Rule2024-02495
Frequency of Renewal Cycle for Indirect Air Carrier Security Programs
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
February 8, 2024
Effective
March 11, 2024
Issuing agencies
Homeland Security DepartmentTransportation Security Administration
Abstract
The Transportation Security Administration (TSA) is modifying 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 now requires renewal once every 3 years. This modification reduces the burden of compliance without a negative impact on security.
Full Text
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[Federal Register Volume 89, Number 27 (Thursday, February 8, 2024)]
[Rules and Regulations]
[Pages 8550-8557]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-02495]
[[Page 8550]]
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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, Department of Homeland
Security (DHS).
ACTION: Final rule.
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SUMMARY: The Transportation Security Administration (TSA) is modifying
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
now requires renewal once every 3 years. This modification reduces the
burden of compliance without a negative impact on security.
DATES: This rule is effective March 11, 2024.
FOR FURTHER INFORMATION CONTACT: Angel Rodriguez, telephone 1-571-227-
2108; email <a href="/cdn-cgi/l/email-protection#c9a8a7aeaca5e7a5e7bba6adbba0aebcacb389bdbaa8e7ada1bae7aea6bf"><span class="__cf_email__" data-cfemail="5839363f3d347634762a373c2a313f2d3d22182c2b39763c302b763f372e">[email protected]</span></a>; 6595 Springfield Center
Drive, Springfield, VA 20598-6003.
SUPPLEMENTARY INFORMATION:
Availability of Rulemaking Document
You can find an electronic copy of this rule using the internet by
accessing the Government Publishing Office's web page at <a href="https://www.govinfo.gov/app/collection/FR/">https://www.govinfo.gov/app/collection/FR/</a> to view the daily published Federal
Register edition or accessing the Office of the Federal Register's web
page at <a href="https://www.federalregister.gov">https://www.federalregister.gov</a>. Copies are also available by
contacting the individual identified for ``General Questions'' in the
FOR FURTHER INFORMATION CONTACT section. Make sure to identify the
docket number of this rulemaking.
Small Entity Inquiries
The Small Business Regulatory Enforcement Fairness Act (SBREFA) of
1996 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 <a href="https://www.sba.gov/category/advocacy-navigation-structure/regulatory-policy/regulatory-flexibility-act/sbrefa">https://www.sba.gov/category/advocacy-navigation-structure/regulatory-policy/regulatory-flexibility-act/sbrefa</a>.
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 Regulation
The Indirect Air Carrier (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 the 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 modifying 49 CFR 1548.7 to reduce the frequency at which
IACs must renew their registration from annual to once every 3 years.
This modification reduces 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.
TSA has determined that the change will not have a negative impact on
aviation security.
B. Summary of Major Provisions
This final rule makes limited changes to 49 CFR 1548.7, which are
necessary to change the regulatory requirement for the IAC security
program-renewal from 1 year to 3 years. Table 1 identifies each change.
C. Costs and Benefits
TSA has determined this modification reduces the cost of compliance
without any negative impacts on security. As described in the notice of
proposed rulemaking (NPRM) (87 FR 79264, December 27, 2022) and as
noted below, TSA estimates that, over 10 years, cost savings aggregate
to $7.8 million undiscounted, $6.6 million discounted at 3 percent, and
$5.4 million discounted at 7 percent. This final rule would realize an
annualized $0.8 million cost savings discounted at 7 percent over 10
years.
II. General Discussion of the Rulemaking
A. Background
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.'' \1\
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\1\ 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.
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 before expiration of
the IACSSP, as well as other standards for the submission.
Since 2006, TSA has required IACs to renew their registration each
year. 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 3 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 8551]]
TSA published an NPRM on December 27, 2022,\2\ proposing to change
the renewal period, and requested comments from the public to be
submitted by February 27, 2023. TSA received two comments, both from
interested industry associations.
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\2\ 87 FR 79264 (Dec. 27, 2022).
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B. Summary of Comments
TSA received two comments, both from interested industry
associations. One trade association representing indirect air carriers
and aircraft operators expressed general support for the rule, and
expressed the belief that the rule would not negatively impact
security.\3\ Another trade association representing airline pilots
recommended that TSA not move forward with the rulemaking.\4\ The
association for the airline pilots stated: (1) TSA should not reduce
oversight in pursuit of economic relief, which could reduce
opportunities to discover evolving security threats; (2) TSA's
estimated burden of 4 hours to complete annual certification is not a
meaningful burden on industry; (3) the high turnover rate among IAC
staff requires TSA audits and training verification on an annual basis
at a minimum; and (4) if TSA's process for revalidating IACs is tied to
their security program renewals, the shift to a 3-year renewal cycle
would create an unnecessary security risk and TSA should assess IACs
for security risks on an annual basis, or more frequently.
