Document ID: USCG-2017-0711-0017
Agency: uscg
Document Type: Rule
Title: TWIC- Reader Requirements; Delay of Effective Date
Posted Date: 2020-03-09T04:00Z

[Federal Register Volume 85, Number 46 (Monday, March 9, 2020)]
[Rules and Regulations]
[Pages 13493-13517]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-24343]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 105
[Docket No. USCG-2017-0711]
RIN 1625-AC47

TWIC--Reader Requirements; Delay of Effective Date

AGENCY: Coast Guard, DHS.

ACTION: Final rule.

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SUMMARY: The Coast Guard is delaying the effective date for three 
categories of facilities affected by the final rule entitled, 
``Transportation Worker Identification Credential (TWIC)--Reader 
Requirements,'' published in the Federal Register on August 23, 2016. 
These three categories are: Facilities that handle certain dangerous 
cargoes in bulk, but do not transfer these cargoes to or from a vessel; 
facilities that handle certain dangerous cargoes in bulk, and do 
transfer these cargoes to or from a vessel; and facilities that receive 
vessels carrying certain dangerous cargoes in bulk, but do not, during 
that vessel-to-facility interface, transfer these bulk cargoes to or 
from those vessels. The Coast Guard is delaying the effective date for 
these categories of facilities by 3 years. Specifically, this rule will 
delay the implementation of the TWIC Reader rule for 370 of the 525 
affected Risk Group A facilities by 3 years, while the remaining 155 
facilities (which are all facilities that receive large passenger 
vessels), as well as 1 vessel, will have to implement the final rule 
requirements within 30 days after the effective date of this rule.

DATES: This final rule is effective May 8, 2020.

ADDRESSES: Documents mentioned in this preamble as being available in 
the docket are included under docket number USCG-2017-0711 and 
available at https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: For information about this document, 
call or email LCDR Kevin McDonald, Coast Guard CG-FAC-2; telephone 202-
372-1120; email Kevin.J.Mcdonald2@uscg.mil.

SUPPLEMENTARY INFORMATION: 

Table of Contents for Preamble

I. Abbreviations
II. Basis and Purpose, and Regulatory History
III. Executive Summary
IV. Discussion of Comments and Developments
    A. Confusion Relating to the Difference Between ``CDC 
Facilities'' and ``Facilities That Handle CDC in Bulk''

[[Page 13494]]

    B. Concerns Relating to the Effectiveness of Electronic TWIC 
Inspection
    C. Concerns Regarding Partial Implementation of the TWIC Reader 
Rule
    D. Problems Estimating the Total Cost of Implementation of the 
Electronic TWIC Inspection Requirement
    E. Use of Electronic TWIC Inspection at Passenger Facilities and 
Vessels
    F. Miscellaneous Comments
    G. Comments on the Regulatory Analysis
    1. Comments on the Total Cost of the TWIC Reader Rule
    2. Comments on the Economic Impact of the Rules
    3. Comments on the Use of the TWIC Pilot Program Data
    4. Comments on Collecting New Cost Data
    H. Conclusion
V. Regulatory Analyses
    A. Regulatory Planning and Review
    B. Small Entities
    C. Assistance for Small Entities
    D. Collection of Information
    E. Federalism
    F. Unfunded Mandates Reform Act
    G. Taking of Private Property
    H. Civil Justice Reform
    I. Protection of Children
    J. Indian Tribal Governments
    K. Energy Effects
    L. Technical Standards
    M. Environment

I. Abbreviations

ANPRM Advanced notice of proposed rulemaking
CDC Certain Dangerous Cargoes
CFR Code of Federal Regulations
COTP Captain of the Port
DHS Department of Homeland Security
GDP Gross Domestic Product
FSO Facility Security Officer
FSP Facility Security Plan
FR Federal Register
GAO Government Accountability Office
HSI Homeland Security Institute
HSOAC Homeland Security Operational Analysis Center
MSRAM Maritime Security Risk Analysis Model
MTSA Maritime Transportation Security Act of 2002
NPRM Notice of proposed rulemaking
OIG Office of the Inspector General
OMB Office of Management and Budget
PAC Policy Advisory Council
PACS Physical access control system
RA Regulatory analysis
SAFE Port Act Security and Accountability for Every Port Act of 2006
Sec.  Section symbol
TSA Transportation Security Administration
TSI Transportation Security Incident
TWIC Transportation Worker Identification Credential
USCG United States Coast Guard

II. Basis and Purpose, and Regulatory History

    Pursuant to the Maritime Transportation Security Act of 2002 
(MTSA),\1\ and in accordance with section 104 of the Security and 
Accountability for Every Port Act of 2006 (SAFE Port Act),\2\ Congress 
requires the electronic inspection of Transportation Worker 
Identification Credential (TWIC[supreg]) cards (``electronic TWIC 
inspection'') upon entry to secure areas on vessels and in facilities 
in the United States. Specifically, the SAFE Port Act mandates that the 
Secretary promulgate final regulations that require the deployment of 
electronic transportation security card readers.\3\ To implement this 
requirement in an effective manner, the Coast Guard undertook a series 
of regulatory actions culminating in a requirement to implement 
electronic TWIC inspection at certain high-risk vessels and facilities 
regulated under MTSA. Beginning in 2006, the Coast Guard and the 
Transportation Security Administration (TSA) conducted a variety of 
rulemaking actions to implement the requirements. This culminated in 
the 2016 publication of a final rule implementing the requirement for 
electronic TWIC inspection (the ``TWIC Reader rule'').\4\ A detailed 
summary of these actions is available in the preamble to the notice of 
proposed rulemaking (NPRM) (the ``TWIC Delay NPRM'') for this rule.\5\
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    \1\ Public Law 107-295, 116 Stat. 2064 (November 25, 2002).
    \2\ Public Law 109-347, 120 Stat. 1884, 1889 (October 13, 2006).
    \3\ See 46 U.S.C. 70105(k)(3).
    \4\ Transportation Worker Identification Credential (TWIC)--
Reader Requirements; Final Rule. August 23, 2016, 81 FR 57652.
    \5\ TWIC Reader Requirements, Delay of Effective Date; Notice of 
Proposed Rulemaking. June 22, 2018, 83 FR 29067, at 29068.
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    Existing regulations require all eligible persons who require 
unescorted access to secure areas of MTSA-regulated facilities to 
possess a TWIC card. However, while the TWIC card contains 
sophisticated authentication, validation, and verification capabilities 
using biographic and biometric information, operators of vessels and 
facilities are not required to use these features in ascertaining 
whether persons are authorized to enter secure areas. Instead, security 
personnel must inspect the card visually (i.e., printed name, facial 
photograph, expiration date, and overt security features) to allow 
entry. The TWIC reader rule changed this requirement for a subset of 
high-risk MTSA-regulated facilities (called ``Risk Group A 
facilities''), requiring that they conduct an ``electronic TWIC 
inspection'' before allowing access to secure areas. This involves 
electronic authentication using the TWIC card's Card Holder Unique 
Identifier (CHUID), validating that the credential has not been revoked 
by comparing it to a TSA-maintained canceled card list, and verifying a 
person's biometric (e.g., fingerprint) to the biometric template stored 
on the card's chip. Because electronic TWIC inspection requires either 
purchasing TWIC readers, integration into an existing physical access 
control system (PACS), or other solutions, and electronic inspection 
may take longer than visually inspecting the card, the TWIC reader rule 
applied the electronic TWIC inspection requirement only to a high-risk 
subset of MTSA vessels and facilities.
    After the publication of the TWIC reader rule, the Coast Guard 
received a variety of communications from persons affected by the rule 
concerning the scope and cost of the rule. Most significantly, numerous 
parties took issue with how the Coast Guard defined some of the high-
risk facilities that were subject to the electronic TWIC inspection 
requirement. While the Coast Guard had proposed and finalized text that 
applied the electronic TWIC inspection requirement to ``facilities that 
handle certain dangerous cargoes (CDC) in bulk,'' various parties 
expressed confusion with that phrase. After the rule published, they 
stated that they had interpreted that phrase to mean that the 
regulation applied only to facilities where bulk CDC was transferred 
from a facility to a vessel (or vice versa), instead of the 
interpretation utilized by the Coast Guard.\6\ Because of this 
confusion, various parties stated that they had not been aware of the 
full scope of the proposed requirements in the NPRM, and thus not had 
an adequate opportunity to comment on the rule. In response to these 
inquiries, the Coast Guard published an informal enforcement guidance 
document in the ``Maritime Commons'' blog, stating that it would not 
enforce the electronic TWIC inspection requirements on facilities that 
did not transfer bulk CDC to or from a vessel.\7\
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    \6\ In the final rule, the Coast Guard stated that a facility 
where bulk CDC is stored and handled away from the maritime nexus 
would be a Risk Group A facility (because the bulk CDC would still 
be protected by the facility's security plan and, thus, would 
present a vulnerability), and stated that ``when the bulk CDC is not 
a part of the maritime transportation activities, it may be that a 
facility could define its MTSA footprint in such a way as to exclude 
that area . . . [with the result that] the TWIC reader requirements 
. . . would not apply in that area.'' See 81 FR 57712 at 57681.
    \7\ ``TWIC Reader Rule Update,'' March 31, 2017, available at 
https://mariners.coastguard.dodlive.mil/2017/03/31/3312017-twic-reader-rule-update/.
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    On May 15, 2017, several parties petitioned the Coast Guard to 
amend the

[[Page 13495]]

TWIC reader rule.\8\ The petitioners specifically requested that the 
Coast Guard promulgate a new rule that would limit the scope of the 
TWIC Reader rule to apply only to facilities that transfer bulk CDC to 
or from a vessel, and that facilities where bulk CDC was otherwise 
transferred, stored, produced, or used be excluded from the 
requirements.\9\ They also requested that the Coast Guard delay 
implementation of the TWIC Reader rule immediately, until we 
promulgated the new rule.\10\ The Coast Guard denied this petition, 
stating, ``[w]hile you suggest that bulk CDC is only dangerous if it is 
being transferred to or from a vessel, nothing in our analysis of 
target or attack scenarios would indicate that such a distinction would 
be relevant.'' \11\ In addition to the petition, the parties also sued 
the Coast Guard, seeking to have the TWIC Reader rule vacated on the 
basis that the plaintiffs had not had adequate opportunity to comment 
on the rule.\12\ However, the court dismissed the lawsuit on ripeness 
grounds, without a decision on the merits of the plaintiffs' 
claims.\13\
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    \8\ See www.regulations.gov, docket number USCG-2017-0447.
    \9\ USCG-2017-0447-0001, p. 22.
    \10\ USCG-2017-0447-0001, p. 22.
    \11\ USCG-2017-0447-0005, p. 2.
    \12\ International Liquid Terminals Association v. United States 
Department of Homeland Security, 2018 WL 8667001 (09/18/2018).
    \13\ Id.
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    Congress also passed several laws that impacted implementation of 
the TWIC reader program. On December 16, 2016, the President signed the 
bill entitled ``Transportation Security Card Program Assessment.'' \14\ 
This law required, among other things, the Secretary of Homeland 
Security to commission a report reviewing the security value of the 
TWIC program by: (1) Evaluating the extent to which the TWIC program 
addresses known or likely security risks in the maritime and port 
environments; (2) evaluating the potential for a non-biometric 
credential alternative; (3) identifying the technology, business 
process, and operational impact of the TWIC card and readers in 
maritime and port environments; (4) assessing the costs and benefits of 
the Program, as implemented; and (5) evaluating the extent to which the 
Department of Homeland Security (DHS) has addressed the deficiencies of 
the TWIC program previously identified by the Government Accountability 
Office (GAO) and the DHS Office of the Inspector General (OIG). On 
August 2, 2018, the President followed up by signing the 
``Transportation Worker Identification Credential Accountability Act of 
2018,'' which prohibited the Coast Guard from implementing the TWIC 
Reader rule until at least 60 days after it submits the above report to 
Congress.'' \15\
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    \14\ Public Law 114-278.
    \15\ Public Law 115-230.
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    In response to the petition for rulemaking and other actions taken 
by private parties and Congress, the Coast Guard proposed to delay 
implementation of the TWIC Reader rule for some facilities subject to 
the electronic TWIC inspection requirement. In doing so, we took note 
of concerns raised in the original analytical works that formed the 
basis for the TWIC Reader rule, namely the question of ``asset 
categorization'' that had been raised by the original Homeland Security 
Institute (HSI) report on the Coast Guard's risk methodology. That 
report specifically ``suggested that further analysis on risk grouping 
of asset categories . . . could help to ensure that the results were 
more defensible.'' \16\ The purpose of the NPRM was to allow for time 
to better assess the risk methodology and conduct this refinement. 
Accordingly, we stated that ``delaying the implementation of the TWIC 
Reader final rule requirements for certain facilities could allow us to 
develop a more precise risk-analysis methodology that would better 
identify which of these facilities . . . would benefit from the 
electronic TWIC inspection requirements.'' \17\
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    \16\ 83 FR at 29070.
    \17\ 83 FR at 29072.
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    We note that the NPRM did not seek to delay the rule for all 
facilities covered under Risk Group A. In drawing a distinction between 
the facilities that would be subject to the proposed delay (the non-
transfer facilities), and those we believed should comply on the 
original 2018 start date, we noted that ``unlike situations where CDC 
is not transferred to or from a vessel, [the categories of facilities 
covered by the delay NPRM] present a clear risk of a Transportation 
Security Incident (TSI).'' \18\ While we continue to believe this to be 
the case, as shown in the discussion below, additional information 
related to the incurred expenses of partial implementation of the rule, 
as well as the findings of new studies on TWIC effectiveness, has 
influenced the scope of this final rule. The reasons for changes 
between the TWIC Delay NPRM and final rule are discussed below in 
Section IV, ``Discussion of Comments and Developments.''
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    \18\ 83 FR at 29073.
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III. Executive Summary

    This final rule finalizes and expands on the proposal in the NPRM 
to delay the implementation of the TWIC Reader rule for certain 
facilities. While the NPRM proposed limiting the delay only to those 
facilities that handle CDC in bulk, but do not transfer it to or from a 
vessel and facilities that receive vessels that carry bulk CDC but do 
not transfer bulk CDC to or from the vessel, this final rule delays 
implementation of the electronic TWIC inspection requirement for all 
that handle bulk CDC and facilities that receive vessels carrying CDC, 
including faciltiies that transfer bulk CDC to or from a vessel. The 
TWIC reader requirement will only go into effect for facilities that 
receive large passenger vessels and passenger vessels certificated to 
carry 1000 or more passengers and more than 20 TWIC-credentialed 
crewmembers. We based this change on comments received, discussed in 
further detail below, showing that the cost of implementing electronic 
TWIC inspection will be lower if facility operators can implement the 
procedure on an enterprise-wide level, rather than in a piecemeal 
fashion. We believe that this delay best balances the need for security 
with the economic realities of the affected population. Facilities that 
receive large passenger vessels will have 60 days from the date of 
publication in the Federal Register to implement the TWIC reader 
requirements. 33 CFR 104.263, which covers vessels, is not being 
amended at this time. Presently, there are no U.S. flagged vessels that 
carry bulk CDC, and the one passenger vessel certificated to carry more 
than 1000 passengers and more than 20 TWIC-credentialed crew members is 
already complying with the 2016 TWIC reader rule, so providing the 60 
day delay is unnecessary.
    Delaying implementation of TWIC reader requirements at facilities 
that handle CDC in bulk while implementing the requirements at 
passenger vessels and facilities carries several benefits. The delay 
for facilities that handle CDC in bulk will provide DHS time to further 
analyze the results of the Congressionally-mandated TWIC program 
assessment and continue the Coast Guard's study of CDC risk. 
Furthermore, implementation at passenger vessel facilities will improve 
the security at these public-facing facilities, which handle 60-plus 
million passengers per year. Finally, it will allow facilities that 
handle CDC in bulk operators more time to plan their

[[Page 13496]]

implementation of electronic TWIC inspection requirements, an 
opportunity to assess new, more flexible reader solutions and 
technology, and the opportunity to implement a solution(s) on a larger, 
enterprise-wide scale, improving efficiency.
    We note that because DHS only received the results of the TWIC 
``comprehensive security assessment'' (titled ``The Risk-Mitigation 
Value of the Transportation Worker Identification Credential: A 
Comprehensive Security Assessment of the TWIC Program'') in early 
August 2019, and the Coast Guard is still analyzing the assessment, 
this final rule is only one step in our further evaluation of the TWIC 
reader requirements. The Congressional requirement to implement 
electronic TWIC inspection requirements in 46 U.S.C. 70105 still 
stands, and while we still believe that electronic validation of TWIC 
cards provides valuable security benefits, we also believe the 
implementation of the electronic TWIC inspection requirement will be 
improved by additional data and further evaluation.
    As a result of this delay, regulated facilities and vessels should 
not infer that readers, access control systems, or other electronic 
inspection solutions provide no security value. While certain reader 
requirements are delayed, facilities or vessels may choose to 
incorporate such inspection solutions into their Facility or Vessel 
Security Plans. Specifically, the use of the electronic inspection 
solutions and the TWIC Canceled Card List (CCL) may enhance security 
and minimize the risk of an ineligible transportation worker entering a 
secure area.
    Overall, we estimate that delaying the implementation of the TWIC 
Reader rule for the estimated 370 facilities that handle CDC in bulk 
will result in cost savings to both industry and the government of 
$23.74 million (discounted at 7 percent) over a 10-year period of 
analysis, and an annualized cost savings of $3.38 million (discounted 
at 7 percent).\19\ \20\ Using a perpetual period of analysis, we 
estimated the total annualized cost savings to industry and the 
government of the rule to be $1.53 million in 2016 dollars, discounted 
back to 2016. For the purpose of this economic analysis, we use a 10-
year period of analysis in order to properly compare the costs of this 
final rule and the TWIC reader rule, where we also estimated the costs 
and benefits using a 10-year period of analysis.
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    \19\ With a 3-percent discount rate, we estimate a total cost 
savings of $18.29 million and an annualized cost savings of $2.14 
million.
    \20\ At the time of analysis, the Coast Guard did not have a 
final draft HSOAC assessment, and therefore we did not incorporate 
any cost estimates from that report into our analysis, as we were 
unable to review or validate those cost estimates for our RA. 
Further, as the HSOAC assessment was published after the publication 
of the NPRM, the public would not have had the opportunity to review 
and comment on those cost estimates.
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IV. Discussion of Comments and Developments

    In response to the publication of the NPRM, the Coast Guard 
received 13 public comments. All commenters supported the Coast Guard's 
proposal to delay implementation of the TWIC reader rule, and most 
urged the Coast Guard to expand that delay in implementation to the 
class of facility represented by the commenter. Commenters also made a 
wide variety of statements about their understanding of the electronic 
TWIC inspection rulemaking documents demonstrating substantial 
confusion about numerous aspects of the TWIC reader rule, which are 
addressed extensively below. Finally, commenters provided additional 
information relating to the costs and implementation concerns 
surrounding the electronic TWIC inspection requirement that the Coast 
Guard has, where applicable, integrated into its analysis.
    In this document, the Coast Guard has grouped together issues from 
various commenters into five broad categories, as laid out below. When 
possible, we have attempted to identify the specific comment to which 
we are responding. Where applicable, we have included a citation to the 
comment and page of a statement to which we are responding.

