[Federal Register Volume 68, Number 16 (Friday, January 24, 2003)]
[Rules and Regulations]
[Pages 3756-3762]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1682]



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Part VI





Department of Transportation





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Transportation Security Administration



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49 CFR Part 1540



Threat Assessments Regarding Citizens of the United States and Alien 
Holders Who Hold or Apply for FAA Certificates; Final Rules

  Federal Register / Vol. 68, No. 16 / Friday, January 24, 2003 / Rules 
and Regulations  

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DEPARTMENT OF TRANSPORTATION

Transportation Security Administration

49 CFR Part 1540

[Docket No. TSA-2002-13732; Amendment No. 1540-3]
RIN 2110-AA14


Threat Assessments Regarding Citizens of the United States Who 
Hold or Apply for FAA Certificates

AGENCY: Transportation Security Administration (TSA), DOT.

ACTION: Final rule; request for comments.

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SUMMARY: This final rule establishes the procedure by which TSA will 
notify the subject individual and the Federal Aviation Administration 
(FAA) of TSA's assessment that an individual who is a citizen of the 
United States and holds or is applying for an FAA airman certificate, 
rating, or authorization poses a security threat. This procedure 
provides such individuals notice and an opportunity to be heard before 
TSA makes a final decision, while furthering the federal government's 
important and immediate interest in protecting national security and 
providing the nation with a safe and secure transportation system.

DATES: Effective on January 24, 2003. Submit comments by March 25, 
2003.

ADDRESSES: Address your comments to the Docket Management System, U.S. 
Department of Transportation, Room Plaza 401, 400 Seventh Street, SW., 
Washington, DC 20590-0001. You must identify the docket number TSA-
2002-13732 at the beginning of your comments, and you should submit two 
copies of your comments. If you wish to receive confirmation that TSA 
received your comments, include a self-addressed, stamped postcard.
    You may also submit comments through the Internet to http://dms.dot.gov. You may review the public docket containing comments to 
these regulations in person in the Dockets Office between 9 a.m. and 5 
p.m., Monday through Friday, except Federal holidays. The Dockets 
Office is on the plaza level of the NASSIF Building at the Department 
of Transportation at the above address. Also, you may review public 
dockets on the Internet at http://dms.dot.gov.

FOR FURTHER INFORMATION CONTACT: Brandon Straus, Office of the Chief 
Counsel, Transportation Security Administration, 400 Seventh Street, 
SW., Washington, DC 20590-0001; telephone (202) 493-1224; e-mail: 
[email protected]. For information regarding the Economic 
Analysis, contact Jenny R. Randall, Economist, Office of Security 
Regulation & Policy, Transportation Security Administration, 400 
Seventh Street, SW., Washington, DC 20590-0001; telephone (202) 385-
1554; e-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Comments Invited

    This final rule is being adopted without prior notice and prior 
public comment. However, the Regulatory Policies and Procedures of the 
Department of Transportation (DOT) (44 FR 1134; February 26, 1979) 
provide that, to the maximum extent possible, operating administrations 
within DOT should provide an opportunity for public comment on 
regulations issued without prior notice. Accordingly, interested 
persons are invited to participate in this rulemaking by submitting 
written data, views, or arguments. We also invite comments relating to 
the economic, environmental, energy, or federalism impacts that might 
result from adopting this amendment. The most helpful comments will 
reference a specific portion of the rule, explain the reason for any 
recommended change, and include supporting data. See ADDRESSES above 
for information on how to submit comments.
    We will file in the docket all comments we receive, as well as a 
report summarizing each substantive public contact with TSA personnel 
concerning this rulemaking. The docket is available for public 
inspection before and after the comment closing date.
    We will consider all comments we receive on or before the closing 
date for comments. We will consider comments filed late if it is 
possible to do so without incurring expense or delay. We may change 
these rules in light of the comments we receive.