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\3\ <a href="https://www.regulations.gov/docket/TSA-2020-0002/comments">https://www.regulations.gov/docket/TSA-2020-0002/comments</a>,
TSA-2020-0002-0002.
\4\ <a href="https://www.regulations.gov/docket/TSA-2020-0002/comments">https://www.regulations.gov/docket/TSA-2020-0002/comments</a>,
TSA-2020-0002-0003.
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TSA Response: Following review of the issues raised by the airlines
pilots' association, TSA has determined that the commenter provided no
new information to counter TSA's previous determination on the benefits
and need for this rulemaking. First, TSA is not sacrificing security in
order to obtain economic benefits. These limited changes to the IAC
regulation are consistent with 49 U.S.C. 114(l)(3), which requires TSA
to consider the costs of any proposed regulation relative to its
security benefit. In addition, Executive Order (E.O.) 13563 of January
18, 2011 (Improving Regulation and Regulatory Review), requires
agencies to periodically review existing regulations to identify
requirements that ``may be outmoded, ineffective, insufficient, or
excessively burdensome, and to modify, streamline, expand, or repeal
them in accordance with what has been learned.'' \5\ Before proposing
this change, TSA conducted a risk analysis and determined that the
revision would not have a negative impact on security due to other
compensating procedures. This final rule provides an overall reduction
in the burden of compliance without negatively affecting security.\6\
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\5\ See sec. 6 of E.O. 13563.
\6\ 87 FR 79265.
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Second, the costs of compliance with the annual renewal requirement
may be relatively small for each IAC, but TSA estimates that over 10
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.\7\ These cost savings accrue for both the industry and
TSA. Reducing the administrative burden on TSA staff of reviewing
annual renewal applications allows TSA to focus additional resources
and staff effort on the highest air cargo security priorities.
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\7\ 87 FR 79266.
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Third, as noted in the NPRM, the transition from an annual security
program certification to a 3-year security program certification
renewal period does not mean that IACs will only be assessed or audited
for compliance once every 3 years. As discussed in the NPRM and below,
TSA has determined that a 3-year renewal cycle is effective, efficient,
and secure when coupled with an appropriately staffed and resourced
inspection and enforcement program.\8\ TSA acknowledges the airline
pilots association concern regarding turnover in the IAC industry, but
an extension of the recertification period does not mean a reduction in
regulatory inspections. This determination is supported by TSA's
experience with other air cargo security regulations, specifically the
Certified Cargo Screening Program (CCSP), and TSA believes it will be
similarly effective with IACs.\9\
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\8\ See id. for more discussion on this issue.
\9\ Id.
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Fourth, under this final rule, within any 3-year period, every IAC
will be subject to at least one triennial comprehensive inspection, two
targeted annual inspections in years when a comprehensive inspection is
not conducted, and possible supplemental inspections whenever TSA's
assessment of risk or evolving compliance posture indicate that
additional inspections are warranted. TSA's process for inspecting and
revalidating IACs is not tied to the annual renewal of IAC security
programs because the inspection and revalidation schedules of TSA
inspectors are managed separately from TSA's program renewal efforts.
TSA implements a national inspection plan based on regular cycles, and
conducts focused Special Emphasis Assessments and Special Emphasis
Inspections whenever necessary. Further, TSA's local inspection plans
augment the national plan with risk-based local inspection and
revalidation schedules that consider regional threats, a specific IAC's
past performance, and other factors.
TSA's local field offices determine whether to conduct additional
inspections of an individual IAC by assessing the results of prior
compliance reviews in light of evolving and emerging threat
information. TSA's local field offices may conduct more frequent
inspections of IACs that have lower compliance rates, or otherwise
present an elevated security risk. All IACs are subject to supplemental
inspections if the local field office determines one is necessary.
When TSA imposed the annual renewal requirement in 2006, 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. As described above, TSA now
ensures compliance with the program through the nationwide schedule of
regular annual inspections, Special Emphasis Assessments and
Inspections, and additional inspections at the discretion of the local
field office.
