[Federal Register Volume 72, Number 31 (Thursday, February 15, 2007)]
[Proposed Rules]
[Pages 7376-7381]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 07-715]


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DEPARTMENT OF HOMELAND SECURITY

Transportation Security Administration

49 CFR Parts 1520 and 1580

[Docket No. TSA-2006-26514]
RIN 1652-AA51


Rail Transportation Security

AGENCY: Transportation Security Administration, DHS.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document places in the Federal Register the entire 
Initial Regulatory Flexibility Analysis (IRFA) for this proposed 
rulemaking on rail transportation security, which has been available in 
the public docket. TSA published a Notice of Proposed Rulemaking (NPRM) 
on Rail Transportation Security and placed the IRFA in the public 
docket as part of the comprehensive Regulatory Impact Assessment, on 
December 28, 2006. However, TSA inadvertently omitted the summary of 
the IRFA from the NPRM when we published it in the Federal Register. 
TSA decided to publish in the Federal Register the same IRFA that has 
been in the docket.

FOR FURTHER INFORMATION CONTACT:
    For questions related to rail security: Lisa Pena, Transportation 
Sector Network Management, Freight Rail Security, TSA-28, 
Transportation Security Administration, 601 South 12th Street, 
Arlington, VA 22202-4220; telephone (571) 227-4414; facsimile (571) 
227-1923; email <a href="/cdn-cgi/l/email-protection#f39f9a8092dd83969d92b3979b80dd949c85"><span class="__cf_email__" data-cfemail="b6dadfc5d798c6d3d8d7f6d2dec598d1d9c0">[email protected]</span></a>.
    For legal questions: David H. Kasminoff, Office of Chief Counsel, 
TSA-2, Transportation Security Administration, 601 South 12th Street, 
Arlington, VA 22202-4220; telephone (571) 227-3583; facsimile (571) 
227-1378; email <a href="/cdn-cgi/l/email-protection#2c484d5a454802474d5f414542434a4a6c48445f024b435a"><span class="__cf_email__" data-cfemail="d9bdb8afb0bdf7b2b8aab4b0b7b6bfbf99bdb1aaf7beb6af">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

Submitting Comments to the NPRM

    TSA invited comments to the NPRM that TSA published in the Federal 
Register on December 21, 2006 (71 FR 76852); Docket No. TSA-2006-26514; 
RIN 1652-AA51. You may continue to submit comments to the NPRM until 
the comment period closes on February 20, 2007, using any one of the 
methods and the procedures identified in the NPRM.

Availability of Rulemaking Document

    You can get an electronic copy using the Internet by
    (1) Searching the Department of Transportation's electronic Docket 
Management System (DMS) web page (http://dms.dot.gov/search);
    (2) Accessing the Government Printing Office's web page at http://www.gpoaccess.gov/fr/index.html; or
    (3) Visiting TSA's Security Regulations web page at http://www.tsa.gov and accessing the link for ``Research Center'' at the top 
of the page.
    In addition, copies are available by writing or calling the 
individual in the FOR FURTHER INFORMATION CONTACT section. Be sure to 
identify the docket number of this rulemaking.

[[Page 7377]]

Background

    In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 
601-612), TSA prepared an Initial Regulatory Flexibility Analysis 
(IRFA) of the proposed rail transportation security rule. On December 
28, 2006, TSA made the IRFA available in the public docket for this 
rulemaking as part of the comprehensive Regulatory Impact Assessment. 
However, TSA inadvertently omitted the summary of the IRFA when we 
published the NPRM in the Federal Register on December 21, 2006 (71 FR 
76852). To correct this oversight, TSA decided to publish in this 
document, the same IRFA, in its entirety, in the Federal Register. No 
new information is being added to the analysis with this document, but 
TSA is providing an additional means for the public to see this 
information.

Initial Regulatory Flexibility Analysis

    You may find the following IRFA, as reproduced below verbatim from 
the public docket for this rulemaking, in Section 7 of the Regulatory 
Impact Assessment, beginning on page 36. In this analysis, we note 
several abbreviations: (1) North American Classification System 
(NAICS); (2) Environmental Protection Agency's Risk Management Program 
(RMP); (3) Rail Security Coordinators (RSCs); and (4) Small Business 
Administration (SBA). You may view or download the IRFA directly from 
the public docket at http://dmses.dot.gov/docimages/pdf99/434562_web.pdf.