A. Confusion Relating to the Difference Between ``CDC Facilities'' and 
``Facilities That Handle CDC in Bulk''

    Many commenters expressed confusion about the scope of the 
population affected by the TWIC reader rule, specifically those that 
are required to implement electronic TWIC inspection because they meet 
the requirements in title 33 Code of Federal Regulations (CFR) 
105.253(a)(1) for ``facilities that handle Certain Dangerous Cargoes 
(CDC) in bulk.'' \21\ Those commenters argued that they believe this 
phrase should only attach to facilities where bulk CDC is transferred 
from a vessel to facility or vice versa. These individuals stated that, 
if a facility received bulk CDC by other means, or the facility 
produces, stores, or uses it in its processes, it should not be 
described as ``handling'' bulk CDC.
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    \21\ While we note that 33 CFR 105.253(a) also contains the 
phrase ``[f]acilities that . . . receive vessels carrying CDC in 
bulk,'' that second phrase is not relevant to this discussion of the 
interpretation of ``Facilities than handle CDC in bulk.''
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    The primary source of this argument is an unrelated requirement in 
33 CFR 105.295, which sets forth additional security requirements for 
``CDC Facilities.'' This requirement was established in 2003, and, 
while the term ``CDC Facility'' was not defined in regulation, a 
subsequently-issued policy document from the Policy Advisory Council 
(PAC 20-04) stated that ``in order for a facility to classify as a CDC 
Facility, a vessel-to-facility interface must occur, or be capable of 
occurring, and involve the transfer of CDC's in bulk.'' \22\ PAC 20-04 
also stated that facilities receiving CDC from entities other than 
vessels, such as rail cars and tanker trucks, would not be considered 
CDC Facilities, but that the Facility Security Plan (FSP) for these 
facilities ``must address the fact that they handle such cargoes.'' 
\23\ This explanation of the meaning of ``CDC Facility'' contrasted 
markedly with the elucidation of the phrase ``facilities that handle 
Certain Dangerous Cargoes in bulk'' provided in the 2016 TWIC Reader 
final rule. In that document, we stated that, in the situation where a 
facility stored or used CDC, or the facility was used to transfer CDC 
in bulk through rail or other non-maritime means, ``such a facility 
would be considered to `handle CDC in bulk' and would be classified as 
Risk Group A.'' \24\ We went on to say that ``this is because the bulk 
CDC would be on the premises of a MTSA-regulated facility, and thus the 
facility's access control system would need to be used to mitigate the 
risk of a TSI.'' \25\
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    \22\ Available at Homeport website, https://homeportr.uscg.mil/Lists/Content/DispForm.aspx?ID=2784. See Policy Advisory (PAC) 
Doucument Registry document.
    \23\ PAC 20-04, ``Scenario D.''
    \24\ 81 FR at 57681.
    \25\ 81 FR at 57681.
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    While the terms ``CDC Facilities'' and ``facilities that handle CDC 
in bulk'' sound similar, they are not identical, and the Coast Guard 
did not intend to conflate the two terms or use them interchangeably. 
The Coast Guard never used the term ``CDC Facilities'' in any of the 
TWIC Reader rulemaking documents, and has been using consistent 
language since the publication of the Advance Notice of Proposed 
Rulemaking (ANPRM) in 2009 (74 FR 13360). We also note substantial 
differences in the rationales for the different requirements associated 
with the two terms. Various elements in 33 CFR 105.295 specifically 
relate to maritime-specific issues, such as searching waterfront areas 
for dangerous

[[Page 13497]]

devices \26\ and a requirement to release cargo only in the presence of 
the Facility Security Officer (FSO) or designated representative,\27\ 
and form the basis for a maritime-based interpretation of the 
applicability of that section. Such requirements would not make sense 
for a facility that did not transfer bulk CDC across a dock. 
Conversely, the attack scenarios that electronic TWIC identification is 
designed to mitigate are all exclusively land-based, specifically 
limited attacks from truck bombs, passersby, and (land-based) assault 
squads,\28\ and there is no reason a maritime nexus should be assumed.
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    \26\ 33 CFR 105.295(a)(4).
    \27\ 33 CFR 105.295(b)(1).
    \28\ See 81 FR at 57701.
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    Despite the Coast Guard's use of distinct language and an 
exclusively land-based rationale in the NPRM, many commenters asserted 
or implied their belief that the terms were interchangeable, and the 
Coast Guard's interpretation of the term ``facilities that handle CDC 
in bulk'' in the final rule, therefore, contradicted its guidance in 
PAC 20-04. One commenter submitted a copy of PAC 20-04 with scenarios 
in which a facilitiy would not be classified as a CDC facility 
highlighted, and statement ``here are several reasons why there are 
several contradictions.'' \29\ One commenter stated that ``the scope of 
the Final Rule was expanded beyond what was initially proposed and 
departed from established Coast Guard policy (PAC 20-04),'' \30\ while 
another requested that the Coast Guard revise the scope of the final 
rule to make it consistent with PAC 20-04. Yet another commenter stated 
that applying electronic TWIC inspection requirements to ``facilities 
without a maritime nexus or where there is no transfer of CDC over a 
dock was unanticipated and unusual based on historical actions taken by 
the Coast Guard,'' \31\ and while the commenter did not elaborate on 
what those ``historical actions'' were, we assume they are referring to 
the issuance of PAC 20-04. A fifth commenter referred to the 
application of the term ``facilities that handle CDC in bulk'' to 
include facilities that don't transfer CDC over a dock as ``a mistake 
in the August 23, 2016 publication,'' \32\ but did notcomment on the 
rationale provided in that document.
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    \29\ USCG-2017-0711-0003-3.
    \30\ USCG-2017-0711-0012, p. 2.
    \31\ USCG-2017-0711-0005, p. 2-3. We note the commenter included 
a footnote to PAC 20-04 (footnote 6), which repeated and emphasized 
the definition of ``CDC Facilities.''
    \32\ USCG-2017-0711-0014, p. 1.
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    One commenter stated that ``in the proposed versions of the reader 
rule, Risk Group A included . . . those that exchange [CDC] between the 
facility and a vessel.'' \33\ The commenter provided various pinpoint 
citations with this statement, which we examined. The first citation, 
from the 2009 ANPRM, uses the phrase ``Facilities that handle CDC in 
bulk'' \34\ to describe the facilities that we expected would be 
included in Risk Group A, without any indication that we meant anything 
other than the plain meaning of those words. The second citation, from 
the NPRM (78 FR 17785-86), is unclear. The section of the document that 
spans these two pages, entitled ``Summary of the Major Provisions of 
the TWIC Reader Advanced Notice of Proposed Rulemaking and This NPRM,'' 
mainly discusses the decision to not propose the ANPRM's suggestion of 
separate requirements for Risk Group B vessels and facilities. With 
regard to the issue of Risk Group A facilities, the only relevant text 
we could find is in Table ES-1, which summarizes the proposal for Risk 
Group A facilities using identical language to that described in the 
ANPRM, ``Facilities that handle CDC in bulk.'' The third citation the 
commenter provides, 78 FR at 17811, does not appear to contain any 
relevant textual information, containing only discussions of the HSI 
report relied upon in the rulemaking and information on additional data 
sources used in the rulemaking. While the commenter goes on to state 
that, ``in the final rule, other facilities were included, specifically 
those that contain CDCs and those that transfer CDCs only via non-
maritime means, such as by truck, rail, or pipeline,'' \35\ the 
commenter's citations provide no basis to conclude any differences 
between the language in the ANPRM, NPRM, and final rule or any basis to 
conclude that the same phrasing used in each of the documents referred 
to anything other than the plain meaning of the words.
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    \33\ USCG-2017-0711-0004, p. 2.
    \34\ See subsection E, ``Facility and Vessel Risk Groups,'' 
expected text for Risk Group A Facilities.
    \35\ USCG-2017-0711-0004, p. 2, including a general citation to 
the 2013 TWIC Reader final rule.
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    One commenter expressed confusion regarding the applicability of 
the electronic TWIC inspection requirement, specifically in regard to 
how they would implement the requirement if they determined they were a 
Risk Group A facility.\36\ The regulatory text states that ``prior to 
each entry into a secure area of the facility, all persons must pass an 
electronic TWIC inspection before being granted unescorted access to 
secure areas of the facility.'' The definition of ``secure area'' 
reads, in part, ``the area . . . at a facility . . . over which the 
owner/operator has implemented security measures for access control in 
accordance with a Coast Guard approved security plan.'' This was 
described at length in the TWIC Reader final rule, and has been clear 
for some time, such as when stated by the GAO in 2011,\37\ ``[f]or most 
maritime facilities, the secure area is generally any place inside the 
outer-most access control point.'' Nonetheless, one commenter asserted 
that it had based its planning on ``the assumption that electronic TWIC 
inspections will only be required in those locations where bulk CDC is 
actually transferred to or from a vessel.'' Based on that assumption, 
the commenter suggested that its current planning processes could lead 
to unforeseen costs if the Coast Guard does not change its regulations 
to meet those expectations. We note that the TWIC Delay NPRM did not 
propose or contemplate the commenter's theory that facilities that 
handle CDC and transfer it to or from a vessel would only be required 
to implement electronic TWIC inspection in the ``maritime nexus'' areas 
of their facility. If such a transfer facility also handled CDC in 
other parts of the facility, under the proposed TWIC Delay rule, it 
would still be required to implement electronic TWIC inspection ``at 
each entry to a secure area'' according to the regulatory text.
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    \36\ USCG-2017-0711-0015, at p. 1-2.
    \37\ GAO-11-657, ``Transportation Worker Identification 
Credential: Internal Control Weaknesses Need to Be Corrected to Help 
Achieve Security Objectives,'' available at https://www.gao.gov.
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    This confusion, and the potential impact, is also discussed in the 
August 2019 ``comprehensive security assessment'' mandated by Public 
Law 114-278, titled The Risk-Mitigation Value of the Transportation 
Worker Identification Credential: A Comprehensive Security Assessment 
of the TWIC Program. The authors of the assessment, the Homeland 
Security Operational Analysis Center (HSOAC), anticipated that this 
confusion could ``potentially increase the number of facilities . . . 
subject to the TWIC Reader Rule to an even larger population of 
facilities.'' HSOAC estimates that up to three times as many facilities 
as estimated in the TWIC Reader final rule may fall under the broader 
definition of a facility that

[[Page 13498]]

handles CDC in bulk, driving the estimate from 525 facilities to 
1,500.\38\
---------------------------------------------------------------------------

    \38\ Assessment of the Risk Mitigation Value of the 
Transportation Worker Identification Credential,'' HSOAC report at 
p. 124 (available in the docket at www.regulations.gov under docket 
number USCG-2017-0447). HSOAC derives this estimate by including 
Risk Group A facilities; non-risk Group A (non-exempt) bulk liquid 
or bulk oil facilities; and non-Risk Group A (non-exempt) facilities 
receiving or transferring hazardous, explosive, or radioactive 
materials.
---------------------------------------------------------------------------

    Based on the comments received, and the information presented in 
the HSOAC assessment, we recognize the similarity between the phrases 
``CDC facilities'' and ``Facilities that handle CDC in bulk,'' which 
contributed to some confusion among commenters. While we do not believe 
that the confusion affects the purpose of electronic TWIC inspection or 
should be the cause for delaying implementation of the rule as a whole, 
we do understand it may have affected the ability of some facility 
operators to effectively comment on the full costs of the rule. 
Accordingly, we are expanding on the proposal in the NPRM to delay the 
implementation of the TWIC Reader rule at facilities that handle CDC in 
bulk and transfer such cargoes from or to a vessel.

B. Concerns Relating to the Effectiveness of the Electronic TWIC 
Inspection Requirement

    Since the TWIC Reader rule was published Congress and stakeholders 
have questioned the extent to which electronic TWIC inspection, 
compared to visual TWIC inspection, improves security and mitigates the 
possibility of a TSI. As described above, the TWIC Accountability Act 
of 2018 delayed implementation of the TWIC Reader rule until after an 
assessment of its effectiveness.\39\ The HSOAC assessment ``review[ed] 
the security value of the [TWIC] program,'' including ``evaluating the 
extent to which the program . . . addresses known or likely security 
risks in the maritime and port environments'' and the extent to which 
the ``deficiencies in the program'' identified by the GAO and DHS OIG 
have been addressed.\40\ The results of this assessment, which are 
discussed in more detail below and are being considered by the Coast 
Guard in the decision to delay the TWIC reader requirements, and will 
be taken in to account in our consideration of follow-up actions to be 
taken during the delay period provided by this final rule. While this 
TWIC Reader delay was proposed in order for the Coast Guard to reassess 
the risk anaylsis methodology for electronic TWIC inspection, questions 
about the effectiveness of electronic TWIC inspection, and the TWIC 
program generally, have been raised by various entities over the years. 
In the comments to this rulemaking, several commenters raised concerns 
about the effectiveness of TWIC, and we have responded to and 
contextualized those comments here.
---------------------------------------------------------------------------

    \39\ Public Law 115-230, 132 Stat. 1631 (August 2, 2018).
    \40\ Public Law 114-278, Sec. 1(b)(C)(i) and (v), December 16, 
2016.
---------------------------------------------------------------------------

    In the TWIC Reader NPRM and final rule, the Coast Guard set forth 
the security rationale for the electronic TWIC inspection procedure, 
and explained how it could help mitigate specific terrorist attacks and 
lessen the possibility of a TSI. The Coast Guard emphasized three 
particular ``attack scenarios''--an attack by a truck bomb, a terrorist 
assault team, and a passerby/passenger explosive device situation. 
These were considered the ``attack scenarios that are most likely to be 
mitigated by the . . . enhanced access control afforded by TWIC 
readers, as they require would-be attackers gaining access to the 
target in question . . . to inflict maximum damage.'' \41\ Similarly, 
in the final rule, we noted that we ``limited our consideration to 
attack scenarios that require physical proximity to the intended target 
and for which access control would affect the ability to conduct an 
attack.'' \42\ In the response to comments during that rulemaking 
process, we acknowledged that there were other ways to attack vessels 
and facilities (for example, by secreting an explosive device in cargo) 
that would not be mitigated by electronic TWIC inspection. We noted 
that ``[f]or this reason, our analysis in this final rule focuses on 
threats that could be prevented or mitigated through the use of 
electronic TWIC inspection.'' \43\
---------------------------------------------------------------------------

    \41\ 78 FR at 17822.
    \42\ 81 FR at 57656.
    \43\ 81 FR at 57656.
---------------------------------------------------------------------------

    Many commenters raised questions about the efficacy of the TWIC 
program in preventing attacks. One commenter stated that a TWIC reader 
would not prevent the three identified attack scenarios, and that, if 
it did, ``we should be using them in Syria and Iraq.'' \44\ While we 
cannot speak on the particular security measures used in overseas 
military bases, we do note that many U.S. government facilities around 
the world indeed do use some form of access control measures for 
security purposes.
---------------------------------------------------------------------------

