[Federal Register Volume 83, Number 121 (Friday, June 22, 2018)]
[Proposed Rules]
[Pages 29067-29081]
[FR Doc No: 2018-13345]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 105

[Docket No. USCG-2017-0711]
RIN 1625-AC47

TWIC--Reader Requirements; Delay of Effective Date

AGENCY: Coast Guard, DHS.

ACTION: Notice of proposed rulemaking.

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

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

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

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

SUPPLEMENTARY INFORMATION:

Table of Contents for Preamble

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

I. Public Participation and Request for Comments

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

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

II. Abbreviations

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

III. Regulatory History

    Pursuant to the Maritime Transportation Security Act of 2002
(MTSA),\1\ and in accordance with section 104 of the Security and
Accountability for Every Port Act of 2006 (SAFE Port Act),\2\ Congress
requires the electronic inspection of Transportation Worker
Identification Credentials (TWIC[reg]) inside secure areas on vessels
and in facilities in the United States. Specifically, the SAFE Port Act
required that the Secretary promulgate final regulations that require
the deployment of electronic transportation security card readers.\3\
To implement this requirement in an effective manner, the Coast Guard
undertook a series of regulatory actions culminating in a requirement
to implement electronic TWIC inspection at certain high-risk vessels
and facilities regulated under MTSA.
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    \1\ Public Law 107-295, 116 Stat. 2064 (November 25, 2002).
    \2\ Public Law 109-347, 120 Stat. 1884, 1889 (October 13, 2006).
    \3\ See 46 U.S.C. 70105(k)(3).
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    On May 22, 2006, the Coast Guard and the Transportation Security
Administration (TSA) jointly published a notice of proposed rulemaking
(NPRM) entitled ``Transportation
    Worker Identification Credential (TWIC) Implementation in the
Maritime Sector; Hazardous Materials Endorsement for a Commercial
Driver's License.'' \4\ On January 25, 2007, the Coast Guard and TSA
published a final rule with the same title.\5\ The 2007 final rule
established the requirement, among others, that all persons allowed
unescorted access to secure areas in MTSA-regulated vessels and
facilities must possess a valid TWIC. The 2007 final rule did not,
however, mandate that the TWIC be read with an electronic reader and,
as such, allowed for visual inspection. Visual inspection does not make
use of the electronic security measures built into the TWIC, such as
the challenge/response to the TWIC's unique electronic identifier,
comparison of the credential to the TWIC Cancelled Card List, and
verification of the biometric template stored on the TWIC to the
individual's biometrics.
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    \4\ 71 FR 29396 (May 22, 2006).
    \5\ 72 FR at 3492 (January 25, 2007).
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    Although the May 22, 2006, NPRM proposed certain TWIC reader
requirements, after reviewing the public comments, the Coast Guard
decided not to include the proposed TWIC reader requirements in the
2007 final rule. Instead, the Coast Guard addressed TWIC reader
requirements in a separate rulemaking after conducting a pilot program
to address the feasibility of reader requirements.\6\ For a detailed
discussion of the public comments and our responses to them, refer to
section III.B.7 of the 2007 final rule.
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    \6\ The SAFE Port Act required DHS to conduct a pilot program to
test the business processes, technology, and operational impacts of
TWIC readers in the maritime environment, and to issue regulations
that require the deployment of TWIC readers that are consistent with
the findings of the pilot program. See 46 U.S.C. 70105(k)(1) and
(3).
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    On March 27, 2009, the Coast Guard published an advanced notice of
proposed rulemaking (ANPRM) on the topic of TWIC reader
requirements.\7\ The ANPRM discussed dividing vessels and facilities
into three ``risk groups''--Risk Group A for the high-risk vessels and
facilities, Risk Group B for medium-risk vessels and facilities, and
Risk Group C for low-risk vessels and facilities. The ANPRM also
considered different electronic inspection requirements for Risk Groups
A and B, with no electronic inspection requirements for Risk Group C.
On March 22, 2013, we published an NPRM \8\ that proposed the three
risk groups (A, B, and C), but limited the proposed electronic TWIC
inspection requirements to Risk Group A vessels and facilities only.
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    \7\ 74 FR 13360 (March 27, 2009).
    \8\ 78 FR 17782 (March 22, 2013).
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    On August 23, 2016, we published a final rule entitled
``Transportation Worker Identification Credential (TWIC)--Reader
Requirements'' \9\ (``TWIC Reader final rule'') that eliminated the
three risk group structure and required that the high-risk vessels and
facilities (still referred to as Risk Group A) conduct electronic TWIC
inspection for all personnel seeking unescorted access to secure areas
of the vessel or facility. The TWIC Reader final rule becomes effective
on August 23, 2018. On May 15, 2017, we received a petition for
rulemaking from the International Liquid Terminals Association and
other industry groups.\10\ The rulemaking petition requested that we
revise the scope of the TWIC Reader final rule to impose electronic
TWIC inspection requirements on only those vessels and facilities that
engage in the maritime transfer of certain dangerous cargoes (CDCs),
and extend the compliance date of the TWIC Reader final rule so that
vessels and facilities do not incur costs while the Coast Guard reviews
the scope of the TWIC Reader final rule. On May 18, 2017, the Coast
Guard opened a public docket on www.regulations.gov, and acknowledged
receipt of the rulemaking petition by letter dated May 25, 2017. The
industry's rulemaking petition is discussed in greater detail below in
section IV.D.
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    \9\ 81 FR 57652.
    \10\ See Docket number USCG-2017-0447, available at
www.regulations.gov.
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IV. Background