7. Initial Regulatory Flexibility Analysis

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 601-
612), TSA prepared this Initial Regulatory Flexibility Analysis (IRFA) 
that examines the impacts of the proposed rule on small entities (5 
U.S.C. 601 et seq.). A small entity may be: (1) A small business, 
defined as any independently owned and operated business not dominant 
in its field that qualifies as a small business per the Small Business 
Act (5 U.S.C. 632); (2) a small not-for-profit organization; or (3) a 
small governmental jurisdiction (locality with fewer than 50,000 
people).
    This IRFA addresses the following:
    1. The objectives of and legal basis for the proposed rule;
    2. The reason the agency is considering this action;
    3. The number and types of small entities to which the rule 
applies;
    4. Projected reporting, recordkeeping, and other compliance 
requirements of the proposed rule, including the classes of small 
entities that will be subject to the requirements and the type of 
professional skills necessary for preparation of the reports and 
records;
    5. Other relevant Federal rules that may duplicate, overlap, or 
conflict with the proposed rule; and
    6. Significant alternatives to the component under consideration 
that accomplish the stated objectives of applicable statutes and may 
minimize any significant economic impact of the proposed rule on small 
entities.

7.1 Background and Legal Authority

    In response to the attacks on September 11, 2001, Congress passed 
the Aviation and Transportation Security Act (ATSA),\1\ which 
established the Transportation Security Administration (TSA). TSA was 
created as an agency within the Department of Transportation (DOT), 
operating under the direction of the Under Secretary of Transportation 
for Security. On March 1, 2003, TSA was transferred to the Department 
of Homeland Security (DHS) and the officer formerly designated Under 
Secretary for Transportation Security, DOT, is now the Assistant 
Secretary, Transportation Security Administration (TSA), Department of 
Homeland Security (DHS).
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    \1\ Public Law 107-71, 115 Stat. 597 (November 19, 2001).
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    TSA has the responsibility for enhancing security in all modes of 
transportation. Under ATSA, and delegated authority from the Secretary 
of Homeland Security, TSA has broad responsibility and authority for 
``security in all modes of transportation * * * including security 
responsibilities'' over modes of transportation that are exercised by 
the Department of Transportation.'' \2\ TSA has additional authorities 
as well. TSA is specifically empowered to develop policies, strategies, 
and plans for dealing with threats to transportation.\3\ As part of its 
security mission, TSA is responsible for assessing intelligence and 
other information to identify individuals who pose a threat to 
transportation security and to coordinate countermeasures with other 
Federal agencies to address such threats.\4\ TSA also is to enforce 
security-related regulations and requirements,\5\ ensure the adequacy 
of security measures for the transportation of cargo,\6\ oversee the 
implementation, and ensure the adequacy, of security measures at 
transportation facilities,\7\ and carry out other appropriate duties 
relating to transportation security.\8\ TSA has broad regulatory 
authority to achieve ATSA's objectives, and may issue, rescind, and 
revise such regulations as are necessary to carry out TSA functions,\9\ 
and may issue regulations and security directives without notice or 
comment or prior approval of the Secretary of DHS.\10\ TSA is also 
charged with serving as the primary liaison for transportation security 
to the intelligence and law enforcement communities.\11\
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    \2\ See, 49 U.S.C. 114(d). The TSA Assistant Secretary's current 
authorities under ATSA have been delegated to him by the Secretary 
of Homeland Security. Under Section 403(2) of the Homeland Security 
Act (HSA) of 2002, Pub. L. 107-296, 116 Stat. 2315 (2002), all 
functions of TSA, including those of the Secretary of Transportation 
and the Undersecretary of Transportation of Security related to TSA, 
transferred to the Secretary of Homeland Security. Pursuant to DHS 
Delegation Number 7060.2, the Secretary delegated to the Assistant 
Secretary (then referred to as the Administrator of TSA), subject to 
the Secretary's guidance and control, the authority vested in the 
Secretary with respect to TSA, including that in Section 403(2) of 
the HSA.
    \3\ 49 U.S.C. 114(f)(3).
    \4\ 49 U.S.C. 114(f)(1)-(5); (h)(1)-(4).
    \5\ 49 U.S.C. 114(f)(7).
    \6\ 49 U.S.C. 114(f)(10).
    \7\ 49 U.S.C. 114(f)(11).
    \8\ 49 U.S.C. 114(f)(15).
    \9\ 49 U.S.C. 114(l)(1).
    \10\ 49 U.S.C. 114(l)(2).
    \11\ 49 U.S.C. 114(f) (1) and (5).
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    TSA's authority with respect to transportation security is 
comprehensive and supported with specific powers related to the 
development and enforcement of regulations, security directives, 
security plans, and other requirements. Accordingly, under this 
authority, TSA may assess a security risk for any mode of 
transportation, develop security measures for dealing with that risk, 
and enforce compliance with those measures.
    TSA's legal authority is supported by National policy. On December 
17, 2003, the President issued Homeland Security Presidential Directive 
7 (HSPD-7, Critical Infrastructure Identification, Prioritization, and 
Protection), which ``establishes a national policy for Federal 
departments and agencies to identify and prioritize United States 
critical infrastructure and key resources and to protect them from 
terrorist attacks.'' \12\ In recognition of the lead role assigned to 
DHS for transportation security, and consistent with the powers granted 
to TSA by ATSA, the directive provides that the roles and 
responsibilities of the Secretary of DHS include coordinating 
protection activities for ``transportation systems, including mass 
transit, aviation, maritime, ground/surface, and rail and

