Frequency of Renewal Cycle for Indirect Air Carrier Security Programs, 79264-79272 [2022-27778]
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Federal Register / Vol. 87, No. 247 / Tuesday, December 27, 2022 / Proposed Rules
file meaningful comments given the
intervening weekend and Christmas
holiday. See 47 CFR 1.46; see also 47
CFR 1.45(e), 47 CFR 1.3. We therefore
grant Requestors unopposed Request
and set the new deadline for filing
Oppositions to Replies to January 10,
2023. The deadline for filing
Oppositions remains December 19,
2022.
II. Ordering Clauses
6. Accordingly, it is ordered that,
pursuant to section 4(i) and (j) of the
Communications Act of 1934, as
amended, 47 U.S.C. 154(i) and (j), and
§§ 0.204, 0.392, and 1.46 of the
Commission’s rules, 47 CFR 0.204,
0.392, 1.46, the Request for Extension of
Time filed by Requestors is granted.
7. It is further ordered that the date to
file Oppositions to Replies in response
to the Petition is extended to January 10,
2023.
Federal Communications Commission.
Lauren Kravetz,
Chief of Staff, Public Safety and Homeland
Security Bureau.
[FR Doc. 2022–28069 Filed 12–23–22; 8:45 am]
BILLING CODE 6712–01–P
DEPARTMENT OF HOMELAND
SECURITY
Transportation Security Administration
49 CFR Part 1548
[Docket No. TSA–2020–0002]
RIN 1652–AA72
Frequency of Renewal Cycle for
Indirect Air Carrier Security Programs
Transportation Security
Administration, DHS.
ACTION: Notice of proposed rulemaking
(NPRM).
AGENCY:
The Transportation Security
Administration (TSA) is proposing to
modify its regulations to reduce the
frequency of renewal applications by
indirect air carriers (IACs). Rather than
requiring these entities to submit an
application to renew their security
program each year, TSA is proposing to
require renewal once every three years.
This modification would reduce the
burden of compliance without a
negative impact on security and would
support this industry’s economic
recovery from the impacts of the
COVID–19 public health crisis.
DATES: Submit comments on or before
February 27, 2023.
ADDRESSES: You may submit comments,
identified by the TSA docket number to
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SUMMARY:
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this rulemaking, to the Federal Docket
Management System (FDMS), a
government-wide, electronic docket
management system. To avoid
duplication, please use only one of the
following methods:
• Electronic Federal eRulemaking
Portal: https://www.regulations.gov.
Follow the online instructions for
submitting comments.
• Mail: Docket Management Facility
(M–30), U.S. Department of
Transportation, 1200 New Jersey
Avenue SE, West Building Ground
Floor, Room W12–140, Washington, DC
20590–0001. The Department of
Transportation (DOT), which maintains
and processes TSA’s official regulatory
dockets, will scan the submission and
post it to FDMS. Comments must be
postmarked by the dates indicated
above.
• Fax: (202) 493–2251.
See SUPPLEMENTARY INFORMATION for
format and other information about
comment submissions.
FOR FURTHER INFORMATION CONTACT:
Angel Rodriguez, telephone 1–571–227–
2108; email angel.l.rodriguez@
tsa.dhs.gov.
SUPPLEMENTARY INFORMATION:
Comments Invited
TSA invites interested persons to
participate in this rulemaking by
submitting written comments, data, or
views. You may submit comments,
identified by the TSA docket number for
this rulemaking, to the ADDRESSES noted
above. With each comment, please
include this docket number at the
beginning of your comments. You may
submit comments and material
electronically, in person, by mail, or fax
as provided under ADDRESSES, but
please submit your comments and
material by only one means. If you
submit comments by mail or in person
submit them in an unbound format, no
larger than 8.5 by 11 inches, suitable for
copying and electronic filing.
If you would like TSA to acknowledge
receipt of comments submitted by mail,
include with your comments a selfaddressed, stamped postcard on which
the docket number appears. TSA will
stamp the date on the postcard and mail
it to you.
All comments, except those that
include confidential or sensitive
security information (SSI) 1 will be
1 ‘‘Sensitive Security Information’’ or ‘‘SSI’’ is
information obtained or developed in the conduct
of security activities, the disclosure of which would
constitute an unwarranted invasion of privacy,
reveal trade secrets or privileged or confidential
information, or be detrimental to the security of
transportation. The protection of SSI is governed by
49 CFR part 1520.
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posted to https://www.regulations.gov,
and will include any personal
information you have provided. Should
you wish your personally identifiable
information redacted prior to filing in
the docket, please clearly indicate this
request in your submission. TSA will
consider all comments that are in the
docket on or before the closing date for
comments and will consider comments
filed late to the extent practicable. The
docket is available for public inspection
before and after the comment closing
date.
Handling of Confidential or Proprietary
Information and SSI Submitted in
Public Comments
Do not submit comments that include
trade secrets, confidential commercial
or financial information, or SSI to the
public regulatory docket. Comments
containing this type of information
should be submitted separately from
other comments, appropriately marked
as containing such information, and
submitted by mail to the address listed
in FOR FURTHER INFORMATION CONTACT
section. TSA will take the following
actions for all submissions containing
SSI:
• TSA will not place comments
containing SSI in the public docket and
will handle them in accordance with
applicable safeguards and restrictions
on access.
• TSA will hold documents
containing SSI, confidential business
information, or trade secrets in a
separate file to which the public does
not have access, and place a note in the
public docket explaining that
commenters have submitted such
documents.
• TSA may include a redacted
version of the comment in the public
docket.
• TSA will treat requests to examine
or copy information that is not in the
public docket as any other request
under the Freedom of Information Act
(FOIA) (5 U.S.C. 552) and the
Department of Homeland Security
(DHS) FOIA regulation found in 6 CFR
part 5.
Reviewing Comments in the Docket
Please be aware that anyone is able to
search the electronic form of all
comments in any of our dockets by the
name of the individual who submitted
or signed the comment (e.g., if
submitted by an association, business,
labor union, etc.). For more about
privacy and the docket, review the
Privacy and Security Notice for the
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FDMS at https://www.regulations.gov/
privacy-notice, as well as the System of
Records Notice DOT/ALL 14—Federal
Docket Management System (73 FR
3316, January 17, 2008) and the System
of Records Notice DHS/ALL 044—
eRulemaking (85 FR 14226, March 11,
2020).
You can review TSA’s electronic
public docket at https://
www.regulations.gov. In addition, DOT’s
Docket Management Facility provides a
physical facility, staff, equipment, and
assistance to the public. To obtain
assistance or to review comments in
TSA’s public docket, you may visit this
facility between 9 a.m. and 5 p.m.,
Monday through Friday, excluding legal
holidays, or call (202) 366–9826. This
DOT facility is located in the West
Building Ground Floor, Room W12–140
at 1200 New Jersey Avenue SE,
Washington, DC 20590.
You can find an electronic copy of
rulemaking documents relevant to this
action by searching the electronic FDMS
web page at https://www.regulations.gov
or at https://www.federalregister.gov. In
addition, copies are available by writing
or calling the individual in the FOR
FURTHER INFORMATION CONTACT section.
Make sure to identify the docket number
of this NPRM.
Abbreviations and Terms Used in This
Document
CCSF—Certified Cargo Screening Facility
CEQ—Council on Environmental Quality
DHS—Department of Homeland Security
DOT—Department of Transportation
E.O.—Executive Order
FOIA—Freedom of Information Act
IAC—Indirect Air Carrier
IACSSP—Indirect Air Carrier Standard
Security Program
NEPA—National Environmental Policy Act
OMB—Office of Management and Budget
PRA—Paperwork Reduction Act of 1995
SBREFA—Small Business Regulatory
Enforcement Fairness Act of 1996
SSI—Sensitive Security Information
TSA—Transportation Security
Administration
I. Executive Summary
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A. Purpose of the Regulatory Action
An IAC, sometimes called a freight
forwarder, acts as an intermediary
between a shipper of air cargo and an air
carrier by receiving and consolidating
cargo from one or more shippers for
transport on one or more aircraft flights.
IACs are a critical component of a
secure, air cargo supply-chain in the
United States, helping to ensure the
safe, timely, and efficient movement of
goods every day. Approximately 3,800
IACs are operating in the United States
and registered with TSA, ranging from
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sole proprietors working out of their
homes to large corporations.
Currently, TSA’s regulations require
IACs to renew their registration each
year. TSA is proposing to modify 49
CFR 1548.7 to reduce the frequency at
which IACs must renew their
registration from annual to once every
three years. This modification will
reduce the burden of compliance by
decreasing the time and effort an IAC
must devote to renewing their
registration, permitting them to focus on
other operational and business
priorities, including meeting supply
chain demands as the industry recovers
from the impact of the COVID–19 public
health crisis.
TSA has determined this modification
reduces the cost of compliance without
any negative impacts on security. As
noted below, TSA estimates that over
ten years, cost savings aggregate to $7.8
million undiscounted, $6.6 million
discounted at 3 percent, and $5.4
million discounted at 7 percent. The
rulemaking would realize an annualized
$800,000 in cost savings discounted at
7 percent over 10 years.
II. Background
A. Regulation of IACs
As noted above, IACs play a critical
role in ensuring a secure, air cargo
supply-chain, acting as an intermediary
between the shipper and the aircraft
operator.2 To ensure the security of the
air cargo system, TSA imposes security
requirements on IACs in 49 CFR part
1548. Through these regulations, TSA
ensures ‘‘IACs are held accountable for
securing the goods entrusted to them
throughout those legs of the supply
chain for which they are responsible.’’ 3
Under 49 CFR 1548.5, each IAC must
adopt and carry out the IAC Standard
Security Program (IACSSP). Persons
interested in becoming IACs are vetted
by TSA and are required to implement
security requirements in the IACSSP.
These requirements are intended to
ensure security during the period
between when a package leaves a
shipper and when it is presented to the
aircraft operators. IACs must also ensure
their employees understand and are
2 TSA’s regulations define an IAC as ‘‘any person
or entity within the United States not in possession
of [a Federal Aviation Administration] air carrier
operating certificate, that undertakes to engage
indirectly in air transportation of property, and uses
for all or any part of such transportation the
services of an air carrier.’’ See 49 CFR 1540.5. The
scope includes businesses engaged in the indirect
transport of cargo on larger commercial aircraft,
regardless of whether the operation is conducted
with a passenger aircraft or an all-cargo aircraft.
3 See Proposed Rule, Air Cargo Security
Requirements, 69 FR 65257, 65269 (Nov. 10, 2004).
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trained to implement their security
responsibilities.
TSA uses a web-based, centralized
system for businesses to obtain IAC
approval and to renew this approval.
Through this process, TSA checks
whether an applicant is a legitimate
business and determines whether the
business or its personnel pose a threat
to transportation security. TSA may
withdraw approval of an IAC if
individuals or companies are found to
be security risks during revalidation.
B. Requirement for Annual Renewal
Current 49 CFR 1548.7(b) presents the
processes an IAC must follow annually
to seek renewed approval from TSA to
operate under the IACSSP. In general,
annual renewal is a continuation of
current practices and security measures
in the IACSSP, including any TSAapproved amendments issued under 49
CFR 1548.7(c), (d), and/or (e). IACs must
submit the renewal request to TSA at
least 30 calendar days prior to
expiration of the IACSSP, as well as
other standards for the submission.
Since 2006, TSA has required IACs to
renew their registration each year. This
requirement was based on the following
considerations. First, other entities
regulated by a TSA security program,
such as aircraft operators and airports,
must obtain annual FAA certification,
which involves the submission and
verification of information relating to
the entity and its operations. IACs are
not required to do so. Second, TSA
found that the IAC industry has a high
degree of turnover. The current
regulations require the IAC to certify
that it has provided TSA with its most
up-to-date information and to
acknowledge that intentional
falsification of the information may be
subject to civil and criminal penalties.4
Since the annual renewal requirement
was imposed in 2006, TSA has
determined that it is unnecessary to
continue requiring annual renewal and
that the program could be renewed once
every three years without having a
negative impact on security. As
discussed below, this determination is
based on two key factors: (1) TSA’s
inspection processes and priorities for
IACs negate the need for annual
renewals, and (2) the triennial renewal
requirement for other TSA air cargo
programs that have proven to be
effective and secure.