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. If TSA withdraws approval, an IAC must discontinue operation
immediately, regardless of the renewal date of its program
certification.
As TSA noted in the NPRM,\10\ the triennial renewal requirement for
other TSA air cargo programs have proven to be effective and secure. In
addition to recognizing the effectiveness of its regular inspections to
ensure compliance with the IAC program, TSA considered the requirements
for the IAC program compared to other aviation security requirements,
specifically requirements for the CCSP under 49 CFR part 1549. When TSA
finalized the rule establishing the CCSP in 2011, TSA provided a 3-year
renewal period for Certified Cargo Screening Facilities (CCSFs).
Experience gained by more than a decade of implementing the CCSP
validates that the triennial recertification cycle does not have a
negative impact on security. The final rule does not change the actions
that
[[Page 8552]]
IACs must perform to recertify or the requirements they must meet to
maintain approval to operate as an IAC; the final rule simply reduces
the frequency with which they must recertify.
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\10\ 87 FR 79266.
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C. Section-by-Section Analysis
After consideration of each comment and any relevant potential
changes to the proposed rule, TSA is adopting the revisions as proposed
in the NPRM. TSA has addressed all issues and concerns derived from
these comments in the discussion below.
Table 1 identifies each change made to 49 CFR 1548.7 as a result of
this rulemaking.
Table 1--Changes to 49 CFR 1548.7
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Section Prior text Revised text
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1548.7(a)(4)....................... Removing the words ``one year after Adding in their place ``3 years
the month it was approved''. after the month it was approved, or
until the program has been
surrendered or withdrawn, whichever
is earlier''.
1548.7(a)(5)....................... ..................................... In the introductory text, adding the
words ``or renewal'' after the
words ``submitted during its
initial''.
1548.7(b)(1)....................... Removing the words ``at least 30 Adding in their place ``at least 30
calendar days prior to the first day calendar days before the 36th month
of the anniversary month of initial after the initial approval''.
approval''.
1548.7(b)(4)....................... Removing the words ``one year after Adding in their place ``3 years
the month it was renewed''. after the month it was renewed, or
until the program has been
surrendered or withdrawn, whichever
is earlier''.
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III. Regulatory Analyses
TSA conducted a regulatory impact analysis (RIA) for the NPRM,
posted in the docket for this rulemaking. As there were no comments
related to the regulatory impact analysis in the NPRM, TSA has made no
changes to the analysis in this final rule. 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
Under the requirements of E.O. 12866 of September 30, 1993
(Regulatory Planning and Review),\11\ as amended by E.O. 14094 of April
6, 2023 (Modernizing Regulatory Review),\12\ and E.O. 13563 of January
18, 2011 (Improving Regulation and Regulatory Review),\13\ agencies
must assess the costs and benefits of available regulatory alternatives
and, if regulation is necessary, select regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety effects, distributive impacts, and equity).
These requirements were supplemented by E.O. 13563, which emphasizes
the importance of quantifying both costs and benefits, of reducing
costs, of harmonizing rules, and of promoting flexibility.
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\11\ Published at 58 FR 51735 (Oct. 4, 1993).
\12\ Published at 88 FR 21879 (Apr. 6, 2023).
\13\ Published at 76 FR 3821 (Jan. 21, 2011).
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The Office of Management and Budget (OMB) has determined this rule
is not a significant regulatory action under section 3(f) of E.O.
12866, as amended. Accordingly, OMB has not reviewed this rule.
In conducting these analyses, TSA has certified that this
rulemaking does not have a significant economic impact on a substantial
number of small entities.
The basis for this conclusion is set forth below.
This final rule reduces regulatory costs by reducing the frequency
that IACs must renew their security program certifications. This final
rule reduces the frequency of annual IAC security program
certifications to once every 3 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 1 year to 3 years. This
change aligns the duration of the IAC security program with the
CCSP.\14\ Table 2 summarizes the change and impact from this action.
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\14\ See 49 CFR 1549.7(a)(6). See also supra notes 8 and 10, and
accompanying text.
Table 2--Comparison of Current 49 CFR Part 1548 and the Final Rule
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Current Final rule Impact Estimated cost savings
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Requires annual renewal of security Revises to renewal (1) Aligns part 1548 renewal period TSA estimates the annualized cost saving to
program. every 3 years. with that of the TSA-approved industry and Federal government to be $0.8
Certified Cargo Screening Program, million annualized at a 7 percent discount
part 1549. rate. Cost savings arise from time saved due to
(2) Provides cost savings to industry a less frequent security program renewal cycle.
and TSA.