Electronic Access

    You can get an electronic copy using the Internet by:
    (1) Searching the Department of Transportation's electronic Docket 
Management System (DMS) Web page (http://dms.dot.gov/search);
    (2) Accessing the Government Printing Office's Web page at http://www.access.gpo.gov/su_docs/aces/aces140.html; or
    (3) Visiting the TSA's Law and Policy Web page at http://www.tsa.dot.gov/public/index.jsp.
    In addition, copies are available by writing or calling the 
individual in the FOR FURTHER INFORMATION CONTACT section. Make sure to 
identify the docket number of this rulemaking.

Small Entity Inquiries

    The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 
1996 requires the TSA to comply with small entity requests for 
information and advice about compliance with statutes and regulations 
within the TSA's jurisdiction. Any small entity that has a question 
regarding this document may contact the person listed in FOR FURTHER 
INFORMATION CONTACT. Persons can obtain further information regarding 
SBREFA on the Small Business Administration's Web page at http://www.sba.gov/advo/laws/law_lib.html.

Background

    Following the terrorist attacks on the United States on September 
11, 2001, Congress recognized the need for a fundamental change in the 
federal government's approach to ensuring the security of civil 
aviation. The September 11 attacks highlighted the fact that the 
security of the civil aviation system is critical to national security 
and essential to the basic freedom of Americans to move in intrastate, 
interstate, and international transportation. See H. R. Conf. Rep. 107-
296, 107th Cong., 1st Sess. 53 (2001).
    In order to address the need for heightened security in civil 
aviation and other modes of transportation, Congress passed the 
Aviation and Transportation Security Act (ATSA), Pub. L. 107-71, 115 
Stat. 597 (November 19, 2001). ATSA established the TSA within DOT, 
operating under the direction of the Under Secretary of Transportation 
for Security (Under Secretary). TSA is responsible for security in all 
modes of transportation regulated by DOT, including civil aviation. 
Accordingly, ATSA transferred the responsibility for civil aviation 
security from the FAA to TSA.

ATSA Requirements

    As part of its security mission, TSA is responsible for assessing 
intelligence and other information in order to identify individuals who 
pose a threat to transportation security and to coordinate 
countermeasures with other Federal agencies, including the FAA, to 
address such threats. See 49 U.S.C. 114(f)(1)-(5), (h)(1)-(4). 
Specifically, Congress required TSA to work with the FAA Administrator 
to take actions that may affect aviation safety or air carrier 
operations. 49 U.S.C. 114(f)(13).
    In the course of carrying out this responsibility, TSA receives 
information from other federal agencies and other