4 See Air Cargo Security Requirements; Final
Rule, 71 FR 30477, 30514 (May 26, 2006).
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First, when the annual renewal
requirement was imposed in 2006,5 TSA
expected that the annual cycle of
renewals would be the primary method
to ensure the agency regularly reviewed
each IAC and confirmed compliance
with TSA security requirements.6 TSA,
however, actually ensures compliance
with the program through regular
inspections of IACs. IACs are typically
subject to a comprehensive inspection
on a one, two, or three-year cycle
depending on TSA’s assessment of the
relative security risk for each individual
IAC. This security risk determination
reflects vulnerabilities that exist based
on the results of prior compliance
reviews. For example, TSA generally
conducts more frequent inspections of
IACs that have lower compliance rates
in order to ensure the IACs being
inspected are performing all actions
necessary to provide the required level
of security. These reviews include
targeted and supplemental inspections.
An additional safeguard is provided
by 49 CFR 1540.301, which allows TSA
to withdraw approval of an IAC security
program if TSA determines continued
operation is contrary to security and the
public interest.7 If TSA withdraws
approval, an IAC must discontinue
operation immediately, regardless of the
renewal date of its program certification.
See discussion in Section III.A. of this
NPRM.
Second, in addition to recognizing the
effectiveness of its regular inspections to
ensure compliance with the IAC
program, TSA also considered the
requirements for the IAC program
compared to other aviation security
requirements, specifically requirements
applicable to Certified Cargo Screening
Facilities (CCSFs) under 49 CFR part
1549. When TSA finalized the rule
establishing the Certified Cargo
Screening Program in 2011,8 TSA
provided a three-year renewal period for
CCSFs.9 Over more than a decade of
implementing the Certified Cargo
Screening Program validates that the
triennial recertification cycle does not
have a negative impact on security. The
proposed rule does not change the
required actions that IACs must perform
to recertify or the requirements they
must meet to maintain approval to
operate as an IAC; the proposed rule
5 Id. at 30495. See also Proposed Rule, Air Cargo
Security Requirements, 69 FR 65257, 65269 (Nov.
10, 2004).
6 See supra n. 4.
7 See 49 CFR 1548.7(f) and 1540.301(b).
8 See Final Rule, Air Cargo Screening, 76 FR
51847 (Aug. 18, 2011).
9 See 49 CFR 1549.7(b).
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simply reduces the frequency with
which they must recertify.
C. Benefits of Proposed Modification of
Renewal Period
Consistent with the principles of
Executive Order (E.O.) 12866 of
September 30, 1993 (Regulatory
Planning and Review) and E.O. 13563 of
January 18, 2011 (Improving Regulation
and Regulatory Review), TSA is
committed to ensuring its regulations do
not impose more stringent or
burdensome requirements than are
necessary to provide the intended
security benefits. This action is also
consistent with the burden-reduction
principles of E.O. 14058 of December
13, 2021 (Transforming Federal
Customer Experience and Service
Delivery to Rebuild Trust in
Government). Whether imposing or
revising a regulation, TSA is required by
49 U.S.C. 114(l)(3) to consider, as one
factor in a final determination, whether
the costs of the regulation are excessive
in relation to the enhancement of
security the regulation will provide.
TSA has determined that the security
benefits of annual recertifications do not
outweigh the cost of annual renewal
applications. As noted below, TSA
estimates that over ten years the cost
savings aggregate to $7.8 million
undiscounted, $6.6 million discounted
at 3 percent, and $5.4 million
discounted at 7 percent. The rule would
realize annualized savings of $0.8
million in 2020 dollars discounted at 7
percent.
This change in the renewal
requirement would not have a negative
impact on security as the security
enhancements provided by annual
recertifications are minimal for the
following two reasons. First, IACs are
required to notify TSA within 30 days
if there are any changes to the
information provided in their
application. See 49 CFR 1548.7(a)(5).
This requirement ensures that TSA
always has current information
regarding the IAC. Second, and as
previously noted, TSA’s existing
inspection program for IACs ensures
that those IACs that might be at risk of
losing certification are inspected more
frequently to ensure they are meeting
minimal program requirements. TSA
would continue to perform compliance
inspections with the same frequency as
the current program operation and
prioritization. The present inspection
schedule, the requirements for
inspections, and the scope of required
inspections are not modified by this
action.
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D. Impact of COVID–19 Public Health
Crisis on Air Cargo Supply Chain
The current COVID–19 public health
crisis has disrupted critical supply
chains globally, including throughout
the United States. IACs are challenged
by the combination of increased
demand for air cargo shipments and
limitations resulting from the impact of
COVID–19 on personnel. As a result,
many IACs are facing logistical,
operational, and personnel challenges.
While the change to the rule may not
have a significant economic impact,
TSA believes it is appropriate to provide
relief from regulatory requirements
during this time, enabling IACs to focus
their time and effort on the essential
tasks of delivering essential goods and
services.
III. Summary of the Proposed Rule
TSA is proposing to make limited
amendments to the text of paragraphs
(a) and (b) in 49 CFR 1548.7, to change
the periodic renewal of all IAC security
programs from one year to three years.
As noted in section I, this modification
will reduce the burden of compliance by
reducing the time and effort an IAC
must devote to renewing their
registration, permitting them to focus on
other operational and business
priorities, including meeting supply
chain demands as the industry recovers
from the COVID–19 public health crisis.
The net result of these changes is a
three-year renewal period for the
approval to operate as an IAC under the
IACSSP.
A. Duration of Program
Currently, 49 CFR 1548.7(a)(4) states
that a program remains effective from
the time it is approved until the end of
the calendar month one year after the
month it was approved. The proposed
rule removes the words ‘‘one year after
the month it was approved’’ in
paragraph (a)(4) and adds in their place:
‘‘three years after the month it was
approved, or until the program has been
surrendered or withdrawn, whichever is
earlier’’.
In addition to the specific change in
the renewal period in this section, TSA
is proposing to add ‘‘or until the
program has been surrendered or
withdrawn, whichever is earlier’’, to the
duration language to ensure greater
consistency across TSA’s cargo
programs.10 The process for becoming
an IAC can be seen as analogous, in
some respects, to an enforceable
contractual relationship between TSA
10 See, e.g., text relating to Certified Cargo
Screening Program renewal periods in 49 CFR
1549.7(a)(6).
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and the regulated entity. We grant
persons permission to operate as an IAC
on condition that they agree to comply
with TSA’s requirements. There are
three actions that could result in a
person no longer being able to represent
themselves as an IAC: (1) the IAC fails
to renew the program by the required
deadline; 11 (2) the IAC informs TSA
that it no longer intends to function as
a TSA-approved IAC (i.e., the IAC
surrenders approval to operate as an
IAC, similar to the concept of surrender
of approval in other TSA programs); or
(3) TSA withdraws approval consistent
with the standards and procedures in
TSA’s regulations.12 The
implementation of the changes
proposed in this rule would increase the
consistency and clarity of regulatory
requirements across TSA’s air cargo
security regulations.13 TSA is proposing
similar changes for paragraph (b)(4),
which addresses duration of an IAC’s
program after renewal.
B. Changes in Information
Paragraph (a)(5) includes the
requirement for IACs to notify TSA if
any of the information relevant to TSA’s
approval of the program changes. In this
section, TSA is proposing to make clear
that the rule covers changes made both
after submission of the initial
application and information submitted
as part of the renewal application. This
additional language would clarify TSA’s
intent and ensure TSA has current
information about the IAC’s operations
that could affect security and the IAC’s
approval to operate under the IACSSP.
C. Conforming Changes
Under § 1548.7(b)(1), IAC’s must
submit their application for renewal at
least 30 calendar days ‘‘prior to the first
day of the anniversary month of initial
approval.’’ TSA is proposing to revise
this language to conform with the
proposed three-year duration of the
program by requiring applications for
renewal to be submitted 30 calendar
days prior to the 36th month after the
initial approval of its security program.
IV. Small Entity Inquiries
The Small Business Regulatory
Enforcement Fairness Act of 1996
(SBREFA) requires TSA to comply with
small entity requests for information
and advice about compliance with
statutes and regulations within TSA’s
jurisdiction. Any small entity that has a
question regarding this document may
contact the person listed in the FOR
FURTHER INFORMATION CONTACT section.
Persons can obtain further information
regarding SBREFA on the Small
Business Administration’s web page at
https://www.sba.gov/category/advocacynavigation-structure/regulatory-policy/
regulatory-flexibility-act/sbrefa.
V. Regulatory Analyses
TSA considered numerous statutes
and Executive orders related to
rulemaking when developing this rule.
The following summarizes TSA’s
analyses of the impact of the rulemaking
as directed by these statutes or
Executive orders.
A. Regulatory Planning and Review
1. Background
E.O. 12866 of September 30, 1993
(Regulatory Planning and Review), and
E.O. 13563 of January 18, 2011
(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,
79267
environmental, public health and safety
effects, distributive impacts, and
equity). E.O. 13563 emphasizes the
importance of quantifying costs and
benefits, reducing costs, harmonizing
rules, and promoting flexibility.
In conducting these analyses, TSA
provides the following conclusions and
summary information:
• The Office of Management and
Budget (OMB) has determined that this
rulemaking is not a ‘‘significant
regulatory action’’ as defined in E.O.
12866; and
• TSA has certified that this
rulemaking would not have a significant
impact on a substantial number of small
entities.
The basis for these conclusions is set
forth below.
This proposed rule would reduce
regulatory costs by reducing the
frequency that IACs must renew their
security program certifications. This
rule would reduce the frequency of
annual IAC security program
certifications to once every three years.
This rule does not impose any
incremental costs because regulated
entities are already performing all
actions required to obtain the
certification in question. The expected
outcome will be a minimal impact with
positive net benefits.
2. Estimated Cost Savings to Affected
Entities
The cost savings from this rule arise
from extending the duration of IAC
security programs approved by TSA
from one year to three years. This
change aligns the duration of the IAC
security program with the Certified
Cargo Screening Program.14 Table 1
summarizes the change and impact from
this action.
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TABLE 1—COMPARISON OF CURRENT 49 CFR PART 1548 AND PROPOSED RULE
Current
Proposed rule
Impact
Estimated cost savings
Requires annual
renewal of security program.
Revises to renewal every
three years.
(1) Aligns part 1548 renewal period with that
of the TSA-approved Certified Cargo
Screening Program, part 1549.
(2) Provides cost savings to industry and
TSA.
TSA estimates the annualized cost saving to industry and
Federal government to be $800,000 annualized at a 7
percent discount rate. Cost savings arise from time saved
due to a less frequent security program renewal cycle.
To estimate cost savings, TSA
calculates the number of instances an
IAC would resubmit a security program
under the current annual requirement,
and the number of instances that would
be avoided under the proposed rule’s
three-year requirement. TSA uses the
11 See
49 CFR 1548.7(b).
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difference in the number of
resubmission instances between the
current requirement and the proposed
rule as the basis for the cost savings.
TSA uses historical data on the
number of existing IACs to forecast the
number of security programs submitted
12 See 49 CFR 1548.7(f) and (g), citing 49 CFR
1540.301.
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for certification over the ten-year period
of analysis. TSA assumes that the
regulatory change for less frequent
recertification does not impact the
annual number of forecasted active IAC
certifications. Based on historical
program data, TSA assumes the
13 See,
14 See
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e.g., supra n. 10.
supra n. 8 and accompanying text.
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aggregate population of active and
approved IACs under the baseline and
the proposed rule decreases each year
with more dropping out than entering.
TSA calculates that the aggregate active
population decreases at an annual rate
of 1.61 percent 15 and compounds this
rate to estimate the aggregate active IAC
population for the next ten years, as
displayed in column a of Table 2. The
aggregate active population of IACs
(column a) also represents the number
of security program submissions and
resubmissions under the baseline
annual renewal requirement.
TSA postulates that the number of
newly approved IAC applications
represents a proportion of the number of
aggregate active IACs in the same year.
