initiates an appeal, the Assistant Secretary will 
serve a copy of this Notice of Appeal on the appellee.
    (3) An Initial Decision is stayed from the timely filing of a 
Notice of Appeal until the Under Secretary issues a Final Decision.
    (4) The appellant must file a Brief with the Office of the General 
Counsel within 28 calendar days of the filing of

[[Page 46957]]

the Presiding Officer's Initial Decision. Where the Assistant Secretary 
initiates an appeal, the Assistant Secretary will serve a copy of this 
Brief on the appellee.
    (5) The appellee must file its/his/her Opposition Brief with the 
Office of the General Counsel within 28 calendar days of the filing of 
the appellant's Brief. Where the Assistant Secretary is an appellee, 
the Assistant Secretary will serve a copy of this Opposition Brief on 
the appellant.
    (c) Expedited appeals. The Under Secretary may provide for 
expedited appeals for appropriate matters.
    (d) Ex parte communications. (1) At no time after the filing of a 
Notice of Appeal and prior to the issuance of a Final Decision on an 
appeal pursuant to 6 CFR 31.735(e) will the Under Secretary, his 
designee, or any person who will advise that official in the decision 
on the matter discuss ex parte the merits of the proceeding with any 
interested person outside the Department, with any Department official 
who performs a prosecutorial or investigative function in such 
proceeding or a factually related proceeding, or with any 
representative of such person.
    (2) If, after the filing of a Notice of Appeal and prior to the 
issuance of a Final Decision on an appeal pursuant to 6 CFR 31.375(e), 
the Under Secretary, his designee, or any person who will advise that 
official in the decision on the matter receives from or on behalf of 
any party, by means of an ex parte communication, information which is 
relevant to the decision of the matter and to which other parties have 
not had an opportunity to respond, a summary of such information will 
be served on all other parties, who will have an opportunity to reply 
to the ex parte communication within a time set by the Under Secretary 
or his/her designee.
    (3) The consideration of classified or Sensitive But Unclassified 
information or materials pursuant to an in camera procedure does not 
constitute a prohibited ex parte communication for purposes of this 
subpart.
    (e) Final decisions. The Under Secretary will issue a Final 
Decision and serve it upon the parties. A Final Decision made by the 
Under Secretary constitutes final agency action.
    (f) Conduct of appeals. The Secretary may establish procedures for 
the conduct of appeals pursuant to this subpart.

Subpart H--Other

Sec.  31.800  State law preemption.

    Subject to subtitle J, the laws of any State are preempted to the 
extent that such laws are inconsistent with this part or with subtitle 
J, except that this section shall not preempt any State law that 
provides additional protection against the acquisition of ammonium 
nitrate by terrorists or the use of ammonium nitrate in explosives in 
acts of terrorism or for other illicit purposes, as determined by the 
Secretary.

Janet Napolitano,
Secretary.
[FR Doc. 2011-19313 Filed 8-2-11; 8:45 am]
BILLING CODE 9119-9P-P
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