[[Page 7378]]

pipeline systems.'' \13\ In furtherance of this coordination process, 
HSPD-7 provides that DHS and DOT will ``collaborate on all matters 
relating to transportation security and transportation infrastructure 
protection.'' \14\ See, HSPD-7, Paragraph 22(h).
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    \12\ HSPD-7, Paragraph 1.
    \13\ HSPD-7, Paragraph 15.
    \14\ HSPD-7, Paragraph 22(h).
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    In accordance with the September 2004 Memorandum of Understanding 
(MOU) between DHS and DOT, both Departments share responsibility for 
rail and hazardous materials transportation security. The two 
departments consult and coordinate on security-related rail and 
hazardous materials transportation requirements to ensure they are 
consistent with overall security policy goals and objectives and the 
regulated industry is not confronted with inconsistent security 
guidance or requirements promulgated by multiple agencies.

7.2 Statement of Need for the Proposed Action

    TSA developed the proposed rule to mitigate threats and 
vulnerabilities in the rail transportation network. In the United 
States, freight rail transportation systems transport hundreds of 
millions of dollars worth of freight and employ hundreds of thousands 
of individuals on an annual basis.\15\ Furthermore, passenger systems, 
including passenger rail carriers as well as mass transit systems, 
carry millions of people daily throughout the country.
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    \15\ U.S. Department of Transportation, Research and Innovative 
Technology Administration, Bureau of Transportation Statistics, 
Pocket Guide to Transportation 2006 (Washington, D.C.: Bureau of 
Transportation Statistics, 2006).
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    Rail transportation networks `` both passenger and freight'' are 
vulnerable to a variety of transportation security incidents. In the 
past, terrorists have targeted passenger rail transportation systems to 
inflict mass casualties (e.g. Tokyo 1995; Moscow 2000, 2001, and 2004; 
Madrid 2004; London 2005; and Mumbai 2006). When transporting certain 
materials, freight rail systems also represent potential terrorist 
targets. Although not the result of a deliberate attack, the incident 
involving a ruptured chlorine tank car in Graniteville, South Carolina, 
killed nine people and injured hundreds more. These incidents highlight 
the fact that hazardous materials in rail transportation and rail 
passenger systems are possible targets of terrorism intended to inflict 
hundreds or even thousands of fatalities, with direct and indirect 
costs from transportation system disruption that could total billions 
of dollars.
    The Notice of Proposed Rulemaking attempts to reduce the 
probability that such an event would occur by: (1) Requiring the 
protection of sensitive security information in the rail sector; (2) 
giving TSA authority to conduct inspections of rail security 
operations; (3) requiring the designation of Rail Security 
Coordinators; (4) requiring covered entities to have the ability to 
report on rail car locations; (5) requiring covered entities to report 
significant security concerns to TSA; and (6) requiring covered 
entities to establish a chain of custody and control standards for 
certain hazardous shipments.