This proportion has stabilized over the
last five years at 5.41 percent. TSA
applied this percentage to the forecasted
aggregate number of active IACs during
a year to estimate the number of newly
approved IAC applications during the
same year 16 as displayed in column c of
Table 2.
The aggregate active population of
IACs during a year is composed of IAC
renewals and newly approved IAC
applications. Since TSA calculates the
number of newly approved IAC
applications by assuming they are a
constant proportion of the number of
aggregate active IACs, then the number
of renewals must be estimated applying
the complementary proportion to the
number of aggregate active IACs, as
shown in column b of Table 2.17
15 Based on TSA data, there were 4,576 IACs in
2008 and 3,768 in 2020. TSA calculates a negative
compound annual growth rate of 1.61% = (3,768 ÷
4,576) (1 ÷ (2020—2008))¥1.
16 The number of aggregate active IACs is
estimated using the previous year aggregate value
and the negative growth rate. For instance, the year
0 (2022) aggregate number of active IACs of 3,648
is estimated applying the negative growth rate to
the year ¥1 (2021) aggregate number of 3,707: 3,648
= 3,707 × (1–1.61%). The number of new IAC
applications in year 0 is estimated at 197 by
multiplying the estimated number of aggregate IACs
in year 0 (3,648) by the average proportion of new
IAC applications: 197 = 3,648 × 5.41%.
17 The number of IAC renewals is estimated
applying the percentage complementary to the
proportion of new IAC applications (1–5.41%) into
the aggregate number of active IACs. For instance,
the year 0 (2022) number of renewals is estimated
multiplying the number of aggregate active IACs, or
3,648, by the complementary percentage of 94.59%
to obtain 3,451 (3,648 × 94.59%). The number of
IAC renewals can also be estimated subtracting the
number of newly approved IAC applications from
the number of aggregate active IACs.
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The exit rate of IAC in a given year
is based on the subtraction of the given
year’s active IAC population from the
preceding year’s active IAC population,
and the removal of the given year’s
newly approved IACs,18 as displayed in
column d of Table 2. Since the number
of IAC exits is estimated based on the
number of active IACs during the year
and the number of newly approved IAC
applications, an exit rate is derived from
these two estimates for the purposes of
compounding the number of exits over
time. TSA calculates an IAC exit rate of
6.92 percent 19 (i.e., do not resubmit or
are not approved) from year to year. The
exit rate in a specific year is the
percentage of IACs that do not request
their security program renewed 20 out of
the total number of IACs that had a
security program in place prior to this
year.
TSA estimates the total number of
submissions in two blocks: the first
block includes submissions associated
with the current IAC population in each
year, and the second block includes
submissions from new applicants. This
proposed rule is expected to be
implemented in 2023 (year 1) and the
relevant 2022 active IAC population
will have, by then, a valid security plan;
which will have to be renewed
following the new three-year cycle.21
18 For example, calculations of Year 0, Year 1 and
Year 2 IAC Exits are as follows:
¥257 (Year 0 Exits) = 3,648 (Year 0 Active
IACs)¥3,707 (Year –1 Active IACs)¥197 (Year 0
Newly Approved IACs);
¥253 (Year 1 Exits) = 3,589 (Year 1 Active
IACs)¥3,648 (Year 0 Active IACs)¥194 (Year 1
Newly Approved IACs);
¥249 (Year 2 Exits) = 3,532 (Year 2 Active
IACs)¥3,395 (Year 1 Active IACs)¥191 (Year 2
Newly Approved IACs).
19 The exit rate is estimated by dividing the
number of IAC exits by the aggregate number of
active IACs in the previous year. For example, TSA
estimates there would be 257 exits in year 0 (197
exits that were replaced by new entrants plus the
60 exits that decreased the aggregate population).
TSA calculates a 6.92% exit rate in year 0 (257 exits
÷ 3,707 aggregate active IACs in year ¥1). This exit
rate is the same throughout the ten-year period of
analysis. The exit rate for future years can also be
derived mathematically as follows: (Newly
Approved IAC Proportion) × (1 + Active IAC
Growth Rate)¥(Active IAC Growth Rate), which
numerically is equal to: 6.92% = 5.41%
(1¥1.61%)¥(¥1.61%).
20 Firms do not get renewals either because a
submission was not filed or was not approved.
21 It is assumed that the validity of security plans
will be extended until year 1 once this action is
executed. If an IAC firm in the year 0 population
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New applicants would also have to
follow this three-year renewal cycle. In
both blocks, there is a share of IAC firms
that will not renew their security plans
during the next renewal event, and a
share of IAC firms that will renew. The
number of IACs resubmitting in a given
year is estimated by multiplying the
number of program submissions from
three years prior by a factor that results
from compounding the annual exit rate
over three years; this retention factor,
estimated to be 80.6 percent,22 is
multiplied by the number of program
submissions from three years prior to
estimate the number of renewals in the
corresponding year.
Table 2 staggers recertifications under
the final rule’s three-year cycle 23 in four
separate columns for submissions one to
four in the 10-year projection span. For
example, TSA estimates that 2,738 of
the 3,395 IAC recertifications in year 1
would resubmit their security programs
in year 4, 24 and that 159 of the 197 new
entrants in year 1 would resubmit for
the first time in year 4 (see columns e
and f regarding first and second
submissions). In Table 2, TSA takes into
account four recertification cycles 25
within the ten-year framework (columns
e through h) and sums all the
recertifications under the proposed rule
in column i. Finally, TSA calculates the
number of eliminated recertifications
(column j) by subtracting the proposed
rule recertifications (column i) from the
baseline annual recertifications (column
b).
wants to remain active over the 10 years of analysis
it will have to obtain four renewals during this
period, in years 1, 4, 7, and 10.
22 80.6% = (100%¥6.92% exit rate)(3 year cycle).
23 A cycle is the period in between renewals (or
between the first renewal and the initial approval).
The three-year cycle means that submissions have
to be renewed every three years. The current
submission cycle is annual, one submission every
year.
24 Note IACs that were approved by TSA in year
¥1 (two years prior to the start date of this rule)
and partially in year 0 (one year prior to the
publication of this proposed rule) would need to
resubmit 36 months from their last approval. IACs
that were approved prior to the publication of the
proposed rule (¥1 & 0) are included in year ¥1,
for the purpose of this analysis. For example: (Year
4 Second Cycle Resubmissions) = (Year 1 Renewals)
× 80.6%
25 The frequency in which an IAC must resubmit
their security program for review.
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Federal Register / Vol. 87, No. 247 / Tuesday, December 27, 2022 / Proposed Rules
TABLE 2— NUMBER OF PROPOSED RULE ELIMINATED SECURITY PROGRAM RECERTIFICATIONS
Active
IACs 26
Baseline
recerts 27
New
IACs
IAC
exits
a(¥1) =
initial pop a
= a(n¥1) ×
(1¥1.61%)
b1 = first
year
renewals
bn = an ×
(1¥5.41%)
c = an ×
(5.41%)
3,589
3,532
3,475
3,419
3,364
3,310
3,257
3,205
3,153
3,103
3,395
3,341
3,287
3,234
3,182
3,131
3,081
3,032
2,983
2,935
Year
1 ..............
2 ..............
3 ..............
4 ..............
5 ..............
6 ..............
7 ..............
8 ..............
9 ..............
10 ............
Recertification cycle 28
1st
2nd
3rd
4th
dn =
(an¥a(n¥1))¥cn
e1 = b1 en
= c(n¥3) ×
(0.806)
fn = e(n¥3)
× (0.806)
gn = f(n¥3)
× (0.806)
hn =
g(n¥3) ×
(0.806)
¥253
¥249
¥245
¥241
¥237
¥233
¥229
¥226
¥222
¥218
3,395
162
159
156
154
151
149
147
144
142
0
0
0
2,738
130
128
126
124
122
120
0
0
0
0
0
0
2,207
105
103
102
194
191
188
185
182
179
176
173
170
168
Proposed
rule
recerts
Eliminated
recerts
i=e+f+
g+h
j = b¥i
0
0
0
0
0
0
0
0
0
1,780
3,395
162
159
2,894
284
280
2,483
376
370
2,144
0
3,179
3,128
340
2,898
2,852
598
2,656
2,613
791
Note: Calculations may not be exact due to rounding in the table.
TSA estimates a time burden of four
hours for an IAC manager to review and
resubmit a security program. To
calculate the hourly savings to industry,
TSA multiplies the four-hour burden by
the fully loaded hourly wage rate for an
IAC manager. TSA calculates the wage
rate by estimating a weighted wage rate
for two occupations across two industry
subgroups.29 To calculate the weighted
wage rate, TSA multiplies each labor
category wage rate by its respective
number of employees, sums the product
of these calculations, and then divides
the result by the total number of
employees across all four wage rates.
Table 3 illustrates the weighted average
wage calculation.
TABLE 3—CALCULATION OF WEIGHTED AVERAGE INDUSTRY WAGE RATE
Industry NAICS
Occupations
Freight Transportation Arrangement (488510) .............
Management, Scientific, and Technical Consulting
Services (541611).
First-Line Supervisors of Transportation and Material
Moving Workers (53–1040).
Transportation, Storage, and Distribution Managers
(11–3071).
First-Line Supervisors of Transportation and Material
Moving Workers (53–1040).
Transportation, Storage, and Distribution Managers
(11–3071).
Wage
rate
Number
of employees
a
b
$28.72
3,460
46.41
4,920
27.52
3,190
50.65
2,680
Industry Weighted Average Wage Rate = è(a × b) ÷ èb
$38.68
TKELLEY on DSK125TN23PROD with PROPOSALS
Note: Calculations may not be exact due to rounding in the table.
Next, TSA adjusts this wage rate to
account for employer benefits,30 which
results in an industry compensation rate
of $57.90 per hour. Table 4 illustrates
the calculation of the hourly industry
compensation rate based on these
adjustments.
26 The active IAC population in subsequent years
was estimated by applying the negative growth rate
of 1.61% to the active IAC population. The negative
growth rate represents the net change in the active
IAC population accounting for IAC exits and
entries. Year 1’s value accounts for three years of
negative growth derived from 3,768 IACs as of the
end of fiscal year 2020 based on TSA records.
27 Baseline renewals represent Active IACs minus
New IACs.
28 A retention factor of 0.806 is calculated as the
exit rate of 6.92 percent compounded over three
years to account for the number of IACs still
operating who submitted a security program three
years prior.
29 Bureau of Labor Statistics (BLS), U.S.
Department of Labor, May 2020 National Industry
Specific Occupation Employment and Wage
Estimates, First-Line Supervisors of Transportation
and Material Moving Workers (SOC 53–1040) in
Freight Transportation Arrangement (NAICS
488510) and Administrative Management and
General Management Consulting Services (NAICS
541611), and to Transportation, Storage, and
Distribution Managers (SOC 11–3071) in (NAICS
488510) and (NAICS 541611). (Accessed May 19,
2021 at https://www.bls.gov/oes/2020/may/naics4_
541600.htm and https://www.bls.gov/oes/2020/
may/naics4_488500.htm).
30 The average compensation factor is 1.4968.
1.4968 = (($31.76 + $30.89 + $30.99 + $30.40) ÷ 4)
÷ (($21.35 + $20.62 + $20.61 + $20.29) ÷ 4). The
compensation factor is calculated based on the
average of the quarterly total compensation divided
by the average of the quarterly total wages. Source:
BLS, News Releases, 2020 Employer Costs for
Employee Compensation, Table 4: Employer Costs
for Employee Compensation for private industry
workers by occupational and industry group
(Transportation and Material Moving Occupational
Group), as published in June 2020, September 2020,
December 2020, and March 2021. (Accessed May
19, 2021 at https://www.bls.gov/bls/news-release/
ecec.htm).
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Federal Register / Vol. 87, No. 247 / Tuesday, December 27, 2022 / Proposed Rules
TABLE 4—CALCULATION OF INDUSTRY COMPENSATION RATE
Weighted wage rate
(a)
Benefits Factor
(b)
Compensation Rate
(c = a × b)
$38.68
1.4968
$57.90
TSA multiplies four hours per
resubmission by the $57.90 for an IAC
manager to calculate a unit cost savings
of $232 per recertification.31
TSA estimates a duration of 2.25
hours for TSA staff to review a
resubmission. The TSA review staff is
composed of two ‘‘I’’ pay band
members 32 and four ‘‘J’’ pay band
members. Each submission could be
reviewed by any one of these staff
members. TSA calculates a staff
compensation rate based on the
weighted average of two different TSA
pay-bands that conduct reviews. To
calculate the TSA weighted
compensation rate, TSA multiplies the
respective pay band compensation 33 by
the respective number of employees,
sums the product of these calculations,
and then divides by the total number of
employees. Table 5 displays this
weighted average calculation.