    \44\ USCG-2017-0711-0003, attachment 3, p. 2.
---------------------------------------------------------------------------

    Another commenter questioned the utility of electronic TWIC 
inspection in the three identified scenarios, asserting that ``an 
individual or group intent on executing such an attack would not be 
deterred simply because the targeted facility requires electronic TWIC 
inspections rather than visual TWIC inspections.'' (emphasis in 
original) \45\ We disagree that electronic TWIC inspection would offer 
no additional security value over visual inspection in such a case. 
Visual inspection cannot detect if a card has been revoked, cancelled, 
or stolen. It is also less effective at determining if a card is 
counterfeit or if the person presenting the card is the person to whom 
the card was issued. In short, it would be likelier for an adversary to 
gain unescorted access to the target--the secure area of the facility--
if the facility relied only on visual TWIC inspection. The commenter 
went on to assert that ``terrorists generally use brute force when 
attacking a target--particularly when carrying out the types of attacks 
identified by [the Coast Guard's Maritime Security Risk Analysis Model] 
MSRAM, . . . or blow up a checkpoint or other barrier rather than stop 
to use false credentials to gain access.'' (emphasis in original).\46\ 
We agree that the inability to infiltrate a facility could cause a 
terrorist group to employ additional means to initiate a full-scale 
attack on a facility, if electronic inspection were used. However, we 
would consider this an issue of electronic TWIC inspection 
``mitigating'' an attack, as the latter scenarios may be more difficult 
to mount, easier to detect, provide more time for responders to arrive, 
or give potential targets advance warning of an attack and time to 
clear the targeted area, among many other considerations. We also note 
that the measures taken to mitigate these sorts of brute-force attacks, 
such as bollards, fences, or other barriers, are generally ineffective 
at preventing the infiltrations mitigated by electronic TWIC 
inspection. The two types of security measures are complementary, not 
mutually exclusive.
---------------------------------------------------------------------------

    \45\ USCG-2017-0711-0007, p. 7.
    \46\ USCG-2017-0711-0007, p. 7.
---------------------------------------------------------------------------

    Several commenters \47\ raised concerns that the Coast Guard had 
not adequately addressed concerns raised by the GAO in its 2013 report 
on the TWIC program.\48\ While the 2013 GAO report raised some concerns 
about the TWIC program, we do not believe that report exposed specific 
problems with the electronic TWIC inspection requirement. Instead, it 
noted concerns

[[Page 13499]]

about the TWIC program that are outside the scope of the electronic 
TWIC inspection requirement (e.g., unreliable cards and readers used in 
the TWIC pilot program, or the ability of GAO operatives to obtain 
genuine TWIC cards at enrollment centers using fraudulent means), and 
noted that the Coast Guard had not conducted an effectiveness 
assessment of the TWIC program as GAO had recommended in 2011.\49\ Many 
of the GAO findings, for example, noting that ``the use of TWIC with 
readers would not stop terrorists from detonating a truck at the 
perimeter of a facility, . . . or obtaining a TWIC card using 
fraudulent documents as we did through covert means'' are in fact 
identical to the Coast Guard's analysis of these same facts, where we 
noted that electronic TWIC inspection does not prevent every 
conceivable security threat.\50\ Furthermore, we note that the Coast 
Guard and TSA addressed many of the issues that GAO raised, such as 
questions about the appropriateness of a single TWIC credential versus 
state and local credentials, improved fraud detection techniques, the 
establishment of internal and quality controls, or data collection 
questions regarding the TWIC program, programmatically, and they no 
longer presented an issue by the time we issued the TWIC Reader final 
rule.
---------------------------------------------------------------------------

    \47\ See USCG-2017-0711-0006, 0007, and 0012.
    \48\ GAO-13-198, ``Transportation Worker Identification 
Credential--Card Reader Pilot Results Are Unreliable; Security 
Benefits Need to Be Reassessed,'' available at http://www.gao.gov.
    \49\ GAO 13-198, p. 41.
    \50\ GAO 13-198, p. 41.
---------------------------------------------------------------------------

    Several commenters asserted that the Coast Guard's failure to heed 
GAO's recommendation to perform an effectiveness study render the final 
rule flawed. One commenter stated that ``the Coast Guard's insistence 
on promulgating a TWIC Reader Rule while refusing to substantively 
respond to the GAO's and HSI's \51\ critiques was arbitrary and 
capricious, and was contrary to the obvious intent of the SAFE Port Act 
that the rule be based on empirical cost-benefit data. Although the 
Coast Guard admits TWIC reader utility requires further study . . . it 
nevertheless insists on partial implementation.'' \52\
---------------------------------------------------------------------------

    \51\ This refers to report entitled ``Independent Verification 
and Validation of Development of Transportation Worker 
Identification Credential (TWIC) Reader Requirements,'' Homeland 
Security Institute, October 21, 2008 (the ``HSI Report''). A 
redacted version of this document is available in the docket.
    \52\ USCG-2017-0771-0006 at 2-3.
---------------------------------------------------------------------------

    We believe the commenter here has conflated several ideas. First, 
we note that while the GAO report stated that an effectiveness study 
should be performed, the report was directed at Congress, which 
declined to act on the recommendation until after the Coast Guard 
promulgated the final rule.\53\ The HSI study, on the other hand, 
expressed concerns about the use of asset categorization and, 
separately, the mechanism by which the Coast Guard integrated the 
``TWIC utility'' factor in determining risk assessments to inform asset 
categorization.\54\ Those topics, while important, are not the same 
thing as effectiveness. Furthermore, we disagree with the commenter's 
assertion that promulgating the rule despite the concerns in these 
reports renders the rule legally invalid. We note that the HSI report, 
despite expressing concerns, did validate the Coast Guard's risk 
analysis methodology and endorse the asset groupings the Coast Guard 
suggested. In addressing the public comments on the TWIC rule, written 
after the GAO report was released, we noted that the overwhelming 
majority of the commenters supported the electronic TWIC inspection 
requirements in general based on the security analysis conducted by the 
Coast Guard, the lack of a generalized ``effectiveness'' study 
notwithstanding. While the issues raised by stakeholders after the 
final rule was promulgated merited consideration regarding 
implementation of the electronic TWIC inspection requirement, we did 
not then and do not now believe that they invalidate the fundamental 
principles upon which Congress and the Coast Guard based the analysis.
---------------------------------------------------------------------------

    \53\ GAO 13-198 at 43, ``Matter for Congressional 
Consideration.''
    \54\ See HSI study at 26.
---------------------------------------------------------------------------

    Nonetheless, as recommended by GAO, and mandated by Congress, DHS 
has provided the HSOAC assessment of the security value of the TWIC 
program. While many of the assessment's conclusions concern areas 
outside of the particular security effectiveness of the electronic TWIC 
inspection requirement, the assessment found that there were some 
security benefits to electronic inspection of TWIC cards and that 
readers may be a beneficial investment for facilities and vessels. 
Specifically, the assessment found that ``the TWIC program is strongest 
in reducing the risk presented by individuals who are known or 
suspected terrorists and who seek to conduct an attack on a maritime 
facility that would require persistent insider access via possession of 
a TWIC credential.'' \55\ The assessment determined that ``TWIC does 
impose costs on the adversary,'' and ``likely contributes to pushing 
threatening actors toward simpler and potentially less harmful 
attacks.'' \56\ Furthermore, the assessment found that the TWIC card 
reader could ``increase the likelihood that invalid TWIC cards are 
detected, and biometrics provide a robust mechanism for identity 
verification.'' \57\ Moreover, some existing users have found that the 
use of biometric, electronic readers can be both cost saving and 
security enhancing. However, the assessment reiterated that the value 
of TWIC is directly related to the quality of security that a vessel or 
facility has overall, including having other security mechanisms in 
place, such as security guards, PACS, and deployable security barriers. 
Ultimately, the assessment found that adversaries are capable of 
gaining unauthorized access via other means and that ``threats TWIC is 
best intended to mitigate are . . . not the most pressing.'' \58\
---------------------------------------------------------------------------

    \55\ HSOAC report at xvii.
    \56\ Id.
    \57\ Id.
    \58\ Id. a. xviii.
---------------------------------------------------------------------------

    The cost effectiveness analysis on the electronic inspection 
requirements in the TWIC Reader rule provided by the HSOAC assessment 
was less favorable, stating that ``one would be hard-pressed to state 
the benefits of TWIC reader rule outweigh the costs.'' \59\ In making 
this determination, the assessment examined the Coast Guard's 
methodology for determining the costs and benefits in the regulatory 
analysis of the 2016 final rule. HSOAC then conducted their own 
analysis using the same methodology with new cost data, when available. 
The assessment found that the Coast Guard underestimated the costs of 
the programs and overestimated the benefits by using the highest 
maximum consequence scores. The ``break-even'' analysis used by the 
Coast Guard to determine the benefits of the rule was found to be 
appropriate, because it is well-established in the cost-benefit 
literature, and has been widely used in previous DHS rulemaking 
projects. However, the assessment found the Coast Guard overestimated 
the benefits by using the average maximum consequence of a successful 
terrorist attack, as provided by MSRAM, as the ``worst case'' scenario 
in the analysis.\60\ The assessment suggests the use of a range of 
consequence scores or the average consequence score would be more 
appropriate.\61\ However, as noted in the report, the use of MSRAM data 
is limited due to classification restrictions on the data, and in the 
2016 analysis,

[[Page 13500]]

the Coast Guard was only able to use the maximum consequence for this 
reason.
---------------------------------------------------------------------------

    \59\ Id.
    \60\ Id. at 133.
    \61\ Id. at. 135.
---------------------------------------------------------------------------

    The assessment also provided several suggestions and alternatives 
to the existing program to improve the cost-effectiveness, including 
limiting the facilities subject to the regulation by using a narrower 
definition, or using different readers (such as portable readers that 
can be used intermittently, access control systems or other inspection 
solutions). Despite the reservations regarding the cost effectiveness 
and benefits surrounding the TWIC readers, the assessment found that 
approximately 50 percent of facilities HSOAC visited and examined have 
implemented electronic inspection for TWIC, either in a PACS or 
portable reader, and that in some cases those PACS also verify identity 
using biometric systems.\62\ Also, nearly 20 percent of facilities 
sampled by the assessment used more technologically sophisticated 
biometric readers. During this delay period, USCG will be looking at 
various means of implementing the use of TWICs at maritime facilities 
including more efficient and cost effective electronic validation modes 
and methods.
---------------------------------------------------------------------------

    \62\ Id. at 91.
---------------------------------------------------------------------------

    The facilities interviewed in the HSOAC assessment that effectively 
integrated readers or access control solutions into operations have had 
largely positive experiences.\63\ Perceptions were mixed on the degree 
of enhanced security that the readers added, with over half of the 
facilities interviewed finding some benefit. Those facilities found 
specifically that ``if the readers are working properly, they are an 
effective tool and provide an additional level of comfort and 
security.'' \64\ While the HSOAC assessment favors a system approach to 
risk-mitigation and does not advocate the use of TWIC as a sole means 
of security for vessels and facilities, the Coast Guard is encouraged 
by positive feedback provided by those facilities that preemptively use 
TWIC readers, particularly the satisfaction with the program as a 
whole. The Coast Guard is further analyzing the suggestions and 
comments provided in the assessment, and determining if modifications 
should be made to the program during the delay period.
---------------------------------------------------------------------------

    \63\ Id. at 99.
    \64\ Id. at 96.
---------------------------------------------------------------------------

C. Concerns Regarding Partial Implementation of the TWIC Reader Rule

    In the delay NPRM, the Coast Guard cited concerns about the risk 
analysis methodology for electronic TWIC inspection as the chief reason 
for proposing a partial delay of the TWIC Reader final rule. 
Specifically, we highlighted concerns about ``asset categorization,'' 
the practice of grouping and analyzing facilities by class, as a basis 
for the application of the electronic TWIC inspection requirement. For 
example, the Coast Guard treats all facilities that ``handle CDC in 
bulk'' as being in the same class, regardless of the geographical 
location of the facility (e.g., whether it is near a large population 
center) or the specific types and quantities of the bulk CDC handled at 
the facility (e.g., whether it is a few thousand gallons of propane or 
several thousand tons of chlorine). While questions about how the Coast 
Guard would consider particular situations where the presence of bulk 
CDC did not pose a threat above a particular threshold were addressed 
in the TWIC Reader final rule, concerns raised after its publication 
caused us to re-evaluate whether the risk analysis methodology was 
adequate or satisfactory.\65\ Furthermore, we began the process of 
reconsidering whether asset categorization was an appropriate means by 
which to evaluate the risk potential of facilities, as opposed to a 
more individualized methodology that incorporates factors such as local 
population, environmental considerations, and similar factors. The 
possibility of inadvertently capturing low-risk facilities in the mix 
of Risk Group A facilities was the reason we proposed to delay the TWIC 
Reader rule for ``non-transfer'' facilities. However, because 
``transfer'' facilities and passenger facilities are high risk due to 
the targets inside the facilities themselves, irrespective of exogenous 
considerations, we declined to propose delaying the electronic TWIC 
inspection requirements for those classes of facilities.\66\
---------------------------------------------------------------------------

    \65\ See, e.g, 78 FR 17782 at 17811, discussing the availability 
of waivers in situations where minimal risk was determined.
    \66\ See 83 FR 29067 at 29073.
---------------------------------------------------------------------------

    Several commenters responded negatively to the Coast Guard's 
proposal to implement the electronic TWIC inspection requirement in 
only some Risk Group A facilities. One commenter urged the Coast Guard 
to delay the requirement for all Risk Group A facilities ``rather than 
work piecemeal.'' \67\ Another commenter asserted that a delay for all 
facilities is necessary because ``manufacturers need regulatory 
certainty to make appropriate, economically justifiable long-term 
investments to protect facilities' threat and vulnerability 
conditions,'' and that a partial delay will ``continue to create 
regulatory uncertainty.'' \68\ A third commenter asserted that ``Coast 
Guard personnel offered that delays for implementation for the Final 
Rule were likely,'' and that ``it was expected that any delay for the 
implementation would apply to all facilities.'' \69\
---------------------------------------------------------------------------

    \67\ USCG-2017-0711-0004, p. 1.
    \68\ USCG-2017-0711-0012, p. 1.
    \69\ USCG-2017-0711-0005, p. 2.
---------------------------------------------------------------------------

    We take seriously concerns that Coast Guard statements and actions 
taken subsequent to the issuance of the final rule, including the 
passage of legislation that postponed the implementation of the rule, 
could create regulatory uncertainty. One commenter noted that ``the 
regulated community and equipment manufacturers had reason to believe 
the compliance deadline would be extended and the scope of the rule 
possibly narrowed,'' leading to ``equipment manufacturers [delaying] 
production until there is more certainty on the rule.'' \70\ Similarly, 
one commenter noted that compliance with the reader rule would take 
significant preparation, including ``restructuring access points, 
training security operators, [and] testing the security interplay 
between the TWIC readers and our existing access controls,'' \71\ which 
it had not begun to implement due to belief that the rule would be 
postponed.
---------------------------------------------------------------------------

    \70\ USCG-2017-0711-0013, p. 2.
    \71\ USCG-2017-0711-0005, p. 6.
---------------------------------------------------------------------------

    Several commenters expressed concern about additional costs 
associated with partial implementation of the electronic TWIC 
inspection requirement. In addition to concerns regarding delayed 
production mentioned above,\72\ ``manufacturers remain concerned that 
they lack the required lead time to sufficiently plan and install new 
equipment, infrastructure, software, and to train new employees,'' \73\ 
and asserted that partial delay of the final rule would create 
``logistical and financial challenges for facilities that are already 
in compliance with the TWIC visual inspection requirements.'' \74\ 
These sentiments are echoed in the TWIC HSOAC assessment, where some 
interviewees from Risk Group A facilities have experienced increased 
costs and have found the number of vendors shrinking.\75\
---------------------------------------------------------------------------

    \72\ USCG-2017-0711-0013, p. 2.
    \73\ USCG-2017-0711-0012, p. 2.
    \74\ Id.
    \75\ HSOAC report at 98.
---------------------------------------------------------------------------