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

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

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

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

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

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

C. Summary of Methodology Used in the TWIC Rulemaking

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

    After publication of the TWIC Reader final rule in August 2016, we
received several questions from the public about our risk analysis, as
well as a rulemaking petition to reconsider the scope of the TWIC
Reader final rule.\36\ A primary issue that arose was whether the Coast
Guard's risk analysis properly analyzed the location of bulk CDC in a
facility. For example, the rulemaking petitioner raised the issue that,
because many Risk Group A facilities store or handle bulk CDC in areas
unconnected to their maritime nexus, such facilities may not pose as
large a risk to transportation infrastructure as those Risk Group A
facilities that handle bulk CDC in the marine transfer area and
actively transfer it to or from vessels. In addition, we received
several inquiries regarding how the Coast Guard would categorize small
quantities of bulk \37\ CDC used for the direct operations of the
facility. Examples of this issue include operational use of CDCs, such
as relatively small tanks of propane used internally at a facility to
generate electricity or to power port equipment, that would still fall
into the broad category of ``CDC in bulk,'' \38\ and yet would also
seem to pose few of the security concerns described in the Coast
Guard's risk analysis.
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    \36\ This petition is located in the docket at
www.regulations.gov, docket number USCG-2017-0447. While we
acknowledge some of the issues raised in that petition here, we note
that this NPRM does not constitute a grant or denial of that
petition.
    \37\ Bulk, in this context, refers to how the cargoes are
packaged rather than to an amount. The terms ``bulk'' or ``in bulk''
are defined in 33 CFR 101.105, in part, as ``a commodity that is
loaded or carried without containers or labels, and that is received
and handled without mark or count.'' See similar definitions in 33
CFR 126.3 and 160.3.
    \38\ As this term is used in the text of 33 CFR 105.253(a)(1),
81 FR 57652, 57712.
---------------------------------------------------------------------------

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

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

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

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

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

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

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

    In the TWIC Reader final rule, we also addressed the issue of bulk
CDC located outside of the maritime nexus of the facility. We noted
that a facility where bulk CDC is stored and handled away from the
maritime nexus would be a Risk Group A facility (because the bulk CDC
would still be protected by the facility's security plan and, thus,
would present a vulnerability), and stated that ``when the bulk CDC is
not a part of the maritime transportation activities, it may be that a
facility could define its MTSA footprint in such a way as to exclude
that area . . . [with the result that] the TWIC reader requirements . .
. would not apply in that area.'' \46\
---------------------------------------------------------------------------

