Document ID: USCG-2017-0711-0001
Agency: uscg
Document Type: Proposed Rule
Title: TWIC- Reader Requirements; Delay of Effective Date
Posted Date: 2018-06-22T04:00Z

[Federal Register Volume 83, Number 121 (Friday, June 22, 2018)]
[Proposed Rules]
[Pages 29067-29081]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-13345]

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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: Notice of proposed rulemaking.

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SUMMARY: The Coast Guard proposes delaying the effective date for 
certain facilities affected by the final rule entitled ``Transportation 
Worker Identification Credential (TWIC)--Reader Requirements,'' 
published in the Federal Register on August 23, 2016. The current 
effective date for the final rule is August 23, 2018. The Coast Guard 
proposes delaying the effective date for two categories of facilities: 
Facilities that handle certain dangerous cargoes in bulk, but do not 
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 proposes delaying the effective 
date for these two categories of facilities by 3 years, until August 
23, 2021. Other vessels and facilities, including facilities that 
receive large passenger vessels and facilities regulated under 33 CFR 
105.295 that handle certain dangerous cargoes in bulk and transfer it 
to or from a vessel, would be required to comply with the final rule by 
August 23, 2018.

DATES: Comments and related material must be received by the Coast 
Guard on or before July 23, 2018.

ADDRESSES: You may submit comments identified by docket number USCG-
2017-0711 using the Federal eRulemaking Portal at http://www.regulations.gov. See the ``Public Participation and Request for 
Comments'' portion of the SUPPLEMENTARY INFORMATION section of this 
notice of proposed rulemaking for further instructions on submitting 
comments.

FOR FURTHER INFORMATION CONTACT: For information about this document, 
call or email LCDR Yamaris Barril, Coast Guard CG-FAC-2; telephone 202-
372-1151, email [email protected].

SUPPLEMENTARY INFORMATION: 

Table of Contents for Preamble

I. Public Participation and Request for Comments
II. Abbreviations
III. Regulatory History
IV. Background
    A. Electronic TWIC Inspection
    B. Coast Guard Analysis and the Homeland Security Institute 
(HSI) Report
    C. Summary of Methodology Used in the TWIC Rulemaking
    D. Petition for Rulemaking and Identified Weaknesses
V. Discussion of the Proposed Rule to Delay the Effective Date
VI. Regulatory Analysis
    A. Regulatory Planning and Review
    B. Small Entities
    C. Assistance for Small Entities
    D. Collection of Information
    E. Federalism
    F. Unfunded Mandates Reform Act
    G. Taking of Private Property
    H. Civil Justice Reform
    I. Protection of Children
    J. Indian Tribal Governments
    K. Energy Effects
    L. Technical Standards
    M. Environment

I. Public Participation and Request for Comments

    The Coast Guard views public participation as essential to 
effective rulemaking and will consider all comments and material 
received during the comment period. Your comment can help shape the 
outcome of this rulemaking. If you submit a comment, please include the 
docket number for this rulemaking, indicate the specific section of 
this document to which each comment applies, and provide a reason for 
each suggestion or recommendation.
    We encourage you to submit comments through the Federal eRulemaking 
Portal at http://www.regulations.gov. If your material cannot be 
submitted using http://www.regulations.gov, contact the person in the 
FOR FURTHER INFORMATION CONTACT section of this notice of proposed 
rulemaking for alternate

[[Page 29068]]

instructions. Documents mentioned in this notice of proposed 
rulemaking, and all public comments, will be available in our online 
docket at http://www.regulations.gov, and can be viewed by following 
that website's instructions. Additionally, if you go to the online 
docket and sign up for email alerts, you will be notified when comments 
are posted or a final rule is published.
    We accept anonymous comments. All comments received will be posted 
without change to http://www.regulations.gov and will include any 
personal information you have provided. For more information about 
privacy and the docket, visit http://www.regulations.gov/privacyNotice.

II. Abbreviations

AHP Analytic Hierarchy Process
ANPRM Advanced notice of proposed rulemaking
BLS U.S. Bureau of Labor Statistics
CDC Certain Dangerous Cargoes
DHS Department of Homeland Security
ECI Employment Cost Index
FR Federal Register
HSI Homeland Security Institute
MSRAM Maritime Security Risk Analysis Model
MTSA Maritime Transportation Security Act of 2002
NPRM Notice of proposed rulemaking
OMB Office of Management and Budget
SAFE Port Act Security and Accountability for Every Port Act of 2006
SME Subject matter expert
Sec.  Section symbol
TSA Transportation Security Administration
TSI Transportation Security Incident
TWIC Transportation Worker Identification Credential
U.S.C. United States Code

III. 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 Credentials (TWIC[reg]) inside secure areas on vessels 
and in facilities in the United States. Specifically, the SAFE Port Act 
required 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.
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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).
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    On May 22, 2006, the Coast Guard and the Transportation Security 
Administration (TSA) jointly published a notice of proposed rulemaking 
(NPRM) entitled ``Transportation
    Worker Identification Credential (TWIC) Implementation in the 
Maritime Sector; Hazardous Materials Endorsement for a Commercial 
Driver's License.'' \4\ On January 25, 2007, the Coast Guard and TSA 
published a final rule with the same title.\5\ The 2007 final rule 
established the requirement, among others, that all persons allowed 
unescorted access to secure areas in MTSA-regulated vessels and 
facilities must possess a valid TWIC. The 2007 final rule did not, 
however, mandate that the TWIC be read with an electronic reader and, 
as such, allowed for visual inspection. Visual inspection does not make 
use of the electronic security measures built into the TWIC, such as 
the challenge/response to the TWIC's unique electronic identifier, 
comparison of the credential to the TWIC Cancelled Card List, and 
verification of the biometric template stored on the TWIC to the 
individual's biometrics.
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    \4\ 71 FR 29396 (May 22, 2006).
    \5\ 72 FR at 3492 (January 25, 2007).
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    Although the May 22, 2006, NPRM proposed certain TWIC reader 
requirements, after reviewing the public comments, the Coast Guard 
decided not to include the proposed TWIC reader requirements in the 
2007 final rule. Instead, the Coast Guard addressed TWIC reader 
requirements in a separate rulemaking after conducting a pilot program 
to address the feasibility of reader requirements.\6\ For a detailed 
discussion of the public comments and our responses to them, refer to 
section III.B.7 of the 2007 final rule.
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    \6\ The SAFE Port Act required DHS to conduct a pilot program to 
test the business processes, technology, and operational impacts of 
TWIC readers in the maritime environment, and to issue regulations 
that require the deployment of TWIC readers that are consistent with 
the findings of the pilot program. See 46 U.S.C. 70105(k)(1) and 
(3).
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    On March 27, 2009, the Coast Guard published an advanced notice of 
proposed rulemaking (ANPRM) on the topic of TWIC reader 
requirements.\7\ The ANPRM discussed dividing vessels and facilities 
into three ``risk groups''--Risk Group A for the high-risk vessels and 
facilities, Risk Group B for medium-risk vessels and facilities, and 
Risk Group C for low-risk vessels and facilities. The ANPRM also 
considered different electronic inspection requirements for Risk Groups 
A and B, with no electronic inspection requirements for Risk Group C. 
On March 22, 2013, we published an NPRM \8\ that proposed the three 
risk groups (A, B, and C), but limited the proposed electronic TWIC 
inspection requirements to Risk Group A vessels and facilities only.
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    \7\ 74 FR 13360 (March 27, 2009).
    \8\ 78 FR 17782 (March 22, 2013).
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    On August 23, 2016, we published a final rule entitled 
``Transportation Worker Identification Credential (TWIC)--Reader 
Requirements'' \9\ (``TWIC Reader final rule'') that eliminated the 
three risk group structure and required that the high-risk vessels and 
facilities (still referred to as Risk Group A) conduct electronic TWIC 
inspection for all personnel seeking unescorted access to secure areas 
of the vessel or facility. The TWIC Reader final rule becomes effective 
on August 23, 2018. On May 15, 2017, we received a petition for 
rulemaking from the International Liquid Terminals Association and 
other industry groups.\10\ The rulemaking petition requested that we 
revise the scope of the TWIC Reader final rule to impose electronic 
TWIC inspection requirements on only those vessels and facilities that 
engage in the maritime transfer of certain dangerous cargoes (CDCs), 
and extend the compliance date of the TWIC Reader final rule so that 
vessels and facilities do not incur costs while the Coast Guard reviews 
the scope of the TWIC Reader final rule. On May 18, 2017, the Coast 
Guard opened a public docket on www.regulations.gov, and acknowledged 
receipt of the rulemaking petition by letter dated May 25, 2017. The 
industry's rulemaking petition is discussed in greater detail below in 
section IV.D.
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    \9\ 81 FR 57652.
    \10\ See Docket number USCG-2017-0447, available at 
www.regulations.gov.
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IV. Background