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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 final rule's 3-year requirement. TSA uses the difference in the
number of resubmission instances between the current requirement and
the final 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
10-year period of analysis. TSA assumes that the regulatory change for
less frequent
[[Page 8553]]
recertification does not impact the annual number of forecasted active
IAC certifications. Based on historical program data, TSA assumes the
aggregate population of active and approved IACs under the baseline and
the final 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 10 years, as
displayed in column a of Table 3. 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)<SUP>(1 / (2020-2008))</SUP>-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 5 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 3.
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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 3.\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.
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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 before 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); and-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 10-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.
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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 final rule is expected to be implemented in year 1
and the relevant prior year active IAC population will have, by then, a
valid security plan; which will have to be renewed following the new 3-
year cycle.\21\ New applicants would also have to follow this 3-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 3 years prior by a factor that results from
compounding the annual exit rate over 3 years; this retention factor,
estimated to be 80.6 percent,\22\ is multiplied by the number of
program submissions from 3 years before estimate the number of renewals
in the corresponding year.
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\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)<SUP>(3-year cycle)</SUP>.
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Table 3 staggers recertifications under the final rule's 3-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 3, TSA takes into
account four recertification cycles \25\ within the 10-year framework
(columns e through h) and sums all the recertifications under the final
rule in column i. Finally, TSA calculates the number of eliminated
recertifications (column j) by subtracting the final rule
recertifications (column i) from the baseline annual recertifications
(column b).
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\23\ A cycle is the period in between renewals (or between the
first renewal and the initial approval). The 3-year cycle means that
submissions have to be renewed every 3 years. The current submission
cycle is annual, one submission every year.
\24\ Note IACs that were approved by TSA in year-1 (2 years
before the start date of this rule) and partially in year 0 (1 year
before the publication of this final rule) would need to resubmit 36
months from their last approval. IACs that were approved before the
publication of the final 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 8554]]
Table 3--Number of Final Rule Eliminated Security Program Recertifications
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Baseline Recertification cycle \28\
Year Active IACs recerts New IACs IAC exits ---------------------------------------------------- Final rule Eliminated
\26\ \27\ 1st 2nd 3rd 4th recerts recerts
a(-1) = b1 = first c = an x dn = e1 = b1 en fn = e(n-3) gn = f(n-3) hn = i = e + f + j = b-i
initial pop year (5.41%) (an-a(n-1))-cn = c(n-3) x (0.806) x (0.806) g(n-3) g + h
a renewals x (0.806) x (0.806)
= a(n-1) x bn = an x
(1-1.61%) (1-5.41%)
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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.
TSA estimates a time burden of 4 hours for an IAC manager to review
and resubmit a security program. To calculate the hourly savings to
industry, TSA multiplies the 4-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 4
illustrates the weighted average wage calculation.
---------------------------------------------------------------------------
\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 3 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 3 years to account for the number of
IACs still operating who submitted a security program 3 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 <a href="https://www.bls.gov/oes/2020/may/naics4_541600.htm">https://www.bls.gov/oes/2020/may/naics4_541600.htm</a> and <a href="https://www.bls.gov/oes/2020/may/naics4_488500.htm">https://www.bls.gov/oes/2020/may/naics4_488500.htm</a>).
Table 4--Calculation of Weighted Average Industry Wage Rate
----------------------------------------------------------------------------------------------------------------
Wage rate Number of
---------------- employees
Industry NAICS Occupations ---------------
a b
----------------------------------------------------------------------------------------------------------------
Freight Transportation Arrangement First-Line Supervisors of Transportation $28.72 3,460
(488510). 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 Transportation 27.52 3,190
Consulting Services (541611). and Material Moving Workers (53-1040).
Transportation, Storage, and 50.65 2,680
Distribution Managers (11-3071).
----------------------------------------------------------------------------------------------------------------
Industry Weighted Average Wage Rate = [sum](ai x bi) / [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 5 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 <a href="https://www.bls.gov/bls/news-release/ecec.htm">https://www.bls.gov/bls/news-release/ecec.htm</a>.)