    One commenter suggested that an option set forth in the TWIC 
rulemaking

[[Page 13501]]

to limit electronic TWIC inspection to discrete areas of a facility 
where it handles bulk CDC--originally intended to be an option designed 
to reduce costs--could end up creating problems if the delay is limited 
to CDC transfer facilities only. The commenter laid out two scenarios 
to show how this could happen, as described below.
    In the first scenario, the facility expends resources to isolate 
the discrete bulk CDC area to the maritime transfer area. The commenter 
writes that ``[i]f after the three-year delay period, the USCG 
determines the bulk CDC handled by non-maritime means in many locations 
throughout the facility does require electronic TWIC inspections, then 
the facility will have no choice but to expand electronic TWIC 
inspections to its perimeter fence-line (which also defines its secure 
area). In this [scenario], the time effort, resources, and money spent 
now isolating the discrete area(s) where bulk CDC is transferred to or 
from a vessel will have been wasted.'' (emphasis in original) \76\ This 
commenter is confusing the 2016 final rule, and the proposed changes in 
the TWIC Delay NPRM. The NPRM did not propose to limit electronic TWIC 
inspections to the areas of the facility where bulk CDC is transferred 
to or from a vessel. Instead, it proposed to limit the requirement to 
``[f]acilities that handle Certain Dangerous Cargoes (CDC) in bulk and 
transfer such cargoes from or to a vessel.'' \77\ Such facilities would 
still have been subject to the general requirement that they conduct 
electronic TWIC inspection pursuant to 33 CFR 101.535(b), which 
requires electronic TWIC inspection before being granted unescorted 
access to secure areas of the facility. The option to isolate 
electronic TWIC inspection to discrete areas of the facility where bulk 
CDC is handled still required electronic TWIC inspection at all 
locations within the applicable facilities where CDC is handled, 
regardless of whether that was the location it was being transferred to 
or from a vessel. There was never a proposal to limit the requirement 
to maritime transfer areas, and, thus, we would not expect this 
scenario to occur.
---------------------------------------------------------------------------

    \76\ USCG-2017-0711-0007, p. 6.
    \77\ 83 FR at 29081.
---------------------------------------------------------------------------

    In the second scenario, the commenter imagines that ``rather than 
isolating the discrete area(s) where bulk CDC is transferred to or from 
a vessel, a facility chooses to conduct electronic TWIC inspections of 
all personnel seeking unescorted access into its secure area (i.e., at 
the perimeter fence line. . . . If after the three-year delay period, 
the USCG determines the bulk CDC handled by non-maritime means at the 
facility does not require electronic TWIC inspections, then the 
facility will have wasted significant time, effort, resources, and 
money.'' \78\ While the Coast Guard has not ever proposed limiting 
electronic TWIC inspection criteria to the maritime area, we realize 
that if we were to change the regulation in that way after promulgating 
a wider regulation, it could result in significant unnecessary 
expenditures. While the commenter's analysis mischaracterizes the 
proposal in the TWIC Delay NPRM, we believe this demonstrates that 
there remains significant confusion regarding the scope of the rule. 
This is a valid point and one that we have considered in promulgating 
this delay.
---------------------------------------------------------------------------

    \78\ USCG-2017-0711-0007, p. 6-7.
---------------------------------------------------------------------------

D. Problems Estimating the Total Cost of Implementation of the 
Electronic TWIC Inspection Requirement

    In the TWIC Reader rulemaking, the Coast Guard limited the 
electronic TWIC inspection to high-risk facilities for purposes of 
producing an efficient regulatory scheme. While we acknowledged that 
electronic TWIC inspection would improve security at all MTSA-regulated 
facilities, we concluded that, for many facilities, the cost of 
implementing such measures would be too high relative to the security 
benefits achieved. For that reason, we conducted extensive analysis as 
to which types of facilities posed the greatest threat to persons and 
key infrastructure targets, as well as which types of facilities would 
reap the greatest benefits from the proposed countermeasures. We 
determined that applying electronic TWIC inspection requirements only 
to Risk Group A facilities provided the most efficient security 
measures. The TWIC Reader rule final regulatory analysis (RA) estimated 
that the rule would require compliance actions by 525 facilities and 1 
vessel, for a total cost of $153.8 million (discounted at 7-percent) 
over a 10-year period.\79\
---------------------------------------------------------------------------

    \79\ See Transportation Worker Identification Credential (TWIC) 
Reader Requirements--Regulatory Analysis and Final Regulatory 
Flexibility Analysis, November 2015, p. 8, available at docket # 
USCG-2007-28915-0231.
---------------------------------------------------------------------------

    In response to the TWIC Delay NPRM, several commenters challenged 
the underlying assumptions that the Coast Guard used in developing this 
figure. Commenters first argued that the Coast Guard's analysis 
undercounted the number of facilities by including both transfer 
facilities and non-transfer facilities in its total estimate of 525 
estimated facilities. Secondly, commenters argued that the inclusion of 
the phrase ``and receive vessels carrying CDC'' in the text of the 
final rule added additional regulated facilities, which were not 
included in the RA. We address each of these issues below. We note that 
specific comments relating to the Coast Guard's economic analysis are 
addressed below in Section IV. G., ``Comments on the Regulatory 
Analysis.''
    One major issue raised by commenters concerned the number of 
facilities subject to the electronic TWIC inspection requirements, 
specifically the idea that the Coast Guard had underestimated the 
number of facilities that would be characterized as Risk Group A under 
the new regulations. In the 2013 TWIC Reader NPRM, the Coast Guard 
estimated that 532 facilities would be classified as Risk Group A,\80\ 
a number that was modified in the 2016 final rule due to the exclusion 
of 7 barge fleeting facilities.\81\ In the TWIC Delay NPRM, we broke 
down the nature of these 525 facilities, indicating that they consisted 
of 122 ``non-transfer'' facilities, as well as 403 passenger and 
``transfer'' facilities combined.\82\ One commenter stated ``neither 
the [2013 TWIC Reader NPRM RA] nor the [2016 TWIC Reader final rule RA] 
ever discusses this class of facilities.'' \83\ This commenter is 
correct: both the TWIC Reader NPRM and final rule applied the 
requirement to ``facilities that handle CDC in bulk,'' and did not draw 
a distinction between those that transfer it to/from vessels and those 
that do not, and so never separated the types of facilities for the 
purposes of economic analysis. Because the TWIC Delay NPRM was the 
first instance in which the Coast Guard considered different 
requirements for transfer and non-transfer facilities, we included a 
separate count of the non-transfer facilities.
---------------------------------------------------------------------------

    \80\ 78 FR 17782 at 17787, Table ES-2.
    \81\ 81 FR 57652 at 57654, Table 1.
    \82\ See 83 FR at 29074. We note that the NPRM did not 
specifically delineate the breakdown among the 403 facilities that 
would not have been delayed under the proposal.
    \83\ USCG-2017-0711-0007, p. 9.
---------------------------------------------------------------------------

    The commenter also suggested that the Coast Guard had dramatically 
underestimated the number of non-transfer facilities. The commenter 
states, ``it is likely that approximately 525 (or more) facilities 
handle bulk CDC by non-maritime means.'' It is unclear if the commenter 
is suggesting that there are a total of 525 facilities that handle bulk 
CDC by non-maritime means (in line with our estimates), or if there are 
525 facilities that handle bulk CDC by non-maritime means exclusively, 
which would exceed the Coast Guard's

[[Page 13502]]

estimates. The commenter also cited the 2017 Petition for 
Rulemaking,\84\ noting, ``the Petition estimated that there are closer 
to 1,500 Non-Transfer Facilities nationwide, most of which handle bulk 
CDC by non-maritime means.'' \85\ (The use of the phrase ``most of 
which'' does appear to imply that the number of facilities is a total 
count, in line with Coast Guard estimates.) This figure is cited in the 
TWIC assessment report also, as mentioned above. Based on the 
information provided by both the commenter and HSOAC, we will attempt 
to get a much fuller estimate of the population in future studies, as 
described in the TWIC Delay NPRM.
---------------------------------------------------------------------------

    \84\ See USCG-2017-0457-0001.
    \85\ USCG-2017-0711-007, p. 10.
---------------------------------------------------------------------------

    Commenters expressed concern about the inclusion, in the TWIC 
Reader final rule, of regulatory text that the Coast Guard did not 
originally propose in the TWIC Reader NPRM. Specifically, while the 
proposed regulatory text in the TWIC Reader NPRM (and the associated 
text discussed in the TWIC Reader ANPRM) applied the Risk Group A 
requirements to ``Facilities that handle Certain Dangerous Cargoes 
(CDC) in bulk,'' \86\ the TWIC Reader final rule added the phrase ``or 
receive vessels carrying CDC in bulk'' to that sentence.\87\ In the 
final rule, we explained the rationale for the additional language. In 
explaining our interpretation of the word ``handle'' in Sec.  
105.253(a), the TWIC Reader final rule stated that the purpose of the 
additional language at issue was to ``clarify risk groups.'' \88\ The 
Coast Guard explained that a facility that receives vessels carrying 
CDC bulk, even if the CDC is not transferred to the facility, is 
functionally the same as a facility that creates, stores, processes, or 
transfers (i.e., ``handles'') bulk CDC, insofar as there is bulk CDC 
present and it is the responsibility of the facility to restrict access 
to those CDCs to valid TWIC-holders. We reasoned that, ``[w]hile moored 
at a facility, a vessel must rely on the facility's security program to 
adequately secure the interface between the facility and vessel and 
mitigate the threat of a TSI.'' \89\ Thus, the Coast Guard does not 
consider the phrase ``or receives vessels carrying CDC in bulk'' to be 
a new class of facilities subject to the electronic TWIC inspection 
requirements, but merely clarification of the original proposed text of 
Sec.  105.253(a).
---------------------------------------------------------------------------

    \86\ 78 FR 17782 at 17831, proposed regulatory text Sec.  
105.253(a)(1).
    \87\ 81 FR 57652 at 57712, final regulatory text Sec.  
105.253(a)(1).
    \88\ 81 FR 57652 at 57681.
    \89\ Id.
---------------------------------------------------------------------------

    Because the Coast Guard did not consider the new language to add 
new requirements to the rule, we did not list ``facilities that receive 
vessels carrying CDC in bulk'' as a separate category of facilities in 
the regulatory text, nor did we consider that it would change the 
number of facilities affected by the electronic TWIC inspection rule in 
the delay NPRM. Furthermore, based on the information available at the 
time, the Coast Guard did not believe there were any facilities that 
received vessels carrying CDC, but did not in any other way store, use, 
process, or transfer bulk CDC on the facility (even if some vessels 
carrying bulk CDC did not unload their cargo at the facility), and so 
we did not add them to the affected population. However, after the 
publication of the final rule, various parties informed the Coast 
Guard, without presenting data, that they believed there was a 
population of facilities that received vessels carrying CDC bulk 
without otherwise handling bulk CDC on their facilities. The Coast 
Guard took such statements in good faith, and thus, in the TWIC Delay 
NPRM, we stated, ``we cannot determine the number of [facilities that 
receive vessels carrying CDC in bulk] at this time.'' \90\
---------------------------------------------------------------------------

    \90\ 83 FR 29067 at 29074.
---------------------------------------------------------------------------

    One commenter argued that because the number of affected facilities 
remained consistent between the NPRM and final rule despite the 
addition of the new language to Sec.  105.253(a), the Coast Guard's 
``accounting for Non-Transfer facilities are so suspect that they 
should be ignored.'' \91\ We disagree. As explained above, the affected 
population remained consistent between the TWIC reader NPRM and final 
rule because the policy in the documents was consistent. Furthermore, 
we note that despite its assertion that the lack of a separate 
accounting for this class of facility renders the Coast Guard's 
calculations moot, the commenter affirms the Coast Guard's original 
logic, noting in a parenthetical that ``relatively few facilities that 
receive vessels carrying CDC without transferring them do not also 
handle bulk CDC by non-maritime means.'' \92\ Similarly, one commenter 
argues, ``the methodology defining the risk categories does not include 
lay-berth \93\ or other cargoes contained or not transferred.'' \94\ 
For the reasons described above, the Coast Guard disagrees, and notes 
the 2016 TWIC Reader rule methodology explicitly accounts for these 
situations.
---------------------------------------------------------------------------

    \91\ USCG-2017-0711-0007, p. 10.
    \92\ USCG-2017-0711-0007, p. 10.
    \93\ ``Lay berth'' is the situation where a vessel docks at a 
facility, but does not load or unload cargo.
    \94\ USCG-2017-0711-0013, p. 2.
---------------------------------------------------------------------------

E. Use of Electronic TWIC Inspection at Passenger Facilities and 
Vessels

    Unlike facilities that handle CDC in bulk, the Coast Guard did not 
propose to delay the final rule for any passenger facilities, and based 
upon comments to this rulemaking, is not extending the delay to those 
facilities at this time. We believe that implementing the electronic 
TWIC inspection requirement at passenger facilities and vessels will 
provide improved security benefits for these facilities, which include 
large ferry and cruise terminals that handle 60 plus million passengers 
per year.
    We received only one comment specific to the treatment of passenger 
vessels and facilities, which contained several major arguments. First, 
the commenter argued that passenger facilities that do not receive 
vessels subject to electronic TWIC inspection requirements should also 
be exempt from the requirements, regardless of how many passengers use 
the facility. More specifically, the commenter suggested that 
facilities receiving vessels with less than 20 crewmembers should be 
exempt from the electronic TWIC inspection requirement. Finally, the 
commenter suggested that electronic TWIC inspection does not 
substantially enhance security at passenger facilities.\95\ We address 
each of these arguments below.
---------------------------------------------------------------------------

    \95\ USCG-2017-0711-0009, p. 2.
---------------------------------------------------------------------------

    The commenter raised an issue, also raised in the TWIC Reader 
rulemaking, that facilities that receive vessels be exempted from the 
electronic TWIC inspection requirement due to low numbers of crew. The 
comment noted that vessels with 20 or fewer TWIC-holding crewmembers 
are exempt from the electronic TWIC inspection requirement, but that 
this exemption does not apply to facilities. It stated that, if a Coast 
Guard-approved vessel security plan for a larger ferry designates 
certain portions of the vessel as off-limits to a passenger and 
requires a person to possess a valid TWIC to have unescorted access 
secure areas, the same standard should apply to a terminal that 
receives such a vessel. The commenter asserted that it was an 
``anomaly'' that certain passenger vessels are not required to carry 
and deploy TWIC readers, but a facility that receives such a vessel is 
required to have and use TWIC readers.\96\ We do not believe this is an 
anomaly, and would refer the commenter back to the logic

[[Page 13503]]

underpinning the requirement. In the TWIC final rule, in a section 
entitled, ``The Crewmember Exemption Does Not Apply to Facilities,'' 
\97\ we explained that ``the rationale that justifies an exemption for 
vessels with a low crew count does not transfer to facilities,'' \98\ 
noting that while at sea, few persons board or depart a vessel, while 
persons constantly do so at facilities. We continue to stand by the 
reasoning laid out in that section of the TWIC final rule. The Coast 
Guard also reiterated that the statutory provision in 46 U.S.C. 
70105(m)(1) mandates an exemption from the electronic TWIC inspection 
requirement for vessels with a low crew count, and noted that there was 
no such provision for facilities.
---------------------------------------------------------------------------

    \96\ USCG-2017-0711-0009, p. 2.
    \97\ 81 FR at 57682.
    \98\ 81 FR at 57682.
---------------------------------------------------------------------------

    The commenter also suggested that the value of electronic TWIC 
inspection at passenger facilities is minimal, and that the current 
level of security is adequate. The commenter stated that ``One 
[Passenger Vessel Association] ferry operator subject to the current 
rule reports that its facility security plan designated only the office 
of the facility security officer (FSO) as a secure space and that only 
the FSO works in the office. Under the current rule, there will need to 
be a TWIC reader installed in this space so the FSO can validate his 
own TWIC each time he enters his office.'' \99\ While we cannot speak 
to individual circumstances, we note that the definition of a ``secure 
area'' is, in part, ``the area . . . at a facility over which the 
owner/operator has implemented security measures for access control in 
accordance with a Coast Guard approved security plan. It does not 
include passenger access areas, employee access areas, or public access 
areas.'' \100\ While it is possible that a facility could have no 
access control measures outside of the FSO's office, we note that many 
passenger facilities do contain substantial secure areas.
---------------------------------------------------------------------------

    \99\ USCG-2017-0711-0009, p. 2.
    \100\ See 81 FR at 57671, citing 33 CFR 101.105.
---------------------------------------------------------------------------

    We do agree with the commenter that there are differences in the 
layouts and security profiles of passenger facilities and other Risk 
Group A facilities (that handle CDC in bulk), and note that these 
differences are paramount in the Coast Guard's decision not to delay 
the electronic TWIC inspection for passenger facilities. We stated the 
differences explicitly in the final rule, highlighting the differences 
between chemical cargo facilities where the entire facility may be 
considered a ``secure area'' and facilities that have public access 
areas, like parking lots with TWIC inspection conducted at a secure 
access point would be outside of the public access area.\101\ For 
passenger facilities, the majority of the areas may be designated 
``public access areas,'' ``passenger access areas,'' or ``employee 
access areas'' (such as break rooms). In such an instance, electronic 
TWIC inspection points may only be located at entrances to secure areas 
such as the pier or FSO's office.\102\
---------------------------------------------------------------------------

    \101\ 81 FR at 57671.
    \102\ Id.
---------------------------------------------------------------------------

    While we agree with the commenter that the secure area footprint of 
a passenger facility may be small, we disagree that this constitutes a 
rationale for delaying or eliminating the electronic TWIC inspection 
requirements at passenger facilities. Unlike a facility that handles 
CDC in bulk, where the targets of a potential terrorist attack would be 
located exclusively inside the secure area, at passenger facilities the 
potential target--the passengers themselves--would be almost 
exclusively located outside the area secured by a TWIC, as passengers 
are not escorted, nor do they generally hold TWICs. However, vital 
parts of the facility, including waterside access to the vessel, 
baggage handling and security areas, storage areas for equipment such 
as vessel fuel or cleaning supplies, and administrative offices, are 
all secured by electronic TWIC inspection. These security measures help 
to ensure that access to those targeted areas is restricted to persons 
who have been granted unescorted access to these areas. By implementing 
TWIC inspection for waterside access to the vessel and baggage handling 
and storage area, and the like, the potential for a TSI is decreased. 
For these reasons, the Coast Guard believes it is imperative that we 
begin implementation of this part of the electronic TWIC inspection 
requirement as soon as possible.