    In this NPRM, we propose to delay the effective date of the TWIC 
Reader final rule, until August 23, 2021, for two categories of 
facilities. The rationale for the proposed delay is to consider 
industry input asking us to reconsider the scope of the TWIC Reader 
final rule and to re-evaluate the underlying methodology used to 
determine the facilities subject to the electronic TWIC inspection 
requirements. For these reasons, and to provide appropriate context 
necessary to understand the purpose of this NPRM, we have included 
background information in this NPRM that details: (1) Why the 
electronic TWIC inspection requirements were originally proposed

[[Page 29069]]

for certain categories of facilities; (2) the Coast Guard's methodology 
used to analyze risk, including the need to re-evaluate that 
methodology; and (3) the related petition for rulemaking we received 
after publication of the TWIC Reader final rule. Specifically, we 
examine the two technical reports issued in 2008 that explained how we 
would categorize facilities to analyze risk, which formed the basis for 
the regulatory framework laid out in the 2009 ANPRM. Overall, these 
reports provide the foundation for the regulatory framework set forth 
in the TWIC reader rulemaking documents. In this framework, we first 
grouped individual facilities by ``asset categories''.\11\ Then, we 
used certain analytical techniques, described below, to rank those 
categories by relative risk, creating a linear list of 68 different 
asset categories. Finally, we grouped similarly-risked facilities 
together into ``Risk Groups,'' to which different regulatory 
requirements would apply. This analysis, with its strengths and 
weaknesses, is discussed below.
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    \11\ Each of these ``asset categories'' describes a certain 
purpose or operational description. For example, ``gravel transfer 
facilities'' would be considered under the same umbrella (i.e., in 
one ``asset category''), rather than as individual facilities.
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A. Electronic TWIC Inspection

    The TWIC Reader final rule was promulgated to fulfill the 
Congressional mandate found in section 104 of the SAFE Port Act.\12\ 
The SAFE Port Act, which required the Coast Guard to conduct a pilot 
program to evaluate the effectiveness of TWIC readers and promulgate 
regulations in accordance with the findings of that program, led to the 
development of the TWIC reader rulemaking. The TWIC Reader final rule, 
the culmination of that rulemaking process, required that high-risk 
facilities conduct ``electronic TWIC inspection,'' and mandated 
security improvements above and beyond the existing requirements set 
forth in the 2007 final rule that all persons with unescorted access to 
secure areas possess a TWIC. Specifically, for high-risk facilities 
called ``Risk Group A facilities,'' the TWIC Reader final rule required 
that, upon each entry into a secure area,\13\ the person requesting 
entry must present a TWIC for electronic inspection before that person 
would be permitted unescorted access to the area.\14\ Other MTSA-
regulated facilities (i.e., those facilities not in Risk Group A) may 
continue to use visual inspection of the TWIC and are not subject to 
the requirement for electronic inspection.\15\ Because the TWIC Reader 
final rule did not change the existing definition of a secure area in 
33 CFR 101.105, and imposed no requirements in other areas,\16\ the 
primary effect of the rule should be to require facilities that are 
already using visual inspection of the TWIC as part of their access 
control procedures to use electronic TWIC inspection instead, 
strengthening existing access control procedures.
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    \12\ Because this NPRM addresses facilities only, we have 
omitted further discussion about application of the TWIC program to 
vessels and outer continental shelf facilities (33 CFR parts 104 and 
106, respectively).
    \13\ ``Secure area'' is defined in 33 CFR 101.105 as ``the area 
onboard a vessel or at a facility or outer continental shelf 
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, as those terms are 
defined in Sec. Sec.  104.106, 104.107, and 105.106, respectively, 
of this subchapter. Vessels operating under the waivers provided for 
at 46 U.S.C. 8103(b)(3)(A) or (B) have no secure areas. Facilities 
subject to part 105 of this subchapter located in the Commonwealth 
of the Northern Mariana Islands and American Samoa have no secure 
areas. Facilities subject to part 105 of this subchapter may, with 
approval of the Coast Guard, designate only those portions of their 
facility that are directly connected to maritime transportation or 
are at risk of being involved in a transportation security incident 
as their secure areas.''
    \14\ See TWIC Reader final rule, section 105.255(a)(4).
    \15\ Pursuant to existing Coast Guard guidance, facilities not 
included in Risk Group A may use electronic inspection in lieu of 
visual inspection on a voluntary basis. See PAC-01-11, ``Voluntary 
use of TWIC Readers,'' available at https://homeport.uscg.mil.
    \16\ The definition of ``secure area'' specifically excludes 
areas like passenger access areas, employee access areas, facilities 
in the Commonwealth of the Northern Mariana Islands and American 
Samoa, etc. The TWIC Reader final rule imposed no requirements on 
those types of areas.
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    Inspection of the TWIC, whether electronic or visual, provides a 
baseline of information to determine who may be provided unescorted 
access to secure areas of MTSA-regulated vessels and facilities. While 
not every person who possesses a TWIC is authorized for unescorted 
access, the TWIC inspection process ensures that facility security 
personnel do not grant unescorted access to individuals who have not 
been vetted or who have been adjudicated unfit for unescorted access to 
secure areas.
    Electronic TWIC inspection is the process by which the TWIC is 
authenticated and validated, and by which the individual presenting the 
TWIC is matched to the stored biometric template. This process consists 
of three discrete parts: (1) Authentication, in which the TWIC 
presented is identified as an authentic credential issued by TSA; (2) 
validity check, in which the TWIC presented is compared to the TSA-
supplied list of cancelled TWICs to ensure that it has not been revoked 
and is not expired; and (3) identity verification, in which biometric 
data stored on the TWIC presented is matched to the person presenting 
it using a fingerprint scan. Electronic TWIC inspection strengthens the 
inspection of TWIC, as compared to visual TWIC inspection, resulting in 
increased security at high-risk facilities. While visual TWIC 
inspection can accomplish the same three goals as electronic inspection 
(authentication, validation, and identify verification), visual 
inspection is not as thorough or reliable.
    Electronic TWIC inspection improves on visual inspection by adding 
additional benefits. With electronic inspection, the authenticity of 
the TWIC is verified by issuing a challenge/response to the unique 
electronic identifier of the TWIC, called a Card Holder Unique 
Identifier. The validity of the TWIC is determined by electronically 
checking the TWIC against a database with the most recently updated 
list of cancelled TWICs. Finally, the identity of the person presenting 
the TWIC is verified by matching the biometric template stored on the 
TWIC with the presenter's biometrics though use of a fingerprint scan. 
These three aspects of electronic inspection represent improvements 
over visual inspection because they are not easily counterfeited or 
altered within the TWIC.\17\ Additionally, electronic inspection 
ensures that the TWIC presented has not been invalidated because it was 
reported lost or stolen (or for other reasons), or revoked because of a 
criminal conviction.
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    \17\ That is, one can create a lookalike of a TWIC card, which 
does not have a working chip or is not linked to the TSA database, 
and it may not be detected as a counterfeit card if the card was 
only subject to visual inspection. However, the non-working chip and 
lack of connection to the TSA database would be detected if the 
counterfeit card were scanned by a TWIC reader, and the reader could 
not confirm the authenticity of the card or match it to known card.
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B. Coast Guard Analysis and the Homeland Security Institute (HSI) 
Report

    The Coast Guard based its decision about which vessels and 
facilities to include in Risk Group A on a study entitled ``Analysis of 
Transportation Worker Identification Credential (TWIC) Electronic 
Reader Requirements in the Maritime Sector,'' \18\ (March 6, 2008)

[[Page 29070]]