TABLE 5—CALCULATION OF WEIGHTED AVERAGE TSA COMPENSATION RATE
TSA pay band
Compensation
rate *
Number of
employees
a
b
TSA I Band ............................................................................................................................................................
TSA J Band ...........................................................................................................................................................
$70.62
83.17
Weighted Average TSA Compensation Rate = è(a × b) ÷ èb
$78.99
2
4
* Compensation Rate includes employer benefits.
TSA multiplies 2.25 hours by the TSA
compensation rate of $78.99 per hour to
obtain a unit cost savings per
recertification of $178.34
To calculate savings, TSA multiplies
the number of eliminated resubmissions
from column j of Table 2, by the
respective unit cost savings for industry
($232) and TSA ($178). Table 6 displays
the industry, TSA, and total savings
from modifying the security program
resubmission frequency from one to
three years. TSA estimates that over ten
years cost savings aggregate to $7.8
million undiscounted, $6.6 million
discounted at 3 percent, and $5.4
million discounted at 7 percent. The
proposed rule would realize an
annualized $0.8 million cost savings
discounted at 7 percent over 10 years.
TABLE 6—TOTAL COST SAVINGS FROM THE PROPOSED RULE
[$Thousands]
Eliminated
resubmissions
Industry
savings
TSA
savings
a
b = a × $231.61
÷ 1,000
c = a × $177.73
÷ 1,000
Year
1 ..............................................................................................
2 ..............................................................................................
3 ..............................................................................................
4 ..............................................................................................
5 ..............................................................................................
6 ..............................................................................................
7 ..............................................................................................
8 ..............................................................................................
9 ..............................................................................................
10 ............................................................................................
..........................
3,179
3,128
340
2,898
2,852
598
2,656
2,613
791
$0
736
725
79
671
660
139
615
605
183
(Cost savings)
d = èb,c
Undiscounted
$0
565
556
60
515
507
106
472
464
141
Discounted
at 3%
Discounted
at 7%
$0
1,301
1,280
139
1,186
1,167
245
1,087
1,070
324
$0
1,227
1,172
124
1,023
978
199
858
820
241
$0
1,137
1,045
106
846
778
153
633
582
165
Total .................................................................................
19,056
4,413
3,387
7,800
6,641
5,443
Annualized .......................................................................
..........................
............................
............................
........................
775
779
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Note: Calculation may not be exact in table due to rounding.
31 $231.61 Renewal Unit Cost to Industry = 4Hour Renewal Time Burden × $57.90 Compensation
Rate for IAC Managers.
32 TSA uses an SV pay grading system, which is
a discrete salary system with pay ranges,
incorporated into pay bands.
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33 TSA, DHS Modular Cost Standards,
Washington DC Metropolitan Area Locality Pay, IBand $70.62 = $147,382 annual compensation ÷
2,087 hours and J-Band $83.17 = $173,585 annual
compensation ÷ 2,087 hours (Office Personnel
Management changed the 2,080 work hours for
Federal employees to 2,087 by amending 5 U.S.C.
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5504(b). Source: Consolidated Omnibus Budget
Reconciliation Act of 1985, Public Law 99–272, 100
Stat. 82 (April 7, 1986).
34 $177.73 Renewal Unit Cost to TSA = $78.99 I/
J Band TSA Weighted Compensation Rate × 2.25
Hour Burden for Renewal Review.
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Federal Register / Vol. 87, No. 247 / Tuesday, December 27, 2022 / Proposed Rules
The Regulatory Flexibility Act 35
requires agencies to consider whether
some rules would have a significant
economic impact on a substantial
number of small entities, including
small businesses and 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. This
rule does not place any new
requirements on the regulated industry
or small businesses.
C. Collection of Information
The Paperwork Reduction Act of 1995
(PRA) 36 requires Federal agencies to
consider the impact of paperwork and
other information collection burdens
imposed on the public and, under the
provisions of PRA section 3507(d),
obtain approval from the OMB for each
collection of information it conducts,
sponsors, or requires through
regulations. As provided by the PRA, as
amended, an agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless it displays a currently valid OMB
control number. The collection of
information covered by this proposed
79271
rule is covered by OMB control number
1652–0040.
This proposed rule impacts the
collection of information by reducing
the frequency that information must be
submitted. This reduction would
decrease the current number of security
program recertifications submitted from
an estimated annual average of 3,700 to
1,239 responses (a reduction of 2,461).
The corresponding burden is also
reduced from an annual average of
14,800 hours to 4,956 hours (a reduction
of 9,844 hours). Table 7 displays the
annual number of responses and burden
hour estimates associated with the
proposed rule.
TABLE 7—PRA INFORMATION COLLECTION RESPONSES AND BURDEN HOURS
Responses
Year 1
Year 2
Year 3
Total
responses
Average
annual
responses
Time
burden per
response
(hours)
3,395
162
159
3,716
1,239
....................
Collection activity
Proposed Rule Recerts .................................................
As required by the PRA (44 U.S.C.
3507(d)), TSA has submitted a copy of
the proposed rule to the OMB for its
review of the collection of information.
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D. International Trade Impact
Assessment
The Trade Agreements Act of 1979 37
prohibits Federal agencies from
establishing standards or engaging in
related activities that create unnecessary
obstacles to the foreign commerce of the
United States. Pursuant to these
requirements, the establishment of
standards is not considered an
unnecessary obstacle to the foreign
commerce of the United States, so long
as the standard has a legitimate
domestic objective, such as the
protection of safety, and does not
operate in a manner that excludes
imports that meet this objective. The
statute also requires consideration of
international standards and, where
appropriate, that they be the basis for
U.S. standards.
TSA has assessed the potential effect
of the proposed rule and determined
that it does not impose any new
requirements. Therefore, the rule will
not create any unnecessary obstacles to
foreign commerce of the United States.
35 See Public Law 96–354, 94 Stat. 1164 (Sept. 19,
1980) as codified at 5 U.S.C. 601 et seq.
36 See 44 U.S.C. 3501 et seq.
37 See Public Law 96–39, 93 Stat. 144 (July 26,
1979) as amended by the Uruguay Round
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E. Unfunded Mandates Assessment
Title II of the Unfunded Mandates
Reform Act of 1995 38 requires each
Federal agency to prepare a written
statement assessing the effects of any
Federal mandate in a proposed agency
rule, or final rule for which a proposed
rule was published, that may result in
an expenditure of $100 million or more
(in 1995 dollars) in any one year by
State, local, and tribal governments, in
the aggregate, or by the private sector.
The proposed rule does not contain
such a mandate. Therefore, the written
statement requirements of the Act do
not apply.
F. Environment
TSA reviews proposed actions to
determine whether the National
Environmental Policy Act (NEPA)
applies to them, and if so, what degree
of analysis is required. DHS Directive
023–01 Rev. 01 and Instruction Manual
023–01–001–01 Rev. 01 establish the
procedures that DHS and its
components use to comply with NEPA
and the Council on Environmental
Quality (CEQ) regulations for
implementing NEPA, 40 CFR parts 1500
through 1508.
The CEQ regulations allow Federal
agencies to establish, with CEQ review
and concurrence, categories of actions
(categorical exclusions) which
Agreements Act, Public Law 103–465, 108 Stat 4809
(Dec. 8, 1994), codified at 19 U.S.C. 2531–2533.
38 See Public Law 104–4, 109 Stat. 48 (Mar. 22,
1995), codified at 2 U.S.C. 1501–1538.
39 40 CFR 1507.3(b)(2)(ii), 1508.4.
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Total hours
Average
annual hours
4,956
1,652
experience has shown do not
individually or cumulatively have a
significant effect on the human
environment and, therefore, do not
require an Environmental Assessment or
Environmental Impact Statement.39 For
an action to be categorically excluded,
it must satisfy each of the following
three conditions: (1) the entire action
clearly fits within one or more of the
categorical exclusions; (2) the action is
not a piece of a larger action; and (3) no
extraordinary circumstances exist that
create the potential for a significant
environmental effect.40
This rulemaking has no anticipated
environmental effects. Specifically, this
proposed rule extends the duration of
TSA approval of IAC security programs
for up to three years without modifying
standards or imposing an additional
burden on regulated entities. It fits
within categorical exclusion A3(d),
‘‘Promulgation of rules . . . that
interpret or amend an existing
regulation without changing its
environmental effect.’’ 41 Furthermore,
the proposed rule is not part of a larger
action and presents no extraordinary
circumstances creating the potential for
significant environmental impacts. As
such, the amendment is categorically
excluded from further NEPA review.
40 See
41 See
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Instruction Manual, section V.B(2)(a)–(c).
id. at Appendix A, Table 1.
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Federal Register / Vol. 87, No. 247 / Tuesday, December 27, 2022 / Proposed Rules
G. International Compatibility and
Cooperation
E.O. 13609 of May 1, 2012 (Promoting
International Regulatory Cooperation),42
promotes international regulatory
cooperation to meet shared challenges
involving health, safety, labor, security,
environmental, and other issues and to
reduce, eliminate, or prevent
unnecessary differences in regulatory
requirements. TSA analyzed this action
under the policies and agency
responsibilities of E.O. 13609, and has
determined that this action would have
no effect on international regulatory
cooperation. In keeping with U.S.
obligations under the Convention on
International Civil Aviation (also known
as the ‘‘Chicago Convention’’), it is TSA
policy to comply with International
Civil Aviation Organization Standards
and Recommended Practices to the
maximum extent practicable. TSA has
determined that this regulation has no
direct relationship to the Chicago
Convention.
H. Executive Order 13132, Federalism
TSA has analyzed this rulemaking
under the principles and criteria of E.O.
13132 of August 4, 1999 (Federalism).43
TSA has determined that this action
will not have a substantial direct effect
on the States, or the relationship
between the Federal Government and
the States, or on the distribution of
42 Published
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43 Published
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at 64 FR 43255 (Aug. 10, 1999).
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power and responsibilities among the
various levels of government, and,
therefore, does not have federalism
implications.
I. Executive Order 13211, Regulations
That Significantly Affect Energy Supply,
Distribution, or Use
TSA analyzed this rulemaking under
E.O. 13211 of May 18, 2001 (Actions
Concerning Regulations that
Significantly Affect Energy Supply,
Distribution, or Use).44 TSA has
determined that it is not a ‘‘significant
energy action’’ under the Executive
order and it is not likely to have a
significant adverse effect on the supply,
distribution, or use of energy.
List of Subjects in 49 CFR Part 1548
Air transportation, Reporting and
recordkeeping requirements, Security
measures.
The Amendment
For the reasons set forth in the
preamble, the Transportation Security
Administration proposes to amend
chapter XII of title 49, Code of Federal
Regulations, as follows:
SUBCHAPTER C—CIVIL AVIATION
SECURITY
PART 1548—INDIRECT AIR CARRIER
SECURITY
1. The authority citation for part 1548
continues to read as follows:
■
44 Published
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Fmt 4702
Sfmt 9990
Authority: 49 U.S.C. 114, 5103, 40113,
44901–44905, 44913–44914, 44916–44917,
44932, 44935–44936, 46105.
§ 1548.7
[Amended]
2. Amend § 1548.7 by:
a. In paragraph (a)(4), removing the
words ‘‘one year after the month it was
approved’’ and adding in their place
‘‘three years after the month it was
approved, or until the program has been
surrendered or withdrawn, whichever is
earlier’’.
■ b. In paragraph (a)(5) introductory
text, adding the words ‘‘or renewal’’
after the words ‘‘submitted during its
initial’’.
■ c. In paragraph (b)(1), removing the
words ‘‘at least 30 calendar days prior
to the first day of the anniversary month
of initial approval’’ and adding in their
place ‘‘at least 30 calendar days prior to
the 36th month after the initial
approval’’.