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sources identifying specific individuals who pose security threats. TSA 
also receives, on a regular basis, copies of the airmen registry from 
the FAA.\1\ In some cases, individuals identified by other agencies as 
security threats hold or have applied for airman certificates, ratings, 
or authorizations, such as pilot certificates, mechanic certificates, 
and special purpose pilot authorizations, issued by the FAA under 49 
U.S.C. Chapter 447. Individuals who pose security threats and hold FAA 
certificates, ratings, or authorizations are in positions to disrupt 
the transportation system and harm the public.
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    \1\ The registry is formally known as the ``Comprehensive Airmen 
Information System.''
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    In ATSA, Congress specifically required the Under Secretary to 
establish procedures to notify the FAA Administrator, among others, of 
the identity of individuals known to pose, or suspected of posing, a 
threat of air piracy or terrorism, or a threat to airline or passenger 
safety. 49 U.S.C. 114(h)(2). Congress required the FAA Administrator to 
``make modifications in the system for issuing airman certificates 
related to combating acts of terrorism.'' 49 U.S.C. 44703(g).
    The Under Secretary has an express mandate to identify and 
coordinate countermeasures to address threats to the transportation 
system. In addition, Congress has expressly directed TSA to work with 
the FAA Administrator with respect to actions that may affect aviation 
safety or air carrier operations and to communicate information to the 
FAA regarding individuals who pose a security threat. Therefore, TSA is 
adopting the procedures set forth herein to notify the FAA of a 
security threat concerning a U.S. citizen who holds or is applying for 
an FAA certificate, rating, or authorization.
    Congress has given the TSA broad powers related to the security of 
civil aviation, including the authority to receive, assess, and 
distribute intelligence information related to transportation security. 
The TSA is charged with serving as the primary liaison for 
transportation security to the intelligence and law enforcement 
communities. See 49 U.S.C. 114(f)(1) and (5). The Under Secretary is 
uniquely situated as an expert in transportation security, based on his 
functions, responsibilities, duties, and powers, to determine whether 
sufficient cause exists to believe that an individual poses a threat to 
aviation security. Congress, in ATSA, committed to the TSA's discretion 
the role of assessing such threats and communicating them to other 
agencies, including the FAA, for appropriate action.
    In ATSA, Congress also created the Transportation Security 
Oversight Board (TSOB). 49 U.S.C. 115. The members include the 
Secretary of Transportation, the Attorney General, the Secretary of 
Defense, the Secretary of the Treasury, and the Director of the Central 
Intelligence Agency, or such officials' designees, as well as one 
member appointed by the President to represent the National Security 
Council and one member appointed by the President to represent the 
Office of Homeland Security. The Under Secretary is required to consult 
with the TSOB in establishing procedures for notifying the 
Administrator of the identity of individuals known to pose, or 
suspected of posing, a risk of air piracy or terrorism, or a threat to 
airline or passenger safety. 49 U.S.C. 114(h)(2). The Under Secretary 
has consulted with the TSOB regarding the procedures set forth in this 
rule.

Discussion of the Final Rule

    This final rule adds a new Sec.  1540.115 to 49 CFR part 1540, 
entitled ``Threat assessments regarding citizens of the United States 
holding or applying for FAA certificates, ratings, or authorizations.'' 