Table 5--Calculation of Industry Compensation Rate
------------------------------------------------------------------------
Compensation rate (c
Weighted wage rate (a) Benefits factor (b) = a x b)
------------------------------------------------------------------------
$38.68 1.4968 $57.90
------------------------------------------------------------------------
[[Page 8555]]
TSA multiplies 4 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
6 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 6--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](ai x bi ) / [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 3, by the respective unit cost
savings for industry ($232) and TSA ($178). Table 7 displays the
industry, TSA, and total savings from modifying the security program
resubmission frequency from 1 to 3 years. TSA estimates that over 10
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
final rule would realize an annualized $0.8 million cost savings
discounted at 7 percent over 10 years.
Table 7--Total Cost Savings From the Final Rule
[$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.
B. Small Entities
As required by the Regulatory Flexibility Act,\35\ TSA considered
whether this final rule 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. In
addition, TSA received no comments related to the regulatory impact
analysis in the NPRM, therefore has made no changes to this analysis in
the final rule. TSA has certified that this rule does not have a
significant economic impact on a substantial number of small entities.
---------------------------------------------------------------------------
\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) (44 U.S.C. 3501. et seq.)
requires that TSA consider the impact of paperwork and other
information collection burdens imposed on the
[[Page 8556]]
public and, under the provisions of 44 U.S.C. 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
final rule is covered by OMB control number 1652-0040.
This final 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 8 displays the annual number of responses and burden hour
estimates associated with the final rule.
Table 8--PRA Information Collection Responses and Burden Hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
Responses
---------------------------------------------------------------------------
Time burden Average annual
Collection activity Total Average per Total hours hours
Year 1 Year 2 Year 3 responses annual response
responses (hours)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Final 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 final rule to the OMB for its review of the collection of
information.
D. International Trade Impact Assessment
The Trade Agreements Act of 1979 \36\ prohibits Federal agencies
from establishing any 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 final rule and has determined that
it does not impose any new requirements. Therefore, the rule would not
have an adverse impact on international trade.
---------------------------------------------------------------------------
\36\ 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.
---------------------------------------------------------------------------
E. Unfunded Mandates Assessment
Title II of the Unfunded Mandates Reform Act of 1995 \37\
establishes requirements for Federal agencies to assess the effects of
their regulatory actions on State, local, and tribal governments and
the private sector. Under sec. 202 of the Unfunded Mandates Reform Act,
TSA generally must prepare a written statement, including a cost-
benefit analysis, for proposed and final rules with ``Federal
mandates'' that may result in expenditures by State, local, and tribal
governments in the aggregate or by the private sector of $100 million
(adjusted for inflation) or more in any one year. The final rule does
not contain such a mandate. Therefore, the written statement
requirements of the Act do not apply.
---------------------------------------------------------------------------
\37\ See Public Law 104-4 (109 Stat. 48; Mar. 22, 1995),
codified at 2 U.S.C. 1501-1538.
---------------------------------------------------------------------------
F. Environment
TSA has reviewed this rulemaking for purposes of the National
Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4347) and has
determined that this action will not have a significant effect on the
human environment. This action is covered by categorical exclusion
number A3(b) in DHS Management Directive 023-01 (formerly Management
Directive 5100.1), Environmental Planning Program, which guides TSA
compliance with NEPA.G. International Compatibility and Cooperation.
E.O. 13609 of May 1, 2012 (Promoting International Regulatory
Cooperation),\38\ 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.
---------------------------------------------------------------------------
\38\ Published at 77 FR 26413 (May 4, 2012).
---------------------------------------------------------------------------
H. Executive Order 13132, Federalism
TSA has analyzed this rule under the principles and criteria of
E.O. 13132 of August 4, 1999 (Federalism).\39\ 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.
---------------------------------------------------------------------------
\39\ Published at 64 FR 43255 (Aug. 10, 1999).
---------------------------------------------------------------------------
I. Energy Impact Analysis
The energy impact of this rulemaking has been assessed in
accordance with the Energy Policy and Conservation Act (EPCA), Public
Law 94-163, as amended (42 U.S.C. 6362). TSA has determined that this
rulemaking would not be a major regulatory action under the provisions
of the EPCA.
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 amends chapter XII of title 49, Code of Federal
Regulations, as follows:
[[Page 8557]]
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 ``3 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 before 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 ``3 years after the month it
was renewed, or until the program has been surrendered or withdrawn,
whichever is earlier''.
Dated: February 1, 2024.
David P. Pekoske,
Administrator.
[FR Doc. 2024-02495 Filed 2-7-24; 8:45 am]
BILLING CODE 9110-05-P
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