F. Miscellaneous Comments

    The Coast Guard received several comments that do not fit into any 
of the above categories. One commenter asked why some Captains of the 
Port (COTPs) are authorized to grant waivers to facilities and some are 
not, as well as under what conditions waivers are authorized.\103\ We 
note that all COTPs are authorized to permit facilities to continue to 
operate in the event of non-compliance pursuant to 33 CFR 105.125, 
which is different than authority to grant waivers. Waivers can be 
authorized under the provisions of 33 CFR 105.130. The regulatory text 
in 33 CFR part 105 contains explanations of noncompliance and waivers 
and when they will be granted. The commenter also asked whether the 
existence of waivers implied that the TWIC delay final rule should 
include all facilities subject to the electronic TWIC inspection. For 
the reasons discussed above, the answer is no.
---------------------------------------------------------------------------

    \103\ USCG-2017-0711-0008.
---------------------------------------------------------------------------

    One commenter stated that the proposed rule does not define ``bulk 
storage.'' \104\ We note that the term ``bulk'' is defined in 33 CFR 
101.105, and we apply the plain meaning to the term ``storage.'' The 
commenter also suggested that, to avoid confusion, the rule should list 
the CDC chemicals, and asked about the treatment of a mixture of 
chemicals listed as CDCs. We agree with the commenter that a list of 
CDCs would be helpful, and to that end, are publishing such a list 
concurrently with this rule, in accordance with 33 CFR 160.202. The 
list is published in the docket and will be maintained in Homeport. 
With regard to ``mixtures,'' we note it could depend on the particular 
chemistry at issue; therefore, we do not have enough information to 
provide an answer.
---------------------------------------------------------------------------

    \104\ USCG-2017-0711-0011.
---------------------------------------------------------------------------

G. Comments on the Regulatory Analysis

    The Coast Guard did not receive any comments on the costs and 
benefits associated with delaying the implementation of the TWIC Reader 
final rule. However, we received several comments regarding the costs 
and benefits associated with the requirement for electronic TWIC 
inspection, as published in the 2016 TWIC Reader final rule RA.\105\ As 
the 2016 TWIC Reader final rule RA is the main data source for the RA 
published in the TWIC Delay NPRM, we address these comments below.
---------------------------------------------------------------------------

    \105\ USCG-2007-28915-0231.
---------------------------------------------------------------------------

1. Comments on the Total Cost of the TWIC Reader Rule
    One commenter stated that the Coast Guard underestimated the total 
cost of the final TWIC Reader rule, citing the declaration of a Dow 
chemical employee.\106\ The employee estimated the TWIC Reader Rule 
would result in an annual productivity loss resulting from the delay 
time of using the TWIC readers of $3.65 million for one Dow facility, 
and a $10 million cost to all Dow facilities including productivity 
losses, and hardware, infrastructure, installation, and maintenance 
costs. The commenter states that Dow's costs alone are almost half of 
the $22.5 million in

[[Page 13504]]

annualized costs as estimated by the final rule.
---------------------------------------------------------------------------

    \106\ USCG-2017-0711-0006.
---------------------------------------------------------------------------

    The cost estimates provided in the final TWIC Reader rule represent 
the average burden across all facilities subject to that rulemaking, 
and therefore the estimates may not reflect the individual 
circumstances of each facility or firm. In addition, the $10 million 
value provided by the commenter is an annual value and is not 
comparable to the $22.5 million annualized cost estimate provided in 
the final rule. An annualized value accounts for the fact that the 
costs of the rule will differ over time and provides an estimate that 
spreads these costs equally over the analysis period, taking a discount 
rate into account. This value accounts for years where a facility may 
have larger costs associated with implementing the rule due to one time 
or infrequent costs such as purchasing hardware, installation, and 
infrastructure costs, as well as years where the facility will have 
much smaller ongoing costs. During the first two years of the cost 
analysis, the Coast Guard accounted for these large onetime costs and 
estimated a much larger total annual cost of approximately $56 million 
per year. The $10 million value provided by the commenter includes 
onetime costs such as hardware and, therefore, is not directly 
comparable to the $22.5 million annualized cost estimate, which smooths 
these costs over time.
    Furthermore, we note that the majority of the measured costs the 
commenter cites are operational losses due to ``average daily loss in 
productivity of $10,000 per day.'' The TWIC Reader rule provided 
facility operators flexibility with regard to the purchase, 
installation, and use of electronic readers, allowing facilities to 
adjust their operations to reduce large delay times. The RA for the 
TWIC Reader rule accounted for the fact that some facilities may have 
to make modifications to business operations to accommodate electronic 
TWIC inspection requirements, such as increasing the number of access 
points for vehicles. Thus, we believe most facilities would be able to 
adjust their operations to ensure the most efficient use of the readers 
rather than incurring large delay costs.
2. Comments on the Economic Impact of the Rules
    We received one comment on the potential ``significant economic 
impact'' of the TWIC Reader rule.\107\ The commenter believes the TWIC 
Reader rule will disrupt the efficient transportation of goods, which, 
in turn, may result in ``very high economic costs.'' As evidence, the 
commenter provided information on the contribution of Louisiana's oil 
and gas and chemical sectors to the Gross Domestic Product (GDP), 
employment numbers, and household earnings, information on the amount 
of cargo shipped through ports located in Louisiana, as well as 
information on the tank truck industry. The commenter also asserts that 
the Coast Guard did not regulate container facilities not otherwise 
categorized in Risk Group A because of the ``significant levels'' of 
''delay costs,'' and states this is evidence of the high economic costs 
of transportation delays.
---------------------------------------------------------------------------

    \107\ USCG-2017-0711-0006.
---------------------------------------------------------------------------

    While the economic data presented by the commenter provides 
information on the oil and gas industry in Louisiana and on the tank 
truck industry, it does not provide any information on how the TWIC 
Reader rule may impact these industries, or the cost of the TWIC Reader 
rule to these industries. We do note the commenter provides context to 
the enormous importance of securing these facilities from terrorist 
attack, given their large role in the local, as well as national, 
economy.
    Further, the Coast Guard disagrees that we did not regulate 
container facilities that would not otherwise be categorized in Risk 
Group A because of significant delay costs associated with the TWIC 
Reader rule, and this is evidence of the high economic costs of delays. 
Rather, the Coast Guard did not regulate these container facilities 
because, upon review, we found that many of the high-risk threat 
scenarios at container facilities would not be mitigated by electronic 
TWIC inspection. Therefore, the costs of electronic TWIC inspection for 
container facilities not in Risk Group A would not be justified by the 
amount of potential risk reduction at these facilities. This is keeping 
with the requirements of Executive Order 12866, which directs agencies 
to select approaches which maximize the net benefits to society.
3. Comments on the Use of the TWIC Pilot Program Data
    The Coast Guard received two comments on the 2016 RA's use of cost 
information from the TWIC Reader pilot program.\108\ One commenter 
stated that the data from the TWIC Pilot Program is too out-of-date to 
be used, and that the pilot program failed to accurately evaluate delay 
times associated with the 2016 TWIC Reader rule. Both commenters cite 
the May 2013 GAO report ``Transportation Worker Identification 
Credential: Card Reader Pilot Results Are Unreliable; Security Benefits 
Need to Be Reassessed,'' (GAO-13-198) as evidence the pilot data is 
inaccurate, and believe the Coast Guard's reliance on this data 
contravenes the GAO's findings. Issues with the pilot data were also 
raised in the HSOAC assessment. The assessment stated that the use of 
the pilot study data in generating the 2015 regulatory analysis was 
flawed in that it made faulty assumptions of the number of readers 
required at facilities.\109\
---------------------------------------------------------------------------

    \108\ USCG-2017-0711-0006; USCG-2017-0711-0007.
    \109\ HSOAC report at 128.
---------------------------------------------------------------------------

    While the Coast Guard acknowledges there were many challenges in 
the implementation of the TWIC reader pilot program, we believe the 
considerable data obtained were of sufficient quantity and quality to 
support the general findings and conclusions of the TWIC reader Pilot 
Report. The pilot program obtained sufficient data to evaluate TWIC 
reader performance and assess the impact of using TWIC readers at 
maritime facilities. Furthermore, the Coast Guard supplemented the 
information from the TWIC Pilot Program with other sources of 
information. For example, in the 2016 RA, the Coast Guard estimated the 
number of access points per facility type through the use of an 
independent data source (Facility Security Plans), and estimated the 
costs of TWIC readers through published pricing information. The Coast 
Guard did not use this data from the pilot program for the exact 
reasons the commenters suggest.
4. Comments on Collecting New Cost Data
    One commenter stated that the TWIC Delay NPRM gave no indication 
the Coast Guard would use the three-year delay period to gather new 
economic data, and thus any economic analysis supporting future rule 
makings would be based on the same ``faulty'' cost data as the previous 
rulemakings.\110\
---------------------------------------------------------------------------

    \110\ USCG-2017-0711-0007.
---------------------------------------------------------------------------

    While the Coast Guard did not explicitly state it would gather new 
cost information to support future rulemaking efforts, that does not 
mean we would not gather additional cost information to support future 
rulemakings. If the Coast Guard chooses to implement a new rulemaking, 
the supporting RA would use the best reasonably available economic 
information, as required by OMB circular A-4. Depending on the

[[Page 13505]]

information available, this cost data may or may not be new.

H. Conclusion

    Based on the concerns of commenters regarding implementation 
problems, particularly involving confusion regarding the final rule and 
delay NPRM, delays in undertaking compliance action, and difficulty 
acquiring equipment, a delay for all facilities that handle CDC in bulk 
represents the best path forward. In doing so, we can give facilities 
that handle CDC in bulk additional time to acquire and install 
equipment, train personnel, make operational adjustments, and update 
FSPs to account for use of electronic TWIC inspection in areas that 
contain bulk CDC. We also note that, as described in this document and 
in the TWIC Delay NPRM, we are studying the distribution of bulk CDC at 
MTSA-regulated facilities, with the goals of determining the exact 
population of affected facilities and the properties of the particular 
chemicals stored at these facilities. We believe that delaying the 
implementation of the rule for facilities that handle CDC in bulk will 
allow those facilities to reduce costs by providing adequate time to 
implement the requirements under conditions of more regulatory 
certainty and equipment availability. We also believe that the 
implementation of electronic TWIC inspection requirements at passenger 
facilities, and for the one large passenger vessel, will provide 
immediate security benefits at those facilities and vessel in 
protecting vital parts of the facility from potential TSI. Overall, we 
estimate that this policy implements the electronic TWIC inspection 
requirement at 155 facilities, primarily cruise and large ferry 
terminals that handle 60 plus million passengers per year and 1 vessel, 
in furtherance of enhanced security measures to protect passengers and 
the public. In order to comply with this immediate security need, 
facilities and vessels will have 60 days to implement the TWIC reader 
requirement. It also provides the Coast Guard time to analyze the 
suggestions and comments relating to the TWIC program provided in the 
assessment, and determine what modifications should be made during the 
delay period.

V. Regulatory Analysis

    This final rule will delay implementation of the TWIC Reader rule 
for 3 years for all facilities that handle CDC in bulk, which are 
comprised of three types of Risk Group A facilities: (1) Facilities 
that handle certain dangerous cargoes in bulk, but do not transfer 
these cargoes to or from a vessel; (2) facilities that handle certain 
dangerous cargoes in bulk, and do transfer these cargoes to or from a 
vessel; and (3) facilities that receive vessels carrying certain 
dangerous cargoes in bulk, but do not, during that vessel-to-facility 
interface, transfer these bulk cargoes to or from those vessels. This 
rule will delay the implementation of the TWIC Reader rule for 370 of 
the 525 affected Risk Group A facilities. The remaining 155 facilities 
(which are all facilities that receive large passenger vessels), and 1 
vessel will have to implement the requirements of the TWIC reader rule 
by June 8, 2020.
    Below, we provide an updated regulatory analysis of the TWIC Reader 
rule that presents the impacts of delaying the effective date of the 
TWIC Reader rule for the three types of Risk Group A facilities defined 
in the preceding paragraph. We developed this rule after considering 
numerous statutes and Executive orders related to rulemaking. Below we 
summarize our analyses based on these statutes or Executive orders.
    For this updated analysis, we estimated the impact of delaying the 
TWIC Reader rule by calculating the 10-year cost of this final rule, 
where only certain facilities will incur costs starting in Years 1 and 
2 and other facilities will incur no costs in the first 2 years, and 
compare it to the 10-year cost presented in the RA for the TWIC Reader 
rule.\111\ We then calculated the difference between the two costs to 
estimate the impact of this final rule. To properly compare the costs 
and benefits of this final rule and the TWIC reader rule, we first 
updated the costs of the TWIC Reader rule from 2012 dollars to 2016 
dollars.
---------------------------------------------------------------------------

    \111\ At the time of analysis, the Coast Guard did not have a 
final draft HSOAC assessment, and therefore we did not incorporate 
any cost estimates from that report into our analysis, as we were 
unable to review or validate those cost estimates for our RA. 
Further, as the HSOAC assessment was published after the publication 
of the NPRM, the public would not have had the opportunity to review 
and comment on those cost estimates. However, we did make 
modifications to the RA to address the mathematical errors from the 
2016 RA as identified in the HSOAC assessment. These errors affected 
estimates of the average number of readers per access point, and the 
average installation and infrastructure cost per reader at 
facilities.
---------------------------------------------------------------------------

A. Regulatory Planning and Review

    Executive Orders 12866 (Regulatory Planning and Review) and 13563 
(Improving Regulation and Regulatory Review) direct agencies to assess 
the costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. Executive Order 13771 (Reducing Regulation and Controlling 
Regulatory Costs) directs agencies to reduce regulation and control 
regulatory costs and provides that ``for every one new regulation 
issued, at least two prior regulations be identified for elimination, 
and that the cost of planned regulations be prudently managed and 
controlled through a budgeting process.''
    This rule is a significant regulatory action under section 3(f) of 
Executive Order 12866. The Office of Management and Budget has reviewed 
it under that Order. It requires an assessment of potential costs and 
benefits under section 6(a)(3) of Executive Order 12866. DHS considers 
this rule to be an Executive Order 13771 deregulatory action. See the 
OMB Memorandum titled ``Guidance Implementing Executive Order 13771, 
titled `Reducing Regulation and Controlling Regulatory Costs''' (April 
5, 2017). Details on the estimated cost savings of this rule can be 
found in the rule's regulatory analysis (RA) that follows.

[[Page 13506]]

    We have determined that this final rule does not have an annual 
effect on the economy of $100 million or more. This rule is an 
``other'' significant regulatory action under Executive Order 12866, 
because of its impact on industry.\112\ Therefore, in accordance with 
OMB Circular A-4, we have prepared an accounting statement showing the 
classification of impacts associated with this final rule.\113\
---------------------------------------------------------------------------

    \112\ Under Executive Order 12866 economically significant 
regulatory action means any regulatory action that is likely to have 
an annual effect on the economy of $100 million or more, or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities. The Office of Information and Regulatory Affairs (OIRA) 
may deem other regulatory actions significant if that action is 
likely to (1) Create a serious inconsistency or otherwise interfere 
with an action taken or planned by another agency; (2) Materially 
alter the budgetary impact of entitlements, grants, user fees, or 
loan programs or the rights and obligations of recipients thereof; 
or (3) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
Executive Order 12866.
    \113\ https://www.whitehouse.gov/sites/whitehouse.gov/files/omb/circulars/A4/a-4.pdf.