7.3 Description and Estimated Number of Small Entities

    The regulated entities are divided into railroad carriers, transit 
systems, and rail hazmat facilities. Rail hazmat facilities are 
primarily chemical manufacturers although some wholesalers may also 
ship chemicals. In addition, some ammonia producers classify themselves 
as support activities for agriculture or agricultural wholesalers. 
Figure 1 provides the NAICS codes and SBA standards for defining small 
entities for the sectors expected to be affected by the rule.

                                         Figure 1.--Firm Size Standards
----------------------------------------------------------------------------------------------------------------
                  Industry                     NAICS                     Small business standard
----------------------------------------------------------------------------------------------------------------
Line Haul railroads........................     482111  1,500 FTE.
Short line railroads.......................     482112  500 FTE.
Transit Systems............................        485  $6.5 million.
Petrochemical manufacturing................      32511  1,000 FTE.
Alkalis and chlorine manufacturing.........     325181  1,000 FTE.
All other basic inorganics.................     325188  1,000 FTE.
All other basic organics...................     325199  1,000 FTE.
Plastic and resin manufacturing............      32511  750 FTE.
Nitrogen fertilizer manufacturing..........     325311  1,000 FTE.
Other chemical manufacturing...............        325  500-1,000 FTE.
Support activities for rail................      48821  $6.5 million.
Petroleum refineries.......................      32411  1,500 FTE.
Pulp and paper mills.......................       3221  750 FTE.
Support activities for agriculture.........       1151  $6.5 million.
Chemical wholesalers.......................      42469  100 FTE.
Agricultural wholesalers...................      42491  100 FTE.
Electric utilities.........................       2111  <4 m megawatt hours/year.
Water and sewage systems, private..........       2213  $6.5 million.
Water and sewage systems, public...........         92  <50,000 people serviced.
----------------------------------------------------------------------------------------------------------------
Source: Small Business Administration.

    Overall, of all the regulated parties, TSA identified 654 entities 
that may meet the SBA definition of small entity.
    The number of small rail carriers potentially affected by the rule 
is difficult to estimate accurately because most local rail carriers 
are privately owned. Based on AAR data on employment and revenues, TSA 
assumed that all rail carriers except the seven Class I railroads are 
small entities.\16\ This assumption may be conservative because some 
private companies own a number of local railroads and may exceed the 
500 FTE size limits. Figure 2 presents the AAR data on the number of 
railroads, average revenues, and average number of FTEs.
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    \16\ Association of American Railroads, ``Overview of U.S. 
Freight Railroads,'' January 2006.

[[Page 7379]]



  Figure 2.--Railroad Types by Average Revenue and Number of Employees
------------------------------------------------------------------------
                                                                 Average
               Type                  Number    Average freight   number
                                                   revenue       of FTEs
------------------------------------------------------------------------
Class I..........................          7    $5,590,000,000    21,100
Regional.........................         31        45,483,871       239
Local............................        314         3,121,019        17
Switching and Terminal...........        204         3,137,255       32
------------------------------------------------------------------------
Source: American Association of Railroads.

    BTS list 152 transit systems (21 commuter rail systems, 45 rail 
transit systems, 86 other rail transit systems).\17\ Of these, 86 are 
listed as ``other,'' and include cable car, inclined plane, monorail, 
and automated guideway.\18\ As shown in Figure 3, only the systems in 
the ``other'' category have average passenger revenues of less than 
$6.5 million, which is the SBA standard for small transit entities. The 
other transit systems not only have average passenger revenues that 
exceed the standard, but are generally also operated by governmental 
entities that receive support from federal and state governments. It is 
unlikely that local governments that meet the SBA standard for small 
governments (50,000 people served) operate rail transit systems. 
Consequently, TSA has included only the ``other'' entities as 
potentially affected small entities.
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    \17\ Bureau of Transportation Statistics, National 
Transportation Statistics, Modal Profile Transit Systems, Updated 
April 2005. Note, however, that four of the 152 transit system 
listed by BTS are classified as trolley bus and would not be covered 
by this proposed rule. This is represented in Figure 22, which only 
shows 41 transit systems (14 heavy rail and 27 light rail).
    \18\ The estimate for ``Other Rail Transit Systems'' impacted by 
the proposed rule shown in Figure 22 is conservative because it 
includes conveyances such as vanpool and aerial tramway, which would 
not be affected by this NPRM.