■ d. In paragraph (b)(4), removing the
words ‘‘one year after the month it was
renewed’’ and adding in their place
‘‘three years after the month it was
renewed, or until the program has been
surrendered or withdrawn, whichever is
earlier’’.
■
■
Dated: December 16, 2022.
David P. Pekoske,
Administrator.
[FR Doc. 2022–27778 Filed 12–23–22; 8:45 am]
BILLING CODE 9110–05–P
E:\FR\FM\27DEP1.SGM
27DEP1
]]>Agencies
[Federal Register Volume 87, Number 247 (Tuesday, December 27, 2022)]
[Proposed Rules]
[Pages 79264-79272]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-27778]
=======================================================================
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DEPARTMENT OF HOMELAND SECURITY
Transportation Security Administration
49 CFR Part 1548
[Docket No. TSA-2020-0002]
RIN 1652-AA72
Frequency of Renewal Cycle for Indirect Air Carrier Security
Programs
AGENCY: Transportation Security Administration, DHS.
ACTION: Notice of proposed rulemaking (NPRM).
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SUMMARY: The Transportation Security Administration (TSA) is proposing
to modify its regulations to reduce the frequency of renewal
applications by indirect air carriers (IACs). Rather than requiring
these entities to submit an application to renew their security program
each year, TSA is proposing to require renewal once every three years.
This modification would reduce the burden of compliance without a
negative impact on security and would support this industry's economic
recovery from the impacts of the COVID-19 public health crisis.
DATES: Submit comments on or before February 27, 2023.
ADDRESSES: You may submit comments, identified by the TSA docket number
to this rulemaking, to the Federal Docket Management System (FDMS), a
government-wide, electronic docket management system. To avoid
duplication, please use only one of the following methods:
Electronic Federal eRulemaking Portal: https://www.regulations.gov. Follow the online instructions for submitting
comments.
Mail: Docket Management Facility (M-30), U.S. Department
of Transportation, 1200 New Jersey Avenue SE, West Building Ground
Floor, Room W12-140, Washington, DC 20590-0001. The Department of
Transportation (DOT), which maintains and processes TSA's official
regulatory dockets, will scan the submission and post it to FDMS.
Comments must be postmarked by the dates indicated above.
Fax: (202) 493-2251.
See SUPPLEMENTARY INFORMATION for format and other information
about comment submissions.
FOR FURTHER INFORMATION CONTACT: Angel Rodriguez, telephone 1-571-227-
2108; email [email protected].
SUPPLEMENTARY INFORMATION:
Comments Invited
TSA invites interested persons to participate in this rulemaking by
submitting written comments, data, or views. You may submit comments,
identified by the TSA docket number for this rulemaking, to the
ADDRESSES noted above. With each comment, please include this docket
number at the beginning of your comments. You may submit comments and
material electronically, in person, by mail, or fax as provided under
ADDRESSES, but please submit your comments and material by only one
means. If you submit comments by mail or in person submit them in an
unbound format, no larger than 8.5 by 11 inches, suitable for copying
and electronic filing.
If you would like TSA to acknowledge receipt of comments submitted
by mail, include with your comments a self-addressed, stamped postcard
on which the docket number appears. TSA will stamp the date on the
postcard and mail it to you.
All comments, except those that include confidential or sensitive
security information (SSI) \1\ will be posted to https://www.regulations.gov, and will include any personal information you have
provided. Should you wish your personally identifiable information
redacted prior to filing in the docket, please clearly indicate this
request in your submission. TSA will consider all comments that are in
the docket on or before the closing date for comments and will consider
comments filed late to the extent practicable. The docket is available
for public inspection before and after the comment closing date.
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\1\ ``Sensitive Security Information'' or ``SSI'' is information
obtained or developed in the conduct of security activities, the
disclosure of which would constitute an unwarranted invasion of
privacy, reveal trade secrets or privileged or confidential
information, or be detrimental to the security of transportation.
The protection of SSI is governed by 49 CFR part 1520.
---------------------------------------------------------------------------
Handling of Confidential or Proprietary Information and SSI Submitted
in Public Comments
Do not submit comments that include trade secrets, confidential
commercial or financial information, or SSI to the public regulatory
docket. Comments containing this type of information should be
submitted separately from other comments, appropriately marked as
containing such information, and submitted by mail to the address
listed in FOR FURTHER INFORMATION CONTACT section. TSA will take the
following actions for all submissions containing SSI:
TSA will not place comments containing SSI in the public
docket and will handle them in accordance with applicable safeguards
and restrictions on access.
TSA will hold documents containing SSI, confidential
business information, or trade secrets in a separate file to which the
public does not have access, and place a note in the public docket
explaining that commenters have submitted such documents.
TSA may include a redacted version of the comment in the
public docket.
TSA will treat requests to examine or copy information
that is not in the public docket as any other request under the Freedom
of Information Act (FOIA) (5 U.S.C. 552) and the Department of Homeland
Security (DHS) FOIA regulation found in 6 CFR part 5.
Reviewing Comments in the Docket
Please be aware that anyone is able to search the electronic form
of all comments in any of our dockets by the name of the individual who
submitted or signed the comment (e.g., if submitted by an association,
business, labor union, etc.). For more about privacy and the docket,
review the Privacy and Security Notice for the
[[Page 79265]]
FDMS at https://www.regulations.gov/privacy-notice, as well as the
System of Records Notice DOT/ALL 14--Federal Docket Management System
(73 FR 3316, January 17, 2008) and the System of Records Notice DHS/ALL
044--eRulemaking (85 FR 14226, March 11, 2020).
You can review TSA's electronic public docket at https://www.regulations.gov. In addition, DOT's Docket Management Facility
provides a physical facility, staff, equipment, and assistance to the
public. To obtain assistance or to review comments in TSA's public
docket, you may visit this facility between 9 a.m. and 5 p.m., Monday
through Friday, excluding legal holidays, or call (202) 366-9826. This
DOT facility is located in the West Building Ground Floor, Room W12-140
at 1200 New Jersey Avenue SE, Washington, DC 20590.
You can find an electronic copy of rulemaking documents relevant to
this action by searching the electronic FDMS web page at https://www.regulations.gov or at https://www.federalregister.gov. In addition,
copies are available by writing or calling the individual in the FOR
FURTHER INFORMATION CONTACT section. Make sure to identify the docket
number of this NPRM.
Abbreviations and Terms Used in This Document
CCSF--Certified Cargo Screening Facility
CEQ--Council on Environmental Quality
DHS--Department of Homeland Security
DOT--Department of Transportation
E.O.--Executive Order
FOIA--Freedom of Information Act
IAC--Indirect Air Carrier
IACSSP--Indirect Air Carrier Standard Security Program
NEPA--National Environmental Policy Act
OMB--Office of Management and Budget
PRA--Paperwork Reduction Act of 1995
SBREFA--Small Business Regulatory Enforcement Fairness Act of 1996
SSI--Sensitive Security Information
TSA--Transportation Security Administration
I. Executive Summary
A. Purpose of the Regulatory Action
An IAC, sometimes called a freight forwarder, acts as an
intermediary between a shipper of air cargo and an air carrier by
receiving and consolidating cargo from one or more shippers for
transport on one or more aircraft flights. IACs are a critical
component of a secure, air cargo supply-chain in the United States,
helping to ensure the safe, timely, and efficient movement of goods
every day. Approximately 3,800 IACs are operating in the United States
and registered with TSA, ranging from sole proprietors working out of
their homes to large corporations.
Currently, TSA's regulations require IACs to renew their
registration each year. TSA is proposing to modify 49 CFR 1548.7 to
reduce the frequency at which IACs must renew their registration from
annual to once every three years. This modification will reduce the
burden of compliance by decreasing the time and effort an IAC must
devote to renewing their registration, permitting them to focus on
other operational and business priorities, including meeting supply
chain demands as the industry recovers from the impact of the COVID-19
public health crisis.
TSA has determined this modification reduces the cost of compliance
without any negative impacts on security. As noted below, TSA estimates
that over ten years, cost savings aggregate to $7.8 million
undiscounted, $6.6 million discounted at 3 percent, and $5.4 million
discounted at 7 percent. The rulemaking would realize an annualized
$800,000 in cost savings discounted at 7 percent over 10 years.
II. Background
A. Regulation of IACs
As noted above, IACs play a critical role in ensuring a secure, air
cargo supply-chain, acting as an intermediary between the shipper and
the aircraft operator.\2\ To ensure the security of the air cargo
system, TSA imposes security requirements on IACs in 49 CFR part 1548.
Through these regulations, TSA ensures ``IACs are held accountable for
securing the goods entrusted to them throughout those legs of the
supply chain for which they are responsible.'' \3\
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\2\ TSA's regulations define an IAC as ``any person or entity
within the United States not in possession of [a Federal Aviation
Administration] air carrier operating certificate, that undertakes
to engage indirectly in air transportation of property, and uses for
all or any part of such transportation the services of an air
carrier.'' See 49 CFR 1540.5. The scope includes businesses engaged
in the indirect transport of cargo on larger commercial aircraft,
regardless of whether the operation is conducted with a passenger
aircraft or an all-cargo aircraft.
\3\ See Proposed Rule, Air Cargo Security Requirements, 69 FR
65257, 65269 (Nov. 10, 2004).
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Under 49 CFR 1548.5, each IAC must adopt and carry out the IAC
Standard Security Program (IACSSP). Persons interested in becoming IACs
are vetted by TSA and are required to implement security requirements
in the IACSSP. These requirements are intended to ensure security
during the period between when a package leaves a shipper and when it
is presented to the aircraft operators. IACs must also ensure their
employees understand and are trained to implement their security
responsibilities.
TSA uses a web-based, centralized system for businesses to obtain
IAC approval and to renew this approval. Through this process, TSA
checks whether an applicant is a legitimate business and determines
whether the business or its personnel pose a threat to transportation
security. TSA may withdraw approval of an IAC if individuals or
companies are found to be security risks during revalidation.
B. Requirement for Annual Renewal
Current 49 CFR 1548.7(b) presents the processes an IAC must follow
annually to seek renewed approval from TSA to operate under the IACSSP.
In general, annual renewal is a continuation of current practices and
security measures in the IACSSP, including any TSA-approved amendments
issued under 49 CFR 1548.7(c), (d), and/or (e). IACs must submit the
renewal request to TSA at least 30 calendar days prior to expiration of
the IACSSP, as well as other standards for the submission.
Since 2006, TSA has required IACs to renew their registration each
year. This requirement was based on the following considerations.
First, other entities regulated by a TSA security program, such as
aircraft operators and airports, must obtain annual FAA certification,
which involves the submission and verification of information relating
to the entity and its operations. IACs are not required to do so.
Second, TSA found that the IAC industry has a high degree of turnover.
The current regulations require the IAC to certify that it has provided
TSA with its most up-to-date information and to acknowledge that
intentional falsification of the information may be subject to civil
and criminal penalties.\4\
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\4\ See Air Cargo Security Requirements; Final Rule, 71 FR
30477, 30514 (May 26, 2006).
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Since the annual renewal requirement was imposed in 2006, TSA has
determined that it is unnecessary to continue requiring annual renewal
and that the program could be renewed once every three years without
having a negative impact on security. As discussed below, this
determination is based on two key factors: (1) TSA's inspection
processes and priorities for IACs negate the need for annual renewals,
and (2) the triennial renewal requirement for other TSA air cargo
programs that have proven to be effective and secure.
[[Page 79266]]
First, when the annual renewal requirement was imposed in 2006,\5\
TSA expected that the annual cycle of renewals would be the primary
method to ensure the agency regularly reviewed each IAC and confirmed
compliance with TSA security requirements.\6\ TSA, however, actually
ensures compliance with the program through regular inspections of
IACs. IACs are typically subject to a comprehensive inspection on a
one, two, or three-year cycle depending on TSA's assessment of the
relative security risk for each individual IAC. This security risk
determination reflects vulnerabilities that exist based on the results
of prior compliance reviews. For example, TSA generally conducts more
frequent inspections of IACs that have lower compliance rates in order
to ensure the IACs being inspected are performing all actions necessary
to provide the required level of security. These reviews include
targeted and supplemental inspections.