                                        Table 1--OMB A-4 Accounting Statement 2019-2029 Period of Analysis--2016$
--------------------------------------------------------------------------------------------------------------------------------------------------------
 
--------------------------------------------------------------------------------------------------------------------------------------------------------
Category                                 Primary estimate
                                         Minimum estimate
                                           High estimate            Source............
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized monetized benefits   None..............              7%  None..............              7%  None..............              7%  RA.
 ($ Mil).
                                None..............              3%  None..............              3%  None..............              3%
                               ------------------------------------------------------------------------------------------------------------
Annualized quantified, but                                                         None                                                     RA.
 unmonetized, benefits.
                               ------------------------------------------------------------------------------------------------------------
Unquantifiable Benefits.......    For facilities with a delayed compliance, final rule will postpone the enhanced benefits of electronic    RA.
                                                                              TWIC inspection.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Cost Savings
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized monetized cost       $3,380,017........              7%  ..................              7%  ..................              7%  RA.
 savings ($ Mil).
                                $2,144,017........              3%  ..................              3%  ..................              3%  RA.
                               ------------------------------------------------------------------------------------------------------------
Annualized quantified, but                                                         None                                                     RA.
 unmonetized, cost savings.
                               ------------------------------------------------------------------------------------------------------------
Qualitative (un-quantified)      The final rule will delay the cost to retrieve or replace lost PINs for use with TWICs for the facilities  RA.
 cost savings.                                                          with delayed implementation.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Transfers
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annualized monetized..........            Not calculated
                                          Not calculated
                                          Not calculated            RA................
                               ------------------------------------------------------------------------------------------------------------
From whom to whom?............                                                                                                              RA.
                               ------------------------------------------------------------------------------------------------------------
Annualized monetized                           None
 transfers: ``off-budget''.
                                               None
                                               None
From whom to whom?............                 None
                                               None
                                               None
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Miscellaneous Analyses/Category
--------------------------------------------------------------------------------------------------------------------------------------------------------
Effects on State, local, and/                  None
 or tribal governments.
                                               None
                                               None
                               ------------------------------------------------------------------------------------------------------------
Effects on small businesses...            Will not have a significant economic impact on a substantial number of small entities.            RA.
                               ------------------------------------------------------------------------------------------------------------
Effects on wages..............                 None
                                               None
                                               None                 ..................
                               ------------------------------------------------------------------------------------------------------------
Effects on growth.............           No determination
                                         No determination
                                         No determination
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Because this final rule does not modify any of the regulatory 
requirements in the TWIC Reader rule but, rather, delays the 
implementation of that 2016 final rule for some facilities, we did not 
revise our fundamental methodologies or key assumptions from the 2016 
TWIC Reader final rule RA.\114\
---------------------------------------------------------------------------

    \114\ USCG-2007-28915-0231.
---------------------------------------------------------------------------

    Table 2 summarizes the changes to the RA between the TWIC Delay 
NPRM and this final rule. In this final rule, the Coast Guard modified 
the population of facilities that will delay the implementation of the 
TWIC reader rule, to include all facilities that handle CDC in bulk. In 
addition, we fixed mathematical errors from the 2016 TWIC Reader rule 
which impacted the estimated average number of readers per access 
point, and the average installation and infrastructure costs for 
facilities. Although we have updated our analysis from the NPRM to 
reflect these changes, this did not modify the methodology of our RA.

[[Page 13507]]

             Table 2--Summary of Changes From the TWIC Delay Rule NPRM to TWIC Delay Rule Final Rule
----------------------------------------------------------------------------------------------------------------
       Element of the analysis                   NPRM                  Final Rule         Resulting change in RA
----------------------------------------------------------------------------------------------------------------
Affected Population..................  122 facilities that      370 facilities that      Increases estimated
                                        handle bulk CDC, but     handle bulk CDC, and     cost savings, as
                                        do not transfer it to    an unknown number of     implementation costs
                                        or from a vessel, and    facilities that          will be delayed for
                                        an unknown number of     receive vessels          more facilities.
                                        facilities that          carrying bulk CDC but,
                                        receive vessels          during that vessel-to-
                                        carrying bulk CDC but,   facility interface, do
                                        during that vessel-to-   not transfer bulk CDC
                                        facility interface, do   to or from the vessel.
                                        not transfer bulk CDC
                                        to or from the vessel.
Errors in TWIC Cost Calculations.....  Cost estimates are       The revised cost model   Increases estimated
                                        based on data from the   calibrated the           compliance costs for
                                        2016 TWIC Final Reader   methodology for          facilities, resulting
                                        Rule, which              estimating the number    in a total annualized
                                        incorrectly calculated   of readers. This         cost increase of
                                        the average number of    change yielded more      approximately $4
                                        readers per access       accurate compliance      million (with a 7%
                                        point for facilities,    costs for facilities.    discount rate).
                                        and the average
                                        installation and
                                        average infrastructure
                                        cost per reader for
                                        facilities. These
                                        errors did not impact
                                        the estimated costs
                                        for vessels.
----------------------------------------------------------------------------------------------------------------

    In the 2016 TWIC Reader final rule RA, we estimated that 525 
facilities and 1 vessel out of the MTSA-regulated entities (13,825 
vessels and more than 3,270 facilities) will have to comply with the 
final rule's electronic TWIC inspection requirements using MSRAM's 
risk-based tiered approach.\115\ This rule will delay the 
implementation of the TWIC reader rule for 370 of the 525 affected Risk 
Group A facilities by 3 years, while the remaining 155 facilities 
(which are all facilities that receive large passenger vessels), and 1 
vessel will have to implement the requirements of the TWIC Reader rule 
by June 8, 2020. The results reflect that 370 facilities out of the 525 
facilities either handle certain dangerous cargoes in bulk but do not 
transfer these cargoes to or from a vessel, or handle certain dangerous 
cargoes in bulk and do transfer these cargoes to or from a vessel. This 
final rule will also apply to facilities that receive vessels carrying 
bulk CDC but, during the vessel-to-facility interface, do not transfer 
the bulk CDC to or from the vessel. We did not include these facilities 
in our MSRAM risk analysis or RA for the TWIC Reader rule, or in this 
final rule's RA because we are unable to determine the number of these 
facilities at this time.
---------------------------------------------------------------------------

    \115\ See Table 2.8 on page 26 of the TWIC Reader final rule RA 
for the estimate of 525 facilities, and Table 2.1 on page 23 for the 
estimate of 1 vessel.
---------------------------------------------------------------------------

    2016 TWIC Reader rule cost estimates from 2012 dollars to 2016 
dollars based on Gross Domestic Product (GDP) Deflator data from the 
U.S. Bureau of Economic Analysis (BEA).\116\ The GDP deflator is a 
measure of the change in price of domestic goods and services purchased 
by consumers, businesses, and the government.
---------------------------------------------------------------------------

    \116\ For consistency across rulemaking analyses, we are using 
the annual Implicit Price Deflators for Gross Domestic Product (BEA 
National Income and Product Accounts (NIPA) Table 1.1.9) values 
updated in March 30, 2017 Available for download at https://apps.bea.gov/histdata/fileStructDisplay.cfm?HMI=7&DY=2016&DQ=Q4&DV=Third&dNRD=March-30-2017 under Section 1 (the BEA only has historical data available for 
download, Accessed March 15, 2019).
---------------------------------------------------------------------------

    Table 3 summarizes the costs and benefits of the 2016 TWIC Reader 
final rule as well as this rule. We do not anticipate any new costs to 
industry as a result of implementing this final rule, because it will 
not change the applicability of the 2016 final rule or result in any 
other changes to the TWIC Reader rule. The impact to the one affected 
vessel, along with the qualitative costs and benefits, remain the same. 
Because this rule will delay the implementation of the TWIC Reader rule 
by 3 years for 370 facilities, it will result in cost savings to both 
industry and the government of $23.74 million (discounted at 7 percent) 
over a 10-year period of analysis ($191.81 million minus $168.07 
million). As stated above, we used the same 10-year period of analysis 
in order to be able to properly compare the costs of this final rule 
and the TWIC Reader rule, which estimated the costs and benefits over a 
10-year period. At a 7-percent discount rate, we estimate the total 
annualized cost savings to be $3.38 million ($27.29 million - $23.92 
million), and $2.14 million ($25.18 million -$23.04 million). Using a 
perpetual period of analysis, and 2019 as the first year of analysis, 
we estimated the total annualized cost savings of this rule to be $1.53 
million in 2016 dollars, discounting back to 2016 dollars.

  Table 3--Summary of Costs Savings and Change in Benefits: 2016 Final
 TWIC Reader Rule (81 FR 57652) and Final Rule To Delay the TWIC Reader
                                  Rule
------------------------------------------------------------------------
                                                     Final rule to delay
          Category              2016 TWIC reader    the TWIC reader rule
                                  rule (2016 $)           (2016 $)
------------------------------------------------------------------------
Applicability...............  High-risk MTSA-       Same as in the TWIC
                               regulated             Reader rule except
                               facilities and high-  the facilities and
                               risk MTSA-regulated   vessels handling
                               vessels with          bulk CDC, but not
                               greater than 20       transferring it to
                               TWIC-holding crew.    or from the vessel.
Affected Population.........  1 vessel............  No change from the
                                                     TWIC Reader rule.

[[Page 13508]]

 
                              525 facilities (to    370 facilities that
                               comply by Aug. 23,    handle bulk CDC (to
                               2018).                comply by May 8,
                               370           2023). The rule
                               facilities that       will also apply to
                               handle bulk CDC..     facilities that
                               155           receive vessels
                               facilities that       carrying bulk CDC
                               handle passenger      but, during that
                               vessels..             vessel-to-facility
                                                     interface, do not
                                                     transfer bulk CDC
                                                     to or from the
                                                     vessel. However,
                                                     the number of these
                                                     facilities cannot
                                                     be determined at
                                                     this time and will
                                                     not be known until
                                                     after an additional
                                                     study is conducted
                                                     to improve the risk
                                                     methodology and
                                                     determine the new
                                                     risk groups.
Costs to Industry and         Industry: $27.29      Industry: $23.92
 Government ($ millions, 7%    (annualized) *.       (annualized).
 discount rate) *.            Government: $0.014    Government: $0.013
                               (annualized) *.       (annualized).
                              Combined: $27.31      Combined: $23.93
                               (annualized) *.       (annualized).
                              Industry: $191.71     Industry: $167.98
                               (10-year) *.          (10-year).
                              Government: $0.097    Government: $0.088
                               (10-year) *.          (10-year).
                              Combined: $191.81     Combined: $168.07
                               (10-year) *.          (10-year).
Costs Savings to Industry     N/A.................  Industry: $3.38
 and Government ($ millions,                         (annualized).
 7% discount rate) *.                               Government: $0.001
                                                     (annualized).
                                                    Total: $3.38
                                                     (annualized).
                              N/A.................  Industry: $23.73 (10-
                                                     year).
                                                    Government: $0.01
                                                     (10-year).
                                                    Total: $23.74 (10-
                                                     year).
Change in Costs               Time to retrieve or   The rule will delay
 (Qualitative).                replace lost PINs     the cost to
                               for use with TWICs.   retrieve or replace
                                                     lost PINs for use
                                                     with TWICs for the
                                                     facilities with
                                                     delayed
                                                     implementation.
Change in Benefits            Enhanced access       Delaying enhanced
 (Qualitative).                control and           access control and
                               security at U.S.      security for the
                               maritime facilities   facilities with
                               and on board U.S.-    delayed
                               flagged vessels.      implementation.
                              Reduction of human    Delaying the
                               error when checking   reduction of human
                               identification and    error when checking
                               manning access        identification and
                               points.               manning access
                                                     points for the
                                                     facilities with
                                                     delayed
                                                     implementation.
------------------------------------------------------------------------
* Note: These are the final costs to industry and government after
  fixing mathematical errors in 2016 TWIC Final Reader Rule, which
  incorrectly calculated the average number of readers per access point
  for facilities, and the average installation and infrastructure cost
  per reader for facilities, and then inflating the costs to 2016
  dollars.
N/A = Not applicable.

Methodology
TWIC Reader Rule Costs Inflated to 2016 dollars
    As shown in table 3, after adjusting the annualized cost from the 
2016 TWIC Reader rule from 2012 dollars to 2016 dollars (over a 10-year 
period) and fixing the mathematical errors in 2016 TWIC Reader rule RA, 
the annualized cost of the 2016 TWIC Reader rule is approximately 
$27.29 million at a 7-percent discount rate.\117\ We performed this 
update to compare them to this final rule's total industry costs on the 
same basis. We also modified the 2016 final rule cost estimates to fix 
mathematical errors identified in the TWIC effectiveness assessment, 
which affected estimates of the average number of readers per access 
point, and the average installation and infrastructure cost per reader 
at facilities. These errors impact the capital and maintenance cost 
estimates for facilities, and we identified them after the publication 
of the NPRM, and after fixing the mathematical errors in the 2016 TWIC 
Reader rule RA, the annualized total cost increased by $4.12 million to 
$27.29 million (in 2016$ with a 7-percent discount rate). These errors, 
however, did not impact the estimated costs for vessels.\118\
---------------------------------------------------------------------------

    \117\ The published annualized cost in the 2016 TWIC Reader rule 
RA was $21.9 million (in 2012 dollars with a 7-percent discount 
rate), and after adjusting for inflation this number is $23.3 
million (in 2016 dollars with a 7-percent discount rate). https://www.federalregister.gov/documents/2016/08/23/2016-19383/transportation-worker-identification-credential-twic-reader-requirements, page 57700.
    \118\ U.S. Bureau of Economic Analysis, ``Table 1.1.9 Implicit 
Price Deflators for Gross Domestic Product,'' published March 30, 
2017,vailable at https://apps.bea.gov/histdata/fileStructDisplay.cfm?HMI=7&DY=2016&DQ=Q4&DV=Third&dNRD=March-30-2017 under Section 1 (the BEA has only historical data available for 
download). Accessed March 15, 2019.
---------------------------------------------------------------------------

    We used an inflation factor derived from the GDP deflator data. We 
calculated the inflation factor of 1.059 by dividing the annual 2016 
index number (111.445) by the annual 2012 index number (105.214).
    We then applied this inflation factor to the costs for vessels and 
additional costs, which include additional delay costs, travel costs, 
and the cost to replace TWIC readers that fail (table 4.38 of the TWIC 
Reader final rule RA).\119\ Table 4 presents these inflated costs.
---------------------------------------------------------------------------

    \119\ Additional delay costs account for delays resulting from 
the use of an invalid and/or broken TWIC card.

[[Page 13509]]

 Table 4--Comparison of Total Cost for Vessels and Additional Costs in 2012 Dollars and 2016 Dollars Under 2016
                                                TWIC Reader Rule
                                                   [Millions]
----------------------------------------------------------------------------------------------------------------
                                                              Vessel                     Additional costs
                      Year                       ---------------------------------------------------------------
                                                      2012 $          2016 $          2012 $          2016 $
----------------------------------------------------------------------------------------------------------------
1...............................................          0.0210          0.0222            4.21            4.46
2...............................................          0.0036          0.0038            4.21            4.46
3...............................................          0.0036          0.0038            4.21            4.46
4...............................................          0.0036          0.0038            4.21            4.46
5...............................................          0.0036          0.0038            4.21            4.46
6...............................................          0.0177          0.0187            4.21            4.46
7...............................................          0.0036          0.0038            4.21            4.46
8...............................................          0.0036          0.0038            4.21            4.46
9...............................................          0.0036          0.0038            4.21            4.46
10..............................................          0.0036          0.0038            4.21            4.46
                                                 ---------------------------------------------------------------
    Total.......................................          0.0677          0.0717           42.10           44.59
----------------------------------------------------------------------------------------------------------------
Totals may not sum due to rounding.

    For facilities, we applied this inflation factor to capital, 
maintenance, and operational costs because the final rule will apply 
only to these cost elements. Capital costs consist of the cost to 
purchase and install TWIC readers, as well as the cost to fully replace 
TWIC readers 5 years after the original installation. Maintenance costs 
account for the costs to maintain TWIC readers every year after the 
original installation. Operational costs include costs that occur only 
at the time of the TWIC reader installation and initial training. 
Operational costs also include ongoing costs, such as those for keeping 
and maintaining records, downloading the canceled card list, and 
ongoing annual training. We also modified the 2016 final rule cost 
estimates to correct errors in the calculations of the average number 
of readers per access point, the average installation cost per reader, 
and the average infrastructure cost per reader. We used these values to 
calculate capital and maintenance costs, and by correcting these errors 
the annualized total capital and maintenance costs increased by 
approximately $4.11 million and 0.01 million respectively (in 2016 $ 
with a 7-percent discount rate). Table 5 presents a comparison of these 
facility costs before and after our corrections, as well as a 
comparison of the costs in 2012 and 2016 dollars, and an estimate of 
the total number of facilities complying with the regulation each year.

                                                              Table 5--Comparison of Total Cost for Facilities in 2012 Dollars and 2016 Dollars Under 2016 TWIC Reader Rule
                                                                                                               [Millions]
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Capital costs                       Maintenance costs               Operational costs *               Undiscounted total
                                                                                         -----------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Number  of     Total                       2012$--                               2012$--                                        2012$--published   2012$--
                              Year                                    new      number of  2012$--published    fixed             2012$--published    fixed             2012$--published             in  2016 final     fixed
                                                                  facilities  facilities   in  2016 final     math      2016$    in  2016 final     math      2016$    in  2016 final     2016$     TWIC  rule RA      math      2016$
                                                                                            TWIC  rule RA    errors               TWIC  rule RA    errors               TWIC  rule RA                   \120\         errors
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................................         263         263          $49.49      $64.51    $68.31           $0.00       $0.00     $0.00           $1.99       $2.10          $51.47       $66.49     $70.42
2...............................................................         262         525           49.49       64.51     68.31            0.99        0.99      1.05            2.16        2.29           52.64        67.66      71.66
3...............................................................           0         525            0.00        0.00      0.00            1.97        1.99      2.11            1.34        1.42            3.31         3.33       3.52
4...............................................................           0         525            0.00        0.00      0.00            1.97        1.99      2.11            1.34        1.42            3.31         3.33       3.52
5...............................................................           0         525            0.00        0.00      0.00            1.97        1.99      2.11            1.34        1.42            3.31         3.33       3.52
6...............................................................           0         525            9.87        9.94     10.53            1.97        1.99      2.11            1.34        1.42           13.18        13.27      14.05
7...............................................................           0         525            9.87        9.94     10.53            1.97        1.99      2.11            1.34        1.42           13.18        13.27      14.05
8...............................................................           0         525            0.00        0.00      0.00            1.97        1.99      2.11            1.34        1.42            3.31         3.33       3.52
9...............................................................           0         525            0.00        0.00      0.00            1.97        1.99      2.11            1.34        1.42            3.31         3.33       3.52
10..............................................................           0         525            0.00        0.00      0.00            1.97        1.99      2.11            1.34        1.42            3.31         3.33       3.52
                                                                                         -----------------------------------------------------------------------------------------------------------------------------------------------
    Total...............................................................................          118.71      148.90    157.69           16.78       16.90     17.90           14.84       15.72          150.33       180.65     191.31
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Totals may not sum due to rounding.
* The math errors in the 2016 RA did not impact operational costs, so they did not need to be adjusted.