(the ``Coast Guard TWIC Report''). The Coast Guard TWIC Report 
documented the risk-based analytic approach used to develop the TWIC 
reader requirements in the maritime sector, and supported the drafting 
of the proposed regulatory requirements for the use of TWIC readers as 
an access control measure. This study was independently verified in a 
report titled ``Independent Verification and Validation of Development 
of Transportation Worker Identification Credential (TWIC) Reader 
Requirements,'' developed by the Homeland Security Institute (HSI) 
(October 21, 2008) (the ``HSI Report'').\19\
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    \18\ While the full Coast Guard TWIC Report contains sensitive 
security information, a redacted version of the document is 
available on the public docket for the TWIC rulemaking, available at 
www.regulations.gov as docket number USCG-2007-28915-0117.
    \19\ ``Independent Verification and Validation of Development of 
Transportation Worker Identification Credential (TWIC) Reader 
Requirements,'' developed by the Homeland Security Institute (HSI) 
(October 21, 2008) (the ``HSI Report''). While the full HSI Report 
contains sensitive security information, a redacted version of the 
document is available on the public docket for the TWIC rulemaking, 
available at www.regulations.gov as docket number USCG-2007-28915-
0119.
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    To develop the Coast Guard TWIC Report, the Coast Guard assembled a 
panel of maritime security subject matter experts (SMEs) from the Coast 
Guard and TSA to conduct a risk-based analysis of MTSA-regulated 
vessels and facilities. The panel determined that the Analytical 
Hierarchy Process (AHP) would provide an effective basis for applying 
the panel's judgment to weigh and apply several key factors to the 
assessment of types of vessels and facilities.\20\ The AHP provides a 
comprehensive and rational framework for structuring a problem, 
representing and quantifying its elements, and relating those elements 
to overall goals, and for evaluating a set of alternative solutions. 
The AHP has been used by government and industry to assess alternatives 
and arrive at solutions when faced with problems that present disparate 
criteria and factors for consideration.
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    \20\ Coast Guard TWIC Report, p. 4.
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    The Coast Guard's panel of SMEs identified 68 distinct types of 
vessels and facilities (referred to as ``asset categories'') based on 
their purpose or operational description. The panel then assessed each 
of the 68 asset categories using three factors: (1) Maximum 
consequences to the vessel or facility resulting from a terrorist 
attack; (2) criticality to the health and economy of the Nation, and to 
national security; and (3) utility of the TWIC in reducing risk. The 
panel used this methodology to develop the framework discussed in the 
2009 ANPRM and proposed in the 2013 TWIC Reader NPRM, in which the 
Coast Guard required vessels and facilities that had the highest 
vulnerabilities, and that could derive benefits from TWIC readers, to 
use electronic inspection procedures. The Coast Guard TWIC Report 
recognized that, while ``security measures are not implemented in a 
`one size fits all' fashion . . . Coast Guard regulations also need to 
be prescriptive to ensure appropriate implementation in a uniform 
manner nationally.'' \21\ For that reason, the Coast Guard TWIC Report 
recommended the Coast Guard determine ``. . . the risk level of 
facilities and vessels . . . as it relates to access control and assign 
TWIC reader requirements accordingly.'' \22\ Additionally, the Coast 
Guard TWIC Report noted that ``in general, [asset categories] are 
ranked by the hazards of the cargo (or passenger quantities) carried by 
the vessel or handled by the facility'' \23\ and thus suggested that 
the high-risk vessels and facilities were those containing bulk CDCs 
and those carrying more than 1,000 passengers.\24\
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    \21\ Coast Guard TWIC Report, p.3.
    \22\ Coast Guard TWIC Report, p.3.
    \23\ Coast Guard TWIC Report, p.11.
    \24\ Coast Guard TWIC Report, p.13, figure 12.
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    The HSI Report was designed to determine the validity of the Coast 
Guard methodology for analyzing the underlying risk to vessels and 
facilities outlined in the Coast Guard TWIC Report and the 
effectiveness of the overall TWIC program in mitigating that risk. As 
stated in the HSI Report, its purpose was to ``strengthen the USCG's 
TWIC reader requirements development efforts by evaluating (1) the 
validity of the risk assessment methodology, (2) the extent to which 
the conclusions follow from the analysis, and (3) the overall strengths 
and limitations of the risk analysis.'' \25\
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    \25\ HSI Report, p.1.
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    The HSI Report validated the Coast Guard's risk assessment 
methodology. Specifically, the report's foremost conclusion was that 
HSI ``verified the [risk-based] process because we were able to 
independently reproduce the results based on the information provided 
in the TWIC report . . . we have also validated the process and found 
it generally defensible and based on a rigorous risk framework 
[emphasis in original].'' \26\ The HSI Report also affirmed the three 
criteria that the Coast Guard panel used to determine the risk ranking 
for the 68 asset categories (Maritime Security Risk Analysis Model 
(MSRAM) maximum consequence data, criticality of infrastructure, and 
TWIC utility), and noted that the MSRAM maximum consequence data were 
``the most rigorous among the three due to the well-established and 
ongoing work of the MSRAM.'' \27\ On the other hand, the HSI Report 
noted that the TWIC utility criterion was ``perhaps the most uncertain 
among the three evaluation criteria.'' \28\
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    \26\ HSI Report, p.2.
    \27\ HSI Report, p.2.
    \28\ HSI Report, p.2.
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    While the Coast Guard TWIC Report and the HSI Report ranked the 
relative risk of facilities based on asset category, the HSI Report did 
not unequivocally state that asset categorization was the best 
methodology to use. Indeed, in the executive summary, the report noted 
that ``[t]he 68 asset categories considered in the well-established 
MSRAM were ranked based on their risk scores. The list is considered 
comprehensive based upon its widespread use. Nevertheless, we also 
point out that there might still be variations among assets in the same 
category [emphasis added].'' \29\ Despite this uncertainty, in the 2013 
TWIC Reader NPRM, the Coast Guard proposed to use the asset category 
methodology to determine which types of facilities would be required to 
use electronic TWIC inspection in their security protocols.
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    \29\ HSI Report, p.2.
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    Furthermore, the HSI Report identified several recommendations that 
could have been used to improve the methodology to develop the Coast 
Guard's risk analysis. Most fundamentally, the HSI Report suggested 
that further analysis on risk grouping of asset categories--that is, 
which categories should be included in Risk Group A--could help to 
ensure that the results were more defensible. The HSI Report also 
suggested that the Coast Guard better define TWIC utility and add 
mechanisms that allow more flexibility in applying TWIC reader 
requirements. Finally, noting that the electronic TWIC inspection 
requirements discussed in the Coast Guard TWIC Report (and, in part, 
ultimately promulgated in the TWIC Reader final rule) were developed 
based on the 2006 MSRAM data, the HSI Report stated that ``there is 
probably a need to reassess reader requirements using recently updated 
MSRAM data. At a minimum [emphasis added], a preliminary assessment 
should be conducted to determine the potential impacts of the use of 
the new data.'' \30\
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    \30\ HSI Report, p.3.
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    After reviewing the methodology used in the TWIC Reader final rule, 
we believe that the information the methodology contained was generally

[[Page 29071]]

accurate. Specifically, we believe that the general conclusions of the 
MSRAM analysis documented in the Coast Guard TWIC Report and validated 
in the HSI Report were correct and that the facilities that handle bulk 
CDC or receive large passenger vessels constitute the most severe 
vulnerabilities. What the recommendations of the HSI Report indicate, 
however, is that there is room for improvement within certain aspects 
of that general methodology, which we discuss in more detail in Section 
V of this NPRM.

C. Summary of Methodology Used in the TWIC Rulemaking

    To ensure that the TWIC reader requirement was applied only to 
those facilities where the readers could enhance security the most, the 
Coast Guard designated certain facilities as high risk, putting them 
into Risk Group A. The TWIC Reader final rule requires that facilities 
in Risk Group A conduct electronic TWIC inspection to identify that a 
person seeking unescorted access to a secure area has undergone a 
biometric identification check, a card authentication check, and a card 
validation check to ensure that the person is authorized to have 
access. To determine which vessels and facilities should be included in 
Risk Group A, we relied on MSRAM. MSRAM is a risk-analysis tool used to 
analyze vulnerabilities and risk-mitigation measures in a wide variety 
of scenarios.
    MSRAM identified three hypothetical scenarios in which a TWIC 
reader could be useful in preventing or mitigating terrorist attacks: 
(1) A truck bomb; (2) a terrorist assault team; and (3) an explosive 
attack carried out by a passenger or passerby (with the specific 
stipulation that the terrorist is not an ``insider'').\31\ MSRAM also 
identified risk factors that made a facility or vessel particularly 
susceptible to these types of attacks and thus warranted the inclusion 
of that facility or vessel in Risk Group A. As we stated in the NPRM, 
``in determining the cutoff points between risk groups, risk rankings 
were graphed to identify natural breaks that occurred in the data . . . 
for facilities, these breaks generally occurred where there was a 
change in the hazardous nature of the materials stored or handled at a 
facility, or where the number of passengers accessing a facilities 
increased.'' \32\
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    \31\ See 81 FR 57652, 57659. While there are other means of 
attacking a facility, we focused on these three scenarios because 
there is a significant improvement in threat mitigation by moving 
from visual TWIC inspection to electronic TWIC inspection.
    \32\ See 78 FR 17782, at 17791.
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    Using the asset categories identified in the HSI Report and the 
risk analysis conducted under MSRAM, the Coast Guard found that three 
discrete classes of facilities could experience security benefits that 
are significant enough to warrant the requirement for electronic TWIC 
inspection. These included: (1) Facilities that handle CDC in bulk; 
\33\ (2) facilities that receive vessels carrying CDC in bulk; and 3) 
facilities that receive vessels certificated to carry more than 1,000 
passengers.\34\ Each of these types of facilities contain targets--
either bulk CDC or groups of more than 1,000 passengers--that could be 
attacked using a method identified above, with a result potentially 
catastrophic enough to be classified as a TSI.
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    \33\ The term ``Certain Dangerous Cargo'' is defined in 33 CFR 
101.105 by reference to 33 CFR 160.202, which lists all covered 
substances.
    \34\ See text for 33 CFR 105.253(a)(1) and (2), 81 FR 57652, 
57712.
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    In the TWIC Reader final rule, our goal was to apply the 
requirements for electronic TWIC inspection only to those high-risk 
facilities that could most benefit from its use. Because the asset 
categories identified in this NPRM contained a vulnerable target, and 
the threat to that vulnerability could be mitigated by electronic TWIC 
inspection, we believe that the security benefits justify the cost of 
the upgraded security. As reported in the Regulatory Analysis section 
of the TWIC Reader final rule, we estimated that the electronic TWIC 
inspection provision would extend to 290 bulk liquid facilities, 16 
break bulk and solid facilities, 3 container facilities, 61 ``mixed 
use'' facilities, and 165 passenger facilities, for a total of 525 
facilities.\35\
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    \35\ See 81 FR 57712, at 57698, Table 5.
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D. Petition for Rulemaking and Identified Weaknesses