New Sec.  1540.115 sets forth the procedure that TSA follows when 
notifying the FAA of certain individuals who pose a security threat.
    Section 1540.115(a) provides that the notification procedure 
applies when TSA has determined that an individual holding or applying 
for an FAA airman certificate, rating, or authorization poses a 
security threat. This rule applies to citizens of the United States. A 
separate rule published in this Federal Register applies to aliens.
    Section 1540.115(b) of the final rule sets forth the definitions of 
certain terms used in the rule, some of which are discussed further 
below.
    Under Sec.  1540.115(c) of the final rule, an individual poses a 
security threat if the individual is suspected of posing or is known to 
pose: (1) A threat to transportation or national security; (2) a threat 
of air piracy or terrorism; (3) a threat to airline or passenger 
security; or (4) a threat to civil aviation security. This definition 
is based on 49 U.S.C. 114(f) and (h), which authorize the Under 
Secretary to identify and counter threats to the transportation system 
and to communicate information to the FAA regarding individuals who 
pose a security threat.
    While the Under Secretary has been granted full discretion to 
conduct threat assessments and act upon them, TSA recognizes that 
notifying the FAA that an individual poses a security threat will have 
significant consequences. Further, the individual may have information 
that he or she may wish the Under Secretary to consider in making a 
final decision. Accordingly, the procedure in this final rule provides 
an individual with an opportunity to respond before the Under Secretary 
makes a decision on the threat assessment.
    Section 1540.115(d) of this final rule makes clear that the 
individual may, if he or she so chooses, be represented by counsel, at 
his or her own expense, in the proceedings described in the final rule.
    Section 1540.115(e)(1) provides that if the Assistant Administrator 
for Intelligence for TSA (Assistant Administrator) determines that an 
individual poses a security threat, the Assistant Administrator will 
serve upon that individual an Initial Notification of Threat Assessment 
and serve it upon the FAA. This Initial Notification will form the 
basis for the FAA to delay the issuance of or to suspend the 
individual's certificate, rating, or authorization pending completion 
of TSA's process.
    Section 1540.115(e)(2) provides that not later than 15 calendar 
days after the date of service of the Initial Notification, the 
individual may serve a written request for copies of releasable 
materials upon which the Initial Notification was based.
    In this section ``date of service'' has the same meaning as the 
definition of that term in the Rules of Practice in Transportation 
Security Administration Civil Penalty Actions and TSA's Investigative 
and Enforcement Procedures. See 49 CFR 1503.211(d). We note that, while 
Sec.  1503.211(e) of the Rules of Practice also provides for additional 
time for a party to act after service by mail, this rule incorporates 
additional time in the stated time frames and no additional time will 
be added for that purpose under this rule.
    Section 1540.115(e)(3) provides that not later than 30 calendar 
days, or such longer period as TSA may determine for good cause, after 
TSA receives the individual's request for copies of the releasable 
materials, TSA will respond.
    Under Section 1540.115(e)(4), not later than 15 calendar days after 
the date of service of the Initial Notification or the date of service 
of TSA's response to the individual's request for releasable materials, 
if such a request was made, the individual may serve a written reply to 
the Initial Notification. The reply may include any information that 
the individual believes the Under Secretary