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

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

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

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

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

VI. Regulatory Analysis

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

A. Regulatory Planning and Review

    Executive Orders 12866 (Regulatory Planning and Review) and 13563
(Improving Regulation and Regulatory Review) direct agencies to assess
the costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
This proposed rule is expected to be an Executive Order 13771 (Reducing
Regulation and Controlling Regulatory Costs) deregulatory action.
Details on the estimated cost savings of this proposed rule can be
found in the rule's economic analysis.
    This proposed rule is a significant regulatory action under section
3(f) of Executive Order 12866. The Office of Management and Budget
(OMB) has reviewed it under that Order. It requires an assessment of
potential costs and

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

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

    In the 2016 final rule Regulatory Analysis, we estimated that 525
facilities and 1 vessel out of the MTSA-regulated entities (13,825
vessels and more than 3,270 facilities) will have to comply with the
final rule's electronic TWIC inspection requirements using MSRAM's
risk-based tiered approach.\48\ Using data from MSRAM, we estimate that
this proposed rule would delay the implementation of the final rule for
122 of the 525 affected Risk Group A facilities by 3 years, while the
remaining 403 facilities and 1 vessel would have to implement the final
rule requirements by August 23, 2018. These 122 facilities handle bulk
CDC, but do not transfer it to or from a vessel. This proposed rule
would also apply to facilities that receive vessels carrying bulk CDC
but, during the vessel-to-facility interface, do not transfer the bulk
CDC to or from the vessel. We did not include these facilities in our
MSRAM risk analysis for the final rule or in the final rule Regulatory
Analysis. Therefore, we cannot determine the number of these facilities
at this time, and we did not include them in our cost estimates for
this proposed rule. We updated our final rule cost estimates from 2012
to 2016 based on Gross Domestic Product (GDP) Deflator data from the
U.S. Bureau of Economic Analysis (BEA).\49\ The GDP deflator is a
measure of the change in price of domestic goods and services purchased
by consumers, businesses, and the government.
---------------------------------------------------------------------------

    \48\ See Table 2.8 on page 26 of the TWIC Reader final rule
Regulatory Analysis for the estimate of 525 facilities, and Table
2.1 on page 23 for the estimate of 1 vessel.
    \49\ For consistency across rulemaking analyses we are using the
annual Implicit Price Deflators for Gross Domestic Product (BEA
National Income and Product Accounts (NIPA) Table 1.1.9) values
updated in March 2017. See page 9. https://faq.bea.gov/scb/pdf/2017/04%20April/0417_selected_nipa_tables.pdf.
---------------------------------------------------------------------------

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

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

Methodology
Final Rule Costs Inflated to 2016 Dollars
    As shown in table 1, we updated the annualized cost of the 2016
final rule from 2012 dollars to 2016 dollars (over a 10-year period),
which is approximately $23.2 million at a 7-percent discount rate. We
performed this update to compare them to this proposed rule's total
industry costs on the same basis.
    To do this, we used an inflation factor from the annual GDP
deflator data . We calculated the inflation factor of 1.059 by dividing
the annual 2016 index number (111.445) by the annual 2012 index number
(105.214).
    We then applied this inflation factor to the costs for vessels and
additional costs, which include additional delay costs, travel costs,
and the cost to replace TWIC readers that fail (Table 4.38 of the final
rule RA). These inflated costs are shown in table 2.