    After publication of the TWIC Reader final rule in August 2016, we 
received several questions from the public about our risk analysis, as 
well as a rulemaking petition to reconsider the scope of the TWIC 
Reader final rule.\36\ A primary issue that arose was whether the Coast 
Guard's risk analysis properly analyzed the location of bulk CDC in a 
facility. For example, the rulemaking petitioner raised the issue that, 
because many Risk Group A facilities store or handle bulk CDC in areas 
unconnected to their maritime nexus, such facilities may not pose as 
large a risk to transportation infrastructure as those Risk Group A 
facilities that handle bulk CDC in the marine transfer area and 
actively transfer it to or from vessels. In addition, we received 
several inquiries regarding how the Coast Guard would categorize small 
quantities of bulk \37\ CDC used for the direct operations of the 
facility. Examples of this issue include operational use of CDCs, such 
as relatively small tanks of propane used internally at a facility to 
generate electricity or to power port equipment, that would still fall 
into the broad category of ``CDC in bulk,'' \38\ and yet would also 
seem to pose few of the security concerns described in the Coast 
Guard's risk analysis.
---------------------------------------------------------------------------

    \36\ This petition is located in the docket at 
www.regulations.gov, docket number USCG-2017-0447. While we 
acknowledge some of the issues raised in that petition here, we note 
that this NPRM does not constitute a grant or denial of that 
petition.
    \37\ Bulk, in this context, refers to how the cargoes are 
packaged rather than to an amount. The terms ``bulk'' or ``in bulk'' 
are defined in 33 CFR 101.105, in part, as ``a commodity that is 
loaded or carried without containers or labels, and that is received 
and handled without mark or count.'' See similar definitions in 33 
CFR 126.3 and 160.3.
    \38\ As this term is used in the text of 33 CFR 105.253(a)(1), 
81 FR 57652, 57712.
---------------------------------------------------------------------------

    Furthermore, even though bulk CDC could be attacked by the 
identified attack methods from the Coast Guard's risk analysis no 
matter where it is located in the facility,\39\ the petitioner 
suggested that the consequence of such an attack may not be as severe 
if the bulk CDC is kept far from the marine transfer area. For example, 
many gasoline refineries may be considered Risk Group A under the TWIC 
Reader final rule, as they receive shipments of bulk oil, which are not 
a CDC, from tankships and combine it with chemicals that are CDCs, 
which may be stored and processed in an inland part of the facility. 
The petitioner requested, among other things, that the Coast Guard 
revise the requirements for electronic TWIC inspection so that only 
facilities that transfer bulk CDC to or from a vessel would be subject 
to the TWIC Reader final rule requirements. This would exclude from the 
regulation those facilities where bulk CDC exists but is not 
transferred to or from a vessel, including facilities where the CDC is 
stored on land or stored on the water and not transferred to land 
(i.e., facilities that receive vessels carrying CDC in bulk but do not 
transfer bulk CDC to or from these vessels).
---------------------------------------------------------------------------

    \39\ The specific attack methods were discussed in the TWIC 
Reader final rule, Section V.A.2, ``Risk analysis methodology,'' 
These scenarios were: (1) A truck bomb, (2) a terrorist assault 
team, and (3) an explosive attack carried out by a passenger or 
passerby (with the specific caveat that the terrorist is not an 
``insider''). 81 FR 57652, 57659.
---------------------------------------------------------------------------

    At this time, we are not issuing a grant or denial for the petition 
for rulemaking, but we do wish to

[[Page 29072]]

acknowledge that the issue of bulk CDC located in non-maritime areas, 
which were raised by the petitioner, factored into the Coast Guard's 
rationale to re-examine the asset categorization that underpins the 
risk analysis methodology in the TWIC rulemaking.\40\ Specifically, it 
was one of the factors that caused us to focus on the conclusions in 
the HSI Report that we ``consider further analysis on risk grouping of 
asset categories,'' and that we ``consider adding mechanisms that allow 
flexibility in applying reader requirements.'' \41\ We also note that 
during the TWIC rulemaking process, other commenters raised similar 
issues, suggesting that the Coast Guard incorporate additional 
mechanisms for waivers and exemptions for various types of situations 
in which the commenters did not believe additional security measures 
were warranted.\42\ While we stated at the time that existing waiver 
provisions in 33 CFR 105.130 enable the Coast Guard to grant ``a waiver 
of any requirement that the owner or operator considers unnecessary,'' 
\43\ at this time, we do not have a full and consistent picture of what 
specific security vulnerabilities would need to be addressed in order 
to grant a waiver based on equivalency. Specifically, because any 
equivalency determination would need to be based on a determination of 
TWIC utility, which is not covered in the facility's security 
assessment, we would be applying any such waivers on an inconsistent 
and uncertain basis. For that reason, there is a need to develop a more 
comprehensive analysis of the risk factors of facilities that handle 
CDC on an individualized basis, and the results of that analysis could 
inform either a revision of the TWIC reader rule applicability or, 
alternatively, to develop a consistent methodology for applying 
waivers. Further analysis could allow the Coast Guard to provide broad 
relief from security requirements for a wide variety of facilities 
currently characterized as Risk Group A due to the asset categorization 
methodology.
---------------------------------------------------------------------------

    \40\ Several other issues raised by the petitioner, such as 
questions regarding administrative procedure and economic analysis, 
are not addressed in this document. We plan to issue a formal 
response to that petition that will respond to all issues it raised.
    \41\ HSI Report, p. 3.
    \42\ See Section III.E.3.a of the NPRM ``Public Comments 
Received in Response to the ANPRM and Public Meeting,'' 78 FR 17782, 
17796.
    \43\ 78 FR 17782, at 17811.
---------------------------------------------------------------------------

    In the NPRM, the Coast Guard addressed the issue of bulk CDC 
located outside of areas related to maritime transportation. In 
response to a comment suggesting that facility owners should not be 
required to use TWIC readers for certain portions of their facilities, 
we noted that facilities already had an ``option to redefine their 
`secure area' as only that portion of their access control area that is 
directly related to maritime transportation . . .'' and that 
``facilities whose footprint includes portions that are not directly 
related to maritime transportation can submit a [Facility Security 
Plan] for Coast Guard approval that removes those areas from the 
definition of the facility's `secure area' for Coast Guard regulatory 
purposes.'' \44\ The Coast Guard went on to note that ``[s]uch 
facilities would typically include refineries, chemical plants, 
factories, mills, power plants, smelting operations, or recreational 
boat marinas.'' \45\
---------------------------------------------------------------------------

    \44\ 78 FR 17782, at 17803.
    \45\ Id.
---------------------------------------------------------------------------

    In the TWIC Reader final rule, we also addressed the issue of bulk 
CDC located outside of the maritime nexus of the facility. We noted 
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.'' \46\
---------------------------------------------------------------------------

    \46\ See 81 FR 57712, at 57681.
---------------------------------------------------------------------------

    In summary, we believe that the manner in which the TWIC Reader 
final rule defines Risk Group A may be overbroad. While some facilities 
that handle bulk CDC that is not transferred to or from a vessel 
present a serious risk of a TSI, the fact that it was evident that 
exceptions and waivers would be necessary to implement the program 
indicates that there may be a need for more refinement of the Risk 
Group A category. The petitioners and others, such as owners and 
operators of facilities that would have to comply with the TWIC Reader 
final rule and members of Congress who represent this interests of 
those persons, who have discussed the TWIC Reader final rule with the 
Coast Guard have raised valid issues about whether the risk groupings 
established in the TWIC Reader final rule represent the best definition 
of high-risk facilities that can benefit from the requirement of 
electronic TWIC inspection. Because it is our goal to impose a 
requirement only where there is clear evidence that the benefits will 
justify the costs, we believe that these issues warrant additional 
study.