    Table 6 summarizes the total costs to industry of the 2016 TWIC 
Reader rule in 2016 dollars. We estimated the annualized cost to be 
$27.29 million at a 7-percent discount rate.
---------------------------------------------------------------------------

    \120\ Transportation Worker Identification Credential (TWIC) 
Reader Requirements, 2016: https://www.federalregister.gov/documents/2016/08/23/2016-19383/transportation-worker-identification-credential-twic-reader-requirements, at 57700.

[[Page 13510]]

                                                Table 6--Total Industry Cost Under 2016 TWIC Reader Rule
                                                                [Millions, 2016 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Additional
                          Year                               Facility         Vessel          costs *      Undiscounted         7%              3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................          $70.42           $0.02           $4.46          $74.90          $70.00          $72.72
2.......................................................           71.66            0.00            4.46           76.12           66.48           71.75
3.......................................................            3.52            0.00            4.46            7.98            6.52            7.31
4.......................................................            3.52            0.00            4.46            7.98            6.09            7.09
5.......................................................            3.52            0.00            4.46            7.98            5.69            6.89
6.......................................................           14.05            0.02            4.46           18.53           12.35           15.52
7.......................................................           14.05            0.00            4.46           18.51           11.53           15.05
8.......................................................            3.52            0.00            4.46            7.98            4.65            6.30
9.......................................................            3.52            0.00            4.46            7.98            4.34            6.12
10......................................................            3.51            0.00            4.46            7.98            4.06            5.94
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................          191.29            0.07           44.59          235.96          191.71          214.69
                                                         -----------------------------------------------------------------------------------------------
        Annualized......................................  ..............  ..............  ..............  ..............           27.29           25.17
--------------------------------------------------------------------------------------------------------------------------------------------------------
* These costs include additional delay, travel, and TWIC replacement costs due to TWIC failures.
Invalid electronic TWIC inspection transaction would lead to the use of a secondary processing operation, such as a visual TWIC inspection, additional
  identification validation, or other provisions as set forth in the FSP. Such actions cause delays. Furthermore, the use of TWIC readers will also
  increase the likelihood of faulty TWICs (TWICs that are not machine readable) being identified and the need for secondary screening procedures so
  affected workers and operators can address these issues. If a TWIC holder's card is faulty and cannot be read, the TWIC-holder would need to travel to
  a TWIC Enrollment Center to get a replacement TWIC, which may result in additional travel and replacement costs. Totals may not sum due to rounding.

Final Rule Costs
    This rule will delay the effective date of the TWIC Reader rule by 
3 years for 370 facilities that handle bulk CDC and an unestimated 
number of facilities that receive vessels carrying bulk CDC, but do not 
transfer it to or from the vessel during that vessel-to-facility 
interface. For analytical purposes, we maintain the assumption from the 
2016 TWIC Reader rule RA that 50 percent of facilities will comply each 
year of the implementation period. Therefore, for this rule we assume 
that 50 percent of facilities with a 3-year implementation delay will 
comply in year 3, and 50 percent of facilities with a 3-year 
implementation delay will comply in year 4. We maintain this assumption 
to provide a consistent comparison between the baseline cost estimates 
presented in the TWIC Reader rule, and the costs of this rule.
    The costs are separated into three categories: Capital costs, 
maintenance costs, and operating costs. To estimate the capital costs 
in a given year, we multiplied the total baseline capital costs for all 
facilities by the percentage of facilities incurring costs in a given 
year. We calculated the total initial baseline capital costs for TWIC 
installation for all facilities by adding the baseline capital costs 
presented in table 5 for years 1 and 2 ($68.31 million + $68.31 million 
= $136.63 million). We calculated the total baseline capital costs for 
replacing TWIC readers 5 years after the original installation by 
adding the baseline capital costs presented in table 5 for years 6 and 
7 ($10.53 million + $10.53 million = $21.06 million). We then 
multiplied these numbers by the percentage of facilities incurring the 
cost in a given year. For example, in year 1, a total of 78 facilities 
are expected to incur capital costs, for a total industry cost of 
$20.30 million ($136.63 million x (78 facilities / 525 facilities)). 
Table 7 presents annual capital costs for all years.

   Table 7--Capital Costs for Facilities of Partially Delaying the Effective Date of the 2016 TWIC Reader Rule
                                             [Millions 2016 dollars]
----------------------------------------------------------------------------------------------------------------
                                                               Number of     Total number
                                            Total baseline    facilities     of facilities
                   Year                      capital costs   with capital   subject to the   Annual capital cost
                                                                 costs           rule
                                                       (a)             (b)             (c)    (d) = (a) x [(b) /
                                                                                                            (c)]
----------------------------------------------------------------------------------------------------------------
1.........................................         $136.63              78             525                $20.30
2.........................................          136.63              77             525                 20.04
3.........................................          136.63             185             525                 48.14
4.........................................          136.63             185             525                 48.14
5.........................................          136.63               0             525                  0.00
6.........................................           21.06              78             525                  3.13
7.........................................           21.06              77             525                  3.09
8.........................................           21.06             185             525                  7.42
9.........................................           21.06             185             525                  7.42
10........................................           21.06               0             525                  0.00
                                           ---------------------------------------------------------------------
    Total.................................  ..............  ..............  ..............                157.69
----------------------------------------------------------------------------------------------------------------
Note: Totals may not sum due to rounding.

[[Page 13511]]

    Because maintenance costs are not incurred until the year after the 
TWIC readers are installed, we calculated the maintenance costs in a 
given year by multiplying the total baseline costs for all facilities 
by the percentage of facilities complying in the previous year. The 
total initial baseline maintenance costs for TWIC readers, $2.11 
million, is found in year 3 of table 5 as this is the first year that 
all facilities will incur maintenance costs under the baseline. To 
estimate maintenance costs, we multiplied the percentage of facilities 
incurring the cost in a given year by the total costs. Because 
maintenance costs are not incurred until the year after the TWIC reader 
is installed, the total number of facilities incurring the cost is 
equal to the total number of complying facilities in the previous year. 
For example, we calculated Year 2 costs as follows: $2.11 million x (78 
facilities / 525 facilities) = $0.31 million. Table 8 presents annual 
maintenance costs for all years.

Table 8--Total Maintenance Costs for Facilities of Partially Delaying the Effective Date of the 2016 TWIC Reader
                                                      Rule
                                             [Millions 2016 dollars]
----------------------------------------------------------------------------------------------------------------
                                                               Number of
                                            Total baseline    facilities     Total number
                   Year                       maintenance        with        of facilities   Annual maintenance
                                                 costs        maintenance   subject to the          cost
                                                                 costs           rule
                                                       (a)             (b)             (c)    (d) = (a) x [(b) /
                                                                                                            (c)]
----------------------------------------------------------------------------------------------------------------
1.........................................           $2.11               0             525                 $0.00
2.........................................            2.11              78             525                  0.31
3.........................................            2.11             155             525                  0.62
4.........................................            2.11             340             525                  1.36
5.........................................            2.11             525             525                  2.11
6.........................................            2.11             525             525                  2.11
7.........................................            2.11             525             525                  2.11
8.........................................            2.11             525             525                  2.11
9.........................................            2.11             525             525                  2.11
10........................................            2.11             525             525                  2.11
                                           ---------------------------------------------------------------------
    Total.................................  ..............  ..............  ..............                 14.94
----------------------------------------------------------------------------------------------------------------
Note: Totals may not sum due to rounding.

    We estimated operational costs in a similar manner, multiplying 
total operational costs by the percentage of facilities complying in a 
given year. Table 7 presents the total cost to facilities under this 
final rule. We calculated total operational costs by adding the 
baseline operational costs in Years 1 and 2 as presented in table 5 
($2.10 million + $2.29 million = $4.39 million). However, this total 
includes a $0.187 million in costs for ongoing costs such as training, 
which do not occur the first year a facility installs a TWIC reader. 
Therefore, the total initial operational cost to industry is $4.206 
million ($4.39 million - $0.187 million). We then multiplied the total 
cost by the percentage of new facilities complying in a given year. We 
also accounted for ongoing costs to industry, which we calculated by 
multiplying the total ongoing operational costs of $1.42 million per 
year (see year 3 of table 5) by the percentage of facilities incurring 
ongoing costs. For example, in year 2, we calculated the total initial 
costs to be $0.617 million ($4.206 million x (77 facilities / 525 
facilities)), and we calculated the total ongoing costs to be $0.210 
million ($1.416 million x (78 facilities / 525 facilities)), for a 
total cost of $0.827 million ($2.10 million + $0.21 million). The 
$1.416 million ongoing cost includes not only the $0.187 million in 
ongoing costs, but also the cost to update the canceled card list 
annually. Table 9 presents annual operational costs.

                  Table 9--Total Operational Costs for Facilities of Partially Delaying the Effective Date of the 2016 TWIC Reader Rule
                                                                 [Millions 2016 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                Number of      Total                             Total      Number of
                                     Total      facilities   number of                          baseline    facilities                          Total
              Year                  baseline       with      facilities     Total initial       ongoing        with        Total ongoing     operational
                                    initial      initial     subject to   operational costs   operational    ongoing     operational costs      costs
                                     costs        costs       the rule                           costs        costs
                                          (a)          (b)          (c)   (d) = (a) x [(b) /          (e)          (f)   (g) = (e) x [(f) /  (h) = (d) +
                                                                                        (c)]                                           (c)]          (g)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................       $4.206           78          525                $0.62        $1.42            0                $0.00        $0.62
2...............................        4.206           77          525                 0.62         1.42           78                 0.21         0.83
3...............................        4.206          185          525                 1.48         1.42          155                 0.42         1.90
4...............................        4.206          185          525                 1.48         1.42          340                 0.92         2.40
5...............................        4.206            0          525                 0.00         1.42          525                 1.42         1.42
6...............................        4.206            0          525                 0.00         1.42          525                 1.42         1.42
7...............................        4.206            0          525                 0.00         1.42          525                 1.42         1.42
8...............................        4.206            0          525                 0.00         1.42          525                 1.42         1.42
9...............................        4.206            0          525                 0.00         1.42          525                 1.42         1.42
10..............................        4.206            0          525                 0.00         1.42          525                 1.42         1.42
                                 -----------------------------------------------------------------------------------------------------------------------

[[Page 13512]]

 
    Total.......................  ...........  ...........  ...........  ...................  ...........  ...........  ...................        14.25
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Totals may not sum due to rounding.

    Table 10 presents the total undiscounted cost to facilities under 
this final rule, including all capital, maintenance, and operational 
costs.

                        Table 10--Total Cost for Facilities of Partially Delaying the Effective Date of the 2016 TWIC Reader Rule
                                                                 [Millions 2016 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Number of new   Total number                     Maintenance     Operational    Undiscounted
                          Year                              facilities     of facilities   Capital costs       costs           costs           total
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................              78              78          $20.30           $0.00           $0.62          $20.92
2.......................................................              77             155           20.04            0.31            0.83           21.18
3.......................................................             185             340           48.14            0.62            1.90           50.67
4.......................................................             185             525           48.14            1.36            2.40           51.91
5.......................................................               0             525            0.00            2.11            1.42            3.52
6.......................................................               0             525            3.13            2.11            1.42            6.65
7.......................................................               0             525            3.09            2.11            1.42            6.61
8.......................................................               0             525            7.42            2.11            1.42           10.94
9.......................................................               0             525            7.42            2.11            1.42           10.94
10......................................................               0             525            0.00            2.11            1.42            3.52
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................  ..............  ..............          157.69           14.94           14.25          186.87
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Totals may not sum due to rounding.

    Table 11 summarizes the total costs to industry of this rule. This 
rule will not impact the compliance schedule of vessels. Therefore, 
these costs remain unchanged from the baseline. We calculated the 
additional costs by multiplying the totals in Table 5 by the percentage 
of facilities complying within a given year and phasing them in 2 
years. Over 10 years, we estimate the annualized cost to industry to be 
$23.92 million at a 7-percent discount rate.

                        Table 11--Total Industry Cost Under of Partially Delaying the Effective Date of the 2016 TWIC Reader Rule
                                                             [Millions, 2016 dollars] \121\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Additional
                          Year                               Facility         Vessel          costs *      Undiscounted         7%              3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................          $20.92          $0.022           $0.66          $21.61          $20.19          $20.98
2.......................................................           21.18          0.0038            1.32           22.50           19.65           21.21
3.......................................................           50.67          0.0038            2.89           53.56           43.72           49.01
4.......................................................           51.91          0.0038            4.46           56.37           43.00           50.08
5.......................................................            3.52          0.0038            4.46            7.98            5.69            6.89
6.......................................................            6.65           0.019            4.46           11.13            7.42            9.32
7.......................................................            6.61          0.0038            4.46           11.07            6.90            9.00
8.......................................................           10.94          0.0038            4.46           15.41            8.97           12.16
9.......................................................           10.94          0.0038            4.46           15.41            8.38           11.81
10......................................................            3.52          0.0038            4.46            7.98            4.06            5.94
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................          186.87           0.072           36.08          223.02          167.98          196.40
                                                         -----------------------------------------------------------------------------------------------
        Annualized......................................  ..............  ..............  ..............  ..............           23.92           23.02
--------------------------------------------------------------------------------------------------------------------------------------------------------
* These costs include additional delay, travel, and TWIC replacement costs due to TWIC failures.
Totals may not sum due to rounding.

[[Page 13513]]

    Table 12 presents the estimated change in total costs to industry 
from delaying the implementation of the TWIC reader rule by 3 years for 
facilities that handle bulk CDC, but do not transfer it to or from a 
vessel, and facilities that receive vessels carrying bulk CDC, but do 
not transfer it to or from the vessel during that vessel-to-facility 
interface. We estimated an annualized cost savings to industry of $3.38 
million at a 7-percent discount rate.
---------------------------------------------------------------------------

    \121\ See page 55 of the TWIC Delay final rule, table 6.

     Table 12--Total Change in Industry Cost From Partially Delaying the Effective Date of TWIC Reader Rule
                                            [Millions, 2016 dollars]
----------------------------------------------------------------------------------------------------------------
                                                        Total 10-year cost               Annualized cost
                              Total 10-year cost           (discounted)          -------------------------------
                               (not discounted)  --------------------------------
                                                        7%              3%              7%              3%
----------------------------------------------------------------------------------------------------------------
TWIC reader rule............             $235.96         $191.71         $214.69          $27.29          $25.17
Delay TWIC Reader rule by 3               223.02          167.98          196.40           23.92           23.02
 years......................
                             -----------------------------------------------------------------------------------
    Change..................             (12.95)         (23.73)         (18.28)          (3.38)          (2.14)
----------------------------------------------------------------------------------------------------------------

Qualitative Costs
    Qualitative costs are as shown in table 3. This rule will delay the 
cost to retrieve or replace lost Personal Identification Numbers (PINs) 
for use with TWICs for the facilities with delayed implementation.
Government Costs
    This final rule will also generate a cost savings to the government 
from delaying the review of the revised security plans for 370 Risk 
Group A facilities that handle bulk CDC and facilities that receive 
vessels carrying bulk CDC. There is no change in cost to the government 
resulting from TWIC inspections, because inspections are already 
required under MTSA, and the TWIC reader requirements do not modify 
these requirements. As such, there is no additional cost to the 
government.
    To estimate the cost to the government, we followed the same 
approach as the industry cost analysis and adjusted the cost estimate 
presented in the TWIC Reader rule RA from 2012 dollars to 2016 dollars. 
For the government analysis, we used the fully loaded 2016 wage rate 
for an E-5 level staff member, $51 per hour, from Commandant 7310.1R: 
Reimbursable Standard Rates, in place of the 2012 wage of $49 per 
hour.\122\ We then estimate a government cost of $53,550 in the first 2 
years ($51 x 4 hours per review x 262.5 plans).\123\ Table 13 presents 
the annualized baseline government costs of $13,785 at a 7-percent 
discount rate.
---------------------------------------------------------------------------

    \122\ Because the Coast Guard is not delaying the implementation 
schedule for vessels, the rule will have no impact on the costs 
associated with vessel security plans, and, therefore, we did not 
include them in this RA.
    \123\ See page 72 of the 2016 TWIC Reader rule RA.