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should consider in making a final decision.
    Section 1540.115(e)(5) provides that not later than 30 calendar 
days, or such longer period as TSA may determine for good cause, after 
TSA receives the individual's reply, TSA serves a final decision in 
accordance with paragraph (f) of this section.
    TSA recognizes that this process provides shorter time periods for 
the individual and TSA to act than in many administrative proceedings. 
However, recognizing that the individual's certificate, rating, or 
authorization will be delayed or suspended by the FAA during this 
period, this procedure is designed to permit TSA to make a final 
determination quickly, ensuring that the affected individual obtains a 
prompt review of any issues that are raised. At the same time, TSA is 
committed to providing adequate process to those individuals who are 
subject to the procedure. Therefore, this rule provides for three 
levels of administrative review of TSA's determination that an 
individual poses a security threat. Unlike the procedure applicable to 
alien holders of or applicants for certificates, this rule, which 
applies only to citizens of the United States, provides for a separate 
review by the Under Secretary. Only after the Under Secretary has 
reviewed the relevant information and confirmed the two prior 
determinations of the Assistant Administrator and the Deputy 
Administrator, is TSA's determination final. This difference between 
the two rules reflects the greater level of process due to citizens of 
the United States under law. TSA believes this process provides 
adequate and appropriate procedural safeguards for the interests of 
United States citizens.
    Under Sec.  1540.115(f), the Deputy Administrator of TSA reviews 
the Initial Notification of Threat Assessment, the materials upon which 
the Initial Notification was based, the individual's reply, if any, and 
any other materials or information available to him. The Deputy 
Administrator will undertake a de novo review to determine whether the 
individual poses a security risk.
    If the Deputy Administrator determines that the individual poses a 
security threat, the Under Secretary reviews the Initial Notification, 
the individual's reply, if any, and any other materials or information 
available to him. If the Under Secretary determines that the individual 
poses a security threat, TSA serves upon the individual a Final 
Notification of Threat Assessment and serves a copy upon the FAA 
Administrator. The Final Notification includes a statement that the 
Under Secretary has personally reviewed the Initial Notification, the 
individual's reply, if any, any other information or materials 
available to him, and has determined that the individual poses a 
security threat. This Final Notification will form the basis of the 
FAA's revocation of, or denial of, the individual's certificate, 
rating, or authorization.
    If the Deputy Administrator does not determine that the individual 
poses a security threat, or upon review, the Under Secretary does not 
determine that the individual poses a security threat, TSA serves upon 
the individual a Withdrawal of the Initial Notification and serves a 
copy to the FAA.
    Section 1540.115(g) provides that in connection with this section, 
TSA does not disclose to the individual classified information, as 
defined in Executive Order 12968 section 1.1(d), and TSA reserves the 
right not to disclose any other information or material not warranting 
disclosure or protected from disclosure under law, such as sensitive 
security information (SSI), sensitive law enforcement and intelligence 
information; sources, methods, means, and application of intelligence 
techniques; and identities of confidential informants, undercover 
operatives, and material witnesses.
    In most cases, the determination that an individual poses a 
security threat will be based, in large part or exclusively, on 
classified national security information, unclassified information 
designated as SSI, or other information that is protected from 
disclosure by law, such as the Freedom of Information Act (FOIA). See 5 
U.S.C 552(b)(1), (2), (7).
    Classified national security information is information that the 
President or another authorized Federal official has determined, 
pursuant to Executive Order (EO) 12958, must be protected against 
unauthorized disclosure in order to safeguard the security of American 
citizens, the country's democratic institutions, and America's 
participation within the community of nations. See E.O. 12958 (60 FR 
19825, April 20, 1995). E.O. 12968 prohibits Federal employees from 
disclosing classified information to individuals who have not been 
cleared to have access to such information under the requirements of 
that EO. See E.O. 12968 sec. 3.2(a), 6.2(a)(1) (60 FR 40245, Aug. 7, 
1995). If the Assistant Administrator has determined that an individual 
who is the subject of a threat assessment proceeding poses a threat to 
transportation security, that individual will not be able to obtain a 
clearance to have access to classified national security information, 
and TSA has no authority to release such information to that 
individual.
    The denial of access to classified information under these 
circumstances is consistent with the treatment of classified 
information under the FOIA, which specifically exempts such information 
from the general requirement under FOIA that all government documents 
are subject to public disclosure. See 5 U.S.C. 522(b)(1).
    SSI is unclassified information that is subject to disclosure 
limitations under statute and TSA regulations. See 49 U.S.C. 114(s); 49 
CFR part 1520. Under 49 U.S.C. 114(s), the Under Secretary may 
designate categories of information as SSI if release of the 
information would be detrimental to the security of transportation. The 
SSI designation allows TSA to limit disclosure of this information to 
people with a need to know in order to carry out regulatory security 
duties. See 49 CFR 1520.5(b).
    Among the categories of information that the Under Secretary has 
defined as SSI by regulation is information concerning threats against 
transportation. See 49 CFR 1520.7(i). Thus, information that TSA 
obtains indicating that an individual poses a security threat, 
including the source of such information and the methods through which 
the information was obtained, will commonly be SSI or classified 
information. The purpose of designating such information as SSI is to 
ensure that those who seek to do harm to the transportation system and 
their associates and supporters do not obtain access to information 
that will enable them to evade the government's efforts to detect and 
prevent their activities. Disclosure of this information, especially to 
an individual specifically suspected of posing a threat to the aviation 
system, is precisely the type of harm that Congress sought to avoid by 
authorizing the Under Secretary to define and protect SSI.
    Other types of information also are protected from disclosure by 
law due to their sensitivity in law enforcement and intelligence. In 
some instances, the release of information about a particular 
individual or his supporters or associates could have a substantial 
adverse impact on security matters. The release of the identities or 
other information regarding individuals related to a security threat 
determination by TSA could jeopardize sources and methods of the 
intelligence community, the identities of confidential sources, and 
techniques and procedures for law enforcement investigations or 
prosecution. See 5