V. Discussion of the Proposed Rule To Delay the Effective Date

    Based on industry input, the recommendations outlined in the HSI 
Report, and the length of time that has passed since the development of 
the original risk analysis, we are proposing in this NPRM a temporary, 
partial delay in implementing the requirements for electronic TWIC 
inspection for certain facilities. Specifically, we are proposing to 
delay for 3 years implementation of the requirements for electronic 
TWIC inspection at facilities that handle bulk CDC but do not transfer 
it to or from a vessel and facilities that receive vessels that carry 
bulk CDC but, during that vessel-to-facility interface, do not transfer 
bulk CDC to or from the vessel. All other vessels and facilities 
subject to the electronic TWIC inspection requirements, including 
facilities that receive large passenger vessels and facilities 
regulated under 33 CFR 105.295 that handle bulk CDC and transfer it to 
or from a vessel, would still be required to comply on the August 23, 
2018, compliance date.
    We are proposing this delay because we believe that we can better 
consider the risk methodology used in the TWIC Reader final rule. When 
we determined that the presence of CDC in bulk within the MTSA 
footprint was enough justification for a facility to be considered Risk 
Group A (i.e., used the asset categorization methodology from the 
original Coast Guard TWIC Report and HSI Report), we eliminated more 
precise risk analysis capabilities for assessing whether a particular 
facility is high risk and warrants the additional regulatory burden of 
requiring electronic TWIC inspection. That is, when using the asset 
categorization methodology, the Coast Guard did not examine each 
facility individually to determine the precise amount of risk posted by 
a specific facility. We believe 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 subject to the 3-year delayed 
implementation date would benefit from the electronic TWIC inspection 
requirements.
    The items raised by the petitioners and recommendations provided by 
the HSI Report establish the parameters of what the Coast Guard plans 
to study and reevaluate during the proposed delay period. Specifically, 
we would analyze whether we can divide the general asset category of 
``facilities that handle CDC

[[Page 29073]]

in bulk'' into more specific asset categories for purposes of 
implementing the electronic TWIC inspection requirement. Additionally, 
the delay period would allow the Coast Guard to determine factors that, 
if they do not lend themselves to subdividing the asset categories, 
would be able to provide guidance for waiver procedures. These factors 
could include, but are not limited to, the quantity of bulk CDC handled 
or stored, the location within the facility where the CDC is handled or 
stored, and the population density or other critical infrastructure 
elements in and around the facility. Furthermore, more precise analysis 
of specific facility aspects, such as plume modeling, analysis of 
prevailing winds and currents, and other potential factors could be 
useful in determining whether an attack on a particular facility 
presents enough of a security threat to warrant a requirement for 
enhanced security measures. Finally, we could analyze existing security 
measures and take them into consideration to determine the marginal 
TWIC utility, as suggested by the HSI Report.
    The goals of the additional study would be to prevent situations 
where electronic TWIC inspection requirements would provide little or 
no protection and, conversely, to capture situations where the existing 
Risk Group A may not cover the full range of necessary facilities. As 
an example, a 1,000 lb. propane tank remotely located in a large 
facility away from a population center may have a relatively low risk 
of causing a TSI. That same propane tank located in a small facility in 
an urban environment may have a much higher risk of causing a TSI, and 
therefore may warrant designation of the facility as Risk Group A. The 
current asset categorization methodology used by the Coast Guard cannot 
make such distinctions.
    We believe that a 3-year delay period is needed to allow time for 
the Coast Guard to attain and analyze data from individual MTSA 
facilities that contain hazardous chemicals, and implement electronic 
TWIC inspection for those facilities that would benefit from electronic 
TWIC inspection requirements. The first 18 months of the delay would be 
dedicated to physical analysis of individual facilities, during which 
we would develop the specific data entry requirements for field 
inspectors, analyze data from facility inspections, and, potentially, 
develop a new risk methodology based on that analysis. After the data 
entry requirements are established, Coast Guard inspectors would 
incorporate any additional data gathering as part of the annual or spot 
inspection of each facility. As data are gathered, they would be 
entered into and analyzed through a risk analysis tool to score for 
operational risks. This process would require several months to collate 
and analyze data to determine the risk values of MTSA facilities with 
regard to electronic TWIC inspection, verify whether the new risk 
values coincide with previous parameters of Risk Group A, and determine 
which facilities have the highest risk of a TSI.
    Based on the information collected and analyzed during the first 
half of the proposed 3-year delay period, we would take one of two next 
steps. If the new data indicates that the risk groupings in the TWIC 
Reader final rule were appropriate, we would not make any changes to 
the existing requirements for electronic TWIC inspection, and would 
publish a document in the Federal Register explaining the results of 
our new data and analysis. If, on the other hand, the data suggest that 
there is a different and preferable way to implement requirements for 
electronic TWIC inspection, and the revised Coast Guard risk analysis 
suggests that additional or fewer facilities not included in the TWIC 
Reader final rule's risk analysis should be covered, we would use the 
remaining time of the proposed 3-year delay period to conduct a 
rulemaking using the new information, including the publication of a 
notice of proposed rulemaking to allow for a public comment period.
    During the proposed delay period, facilities that receive large 
passenger vessels and facilities that transfer bulk CDC to or from a 
vessel will be required to implement electronic TWIC inspection. We 
believe that, unlike situations where CDC is not transferred to or from 
a vessel, these two categories of facilities present a clear risk of a 
TSI. Facilities that transfer CDCs to or from a vessel typically 
transfer large quantities. Similarly, large passenger facilities 
present an inherent risk of a TSI. Unlike the scenarios described above 
involving bulk CDC, the loss of human life that could occur as a result 
of an attack at a large passenger facility is not related to the 
location of the facility (e.g., near or far from a population center), 
because the lives would be lost at the facility itself. For these 
reasons, the August 23, 2018, implementation date of the TWIC Reader 
final rule continues to be appropriate for these classes of facilities. 
We also note that the petitioners referred to above did not request 
that the electronic TWIC inspection requirements be delayed for these 
categories of facilities.

VI. Regulatory Analysis

    This proposed rule would delay implementation of the TWIC Reader 
final rule by 3 years, until August 23, 2021, for two types of Risk 
Group A facilities: (1) Those that handle CDCs in bulk, but do not 
transfer CDCs to or from a vessel, and (2) those that receive vessels 
carrying bulk CDC but, during the vessel-to-facility interface, do not 
transfer bulk CDC to or from the vessel. Other facilities and vessels 
would still be required to comply with the TWIC Reader final rule by 
August 23, 2018.
    Below, we provide an updated Regulatory Analysis of the TWIC Reader 
final rule that presents the impacts of delaying the effective date of 
the final rule for the two types of Risk Group A facilities defined in 
the preceding paragraph. For this updated analysis, we estimated the 
impact of delaying the final rule by calculating the 10-year cost of 
this proposed rule, where only certain facilities will incur costs 
starting in year one and other facilities will incur no costs in the 
first 3 years, and compare it to the 10-year cost presented in the 
Regulatory Analysis for the TWIC Reader final rule. We then calculated 
the difference between the two costs to estimate the impact of this 
proposed rule. To properly compare the costs and benefits of this 
proposed rule and the TWIC Reader final rule, we first updated the 
costs of the final rule from 2012 dollars to 2016 dollars.

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 costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
This proposed rule is expected to be an Executive Order 13771 (Reducing 
Regulation and Controlling Regulatory Costs) deregulatory action. 
Details on the estimated cost savings of this proposed rule can be 
found in the rule's economic analysis.
    This proposed rule is a significant regulatory action under section 
3(f) of Executive Order 12866. The Office of Management and Budget 
(OMB) has reviewed it under that Order. It requires an assessment of 
potential costs and

[[Page 29074]]

benefits under section 6(a)(3) of Executive Order 12866. Because this 
proposed rule would delay the implementation of the TWIC Reader final 
rule by only 3 years (until August 23, 2021) for facilities that handle 
CDC in bulk, but do not transfer it to or from a vessel, and facilities 
that receive vessels carrying bulk CDC but, during that vessel-to-
facility interface, do not transfer bulk CDC to or from the vessel, we 
did not revise our fundamental methodologies or key assumptions for the 
TWIC Reader final rule Regulatory Analysis.\47\
---------------------------------------------------------------------------

    \47\ Available in the docket, docket number USCG-2007-28915-
0231.
---------------------------------------------------------------------------

    In the 2016 final rule Regulatory Analysis, 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.\48\ Using data from MSRAM, we estimate that 
this proposed rule would delay the implementation of the final rule for 
122 of the 525 affected Risk Group A facilities by 3 years, while the 
remaining 403 facilities and 1 vessel would have to implement the final 
rule requirements by August 23, 2018. These 122 facilities handle bulk 
CDC, but do not transfer it to or from a vessel. This proposed rule 
would 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 for the final rule or in the final rule Regulatory 
Analysis. Therefore, we cannot determine the number of these facilities 
at this time, and we did not include them in our cost estimates for 
this proposed rule. We updated our final rule cost estimates from 2012 
to 2016 based on Gross Domestic Product (GDP) Deflator data from the 
U.S. Bureau of Economic Analysis (BEA).\49\ The GDP deflator is a 
measure of the change in price of domestic goods and services purchased 
by consumers, businesses, and the government.
---------------------------------------------------------------------------

    \48\ See Table 2.8 on page 26 of the TWIC Reader final rule 
Regulatory Analysis for the estimate of 525 facilities, and Table 
2.1 on page 23 for the estimate of 1 vessel.
    \49\ 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 2017. See page 9. https://faq.bea.gov/scb/pdf/2017/04%20April/0417_selected_nipa_tables.pdf.
---------------------------------------------------------------------------

    Table 1 summarizes the costs and benefits of the TWIC Reader final 
rule as well as this proposed rule, which would delay the final rule. 
We do not anticipate any new costs to industry if the final rule is 
implemented, because this proposed rule would not change the 
applicability of the 2016 final rule. This proposed rule would result 
in no other changes to the final rule. The impact to the one affected 
vessel, along with the qualitative costs and benefits, remain the same. 
Because this proposed rule would delay the implementation of the final 
rule by 3 years for 122 facilities, it would result in cost savings to 
both industry and the government of $8.1 million (discounted at 7 
percent) over a 10-year period of analysis ($162.9 million minus $154.8 
million). At a 7-percent discount rate, we estimate the total 
annualized cost savings to be $1.2 million ($23.2 million minus $22.0 
million). Using a perpetual period of analysis, we estimated the total 
annualized cost savings of the proposed rule to be $0.552 million in 
2016 dollars, using a 7-percent discount rate.