             Figure 3.--Transit Systems by Average Revenues
------------------------------------------------------------------------
                                                        Average annual
                  Type                      Number    passenger revenue
------------------------------------------------------------------------
Heavy Rail..............................         14         $189,590,000
Light Rail..............................         27            8,490,000
Commuter Rail...........................         21           73,910,000
Other...................................         86             590,000
------------------------------------------------------------------------
Source: BTS.

    Of the 241 rail hazmat facilities identified from the RMP data, 
there are 36 facilities that may be small entities (fewer than 500 
employees for manufacturers or 100 for wholesalers and not obviously 
part of larger corporations). Of the 36 identified small entities, only 
a certain subset may incur costs for rail secure areas. As explained in 
Section 5.6.1, only facilities with a range of less than five to less 
than 21 employees are expected to incur incremental costs related to 
creating secure storage areas, while all would incur costs for the 
other requirements.
    Figure 4 presents the RMP data distribution by FTE for hazmat 
facilities that may be SBA-defined small entities. Of the total 
facilities assumed to be small, seven have 10 to 19 employees; 17 have 
20-49 employees; six have 50-99 employees; and 6 have 100-499.\19\
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    \19\ The number of facilities that actually are part of firms 
that meet the small entity definitions may be lower. TSA excluded 
only those facilities that could be clearly identified as belonging 
to corporations or municipalities that exceed the SBA standards.

            Figure 4.--Affected Small Rail Hazmat Facilities
------------------------------------------------------------------------
                                                            Rail hazmat
                     Number of FTEs                         facilities
------------------------------------------------------------------------
100-499.................................................               6
50-99...................................................               6
20-49...................................................              17
10-19...................................................               7
1-9.....................................................               0
Potential Small Entities................................              36
Facilities with FTE > 499...............................             205
                                                         ---------------
    Total Rail Hazmat Facilities........................            241
------------------------------------------------------------------------
Source: TSA Calculations.

7.4 Description of Compliance Requirements

    Railroads will have to submit the name(s) of and engage in training 
of the RSC, document chain of custody transfers, and file incident 
reports and car location reports as needed. TSA assumed that regional 
and local carriers handled hazmat shipments in proportion to their 
percentage of total freight carried. Again, this assumption may be 
conservative because it is likely that Class I carriers move most 
chemicals. Figure 5 presents the costs for an average regional, local, 
and S&T rail carrier to comply with the requirements.

                                  Figure 5.--Average Costs to Railroads by Size
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                                                                       <greek-i>
                      Requirement                         Unit cost   Activities/   Regional    Local     S & T
                                                                          year
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RSC....................................................          $91            2       $182      $182      $182
Incident Report........................................           63            2        126       126       126

[[Page 7380]]

 
Chain of Custody.......................................    4,969,723  Weighted by      5,362       368       370
                                                                             % of
                                                                          Revenue
Location...............................................           91            1         91        91        91
                                                        --------------------------------------------------------
    Total..............................................  ...........  ...........      5,761       767      769
----------------------------------------------------------------------------------------------------------------
Source: TSA Calculations.

    As discussed above, only the 86 transit systems in the ``other'' 
category in Figure 3 are expected to be small entities according to SBA 
standards.\20\ These small transit systems will only incur unit costs 
for submission of RSC information and incident reporting. Both the RSC 
and incident reporting costs are expected to be incurred on average 
just once per year per small transit system, resulting in average costs 
per system of just $245, as shown in Figure 6.
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    \20\ Again, it is important to note that the estimate of 86 
``Other Rail Transit Systems'' impacted by the rule is in all 
likelihood conservative.