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\5\ Id. at 30495. See also Proposed Rule, Air Cargo Security
Requirements, 69 FR 65257, 65269 (Nov. 10, 2004).
\6\ See supra n. 4.
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An additional safeguard is provided by 49 CFR 1540.301, which
allows TSA to withdraw approval of an IAC security program if TSA
determines continued operation is contrary to security and the public
interest.\7\ If TSA withdraws approval, an IAC must discontinue
operation immediately, regardless of the renewal date of its program
certification. See discussion in Section III.A. of this NPRM.
---------------------------------------------------------------------------
\7\ See 49 CFR 1548.7(f) and 1540.301(b).
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Second, in addition to recognizing the effectiveness of its regular
inspections to ensure compliance with the IAC program, TSA also
considered the requirements for the IAC program compared to other
aviation security requirements, specifically requirements applicable to
Certified Cargo Screening Facilities (CCSFs) under 49 CFR part 1549.
When TSA finalized the rule establishing the Certified Cargo Screening
Program in 2011,\8\ TSA provided a three-year renewal period for
CCSFs.\9\ Over more than a decade of implementing the Certified Cargo
Screening Program validates that the triennial recertification cycle
does not have a negative impact on security. The proposed rule does not
change the required actions that IACs must perform to recertify or the
requirements they must meet to maintain approval to operate as an IAC;
the proposed rule simply reduces the frequency with which they must
recertify.
---------------------------------------------------------------------------
\8\ See Final Rule, Air Cargo Screening, 76 FR 51847 (Aug. 18,
2011).
\9\ See 49 CFR 1549.7(b).
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C. Benefits of Proposed Modification of Renewal Period
Consistent with the principles of Executive Order (E.O.) 12866 of
September 30, 1993 (Regulatory Planning and Review) and E.O. 13563 of
January 18, 2011 (Improving Regulation and Regulatory Review), TSA is
committed to ensuring its regulations do not impose more stringent or
burdensome requirements than are necessary to provide the intended
security benefits. This action is also consistent with the burden-
reduction principles of E.O. 14058 of December 13, 2021 (Transforming
Federal Customer Experience and Service Delivery to Rebuild Trust in
Government). Whether imposing or revising a regulation, TSA is required
by 49 U.S.C. 114(l)(3) to consider, as one factor in a final
determination, whether the costs of the regulation are excessive in
relation to the enhancement of security the regulation will provide.
TSA has determined that the security benefits of annual
recertifications do not outweigh the cost of annual renewal
applications. As noted below, TSA estimates that over ten years the
cost savings aggregate to $7.8 million undiscounted, $6.6 million
discounted at 3 percent, and $5.4 million discounted at 7 percent. The
rule would realize annualized savings of $0.8 million in 2020 dollars
discounted at 7 percent.
This change in the renewal requirement would not have a negative
impact on security as the security enhancements provided by annual
recertifications are minimal for the following two reasons. First, IACs
are required to notify TSA within 30 days if there are any changes to
the information provided in their application. See 49 CFR 1548.7(a)(5).
This requirement ensures that TSA always has current information
regarding the IAC. Second, and as previously noted, TSA's existing
inspection program for IACs ensures that those IACs that might be at
risk of losing certification are inspected more frequently to ensure
they are meeting minimal program requirements. TSA would continue to
perform compliance inspections with the same frequency as the current
program operation and prioritization. The present inspection schedule,
the requirements for inspections, and the scope of required inspections
are not modified by this action.
D. Impact of COVID-19 Public Health Crisis on Air Cargo Supply Chain
The current COVID-19 public health crisis has disrupted critical
supply chains globally, including throughout the United States. IACs
are challenged by the combination of increased demand for air cargo
shipments and limitations resulting from the impact of COVID-19 on
personnel. As a result, many IACs are facing logistical, operational,
and personnel challenges. While the change to the rule may not have a
significant economic impact, TSA believes it is appropriate to provide
relief from regulatory requirements during this time, enabling IACs to
focus their time and effort on the essential tasks of delivering
essential goods and services.
III. Summary of the Proposed Rule
TSA is proposing to make limited amendments to the text of
paragraphs (a) and (b) in 49 CFR 1548.7, to change the periodic renewal
of all IAC security programs from one year to three years. As noted in
section I, this modification will reduce the burden of compliance by
reducing the time and effort an IAC must devote to renewing their
registration, permitting them to focus on other operational and
business priorities, including meeting supply chain demands as the
industry recovers from the COVID-19 public health crisis. The net
result of these changes is a three-year renewal period for the approval
to operate as an IAC under the IACSSP.
A. Duration of Program
Currently, 49 CFR 1548.7(a)(4) states that a program remains
effective from the time it is approved until the end of the calendar
month one year after the month it was approved. The proposed rule
removes the words ``one year after the month it was approved'' in
paragraph (a)(4) and adds in their place: ``three years after the month
it was approved, or until the program has been surrendered or
withdrawn, whichever is earlier''.
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\10\ See, e.g., text relating to Certified Cargo Screening
Program renewal periods in 49 CFR 1549.7(a)(6).
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In addition to the specific change in the renewal period in this
section, TSA is proposing to add ``or until the program has been
surrendered or withdrawn, whichever is earlier'', to the duration
language to ensure greater consistency across TSA's cargo programs.\10\
The process for becoming an IAC can be seen as analogous, in some
respects, to an enforceable contractual relationship between TSA
[[Page 79267]]
and the regulated entity. We grant persons permission to operate as an
IAC on condition that they agree to comply with TSA's requirements.
There are three actions that could result in a person no longer being
able to represent themselves as an IAC: (1) the IAC fails to renew the
program by the required deadline; \11\ (2) the IAC informs TSA that it
no longer intends to function as a TSA-approved IAC (i.e., the IAC
surrenders approval to operate as an IAC, similar to the concept of
surrender of approval in other TSA programs); or (3) TSA withdraws
approval consistent with the standards and procedures in TSA's
regulations.\12\ The implementation of the changes proposed in this
rule would increase the consistency and clarity of regulatory
requirements across TSA's air cargo security regulations.\13\ TSA is
proposing similar changes for paragraph (b)(4), which addresses
duration of an IAC's program after renewal.
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\11\ See 49 CFR 1548.7(b).
\12\ See 49 CFR 1548.7(f) and (g), citing 49 CFR 1540.301.
\13\ See, e.g., supra n. 10.
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B. Changes in Information
Paragraph (a)(5) includes the requirement for IACs to notify TSA if
any of the information relevant to TSA's approval of the program
changes. In this section, TSA is proposing to make clear that the rule
covers changes made both after submission of the initial application
and information submitted as part of the renewal application. This
additional language would clarify TSA's intent and ensure TSA has
current information about the IAC's operations that could affect
security and the IAC's approval to operate under the IACSSP.
C. Conforming Changes
Under Sec. 1548.7(b)(1), IAC's must submit their application for
renewal at least 30 calendar days ``prior to the first day of the
anniversary month of initial approval.'' TSA is proposing to revise
this language to conform with the proposed three-year duration of the
program by requiring applications for renewal to be submitted 30
calendar days prior to the 36th month after the initial approval of its
security program.
IV. Small Entity Inquiries
The Small Business Regulatory Enforcement Fairness Act of 1996
(SBREFA) requires TSA to comply with small entity requests for
information and advice about compliance with statutes and regulations
within TSA's jurisdiction. Any small entity that has a question
regarding this document may contact the person listed in the FOR
FURTHER INFORMATION CONTACT section. Persons can obtain further
information regarding SBREFA on the Small Business Administration's web
page at https://www.sba.gov/category/advocacy-navigation-structure/regulatory-policy/regulatory-flexibility-act/sbrefa.
V. Regulatory Analyses
TSA considered numerous statutes and Executive orders related to
rulemaking when developing this rule. The following summarizes TSA's
analyses of the impact of the rulemaking as directed by these statutes
or Executive orders.
A. Regulatory Planning and Review
1. Background
E.O. 12866 of September 30, 1993 (Regulatory Planning and Review),
and E.O. 13563 of January 18, 2011 (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). E.O. 13563 emphasizes the importance of
quantifying costs and benefits, reducing costs, harmonizing rules, and
promoting flexibility.
In conducting these analyses, TSA provides the following
conclusions and summary information:
The Office of Management and Budget (OMB) has determined
that this rulemaking is not a ``significant regulatory action'' as
defined in E.O. 12866; and
TSA has certified that this rulemaking would not have a
significant impact on a substantial number of small entities.
The basis for these conclusions is set forth below.
This proposed rule would reduce regulatory costs by reducing the
frequency that IACs must renew their security program certifications.
This rule would reduce the frequency of annual IAC security program
certifications to once every three years. This rule does not impose any
incremental costs because regulated entities are already performing all
actions required to obtain the certification in question. The expected
outcome will be a minimal impact with positive net benefits.
2. Estimated Cost Savings to Affected Entities
The cost savings from this rule arise from extending the duration
of IAC security programs approved by TSA from one year to three years.
This change aligns the duration of the IAC security program with the
Certified Cargo Screening Program.\14\ Table 1 summarizes the change
and impact from this action.
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\14\ See supra n. 8 and accompanying text.
Table 1--Comparison of Current 49 CFR Part 1548 and Proposed Rule
--------------------------------------------------------------------------------------------------------------------------------------------------------
Current Proposed rule Impact Estimated cost savings
--------------------------------------------------------------------------------------------------------------------------------------------------------
Requires annual renewal of security Revises to renewal (1) Aligns part 1548 renewal period TSA estimates the annualized cost saving to
program. every three years. with that of the TSA-approved industry and Federal government to be $800,000
Certified Cargo Screening Program, annualized at a 7 percent discount rate. Cost
part 1549. savings arise from time saved due to a less
(2) Provides cost savings to industry frequent security program renewal cycle.
and TSA.
--------------------------------------------------------------------------------------------------------------------------------------------------------
To estimate cost savings, TSA calculates the number of instances an
IAC would resubmit a security program under the current annual
requirement, and the number of instances that would be avoided under
the proposed rule's three-year requirement. TSA uses the difference in
the number of resubmission instances between the current requirement
and the proposed rule as the basis for the cost savings.
TSA uses historical data on the number of existing IACs to forecast
the number of security programs submitted for certification over the
ten-year period of analysis. TSA assumes that the regulatory change for
less frequent recertification does not impact the annual number of
forecasted active IAC certifications. Based on historical program data,
TSA assumes the
[[Page 79268]]
aggregate population of active and approved IACs under the baseline and
the proposed rule decreases each year with more dropping out than
entering. TSA calculates that the aggregate active population decreases
at an annual rate of 1.61 percent \15\ and compounds this rate to
estimate the aggregate active IAC population for the next ten years, as
displayed in column a of Table 2. The aggregate active population of
IACs (column a) also represents the number of security program
submissions and resubmissions under the baseline annual renewal
requirement.
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\15\ Based on TSA data, there were 4,576 IACs in 2008 and 3,768
in 2020. TSA calculates a negative compound annual growth rate of
1.61% = (3,768 / 4,576) (1 / (2020--2008))-1.
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TSA postulates that the number of newly approved IAC applications
represents a proportion of the number of aggregate active IACs in the
same year. This proportion has stabilized over the last five years at
5.41 percent. TSA applied this percentage to the forecasted aggregate
number of active IACs during a year to estimate the number of newly
approved IAC applications during the same year \16\ as displayed in
column c of Table 2.
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\16\ The number of aggregate active IACs is estimated using the
previous year aggregate value and the negative growth rate. For
instance, the year 0 (2022) aggregate number of active IACs of 3,648
is estimated applying the negative growth rate to the year -1 (2021)
aggregate number of 3,707: 3,648 = 3,707 x (1-1.61%). The number of
new IAC applications in year 0 is estimated at 197 by multiplying
the estimated number of aggregate IACs in year 0 (3,648) by the
average proportion of new IAC applications: 197 = 3,648 x 5.41%.