      Table 1--Summary of Costs Saving and Change in Benefits: Final Rule and NPRM To Delay the Final Rule
----------------------------------------------------------------------------------------------------------------
                                         TWIC Reader final rule (2016    Proposed rule to delay final rule (2016
               Category                               $)                                   $)
----------------------------------------------------------------------------------------------------------------
Applicability.........................  High-risk MTSA-regulated        Same as in final rule except the
                                         facilities and high-risk MTSA-  facilities and vessels handling bulk
                                         regulated vessels with          CDC, but not transferring it to or from
                                         greater than 20 TWIC-holding    the vessel.
                                         crew.
Affected Population...................  1 vessel......................  No change from final rule.
                                        525 facilities (to comply by    122 facilities that handle bulk CDC, but
                                         Aug. 23, 2018).                 do not transfer it to or from a vessel
                                                                         (to comply by Aug. 23, 2021). The
                                                                         proposed rule would also apply to
                                                                         facilities that receive vessels
                                                                         carrying bulk CDC but, during that
                                                                         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 to comply
                                                                         by August 23, 2021.
Costs to Industry and Government ($     Industry: $23.2 (annualized)..  Industry: $22.0 (annualized).
 millions, 7% discount rate) *.         Government: $0.014              Government: $0.013 (annualized).
                                         (annualized).                  Both: $22.0 (annualized)
                                        Both: $23.2 (annualized)......  Industry: $154.7 (10-year)
                                        Industry: $162.8 (10-year)....
                                        Government: $0.097 (10-year)..  Both: $154.8 (10-year).
                                        Both: $162.9 (10-year)........  Government: $0.092 (10-year).
Change in Costs (Qualitative).........  Time to retrieve or replace     The proposed rule would delay the cost
                                         lost PINs for use with TWICs.   to retrieve or replace lost PINs for
                                                                         use with TWICs for the facilities with
                                                                         delayed implementation.
Change in Benefits (Qualitative)......  Enhanced access control and     Delaying enhanced access control and
                                         security at U.S. maritime       security for the facilities with
                                         facilities and on board U.S.-   delayed implementation.
                                         flagged vessels.
                                        Reduction of human error when   Delaying the reduction of human error
                                         checking identification and     when checking identification and
                                         manning access points.          manning access points for the
                                                                         facilities with delayed implementation.
----------------------------------------------------------------------------------------------------------------
* The TWIC Reader final rule Regulatory Analysis estimated an annualized cost to industry of $21.9 million (at a
  7-percent discount rate), and a 10-year cost of $153.7 million (at a 7-percent discount rate) in 2012 dollars.
  For the purposes of this analysis, all costs are presented in 2016 dollars and are updated using annual GDP
  deflator data from the BEA. The annualized total industry cost of $21.9 million in 2012 dollars is now $23.2
  million in 2016 dollars and the 10-year cost of $153.7 million is now $162.8 million in 2016 dollars.

[[Page 29075]]

Methodology
Final Rule Costs Inflated to 2016 Dollars
    As shown in table 1, we updated the annualized cost of the 2016 
final rule from 2012 dollars to 2016 dollars (over a 10-year period), 
which is approximately $23.2 million at a 7-percent discount rate. We 
performed this update to compare them to this proposed rule's total 
industry costs on the same basis.
    To do this, we used an inflation factor from the annual 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 final 
rule RA). These inflated costs are shown in table 2.

 Table 2--Comparison of Total Cost for Vessels and Additional Costs in 2012 Dollars and 2016 Dollars Under 2016
                                             TWIC Reader Final Rule
                                                   [Millions]
----------------------------------------------------------------------------------------------------------------
                                                              Vessel                     Additional costs
                      Year                       ---------------------------------------------------------------
                                                      2012 $          2016 $          2012 $          2016 $
----------------------------------------------------------------------------------------------------------------
1...............................................          $0.021          $0.022           $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...............................................           0.018           0.019            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.......................................           0.068           0.072           42.10           44.59
----------------------------------------------------------------------------------------------------------------

    For facilities, we applied this inflation factor to the total cost-
by-cost component (table 4.17 of the final rule RA) because the 
proposed rule would apply only to some of these cost elements. Facility 
costs include capital costs, maintenance costs, and operational costs. 
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, such as those for amending security plans, 
creating a recordkeeping system, 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. Table 3 presents a comparison of the facility costs in 
2012 and 2016 dollars, as well as an estimate of the total number of 
facilities complying with the regulation each year.

                                       Table 3--Comparison of Total Cost for Facilities in 2012 Dollars and 2016 Dollars Under 2016 TWIC Reader Final Rule
                                                                                           [Millions]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Number of      Total           Capital costs           Maintenance costs         Operational costs        Undiscounted total
                             Year                                   new       number of  -------------------------------------------------------------------------------------------------------
                                                                 facilities   facilities     2012 $       2016 $       2012 $       2016 $       2012 $       2016 $       2012 $       2016 $
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1.............................................................          263          263       $49.49       $52.41           $0           $0        $1.99        $2.10       $51.47       $54.51
2.............................................................          262          525        49.49        52.41         0.99         1.05         2.16         2.29        52.64        55.74
3.............................................................            0          525            0            0         1.97         2.09         1.34         1.42         3.31         3.51
4.............................................................            0          525            0            0         1.97         2.09         1.34         1.42         3.31         3.51
5.............................................................            0          525            0            0         1.97         2.09         1.34         1.42         3.31         3.51
6.............................................................            0          525         9.87        10.45         1.97         2.09         1.34         1.42        13.18        13.96
7.............................................................            0          525         9.87        10.45         1.97         2.09         1.34         1.42        13.18        13.96
8.............................................................            0          525            0            0         1.97         2.09         1.34         1.42         3.31         3.51
9.............................................................            0          525            0            0         1.97         2.09         1.34         1.42         3.31         3.51
10............................................................            0          525            0            0         1.97         2.09         1.34         1.42         3.31         3.51
                                                               ---------------------------------------------------------------------------------------------------------------------------------
    Total.....................................................  ...........  ...........       118.71       125.72        16.78        17.77        14.84        15.72       150.33       159.20
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    Table 4 summarizes the total costs to industry of the final rule in 
2016 dollars. We estimated the annualized cost to be $23.2 million at a 
7-percent discount rate.

[[Page 29076]]

                                             Table 4--Total Industry Cost Under 2016 TWIC Reader Final Rule
                                                                [Millions, 2016 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Additional
                          Year                               Facility         Vessel          costs *      Undiscounted         7%              3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................          $54.51          $0.022           $4.46          $58.99          $55.13          $57.27
2.......................................................           55.74          0.0038            4.46           60.20           52.58           56.75
3.......................................................            3.51          0.0038            4.46            7.97            6.50            7.29
4.......................................................            3.51          0.0038            4.46            7.97            6.08            7.08
5.......................................................            3.51          0.0038            4.46            7.97            5.68            6.87
6.......................................................           13.96           0.019            4.46           18.44           12.28           15.44
7.......................................................           13.96          0.0038            4.46           18.42           11.47           14.98
8.......................................................            3.51          0.0038            4.46            7.97            4.64            6.29
9.......................................................            3.51          0.0038            4.46            7.97            4.33            6.11
10......................................................            3.51          0.0038            4.46            7.97            4.05            5.93
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................          159.20           0.072           44.59          203.86          162.76          184.01
                                                         -----------------------------------------------------------------------------------------------
        Annualized......................................  ..............  ..............  ..............  ..............           23.17           21.57
--------------------------------------------------------------------------------------------------------------------------------------------------------
* These costs include additional delay, travel, and TWIC replacement costs due to TWIC failures.
Totals may not sum due to rounding.