                           Table 13--Total Government Cost Under 2016 TWIC Reader Rule
                                                 [2016 Dollars]
----------------------------------------------------------------------------------------------------------------
                              Year                                  Cost of FSP         7%              3%
----------------------------------------------------------------------------------------------------------------
1...............................................................         $53,550         $50,047         $51,990
2...............................................................          53,550          46,773          50,476
3...............................................................               0               0               0
4...............................................................               0               0               0
5...............................................................               0               0               0
6...............................................................               0               0               0
7...............................................................               0               0               0
8...............................................................               0               0               0
9...............................................................               0               0               0
10..............................................................               0               0               0
                                                                 -----------------------------------------------
    Total.......................................................         107,100          96,819         102,466
                                                                 -----------------------------------------------
        Annualized..............................................  ..............          13,785          12,012
----------------------------------------------------------------------------------------------------------------

    Table 14 presents the government cost under this final rule, from 
delaying the effective date of the 2016 TWIC Reader rule for facilities 
that handle CDC in bulk. We estimated the annualized government cost to 
be $12,556 at a 7-percent discount rate. To estimate government costs 
in year 1 and year 2, we used the same approach as the baseline cost 
estimates.\124\
---------------------------------------------------------------------------

    \124\ We calculated the total cost in year 1 as 4 hours x $51 x 
202 FSPs; the total cost in year 2 as 4 hours x $51 x 201 FSP; and 
the total cost in Years 3 and 4 as 4 hours x $51 x 61 FSPs.

[[Page 13514]]

  Table 14--Total Government Costs of Partially Delaying the Effective Date of the 2016 TWIC Reader Rule, Risk
                                                     Group A
                                                 [2016 Dollars]
----------------------------------------------------------------------------------------------------------------
                              Year                                  Cost of FSP         7%              3%
----------------------------------------------------------------------------------------------------------------
1...............................................................         $15,912         $14,871         $15,449
2...............................................................          15,708          13,720          14,806
3...............................................................          37,740          30,807          34,537
4...............................................................          37,740          28,792          33,532
5...............................................................               0               0               0
6...............................................................               0               0               0
7...............................................................               0               0               0
8...............................................................               0               0               0
9...............................................................               0               0               0
10..............................................................               0               0               0
                                                                 -----------------------------------------------
    Total.......................................................         107,100          88,190          98,324
                                                                 -----------------------------------------------
        Annualized..............................................  ..............          12,556          11,527
----------------------------------------------------------------------------------------------------------------

    Table 15 presents the estimated change in government costs from 
delaying the implementation of the TWIC Reader rule by 3 years for 
facilities that handle bulk CDC and facilities that receive vessels 
carrying bulk CDC. We estimated an annualized cost savings to the 
government of $1,229 at a 7-percent discount rate.

       Table 15--Total Change in Government Cost from Delaying the Effective Date of 2016 TWIC Reader Rule
                                                [2016 Dollars] *
----------------------------------------------------------------------------------------------------------------
                                                      Total cost (discounted)            Annualized cost
                                Total cost (not  ---------------------------------------------------------------
                                  discounted)           7%              3%              7%              3%
----------------------------------------------------------------------------------------------------------------
TWIC reader rule............            $107,100         $96,819        $102,466         $13,785         $12,012
Delay TWIC Reader rule by 3              107,100          88,190          98,324          12,556          11,527
 years......................
                             -----------------------------------------------------------------------------------
    Change..................                 0.0         (8,630)         (4,143)         (1,229)           (486)
----------------------------------------------------------------------------------------------------------------
* Over a ten year period.

    Using a perpetual period of analysis, we estimated the total 
annualized cost savings of the rule to be $1.53 million in 2016 
dollars, discounted back to 2016 dollars.
Change in Benefits
    As noted, this rule will delay the effective date of the TWIC 
reader requirement for three categories of facilities: (1) Facilities 
that handle certain dangerous cargoes in bulk, but do not transfer 
these cargoes to or from a vessel; (2) facilities that handle certain 
dangerous cargoes in bulk, and do transfer these cargoes to or from a 
vessel; and (3) facilities that receive vessels carrying certain 
dangerous cargoes in bulk, but do not, during that vessel-to-facility 
interface, transfer these bulk cargoes to or from those vessels. The 
facilities for which the TWIC reader rule will be delayed will delay 
the enhanced benefits of electronic inspection, such as ensuring that 
only individuals who hold valid TWICs are granted unescorted access to 
secure areas, enhanced verification of personal identity, and a 
reduction in potential vulnerability by establishing earlier the intent 
of perpetrators who attempt to bypass or thwart the TWIC readers.
Summary of Cost Savings Under Executive Order 13771
    This rule will generate a cost savings to both the industry and 
government, and therefore, this rule is an Executive Order 13771 
deregulatory action. Table 16 summarizes the cost savings of this rule 
by comparing and subtracting the costs of this rule from the TWIC 
Reader rule costs. Because this rule will delay the implementation of 
the TWIC Reader rule by 3 years for 370 facilities, it will result in 
cost savings of $23.73 million for industry, $0.01 million for 
government, and $23.74 million total (all discounted at 7 percent) over 
a 10-year period of analysis. At a 7-percent discount rate, we estimate 
the annualized cost savings to be $3.38 million to the industry, $0.001 
million to the government, and $3.38 million total. Using a 3-percent 
discount rate, we estimate the annualized cost savings to be $2.14 
million to the industry, $0.0005 million to the government, and $2.14 
million total. Using a perpetual period of analysis, we found total 
annualized cost savings of the rule to industry and the government to 
be $1.53 million in 2016 dollars, discounted back to 2016.

[[Page 13515]]

                         Table 16--Summary of Costs Savings Under Executive Order 13771
----------------------------------------------------------------------------------------------------------------
                  Category                             Cost savings of this final rule (millions 2016$)
----------------------------------------------------------------------------------------------------------------
Costs to Industry, Government and Total ($    Industry: $23.73 (10-year).
 millions, 7% discount rate).                 Government: $0.01 (10-year).
                                              Total: $23.74 (10-year).
                                              Industry: $3.38 (annualized).
                                              Government: $0.001 (annualized).
                                              Total: $3.38 (annualized).
                                              Industry: $1.53 (perpetual).
                                              Government: $0.0005 (perpetual).
                                              Total: $1.53 (perpetual).
----------------------------------------------------------------------------------------------------------------

Alternatives
    One regulatory alternative to this final rule is for the Coast 
Guard to take no action. Under this alternative, the TWIC Reader rule 
would become effective 60 days after Congress receives the HSOAC 
assessment, and all 370 facilities we identified in our 2016 TWIC 
Reader rule RA, in addition to the unknown number of facilities, would 
be expected to comply with the TWIC Reader rule. These entities would 
be required to implement the requirements for the electronic inspection 
of TWICs and would incur the costs we estimated in our 2016 TWIC Reader 
rule RA unless a waiver was granted by the Coast Guard.
    Another alternative the Coast Guard considered was a waiver 
approach. However, because we currently lack a comprehensive risk 
analysis on the level of individualized facilities, we do not believe 
this approach maximizes benefits. In the absence of a new comprehensive 
risk analysis, the Coast Guard might issue blanket waivers that include 
facilities that may indeed warrant the additional security of 
electronic inspection. For example, consider two facilities with a 
5,000 gallon tank of a CDC each. The tank in the first facility is 
placed near enough to the perimeter fence in a populated area that, if 
the tank explodes, would kill enough people to cause a TSI and, 
therefore, should require electronic TWIC inspection. That same tank on 
the other facility is located away from the water in an isolated area 
within the MTSA footprint (not near a population). If this tank 
explodes, it does not cause a TSI and therefore should not need to 
conduct electronic TWIC inspection. If the Coast Guard issued a blanket 
waiver for those facilities with a storage tank of CDC with 5,000 
gallons or less, then we would not be properly implementing these 
requirements to mitigate the risks as intended.
    We rejected both alternatives (`no action' and `waiver approach') 
because they do not address our need to conduct a comprehensive risk 
analysis at the individual facility level to determine whether or not 
those 370 facilities and an unknown number of facilities would be 
required to comply with the final rule 60 days after Congress receives 
the HSOAC assessment, and also develop a consistent methodology that 
would form the rationale for Coast Guard when issuing waivers.

B. Small Entities

    Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, we have 
considered whether this rule will have a significant economic impact on 
a substantial number of small entities. The term ``small entities'' 
comprises small businesses, not-for-profit organizations that are 
independently owned and operated and are not dominant in their fields, 
and governmental jurisdictions with populations of less than 50,000.
    The Coast Guard will delay the effective date of the TWIC Reader 
rule until May 8, 2023 for facilities that handle CDC in bulk. We 
estimate these facilities will experience an annualized cost savings of 
approximately $9,000 (with a 7-percent discount rate), and that on 
average each entity owns two facilities and will save approximately 
$18,000. We calculate that approximately 2% of the small entities 
impacted by this delay rule will have a cost savings that is greater 
than 1% but less than 3% of their annual revenue. The other 98% will 
have a cost savings that is less than 1% of their annual revenue.
    Given this information, the Coast Guard certifies under 5 U.S.C. 
605(b) that this rule will not have a significant economic impact on a 
substantial number of small entities.

C. Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement 
Fairness Act of 1996, Public Law 104-121, we offer to assist small 
entities in understanding this rule so that they can better evaluate 
its effects on them and participate in the rulemaking. The Coast Guard 
will not retaliate against small entities that question or complain 
about this rule or any policy or action of the Coast Guard.
    Small businesses may send comments on the actions of Federal 
employees who enforce, or otherwise determine compliance with, Federal 
regulations to the Small Business and Agriculture Regulatory 
Enforcement Ombudsman and the Regional Small Business Regulatory 
Fairness Boards. The Ombudsman evaluates these actions annually and 
rates each agency's responsiveness to small business. If you wish to 
comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR 
(1-888-734-3247).

D. Collection of Information

    This rule calls for no new collection of information under the 
Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3520.

E. Federalism

    A rule has implications for federalism under Executive Order 13132 
(Federalism) if it has a substantial direct effect on States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. We have analyzed this rule under Executive Order 13132 and 
have determined that it is consistent with the fundamental federalism 
principles and preemption requirements described in Executive Order 
13132. Our analysis follows.
    This rule will delay the implementation of existing regulations on 
certain facilities after evaluation by a risk-based set of security 
measures of MTSA-regulated facilities. Based on this analysis, each 
facility is classified according to its risk level, which then 
determines whether the facility will be required to conduct electronic 
TWIC inspection. As this rule does not impose any new requirements, but 
simply delays the implementation of existing requirements, it does not 
have preemptive impact.

[[Page 13516]]

    Additionally, Executive Order 13132 require that for any rules with 
preemptive effect, the Coast Guard provide elected officials of 
affected State and local governments and their representative national 
organizations the notice and opportunity for appropriate participation 
in any rulemaking proceedings, and consultation with such officials 
early in the rulemaking process. Please refer to the TWIC Reader final 
rule for additional information regarding the federalism analysis of 
the substantive requirements (81 FR 57652, 57706).
    While it is well settled that States may not regulate in categories 
in which Congress intended the Coast Guard to be the sole source of a 
vessel's obligations, the Coast Guard recognizes the key role that 
State and local governments may have in making regulatory 
determinations. Additionally, for rules with federalism implications 
and preemptive effect, Executive Order 13132 specifically directs 
agencies to consult with State and local governments during the 
rulemaking process. If you believe this rule has implications for 
federalism under Executive Order 13132, please call or email the person 
listed in the FOR FURTHER INFORMATION CONTACT section of this preamble.

F. Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531-1538, 
requires Federal agencies to assess the effects of their discretionary 
regulatory actions. In particular, the Act addresses actions that may 
result in the expenditure by a State, local, or tribal government, in 
the aggregate, or by the private sector of $100,000,000 (adjusted for 
inflation) or more in any one year. Although this rule will not result 
in such expenditure, we do discuss the effects of this rule elsewhere 
in this preamble.

G. Taking of Private Property

    This rule will not cause a taking of private property or otherwise 
have taking implications under Executive Order 12630 (Governmental 
Actions and Interference with Constitutionally Protected Property 
Rights).

H. Civil Justice Reform

    This rule meets applicable standards in sections 3(a) and 3(b)(2) 
of Executive Order 12988 (Civil Justice Reform) to minimize litigation, 
eliminate ambiguity, and reduce burden.

I. Protection of Children

    We have analyzed this rule under Executive Order 13045 (Protection 
of Children from Environmental Health Risks and Safety Risks). This 
rule is not an economically significant rule and will not create an 
environmental risk to health or risk to safety that might 
disproportionately affect children.

J. Indian Tribal Governments

    This rule does not have tribal implications under Executive Order 
13175 (Consultation and Coordination with Indian Tribal Governments), 
because it will not have a substantial direct effect on one or more 
Indian tribes, on the relationship between the Federal Government and 
Indian tribes, or on the distribution of power and responsibilities 
between the Federal Government and Indian tribes.

K. Energy Effects

    We have analyzed this rule under Executive Order 13211 (Actions 
Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use). We have determined that it is not a 
``significant energy action'' under Executive Order 13211, because 
although it is a ``significant regulatory action'' under Executive 
Order 12866, it is not likely to have a significant adverse effect on 
the supply, distribution, or use of energy, and the Administrator of 
OMB's Office of Information and Regulatory Affairs has not designated 
it as a significant energy action.

L. Technical Standards

    The National Technology Transfer and Advancement Act, codified as a 
note to 15 U.S.C. 272, directs agencies to use voluntary consensus 
standards in their regulatory activities unless the agency provides 
Congress, through OMB, with an explanation of why using these standards 
would be inconsistent with applicable law or otherwise impractical. 
Voluntary consensus standards are technical standards (e.g., 
specifications of materials, performance, design, or operation; test 
methods; sampling procedures; and related management systems practices) 
that are developed or adopted by voluntary consensus standards bodies.
    This rule does not use technical standards. Therefore, we did not 
consider the use of voluntary consensus standards.

M. Environment

    We have analyzed this rule under Department of Homeland Security 
Management Directive 023-01 and Environmental Planning Commandant 
Instruction (COMDTINST) 5090.1 (series), which guide the Coast Guard in 
complying with the National Environmental Policy Act of 1969 (42 U.S.C. 
4321-4370f), and determined that this action is one of a category of 
actions that do not individually or cumulatively have a significant 
effect on the human environment. A Record of Environmental 
Consideration (REC) supporting this determination is available in the 
docket where indicated under the ADDRESSES portion of the preamble. 
This rule is categorically excluded under paragraph L54 in Table 3-1 of 
U.S. Coast Guard Environmental Planning Implementing Procedures. 
Paragraph L54 pertains to regulations that are editorial or procedural. 
This rule establishes a 3 year postponement of the effective date for 
deploying electronic transportation security card readers and requiring 
electronic TWIC inspection at certain facilities affected by the final 
rule entitled ``Transportation Worker Identification Credential 
(TWIC)--Reader Requirements,'' published in the Federal Register on 
August 23, 2016. This rule supports the Coast Guard's statutory mission 
to ensure port, waterway, and coastal security.

List of Subjects in 33 CFR Part 105

    Maritime security, Navigation (water), Reporting and recordkeeping 
requirements, Security measures, Waterways.

    For the reasons discussed in the preamble, the Coast Guard amends 
33 CFR part 105 as follows:

PART 105--MARITIME SECURITY: FACILITIES

0
1. The authority citation for part 105 continues to read as follows:

    Authority: 33 U.S.C. 1226, 1231; 46 U.S.C. 70103; 50 U.S.C. 191; 
Sec. 811, Pub. L. 111-281, 124 Stat. 2905; 33 CFR 1.05-16.04-11, 
6.14, 6.16, and 6.19; Department of Homeland Security Delegation No. 
0170.1.

0
2. In Sec.  105.253, revise paragraphs (a)(1) and (2) and add paragaphs 
(a)(3) and (4) to read as follows:

Sec.  105.253   Risk Group classifications for facilities.

    (a) * * *
    (1) Beginning June 8, 2020: Facilities that receive vessels 
certificated to carry more than 1,000 passengers.
    (2) Beginning May 8, 2023: Facilities that handle Certain Dangerous 
Cargoes (CDC) in bulk and transfer such cargoes from or to a vessel.
    (3) Beginning May 8, 2023: Facilities that handle CDC in bulk, but 
do not transfer it from or to a vessel.
    (4) Beginning May 8, 2023: Facilities that receive vessels carrying 
CDC in bulk but, during the vessel-to-facility

[[Page 13517]]

interface, do not transfer it from or to the vessel.
* * * * *

    Dated: October 31, 2019.
Karl L. Schultz,
Admiral, U.S. Coast Guard, Commandant.

    Editorial note:  The U.S. Coast Guard requested that the Office 
of the Federal Register hold this document from publication until 
delivery to Congress of the assessment required by the 
Transportation Worker Identification Credential Security Card 
Program Act (Pub. L. 114-278).

[FR Doc. 2019-24343 Filed 3-6-20; 8:45 am]
 BILLING CODE 9110-04-P