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The aggregate active population of IACs during a year is composed
of IAC renewals and newly approved IAC applications. Since TSA
calculates the number of newly approved IAC applications by assuming
they are a constant proportion of the number of aggregate active IACs,
then the number of renewals must be estimated applying the
complementary proportion to the number of aggregate active IACs, as
shown in column b of Table 2.\17\
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\17\ The number of IAC renewals is estimated applying the
percentage complementary to the proportion of new IAC applications
(1-5.41%) into the aggregate number of active IACs. For instance,
the year 0 (2022) number of renewals is estimated multiplying the
number of aggregate active IACs, or 3,648, by the complementary
percentage of 94.59% to obtain 3,451 (3,648 x 94.59%). The number of
IAC renewals can also be estimated subtracting the number of newly
approved IAC applications from the number of aggregate active IACs.
---------------------------------------------------------------------------
The exit rate of IAC in a given year is based on the subtraction of
the given year's active IAC population from the preceding year's active
IAC population, and the removal of the given year's newly approved
IACs,\18\ as displayed in column d of Table 2. Since the number of IAC
exits is estimated based on the number of active IACs during the year
and the number of newly approved IAC applications, an exit rate is
derived from these two estimates for the purposes of compounding the
number of exits over time. TSA calculates an IAC exit rate of 6.92
percent \19\ (i.e., do not resubmit or are not approved) from year to
year. The exit rate in a specific year is the percentage of IACs that
do not request their security program renewed \20\ out of the total
number of IACs that had a security program in place prior to this year.
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\18\ For example, calculations of Year 0, Year 1 and Year 2 IAC
Exits are as follows:
-257 (Year 0 Exits) = 3,648 (Year 0 Active IACs)-3,707 (Year -1
Active IACs)-197 (Year 0 Newly Approved IACs);
-253 (Year 1 Exits) = 3,589 (Year 1 Active IACs)-3,648 (Year 0
Active IACs)-194 (Year 1 Newly Approved IACs);
-249 (Year 2 Exits) = 3,532 (Year 2 Active IACs)-3,395 (Year 1
Active IACs)-191 (Year 2 Newly Approved IACs).
\19\ The exit rate is estimated by dividing the number of IAC
exits by the aggregate number of active IACs in the previous year.
For example, TSA estimates there would be 257 exits in year 0 (197
exits that were replaced by new entrants plus the 60 exits that
decreased the aggregate population). TSA calculates a 6.92% exit
rate in year 0 (257 exits / 3,707 aggregate active IACs in year -1).
This exit rate is the same throughout the ten-year period of
analysis. The exit rate for future years can also be derived
mathematically as follows: (Newly Approved IAC Proportion) x (1 +
Active IAC Growth Rate)-(Active IAC Growth Rate), which numerically
is equal to: 6.92% = 5.41% (1-1.61%)-(-1.61%).
\20\ Firms do not get renewals either because a submission was
not filed or was not approved.
---------------------------------------------------------------------------
TSA estimates the total number of submissions in two blocks: the
first block includes submissions associated with the current IAC
population in each year, and the second block includes submissions from
new applicants. This proposed rule is expected to be implemented in
2023 (year 1) and the relevant 2022 active IAC population will have, by
then, a valid security plan; which will have to be renewed following
the new three-year cycle.\21\ New applicants would also have to follow
this three-year renewal cycle. In both blocks, there is a share of IAC
firms that will not renew their security plans during the next renewal
event, and a share of IAC firms that will renew. The number of IACs
resubmitting in a given year is estimated by multiplying the number of
program submissions from three years prior by a factor that results
from compounding the annual exit rate over three years; this retention
factor, estimated to be 80.6 percent,\22\ is multiplied by the number
of program submissions from three years prior to estimate the number of
renewals in the corresponding year.
---------------------------------------------------------------------------
\21\ It is assumed that the validity of security plans will be
extended until year 1 once this action is executed. If an IAC firm
in the year 0 population wants to remain active over the 10 years of
analysis it will have to obtain four renewals during this period, in
years 1, 4, 7, and 10.
\22\ 80.6% = (100%-6.92% exit rate)\(3 year cycle)\.
---------------------------------------------------------------------------
Table 2 staggers recertifications under the final rule's three-year
cycle \23\ in four separate columns for submissions one to four in the
10-year projection span. For example, TSA estimates that 2,738 of the
3,395 IAC recertifications in year 1 would resubmit their security
programs in year 4,\24\ and that 159 of the 197 new entrants in year 1
would resubmit for the first time in year 4 (see columns e and f
regarding first and second submissions). In Table 2, TSA takes into
account four recertification cycles \25\ within the ten-year framework
(columns e through h) and sums all the recertifications under the
proposed rule in column i. Finally, TSA calculates the number of
eliminated recertifications (column j) by subtracting the proposed rule
recertifications (column i) from the baseline annual recertifications
(column b).
---------------------------------------------------------------------------
\23\ A cycle is the period in between renewals (or between the
first renewal and the initial approval). The three-year cycle means
that submissions have to be renewed every three years. The current
submission cycle is annual, one submission every year.
\24\ Note IACs that were approved by TSA in year -1 (two years
prior to the start date of this rule) and partially in year 0 (one
year prior to the publication of this proposed rule) would need to
resubmit 36 months from their last approval. IACs that were approved
prior to the publication of the proposed rule (-1 & 0) are included
in year -1, for the purpose of this analysis. For example: (Year 4
Second Cycle Resubmissions) = (Year 1 Renewals) x 80.6%
\25\ The frequency in which an IAC must resubmit their security
program for review.
[[Page 79269]]
Table 2-- Number of Proposed Rule Eliminated Security Program Recertifications
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline Recertification cycle \28\ Proposed
Year Active IACs recerts New IACs IAC exits ---------------------------------------------------- rule Eliminated
\26\ \27\ 1st 2nd 3rd 4th recerts recerts
a(-1) = b1 = first c = an x dn = (an-a(n-1))- e1 = b1 en fn = e(n-3) gn = f(n-3) hn = g(n-3) i = e + f + j = b-i
initial pop year (5.41%) cn = c(n-3) x x (0.806) x (0.806) x (0.806) g + h
a = a(n-1) renewals (0.806)
x (1-1.61%) bn = an x
(1-5.41%)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................................... 3,589 3,395 194 -253 3,395 0 0 0 3,395 0
2....................................................... 3,532 3,341 191 -249 162 0 0 0 162 3,179
3....................................................... 3,475 3,287 188 -245 159 0 0 0 159 3,128
4....................................................... 3,419 3,234 185 -241 156 2,738 0 0 2,894 340
5....................................................... 3,364 3,182 182 -237 154 130 0 0 284 2,898
6....................................................... 3,310 3,131 179 -233 151 128 0 0 280 2,852
7....................................................... 3,257 3,081 176 -229 149 126 2,207 0 2,483 598
8....................................................... 3,205 3,032 173 -226 147 124 105 0 376 2,656
9....................................................... 3,153 2,983 170 -222 144 122 103 0 370 2,613
10...................................................... 3,103 2,935 168 -218 142 120 102 1,780 2,144 791
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Calculations may not be exact due to rounding in the table.
---------------------------------------------------------------------------
\26\ The active IAC population in subsequent years was estimated
by applying the negative growth rate of 1.61% to the active IAC
population. The negative growth rate represents the net change in
the active IAC population accounting for IAC exits and entries. Year
1's value accounts for three years of negative growth derived from
3,768 IACs as of the end of fiscal year 2020 based on TSA records.
\27\ Baseline renewals represent Active IACs minus New IACs.
\28\ A retention factor of 0.806 is calculated as the exit rate
of 6.92 percent compounded over three years to account for the
number of IACs still operating who submitted a security program
three years prior.
---------------------------------------------------------------------------
TSA estimates a time burden of four hours for an IAC manager to
review and resubmit a security program. To calculate the hourly savings
to industry, TSA multiplies the four-hour burden by the fully loaded
hourly wage rate for an IAC manager. TSA calculates the wage rate by
estimating a weighted wage rate for two occupations across two industry
subgroups.\29\ To calculate the weighted wage rate, TSA multiplies each
labor category wage rate by its respective number of employees, sums
the product of these calculations, and then divides the result by the
total number of employees across all four wage rates. Table 3
illustrates the weighted average wage calculation.
---------------------------------------------------------------------------
\29\ Bureau of Labor Statistics (BLS), U.S. Department of Labor,
May 2020 National Industry Specific Occupation Employment and Wage
Estimates, First-Line Supervisors of Transportation and Material
Moving Workers (SOC 53-1040) in Freight Transportation Arrangement
(NAICS 488510) and Administrative Management and General Management
Consulting Services (NAICS 541611), and to Transportation, Storage,
and Distribution Managers (SOC 11-3071) in (NAICS 488510) and (NAICS
541611). (Accessed May 19, 2021 at https://www.bls.gov/oes/2020/may/naics4_541600.htm and https://www.bls.gov/oes/2020/may/naics4_488500.htm).
Table 3--Calculation of Weighted Average Industry Wage Rate
----------------------------------------------------------------------------------------------------------------
Wage rate Number of
---------------- employees
Industry NAICS Occupations ---------------
a b
----------------------------------------------------------------------------------------------------------------
Freight Transportation Arrangement (488510)... First-Line Supervisors of $28.72 3,460
Transportation and Material
Moving Workers (53-1040).
Transportation, Storage, and 46.41 4,920
Distribution Managers (11-3071).
Management, Scientific, and Technical First-Line Supervisors of 27.52 3,190
Consulting Services (541611). Transportation and Material
Moving Workers (53-1040).
Transportation, Storage, and 50.65 2,680
Distribution Managers (11-3071).
----------------------------------------------------------------------------------------------------------------
Industry Weighted Average Wage Rate = [sum](a x b) / [sum]b $38.68
----------------------------------------------------------------------------------------------------------------
Note: Calculations may not be exact due to rounding in the table.
Next, TSA adjusts this wage rate to account for employer
benefits,\30\ which results in an industry compensation rate of $57.90
per hour. Table 4 illustrates the calculation of the hourly industry
compensation rate based on these adjustments.
---------------------------------------------------------------------------
\30\ The average compensation factor is 1.4968. 1.4968 =
(($31.76 + $30.89 + $30.99 + $30.40) / 4) / (($21.35 + $20.62 +
$20.61 + $20.29) / 4). The compensation factor is calculated based
on the average of the quarterly total compensation divided by the
average of the quarterly total wages. Source: BLS, News Releases,
2020 Employer Costs for Employee Compensation, Table 4: Employer
Costs for Employee Compensation for private industry workers by
occupational and industry group (Transportation and Material Moving
Occupational Group), as published in June 2020, September 2020,
December 2020, and March 2021. (Accessed May 19, 2021 at https://www.bls.gov/bls/news-release/ecec.htm).
[[Page 79270]]
Table 4--Calculation of Industry Compensation Rate
------------------------------------------------------------------------
Compensation Rate (c =
Weighted wage rate (a) Benefits Factor (b) a x b)
------------------------------------------------------------------------
$38.68 1.4968 $57.90
------------------------------------------------------------------------
TSA multiplies four hours per resubmission by the $57.90 for an IAC
manager to calculate a unit cost savings of $232 per
recertification.\31\
---------------------------------------------------------------------------
\31\ $231.61 Renewal Unit Cost to Industry = 4-Hour Renewal Time
Burden x $57.90 Compensation Rate for IAC Managers.
---------------------------------------------------------------------------
TSA estimates a duration of 2.25 hours for TSA staff to review a
resubmission. The TSA review staff is composed of two ``I'' pay band
members \32\ and four ``J'' pay band members. Each submission could be
reviewed by any one of these staff members. TSA calculates a staff
compensation rate based on the weighted average of two different TSA
pay-bands that conduct reviews. To calculate the TSA weighted
compensation rate, TSA multiplies the respective pay band compensation
\33\ by the respective number of employees, sums the product of these
calculations, and then divides by the total number of employees. Table
5 displays this weighted average calculation.
---------------------------------------------------------------------------
\32\ TSA uses an SV pay grading system, which is a discrete
salary system with pay ranges, incorporated into pay bands.