Proposed Rule Costs
    This proposed rule would delay the effective date of the final rule 
by 3 years (until August 23, 2021) for 122 facilities that handle bulk 
CDC, but do not transfer it to or from a vessel, 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. To allow for a consistent comparison between the baseline 
estimates and the costs of this proposed rule, we maintain the 
assumption that 50 percent of facilities will comply each year of the 
implementation period. Therefore, we expect that 50 percent of the 403 
facilities unaffected by the delayed implementation will comply in year 
1 (202 facilities), and the remaining 50 percent will comply in year 2 
(201 facilities). For the 122 facilities with the 3-year implementation 
delay, we assume that 50 percent will comply in year 3 (61 facilities), 
and 50 percent will comply in year 4 (61 facilities).
    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.\50\ Because maintenance costs are not incurred until the year 
after the TWIC readers are installed, we calculated the proposed rule 
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.\51\ We estimated operational costs in a similar 
manner, multiplying total operational costs by the percentage of 
facilities complying in a given year.\52\ Table 5 presents the total 
cost to facilities under the proposed rule.
---------------------------------------------------------------------------

    \50\ We calculated the total initial baseline capital costs for 
TWIC installation for all facilities by adding the baseline capital 
costs presented in table 3 for years 1 and 2 ($52.41 million + 
$52.41 million = $104.81 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 
3 for years 6 and 7 ($10.45 million + $10.45 million = $20.90 
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 202 facilities are expected to incur capital costs, 
for a total industry cost of $40.33 million ($104.81 million x (202 
facilities/525 facilities) = $40.33 million).
    \51\ The total initial baseline maintenance costs for TWIC 
readers, $2.09 million, is found in year 3 of table 3, 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: $2.09 million x (202 facilities/
525 facilities) = $0.80 million.
    \52\ We calculated total operational costs by adding the 
baseline operational costs in years 1 and 2 as presented in table 3 
($2.10 million + $2.29 million = $4.39 million). However, this total 
includes a $0.187 million in costs for ongoing recordkeeping and 
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 = $4.206 
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 $1.416 million per year (see year 3 of 
table 3) by the percentage of facilities incurring ongoing costs. 
For example, in year 2, we calculated the total initial costs to be 
$1.61 million ($4.206 million x (201 facilities/525 facilities)), 
and we calculated the total ongoing costs to be $0.545 million 
($1.416 million x (202 facilities/525 facilities)), for a total cost 
of $2.16 million ($1.610 million + $0.545 million). The $1.416 
million ongoing cost includes not only the $0.187 million in ongoing 
training and recordkeeping costs, but also the cost to update the 
canceled card list annually.

                               Table 5--Total Cost for Facilities From Partially Delaying the Effective Date of Final Rule
                                                                 [Millions 2016 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Number of new   Total number                     Maintenance     Operational    Undiscounted
                          Year                              facilities     of facilities   Capital costs       costs           costs           total
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................             202             202          $40.33              $0           $1.62          $41.95
2.......................................................             201             403           40.13            0.80            2.16           43.09
3.......................................................              61             464           12.18            1.60            1.58           15.36
4.......................................................              61             525           12.18            1.85            1.74           15.77
5.......................................................               0             525               0            2.09            1.42            3.51
6.......................................................               0             525            8.04            2.09            1.42           11.55
7.......................................................               0             525            8.00            2.09            1.42           11.51
8.......................................................               0             525            2.43            2.09            1.42            5.93

[[Page 29077]]

 
9.......................................................               0             525            2.43            2.09            1.42            5.93
10......................................................               0             525               0            2.09            1.42            3.51
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................  ..............  ..............          125.72           16.80           15.58          158.10
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Totals may not sum due to rounding.

    Table 6 summarizes the total costs to industry of this proposed 
rule, which would delay the TWIC Reader final rule, in 2016 
dollars.\53\ This proposed rule would not impact the compliance 
schedule to vessels. Therefore, these costs remain unchanged from the 
baseline. We calculated the additional costs by multiplying the totals 
in table 2 by the percentage of facilities complying within a given 
year and phasing them in in 2 years. Over 10 years, we estimate the 
annualized cost to industry to be $22.03 million at a 7-percent 
discount rate.

                    Table 6--Total Industry Cost Under the Proposed Rule Partially Delaying the Effective Date of the 2016 Final Rule
                                                                [Millions, 2016 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Additional
                          Year                               Facility         Vessel          costs *      Undiscounted         7%              3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................          $41.95          $0.022           $1.73          $43.70          $40.84          $42.43
2.......................................................           43.09          0.0038            3.41           46.50           40.62           43.83
3.......................................................           15.36          0.0038            3.94           19.30           15.75           17.66
4.......................................................           15.77          0.0038            4.46           20.23           15.43           17.97
5.......................................................            3.51          0.0038            4.46            7.97            5.68            6.87
6.......................................................           11.55           0.019            4.46           16.03           10.68           13.42
7.......................................................           11.51          0.0038            4.46           15.97            9.95           12.99
8.......................................................            5.93          0.0038            4.46           10.40            6.05            8.21
9.......................................................            5.93          0.0038            4.46           10.40            5.66            7.97
10......................................................            3.51          0.0038            4.46            7.97            4.05            5.93
                                                         -----------------------------------------------------------------------------------------------
    Total...............................................          158.10           0.072           40.29          198.46          154.71          177.28
                                                         -----------------------------------------------------------------------------------------------
        Annualized......................................  ..............  ..............  ..............  ..............           22.03           20.78
--------------------------------------------------------------------------------------------------------------------------------------------------------
* These costs include additional delay, travel, and TWIC replacement costs due to TWIC failures.
Totals may not sum due to rounding.

    Table 7 presents the estimated change in total costs to industry 
from delaying the implementation of the TWIC Reader final rule by 3 
years (until August 23, 2021) 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 $1.15 million at a 7-percent discount rate.

 Table 7--Total Change in Industry Cost From the Final Rule to the NPRM Partially Delaying the Effective Date of
                                                   Final Rule
                                            [Millions, 2016 dollars]
----------------------------------------------------------------------------------------------------------------
                                                        Total 10-year cost                Annualized cost
                                  Total 10-year            (discounted)          -------------------------------
                                    cost (not    --------------------------------
                                   discounted)          7%              3%              7%              3%
----------------------------------------------------------------------------------------------------------------
TWIC Reader Final Rule.........          $203.86         $162.76         $184.01          $23.17          $21.57
NPRM to Delay Final Rule by 3             198.46          154.71          177.28           22.03           20.78
 years.........................
                                --------------------------------------------------------------------------------
    Change.....................           (5.40)          (8.05)          (6.73)          (1.15)          (0.79)
----------------------------------------------------------------------------------------------------------------

Qualitative Costs
    Qualitative costs are as shown in table 1. This proposed rule would 
delay the cost to retrieve or replace lost PINs for use with TWICs for 
the facilities with delayed implementation.
Government Costs
    We expect that this proposed rule would also generate a cost 
savings to the government from delaying the review of the revised 
security plans for 122 Risk Group A facilities that handle bulk CDC, 
but do not transfer it to or from a vessel, 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

[[Page 29078]]

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 final rule Regulatory Analysis 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 Instruction 7310.1R: Reimbursable Standard Rates, in place 
of the 2012 wage of $49 per hour.\54\ We then followed the calculations 
outlined on page 72 of the final rule Regulatory Analysis to estimate a 
government cost of $53,550 in the first 2 years ($51 x 4 hours per 
review x 262.5 plans). Table 8 presents the annualized baseline 
government costs of $13,785 at a 7-percent discount rate.
---------------------------------------------------------------------------

    \54\ Because the Coast Guard is not delaying the implementation 
schedule for vessels, the proposed rule would have no impact on the 
costs associated with vessel security plans, and, therefore, we did 
not include them in this Regulatory Analysis.

                        Table 8--Total Government Cost Under 2016 TWIC Reader Final 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 9 presents the government cost under the proposed rule. We 
estimated the annualized government cost to be $13,047 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.\55\
---------------------------------------------------------------------------

    \55\ 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.

Table 9--Total Government Cost Under the NPRM Partially Delaying the Effective Date of the 2016 Final Rule, Risk
                                                     Group A
                                                 [2016 dollars]
----------------------------------------------------------------------------------------------------------------
                              Year                                  Cost of FSP         7%              3%
----------------------------------------------------------------------------------------------------------------
1...............................................................         $41,208         $38,512         $40,008
2...............................................................          41,004          33,471          38,650
3...............................................................          12,444          10,158          11,388
4...............................................................          12,444           9,493          11,056
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          91,635         101,102
                                                                 -----------------------------------------------
        Annualized..............................................  ..............          13,047          11,852
----------------------------------------------------------------------------------------------------------------

    Table 10 presents the estimated change in government costs from 
delaying the implementation of the TWIC Reader final rule by 3 years 
(until August 23, 2021) 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 the government of $738 at a 7-percent discount rate.