 Table 2--Comparison of Total Cost for Vessels and Additional Costs in 2012 Dollars and 2016 Dollars Under 2016
                                             TWIC Reader Final Rule
                                                   [Millions]
----------------------------------------------------------------------------------------------------------------
                                                              Vessel                     Additional costs
                      Year                       ---------------------------------------------------------------
                                                      2012 $          2016 $          2012 $          2016 $
----------------------------------------------------------------------------------------------------------------
1...............................................          $0.021          $0.022           $4.21           $4.46
2...............................................          0.0036          0.0038            4.21            4.46
3...............................................          0.0036          0.0038            4.21            4.46
4...............................................          0.0036          0.0038            4.21            4.46
5...............................................          0.0036          0.0038            4.21            4.46
6...............................................           0.018           0.019            4.21            4.46
7...............................................          0.0036          0.0038            4.21            4.46
8...............................................          0.0036          0.0038            4.21            4.46
9...............................................          0.0036          0.0038            4.21            4.46
10..............................................          0.0036          0.0038            4.21            4.46
                                                 ---------------------------------------------------------------
    Total.......................................           0.068           0.072           42.10           44.59
----------------------------------------------------------------------------------------------------------------

    For facilities, we applied this inflation factor to the total cost-
by-cost component (table 4.17 of the final rule RA) because the
proposed rule would apply only to some of these cost elements. Facility
costs include capital costs, maintenance costs, and operational costs.
Capital costs consist of the cost to purchase and install TWIC readers,
as well as the cost to fully replace TWIC readers 5 years after the
original installation. Maintenance costs account for the costs to
maintain TWIC readers every year after the original installation.
Operational costs include costs that occur only at the time of the TWIC
reader installation, such as those for amending security plans,
creating a recordkeeping system, and initial training. Operational
costs also include ongoing costs, such as those for keeping and
maintaining records, downloading the canceled card list, and ongoing
annual training. Table 3 presents a comparison of the facility costs in
2012 and 2016 dollars, as well as an estimate of the total number of
facilities complying with the regulation each year.

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

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

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

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

    \50\ We calculated the total initial baseline capital costs for
TWIC installation for all facilities by adding the baseline capital
costs presented in table 3 for years 1 and 2 ($52.41 million +
$52.41 million = $104.81 million). We calculated the total baseline
capital costs for replacing TWIC readers 5 years after the original
installation by adding the baseline capital costs presented in table
3 for years 6 and 7 ($10.45 million + $10.45 million = $20.90
million). We then multiplied these numbers by the percentage of
facilities incurring the cost in a given year. For example, in year
1, a total of 202 facilities are expected to incur capital costs,
for a total industry cost of $40.33 million ($104.81 million x (202
facilities/525 facilities) = $40.33 million).
    \51\ The total initial baseline maintenance costs for TWIC
readers, $2.09 million, is found in year 3 of table 3, as this is
the first year that all facilities will incur maintenance costs
under the baseline. To estimate maintenance costs, we multiplied the
percentage of facilities incurring the cost in a given year by the
total costs. Because maintenance costs are not incurred until the
year after the TWIC reader is installed, the total number of
facilities incurring the cost is equal to the total number of
complying facilities in the previous year. For example, we
calculated year 2 costs as follows: $2.09 million x (202 facilities/
525 facilities) = $0.80 million.
    \52\ We calculated total operational costs by adding the
baseline operational costs in years 1 and 2 as presented in table 3
($2.10 million + $2.29 million = $4.39 million). However, this total
includes a $0.187 million in costs for ongoing recordkeeping and
training which do not occur the first year a facility installs a
TWIC reader. Therefore, the total initial operational cost to
industry is $4.206 million ($4.39 million-$0.187 million = $4.206
million). We then multiplied the total cost by the percentage of new
facilities complying in a given year. We also accounted for ongoing
costs to industry, which we calculated by multiplying the total
ongoing operational costs of $1.416 million per year (see year 3 of
table 3) by the percentage of facilities incurring ongoing costs.
For example, in year 2, we calculated the total initial costs to be
$1.61 million ($4.206 million x (201 facilities/525 facilities)),
and we calculated the total ongoing costs to be $0.545 million
($1.416 million x (202 facilities/525 facilities)), for a total cost
of $2.16 million ($1.610 million + $0.545 million). The $1.416
million ongoing cost includes not only the $0.187 million in ongoing
training and recordkeeping costs, but also the cost to update the
canceled card list annually.