           Figure 6.--Average Costs for Small Transit Systems
------------------------------------------------------------------------
                                    Unit cost    <greek-i>     Regional
                                  -------------      of     ------------
                                                Activities/
           Requirement                              year
                                        A      -------------    A x B
                                                     B
------------------------------------------------------------------------
RSC..............................       $91.00            2         $182
Incident Report..................        63.00            1           63
                                  --------------------------------------
    Total........................  ...........  ...........         245
------------------------------------------------------------------------
Source: TSA Calculations.

    As explained above, the cost for hazmat facilities includes the 
cost of adding fencing, training, and inspections, plus the types of 
cost incurred by railroads. TSA assumed that each facility will train 
10 workers and the number of inspections per small facility is based on 
the assumption that the number of inspections is proportional to the 
quantity of chemical held. The 36 small rail hazmat facilities 
represent about 6.5 percent of the affected chemicals; therefore 6.5 
percent of the inspections were divided among the 36 firms to estimate 
384 inspections a year. Figure 7 presents the average costs for a 
hazmat facility. Because fencing is a capital cost, Figure 7 also 
presents the cost based on amortizing the fencing cost over 10 years at 
7% discount rate.\21\
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    \21\ Note that calculations in Figure 23 may be off due to 
rounding.

                            Figure 7.--Average Costs for Small Rail Hazmat Facilities
----------------------------------------------------------------------------------------------------------------
                                                               Unit cost    <greek-i>    First-year
                                                             --------------------------     cost
                         Requirement                                                   -------------  Annualized
                                                                   A            B          A x B
----------------------------------------------------------------------------------------------------------------
Secure Storage Area.........................................      $16,150            1      $16,150       $2,299
RSC.........................................................           91            2          182          182
Training....................................................           63           10          630          630
Inspections.................................................           32          384       12,096       12,096
Incident Report.............................................           63            1           63           63
Chain of Custody............................................       42,481            1       42,481       42,481
Location Reporting..........................................           91            1           91           91
                                                             ---------------------------------------------------
    Total...................................................  ...........  ...........       71,693      57,842
----------------------------------------------------------------------------------------------------------------
Source: TSA Calculations.

    Figure 8 presents the average costs as a percent of average sales. 
As can be seen, some small entities categorized as chemical or 
agricultural wholesalers may incur costs that exceed one percent of 
annual sales. TSA requests comment on whether the rule will have a 
significant economic impact on a substantial number of small entities.

[[Page 7381]]



                     Figure 8.--Average First-Year Compliance Costs as a Percent of Revenue
----------------------------------------------------------------------------------------------------------------
                                                                  Average first-      Average        Cost as a
                                                                     year cost        revenue       percent of
                                                                 --------------------------------     revenue
                              Type                                                                   (percent)
                                                                         A               B       ---------------
                                                                                                        A/B
----------------------------------------------------------------------------------------------------------------
Regional........................................................          $5,761     $45,483,871            0.01
Local...........................................................             767       3,121,019            0.02
S & T...........................................................             769       3,137,255            0.02
Small Transit...................................................             245         590,000            0.04
Chemical Manufacturer, 10-19 FTE................................          71,693      18,637,676            0.38
Chemical Wholesaler, 10-19 FTE..................................          71,693       6,184,695            1.16
Agricultural Wholesaler, 10-19 FTE..............................          71,693       6,062,925           1.18
----------------------------------------------------------------------------------------------------------------
Source: TSA Calculations.

7.5 Identification of Duplication, Overlap, and Conflict With Other 
Rules

    TSA has no knowledge of any duplicative, overlapping, or 
conflicting Federal rules.

7.6 Preliminary Conclusion

    Based on this preliminary analysis, TSA has not determined if the 
rulemaking would have a significant economic impact on a substantial 
number of small entities under section 605(b) of the RFA (5 U.S.C. 601 
et seq.). The agency requests comment on all aspects of this analysis. 
TSA will publish a Final Regulatory Flexibility Analysis for the Final 
Rule.

    Issued in Arlington, Virginia, on February 12, 2007.
Mardi Ruth Thompson,
Deputy Chief Counsel for Regulations.
[FR Doc. 07-715 Filed 2-13-07; 10:44 am]
BILLING CODE 9110-05-P


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