[[Page 29079]]

 Table 10--Total Change in Government Cost From the Final Rule to the NPRM Delaying the Effective Date of Final
                                                      Rule
                                                 [2016 dollars]
----------------------------------------------------------------------------------------------------------------
                                                      Total cost (discounted)             Annualized cost
                                 Total cost (not ---------------------------------------------------------------
                                   discounted)          7%              3%              7%              3%
----------------------------------------------------------------------------------------------------------------
TWIC Reader Final Rule.........         $107,100         $96,819        $102,466         $13,785         $12,012
NPRM to Delay Final Rule by 3            107,100          91,635         101,102          13,047          11,852
 years.........................
                                --------------------------------------------------------------------------------
    Change.....................              0.0       (5,184.3)       (1,364.0)         (738.1)         (159.9)
----------------------------------------------------------------------------------------------------------------

    Using a perpetual period of analysis, we estimated the total 
annualized cost savings of the proposed rule to be $0.552 million in 
2016 dollars, using a 7-percent discount rate.
Change in Benefits
    As noted, this proposed rule would delay the effective date of the 
TWIC reader requirement for two categories of facilities: (1) 
Facilities that handle bulk CDC, but do not transfer it to or from a 
vessel (to comply by Aug. 23, 2021), and (2) facilities that receive 
vessels carrying bulk CDC but do not transfer bulk CDC to or from the 
vessel during that vessel-to-facility interface. The facilities for 
which the TWIC Reader final rule would be delayed will not realize 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, until 
August 23, 2021.
Summary of Cost Savings Under Executive Order 13771
    We do not anticipate any new costs to the industry and government 
if this proposed rule is implemented and the effective date of the TWIC 
Reader final rule is delayed by 3 years. Therefore, this proposed rule 
is expected to be an Executive Order 13771 deregulatory action. Table 
11 summarizes the cost savings of this rule by comparing and 
subtracting the costs of this proposed rule from the TWIC Reader final 
rule costs. Because this proposed rule would delay the implementation 
of the final rule by 3 years for 122 facilities, it would result in 
cost savings of $8.1 million for industry, $0.005 million for 
government, and $8.1 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 $1.15 million to the industry, 
$0.0007 to the government, and $1.15 million total. Using a perpetual 
period of analysis, we found total annualized cost savings of the 
proposed rule to be $0.552 million to industry and the government.

  Table 11--Summary of Costs Savings Under Executive Order 13771: Final
       Rule and NPRM To Delay the Effective Date of the Final Rule
------------------------------------------------------------------------
                                              Cost savings of this NPRM
                 Category                         (millions 2016$)
------------------------------------------------------------------------
Costs to Industry, Government and Total ($  Industry: $8.050 (10-year).
 millions, 7% discount rate).               Government: $0.005 (10-
                                             year).
                                            Total: $8.055 (10-year).
                                            Industry: $1.146
                                             (annualized).
                                            Government: $0.0007
                                             (annualized).
                                            Total: $1.147 (annualized).
                                            Industry: $0.522
                                             (perpetual).
                                            Government: $0.00017
                                             (perpetual).
                                            Total: $0.522 (perpetual).
------------------------------------------------------------------------

Alternatives
    One regulatory alternative to this proposed rule is for the Coast 
Guard to take no action. Under this alternative, the TWIC Reader final 
rule would become effective on August 23, 2018, and all 122 facilities 
we identified in our final rule Regulatory Analysis, in addition to the 
unknown number of facilities, would be expected to comply with the 
final 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 final rule Regulatory Analysis 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, take 2 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, it 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 it 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

[[Page 29080]]

they do not address our need to conduct a comprehensive risk analysis 
at the individual facility level to determine whether or not those 122 
facilities and an unknown number of facilities would be required to 
comply with the final rule after August 23, 2018, 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 proposed rule would 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 proposes to delay the effective date of the TWIC 
Reader final rule (August 23, 2018) by 3 years, until August 23, 2021, 
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, 
during that vessel-to-facility interface, do not transfer it to or from 
the vessel. These facilities will experience a cost savings. Therefore, 
we estimate that this proposed rule would provide cost savings to 122 
facilities.
    Given this information, the Coast Guard certifies under 5 U.S.C. 
605(b) that this proposed rule would not have a significant economic 
impact on a substantial number of small entities. If you think that 
your business, organization, or governmental jurisdiction qualifies as 
a small entity and that this proposed rule would have a significant 
economic impact on it, please submit a comment to the docket at the 
address listed in the ADDRESSES section of this preamble. In your 
comment, explain why you think it qualifies and how and to what degree 
this proposed rule would economically affect it.

C. Assistance for Small Entities

    Under section 213(a) of the Small Business Regulatory Enforcement 
Fairness Act of 1996, Public Law 104-121, we want to assist small 
entities in understanding this proposed rule so that they can better 
evaluate its effects on them and participate in the rulemaking. If this 
proposed rule would affect your small business, organization, or 
governmental jurisdiction and you have questions concerning its 
provisions or options for compliance, please contact the person in the 
FOR FURTHER INFORMATION CONTACT section of this NPRM. The Coast Guard 
will not retaliate against small entities that question or complain 
about this proposed rule or any policy or action of the Coast Guard.
    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 proposed rule would call 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 E.O. 13132 
(Federalism) if it has a substantial direct effect on the States, on 
the relationship between the national government and the States, or on 
the distribution of power and responsibilities among the various levels 
of government. We have analyzed this proposed rule under that order and 
have determined that it is consistent with the fundamental federalism 
principles and preemption requirements described in E.O. 13132. Our 
analysis is explained below.
    This proposed rule would delay the implementation of existing 
regulations that create a risk-based set of security measures for 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 proposed rule would not impose any new requirements, but simply 
delay the implementation of existing requirements, it would not have a 
preemptive impact. Please refer to the Coast Guard's federalism 
analysis in the final rule entitled ``Transportation Worker 
Identification Credential (TWIC)--Reader Requirements,'' (81 FR 57652, 
57706) for additional information.
    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, States and local governments have traditionally 
shared certain regulatory jurisdiction over waterfront facilities. 
Therefore, MTSA standards contained in 33 CFR part 105 (Maritime 
security: Facilities) are not preemptive of State or local law or 
regulations that do not conflict with them (i.e., they would either 
actually conflict or would frustrate an overriding Federal need for 
uniformity).
    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 contact the person listed in the FOR FURTHER INFORMATION section 
of this preamble.

F. Unfunded Mandates Reform Act

    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 million (adjusted for 
inflation) or more in any one year. Although this proposed rule would 
not result in such expenditure, we discuss the effects of this NPRM 
elsewhere in this preamble.

G. Taking of Private Property

    This proposed rule would 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 proposed 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 proposed rule under Executive Order 13045 
(Protection of Children from Environmental Health Risks and Safety 
Risks). This proposed 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 proposed rule does not have tribal implications under 
Executive

[[Page 29081]]

Order 13175 (Consultation and Coordination with Indian Tribal 
Governments) because it would not have a substantial direct effect on 
one or more Indian tribes, on the relationship between the Federal 
Government and Indian tribes, or on the distribution of power and 
responsibilities between the Federal Government and Indian tribes.

K. Energy Effects

    We have analyzed this proposed 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 that order 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 proposed rule does not use technical standards. Therefore, we 
did not consider the use of voluntary consensus standards.

M. Environment

    We have analyzed this proposed rule under Department of Homeland 
Security Management Directive 023-01 and Commandant Instruction 
M16475.lD, which guide the Coast Guard in complying with the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made 
a preliminary determination that this action is one of a category of 
actions that do not individually or cumulatively have a significant 
effect on the human environment. A preliminary Record of Environmental 
Consideration (REC) supporting this determination is available in the 
docket where indicated under the ``Public Participation and Request for 
Comments'' section of this preamble. This proposed rule would be 
categorically excluded under paragraph L54 of Appendix A, Table 1 of 
DHS Instruction Manual 023-01(series). Paragraph L54 pertains to 
regulations that are editorial or procedural. We seek any comments or 
information that may lead to the discovery of a significant 
environmental impact from this proposed rule.

List of Subjects in 33 CFR Part 105

    Maritime security, Reporting and recordkeeping requirements, 
Security measures.

    For the reasons listed in the preamble, the Coast Guard proposes to 
amend 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; 33 CFR 1.05-1, 6.04-11, 6.14, 6.16, and 6.19; Department of 
Homeland Security Delegation No. 0170.1.

0
2. Amend Sec.  105.253, as proposed to be added August 23, 2018 at 81 
FR 57712, by revising paragraphs (a)(1) and (2) and adding paragraphs 
(a)(3) and (4) to read as follows:

Sec.  105.253   Risk Group classifications for facilities.

    (a) * * *
    (1) Beginning August 23, 2018: Facilities that receive vessels 
certificated to carry more than 1,000 passengers.
    (2) Beginning August 23, 2018: Facilities that handle Certain 
Dangerous Cargoes (CDC) in bulk and transfer such cargoes from or to a 
vessel.
    (3) Beginning August 23, 2021: Facilities that handle CDC in bulk, 
but do not transfer it from or to a vessel.
    (4) Beginning August 23, 2021: Facilities that receive vessels 
carrying CDC in bulk but, during the vessel-to-facility interface, do 
not transfer it from or to the vessel.
* * * * *

    Dated: June 15, 2018.
Karl L. Schultz,
Admiral, U.S. Coast Guard, Commandant.
[FR Doc. 2018-13345 Filed 6-21-18; 8:45 am]
 BILLING CODE 9110-04-P