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

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

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

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

    Table 7 presents the estimated change in total costs to industry
from delaying the implementation of the TWIC Reader final rule by 3
years (until August 23, 2021) for facilities that handle bulk CDC, but
do not transfer it to or from a vessel, and facilities that receive
vessels carrying bulk CDC, but do not transfer it to or from the vessel
during that vessel-to-facility interface. We estimated an annualized
cost savings to industry of $1.15 million at a 7-percent discount rate.

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

Qualitative Costs
    Qualitative costs are as shown in table 1. This proposed rule would
delay the cost to retrieve or replace lost PINs for use with TWICs for
the facilities with delayed implementation.
Government Costs
    We expect that this proposed rule would also generate a cost
savings to the government from delaying the review of the revised
security plans for 122 Risk Group A facilities that handle bulk CDC,
but do not transfer it to or from a vessel, and facilities that receive
vessels carrying bulk CDC. There is no change in cost to the government
resulting from TWIC inspections, because inspections are already
required under MTSA and

the TWIC reader requirements do not modify these requirements. As such,
there is no additional cost to the government
    To estimate the cost to the government we followed the same
approach as the industry cost analysis and adjusted the cost estimate
presented in the final rule Regulatory Analysis from 2012 dollars to
2016 dollars. For the government analysis, we used the fully loaded
2016 wage rate for an E-5 level staff member, $51 per hour, from
Commandant Instruction 7310.1R: Reimbursable Standard Rates, in place
of the 2012 wage of $49 per hour.\54\ We then followed the calculations
outlined on page 72 of the final rule Regulatory Analysis to estimate a
government cost of $53,550 in the first 2 years ($51 x 4 hours per
review x 262.5 plans). Table 8 presents the annualized baseline
government costs of $13,785 at a 7-percent discount rate.
---------------------------------------------------------------------------

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

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

    Table 9 presents the government cost under the proposed rule. We
estimated the annualized government cost to be $13,047 at a 7-percent
discount rate. To estimate government costs in year 1 and year 2, we
used the same approach as the baseline cost estimates.\55\
---------------------------------------------------------------------------

    \55\ We calculated the total cost in year 1 as 4 hours x $51 x
202 FSPs; the total cost in year 2 as 4 hours x $51 x 201 FSP; and
the total cost in years 3 and 4 as 4 hours x $51 x 61 FSPs.

Table 9--Total Government Cost Under the NPRM Partially Delaying the Effective Date of the 2016 Final Rule, Risk
                                                     Group A
                                                 [2016 dollars]
----------------------------------------------------------------------------------------------------------------
                              Year                                  Cost of FSP         7%              3%
----------------------------------------------------------------------------------------------------------------
1...............................................................         $41,208         $38,512         $40,008
2...............................................................          41,004          33,471          38,650
3...............................................................          12,444          10,158          11,388
4...............................................................          12,444           9,493          11,056
5...............................................................               0               0               0
6...............................................................               0               0               0
7...............................................................               0               0               0
8...............................................................               0               0               0
9...............................................................               0               0               0
10..............................................................               0               0               0
                                                                 -----------------------------------------------
    Total.......................................................         107,100          91,635         101,102
                                                                 -----------------------------------------------
        Annualized..............................................  ..............          13,047          11,852
----------------------------------------------------------------------------------------------------------------

    Table 10 presents the estimated change in government costs from
delaying the implementation of the TWIC Reader final rule by 3 years
(until August 23, 2021) for facilities that handle bulk CDC, but do not
transfer it to or from a vessel, and facilities that receive vessels
carrying bulk CDC, but do not transfer it to or from the vessel during
that vessel-to-facility interface. We estimated an annualized cost
savings to the government of $738 at a 7-percent discount rate.