\33\ TSA, DHS Modular Cost Standards, Washington DC Metropolitan
Area Locality Pay, I-Band $70.62 = $147,382 annual compensation /
2,087 hours and J-Band $83.17 = $173,585 annual compensation / 2,087
hours (Office Personnel Management changed the 2,080 work hours for
Federal employees to 2,087 by amending 5 U.S.C. 5504(b). Source:
Consolidated Omnibus Budget Reconciliation Act of 1985, Public Law
99-272, 100 Stat. 82 (April 7, 1986).
Table 5--Calculation of Weighted Average TSA Compensation Rate
----------------------------------------------------------------------------------------------------------------
Compensation Number of
rate * employees
TSA pay band --------------------------------
a b
----------------------------------------------------------------------------------------------------------------
TSA I Band..................................................................... $70.62 2
TSA J Band..................................................................... 83.17 4
----------------------------------------------------------------------------------------------------------------
Weighted Average TSA Compensation Rate = [sum](a x b) / [sum]b $78.99
----------------------------------------------------------------------------------------------------------------
* Compensation Rate includes employer benefits.
TSA multiplies 2.25 hours by the TSA compensation rate of $78.99
per hour to obtain a unit cost savings per recertification of $178.\34\
---------------------------------------------------------------------------
\34\ $177.73 Renewal Unit Cost to TSA = $78.99 I/J Band TSA
Weighted Compensation Rate x 2.25 Hour Burden for Renewal Review.
---------------------------------------------------------------------------
To calculate savings, TSA multiplies the number of eliminated
resubmissions from column j of Table 2, by the respective unit cost
savings for industry ($232) and TSA ($178). Table 6 displays the
industry, TSA, and total savings from modifying the security program
resubmission frequency from one to three years. TSA estimates that over
ten years cost savings aggregate to $7.8 million undiscounted, $6.6
million discounted at 3 percent, and $5.4 million discounted at 7
percent. The proposed rule would realize an annualized $0.8 million
cost savings discounted at 7 percent over 10 years.
Table 6--Total Cost Savings From the Proposed Rule
[$Thousands]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Eliminated Industry savings TSA savings (Cost savings) d = [sum]b,c
resubmissions -----------------------------------------------------------------------------
Year ----------------- b = a x $231.61 / c = a x $177.73 / Discounted Discounted
a 1,000 1,000 Undiscounted at 3% at 7%
--------------------------------------------------------------------------------------------------------------------------------------------------------
1........................................................ ............... $0 $0 $0 $0 $0
2........................................................ 3,179 736 565 1,301 1,227 1,137
3........................................................ 3,128 725 556 1,280 1,172 1,045
4........................................................ 340 79 60 139 124 106
5........................................................ 2,898 671 515 1,186 1,023 846
6........................................................ 2,852 660 507 1,167 978 778
7........................................................ 598 139 106 245 199 153
8........................................................ 2,656 615 472 1,087 858 633
9........................................................ 2,613 605 464 1,070 820 582
10....................................................... 791 183 141 324 241 165
----------------------------------------------------------------------------------------------
Total................................................ 19,056 4,413 3,387 7,800 6,641 5,443
----------------------------------------------------------------------------------------------
Annualized........................................... ............... ................ ................ .............. 775 779
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Calculation may not be exact in table due to rounding.
[[Page 79271]]
B. Small Entities
The Regulatory Flexibility Act \35\ requires agencies to consider
whether some rules would have a significant economic impact on a
substantial number of small entities, including small businesses and
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. This rule does not place any new
requirements on the regulated industry or small businesses.
---------------------------------------------------------------------------
\35\ See Public Law 96-354, 94 Stat. 1164 (Sept. 19, 1980) as
codified at 5 U.S.C. 601 et seq.
---------------------------------------------------------------------------
C. Collection of Information
The Paperwork Reduction Act of 1995 (PRA) \36\ requires Federal
agencies to consider the impact of paperwork and other information
collection burdens imposed on the public and, under the provisions of
PRA section 3507(d), obtain approval from the OMB for each collection
of information it conducts, sponsors, or requires through regulations.
As provided by the PRA, as amended, an agency may not conduct or
sponsor, and a person is not required to respond to, a collection of
information unless it displays a currently valid OMB control number.
The collection of information covered by this proposed rule is covered
by OMB control number 1652-0040.
---------------------------------------------------------------------------
\36\ See 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------
This proposed rule impacts the collection of information by
reducing the frequency that information must be submitted. This
reduction would decrease the current number of security program
recertifications submitted from an estimated annual average of 3,700 to
1,239 responses (a reduction of 2,461). The corresponding burden is
also reduced from an annual average of 14,800 hours to 4,956 hours (a
reduction of 9,844 hours). Table 7 displays the annual number of
responses and burden hour estimates associated with the proposed rule.
Table 7--PRA Information Collection Responses and Burden Hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
Responses
---------------------------------------------------------------------------
Collection activity Average Time burden Total hours Average annual
Year 1 Year 2 Year 3 Total annual per response hours
responses responses (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed Rule Recerts....................... 3,395 162 159 3,716 1,239 ............ 4,956 1,652
--------------------------------------------------------------------------------------------------------------------------------------------------------
As required by the PRA (44 U.S.C. 3507(d)), TSA has submitted a
copy of the proposed rule to the OMB for its review of the collection
of information.
D. International Trade Impact Assessment
The Trade Agreements Act of 1979 \37\ prohibits Federal agencies
from establishing standards or engaging in related activities that
create unnecessary obstacles to the foreign commerce of the United
States. Pursuant to these requirements, the establishment of standards
is not considered an unnecessary obstacle to the foreign commerce of
the United States, so long as the standard has a legitimate domestic
objective, such as the protection of safety, and does not operate in a
manner that excludes imports that meet this objective. The statute also
requires consideration of international standards and, where
appropriate, that they be the basis for U.S. standards.
---------------------------------------------------------------------------
\37\ See Public Law 96-39, 93 Stat. 144 (July 26, 1979) as
amended by the Uruguay Round Agreements Act, Public Law 103-465, 108
Stat 4809 (Dec. 8, 1994), codified at 19 U.S.C. 2531-2533.
---------------------------------------------------------------------------
TSA has assessed the potential effect of the proposed rule and
determined that it does not impose any new requirements. Therefore, the
rule will not create any unnecessary obstacles to foreign commerce of
the United States.
E. Unfunded Mandates Assessment
Title II of the Unfunded Mandates Reform Act of 1995 \38\ requires
each Federal agency to prepare a written statement assessing the
effects of any Federal mandate in a proposed agency rule, or final rule
for which a proposed rule was published, that may result in an
expenditure of $100 million or more (in 1995 dollars) in any one year
by State, local, and tribal governments, in the aggregate, or by the
private sector. The proposed rule does not contain such a mandate.
Therefore, the written statement requirements of the Act do not apply.
---------------------------------------------------------------------------
\38\ See Public Law 104-4, 109 Stat. 48 (Mar. 22, 1995),
codified at 2 U.S.C. 1501-1538.
---------------------------------------------------------------------------
F. Environment
TSA reviews proposed actions to determine whether the National
Environmental Policy Act (NEPA) applies to them, and if so, what degree
of analysis is required. DHS Directive 023-01 Rev. 01 and Instruction
Manual 023-01-001-01 Rev. 01 establish the procedures that DHS and its
components use to comply with NEPA and the Council on Environmental
Quality (CEQ) regulations for implementing NEPA, 40 CFR parts 1500
through 1508.
The CEQ regulations allow Federal agencies to establish, with CEQ
review and concurrence, categories of actions (categorical exclusions)
which experience has shown do not individually or cumulatively have a
significant effect on the human environment and, therefore, do not
require an Environmental Assessment or Environmental Impact
Statement.\39\ For an action to be categorically excluded, it must
satisfy each of the following three conditions: (1) the entire action
clearly fits within one or more of the categorical exclusions; (2) the
action is not a piece of a larger action; and (3) no extraordinary
circumstances exist that create the potential for a significant
environmental effect.\40\
---------------------------------------------------------------------------
\39\ 40 CFR 1507.3(b)(2)(ii), 1508.4.
\40\ See Instruction Manual, section V.B(2)(a)-(c).
---------------------------------------------------------------------------
This rulemaking has no anticipated environmental effects.
Specifically, this proposed rule extends the duration of TSA approval
of IAC security programs for up to three years without modifying
standards or imposing an additional burden on regulated entities. It
fits within categorical exclusion A3(d), ``Promulgation of rules . . .
that interpret or amend an existing regulation without changing its
environmental effect.'' \41\ Furthermore, the proposed rule is not part
of a larger action and presents no extraordinary circumstances creating
the potential for significant environmental impacts. As such, the
amendment is categorically excluded from further NEPA review.
---------------------------------------------------------------------------
\41\ See id. at Appendix A, Table 1.
---------------------------------------------------------------------------
[[Page 79272]]
G. International Compatibility and Cooperation
E.O. 13609 of May 1, 2012 (Promoting International Regulatory
Cooperation),\42\ promotes international regulatory cooperation to meet
shared challenges involving health, safety, labor, security,
environmental, and other issues and to reduce, eliminate, or prevent
unnecessary differences in regulatory requirements. TSA analyzed this
action under the policies and agency responsibilities of E.O. 13609,
and has determined that this action would have no effect on
international regulatory cooperation. In keeping with U.S. obligations
under the Convention on International Civil Aviation (also known as the
``Chicago Convention''), it is TSA policy to comply with International
Civil Aviation Organization Standards and Recommended Practices to the
maximum extent practicable. TSA has determined that this regulation has
no direct relationship to the Chicago Convention.
---------------------------------------------------------------------------
\42\ Published at 77 FR 26413 (May 4, 2012).
---------------------------------------------------------------------------
H. Executive Order 13132, Federalism
TSA has analyzed this rulemaking under the principles and criteria
of E.O. 13132 of August 4, 1999 (Federalism).\43\ TSA has determined
that this action will not have a substantial direct effect on the
States, or the relationship between the Federal Government and the
States, or on the distribution of power and responsibilities among the
various levels of government, and, therefore, does not have federalism
implications.
---------------------------------------------------------------------------
\43\ Published at 64 FR 43255 (Aug. 10, 1999).
---------------------------------------------------------------------------
I. Executive Order 13211, Regulations That Significantly Affect Energy
Supply, Distribution, or Use
TSA analyzed this rulemaking under E.O. 13211 of May 18, 2001
(Actions Concerning Regulations that Significantly Affect Energy
Supply, Distribution, or Use).\44\ TSA has determined that it is not a
``significant energy action'' under the Executive order and it is not
likely to have a significant adverse effect on the supply,
distribution, or use of energy.
---------------------------------------------------------------------------
\44\ Published at 66 FR 28355 (May 22, 2001).
---------------------------------------------------------------------------
List of Subjects in 49 CFR Part 1548
Air transportation, Reporting and recordkeeping requirements,
Security measures.
The Amendment
For the reasons set forth in the preamble, the Transportation
Security Administration proposes to amend chapter XII of title 49, Code
of Federal Regulations, as follows:
SUBCHAPTER C--CIVIL AVIATION SECURITY
PART 1548--INDIRECT AIR CARRIER SECURITY
0
1. The authority citation for part 1548 continues to read as follows:
Authority: 49 U.S.C. 114, 5103, 40113, 44901-44905, 44913-44914,
44916-44917, 44932, 44935-44936, 46105.
Sec. 1548.7 [Amended]
0
2. Amend Sec. 1548.7 by:
0
a. In paragraph (a)(4), removing the words ``one year after the month
it was approved'' and adding in their place ``three years after the
month it was approved, or until the program has been surrendered or
withdrawn, whichever is earlier''.
0
b. In paragraph (a)(5) introductory text, adding the words ``or
renewal'' after the words ``submitted during its initial''.
0
c. In paragraph (b)(1), removing the words ``at least 30 calendar days
prior to the first day of the anniversary month of initial approval''
and adding in their place ``at least 30 calendar days prior to the 36th
month after the initial approval''.
0
d. In paragraph (b)(4), removing the words ``one year after the month
it was renewed'' and adding in their place ``three years after the
month it was renewed, or until the program has been surrendered or
withdrawn, whichever is earlier''.
Dated: December 16, 2022.
David P. Pekoske,
Administrator.
[FR Doc. 2022-27778 Filed 12-23-22; 8:45 am]
BILLING CODE 9110-05-P