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

    Using a perpetual period of analysis, we estimated the total
annualized cost savings of the proposed rule to be $0.552 million in
2016 dollars, using a 7-percent discount rate.
Change in Benefits
    As noted, this proposed rule would delay the effective date of the
TWIC reader requirement for two categories of facilities: (1)
Facilities that handle bulk CDC, but do not transfer it to or from a
vessel (to comply by Aug. 23, 2021), and (2) facilities that receive
vessels carrying bulk CDC but do not transfer bulk CDC to or from the
vessel during that vessel-to-facility interface. The facilities for
which the TWIC Reader final rule would be delayed will not realize the
enhanced benefits of electronic inspection, such as ensuring that only
individuals who hold valid TWICs are granted unescorted access to
secure areas, enhanced verification of personal identity, and a
reduction in potential vulnerability by establishing earlier the intent
of perpetrators who attempt to bypass or thwart the TWIC readers, until
August 23, 2021.
Summary of Cost Savings Under Executive Order 13771
    We do not anticipate any new costs to the industry and government
if this proposed rule is implemented and the effective date of the TWIC
Reader final rule is delayed by 3 years. Therefore, this proposed rule
is expected to be an Executive Order 13771 deregulatory action. Table
11 summarizes the cost savings of this rule by comparing and
subtracting the costs of this proposed rule from the TWIC Reader final
rule costs. Because this proposed rule would delay the implementation
of the final rule by 3 years for 122 facilities, it would result in
cost savings of $8.1 million for industry, $0.005 million for
government, and $8.1 million total (all discounted at 7 percent) over a
10-year period of analysis. At a 7-percent discount rate, we estimate
the annualized cost savings to be $1.15 million to the industry,
$0.0007 to the government, and $1.15 million total. Using a perpetual
period of analysis, we found total annualized cost savings of the
proposed rule to be $0.552 million to industry and the government.

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

Alternatives
    One regulatory alternative to this proposed rule is for the Coast
Guard to take no action. Under this alternative, the TWIC Reader final
rule would become effective on August 23, 2018, and all 122 facilities
we identified in our final rule Regulatory Analysis, in addition to the
unknown number of facilities, would be expected to comply with the
final rule. These entities would be required to implement the
requirements for the electronic inspection of TWICs and would incur the
costs we estimated in our final rule Regulatory Analysis unless a
waiver was granted by the Coast Guard.
    Another alternative the Coast Guard considered was a waiver
approach. However, because we currently lack a comprehensive risk
analysis on the level of individualized facilities, we do not believe
this approach maximizes benefits. In the absence of a new comprehensive
risk analysis, the Coast Guard might issue blanket waivers that include
facilities that may indeed warrant the additional security of
electronic inspection. For example, take 2 facilities with a 5,000
gallon tank of a CDC each. The tank in the first facility is placed
near enough to the perimeter fence in a populated area that, if the
tank explodes, it would kill enough people to cause a TSI and therefore
should require electronic TWIC inspection. That same tank on the other
facility is located away from the water in an isolated area within the
MTSA footprint (not near a population). If it explodes it does not
cause a TSI and therefore should not need to conduct electronic TWIC
inspection. If the Coast Guard issued a blanket waiver for those
facilities with a storage tank of CDC with 5,000 gallons or less, then
we would not be properly implementing these requirements to mitigate
the risks as intended.
    We rejected both alternatives (`no action' and `waiver approach')
because

they do not address our need to conduct a comprehensive risk analysis
at the individual facility level to determine whether or not those 122
facilities and an unknown number of facilities would be required to
comply with the final rule after August 23, 2018, and also develop a
consistent methodology that would form the rationale for Coast Guard
when issuing waivers.

B. Small Entities

    Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, we have
considered whether this proposed rule would have a significant economic
impact on a substantial number of small entities. The term ``small
entities'' comprises small businesses, not-for-profit organizations
that are independently owned and operated and are not dominant in their
fields, and governmental jurisdictions with populations of less than
50,000.
    The Coast Guard proposes to delay the effective date of the TWIC
Reader final rule (August 23, 2018) by 3 years, until August 23, 2021,
for facilities that handle bulk CDC, but do not transfer it to or from
a vessel, and facilities that receive vessels carrying bulk CDC but,
during that vessel-to-facility interface, do not transfer it to or from
the vessel. These facilities will experience a cost savings. Therefore,
we estimate that this proposed rule would provide cost savings to 122
facilities.
    Given this information, the Coast Guard certifies under 5 U.S.C.
605(b) that this proposed rule would not have a significant economic
impact on a substantial number of small entities. If you think that
your business, organization, or governmental jurisdiction qualifies as
a small entity and that this proposed rule would have a significant
economic impact on it, please submit a comment to the docket at the
address listed in the ADDRESSES section of this preamble. In your
comment, explain why you think it qualifies and how and to what degree
this proposed rule would economically affect it.

C. Assistance for Small Entities

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

D. Collection of Information

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

E. Federalism

    A rule has implications for Federalism under E.O. 13132
(Federalism) if it has a substantial direct effect on the States, on
the relationship between the national government and the States, or on
the distribution of power and responsibilities among the various levels
of government. We have analyzed this proposed rule under that order and
have determined that it is consistent with the fundamental federalism
principles and preemption requirements described in E.O. 13132. Our
analysis is explained below.
    This proposed rule would delay the implementation of existing
regulations that create a risk-based set of security measures for MTSA-
regulated facilities. Based on this analysis, each facility is
classified according to its risk level, which then determines whether
the facility will be required to conduct electronic TWIC inspection. As
this proposed rule would not impose any new requirements, but simply
delay the implementation of existing requirements, it would not have a
preemptive impact. Please refer to the Coast Guard's federalism
analysis in the final rule entitled ``Transportation Worker
Identification Credential (TWIC)--Reader Requirements,'' (81 FR 57652,
57706) for additional information.
    While it is well settled that States may not regulate in categories
in which Congress intended the Coast Guard to be the sole source of a
vessel's obligations, States and local governments have traditionally
shared certain regulatory jurisdiction over waterfront facilities.
Therefore, MTSA standards contained in 33 CFR part 105 (Maritime
security: Facilities) are not preemptive of State or local law or
regulations that do not conflict with them (i.e., they would either
actually conflict or would frustrate an overriding Federal need for
uniformity).
    The Coast Guard recognizes the key role that State and local
governments may have in making regulatory determinations. Additionally,
for rules with federalism implications and preemptive effect, Executive
Order 13132 specifically directs agencies to consult with State and
local governments during the rulemaking process. If you believe this
rule has implications for federalism under Executive Order 13132,
please contact the person listed in the FOR FURTHER INFORMATION section
of this preamble.

F. Unfunded Mandates Reform Act

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

G. Taking of Private Property

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

H. Civil Justice Reform

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

I. Protection of Children

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

J. Indian Tribal Governments

    This proposed rule does not have tribal implications under
Executive

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

K. Energy Effects

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

L. Technical Standards

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

M. Environment

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

List of Subjects in 33 CFR Part 105

    Maritime security, Reporting and recordkeeping requirements,
Security measures.

    For the reasons listed in the preamble, the Coast Guard proposes to
amend 33 CFR part 105 as follows:

PART 105--MARITIME SECURITY: FACILITIES

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

    Authority:  33 U.S.C. 1226, 1231; 46 U.S.C. 70103; 50 U.S.C.
191; 33 CFR 1.05-1, 6.04-11, 6.14, 6.16, and 6.19; Department of
Homeland Security Delegation No. 0170.1.

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

Sec.  105.253   Risk Group classifications for facilities.

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

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