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U.S.C 552(b)(7)(D), (E). Release of such information also could have a 
substantial adverse impact on ongoing investigations being conducted by 
federal law enforcement agencies, possibly giving a terrorist 
organization or other group a roadmap of the course and progress of an 
investigation. In certain instances, release of information could alert 
a terrorist's coconspirators to the extent of the federal investigation 
and the imminence of their own detection, thus provoking flight. Those 
without access to information about the progress of federal 
investigations are not in a meaningful position and therefore cannot 
make judgments about the risk of release of information about that 
investigation that TSA has relied upon in making a security threat 
determination.
    This intelligence ``mosaic'' dilemma has been well recognized by 
the courts in concluding both that they are ill-suited to second guess 
the Executive Branch's determination and that seemingly innocuous 
production should not be made. The business of foreign intelligence 
gathering in this age of computer technology is more akin to the 
construction of a mosaic than it is to the management of a cloak-and-
dagger affair. Thousands of pieces of seemingly innocuous information 
can be analyzed and fitted into place to reveal with startling clarity 
how the unseen whole must operate. The Fourth Circuit Court of Appeals 
has observed:

    The significance of one item of information may frequently 
depend upon knowledge of many other items of information. What may 
seem trivial to the uninformed, may appear of great moment to one 
who has a broad view of the scene and may put the questioned item of 
information in its proper context. The courts, of course are ill-
equipped to become sufficiently steeped in foreign intelligence 
matters to serve effectively in the review of secrecy 
classifications in this area.

    United States v. Marchetti, 466 F.2d 1309, 1318 (4th Cir.), cert. 
denied, 409 U.S. 1063 (1972). Halkin v. Helms, 598 F. 2d 1 (D.C. Cir 
1978). See also e.g., Kasza v. Browner, 133 F. 3d 1159, 1166 (9th Cir. 
1998) (Quoting Halkin); J Roderick MacArthur Foundation v. Federal 
Bureau of Investigation, 102 F.3d 600, 604 (D.C. Cir 1996) (``As we 
have said before, ``Intelligence gathering is akin to the construction 
of a mosaic' ''(citation omitted)).
    For the reasons discussed above, TSA will not provide to the 
individual under these procedures any classified information, and TSA 
reserves the right not to disclose SSI or other sensitive material not 
warranting disclosure or protected from disclosure under law.

Good Cause for Immediate Adoption

    This action is being taken without providing the opportunity for 
notice and comment, and it provides for immediate effectiveness upon 
adoption. The Under Secretary has determined this action is necessary 
to prevent imminent hazard to aircraft, persons, and property within 
the United States. TSA, after consultation with the FAA, has determined 
that this action is necessary to minimize security threats and 
potential security vulnerabilities to the fullest extent possible. The 
FAA, TSA, and other federal security organizations have been concerned 
about the potential use of aircraft to carry out terrorist acts in the 
United States since September 11. This rule codifies the fundamental 
and inherently obvious principle that a person who TSA determines poses 
a security threat should not hold an FAA-issued airman certificate.
    The Under Secretary finds that notice and comment are unnecessary, 
impracticable, and contrary to the public interest, pursuant to section 
553 of the Administrative Procedure Act (APA). Section 553(b) of the 
APA permits an agency to forgo notice and comment rulemaking when ``the 
agency for good cause finds * * * that notice and public procedures 
thereon are impracticable, unnecessary, or contrary to the public 
interest.'' The use of notice and comment prior to issuance of this 
rule could delay the ability of TSA and the FAA to take effective 
action to keep persons found by TSA to pose a security threat from 
holding an airman certificate. Further, the Under Secretary finds that 
good cause exists under 5 U.S.C. 553(d) for making this final rule 
effective immediately upon publication. This action is necessary to 
prevent a possible imminent hazard to aircraft, persons, and property 
within the United States.

Economic Analyses

    Changes to Federal regulations must undergo several economic 
analyses. First, E.O. 12866 directs each Federal agency to propose or 
adopt a regulation only upon a reasoned determination that the benefits 
of the intended regulation justify its costs. Second, the Regulatory 
Flexibility Act of 1980 requires agencies to analyze the economic 
impact of regulatory changes on small entities. Third, the Office of 
Management and Budget directs agencies to assess the effect of 
regulatory changes on international trade. Fourth, the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to 
prepare a written assessment of the costs, benefits, and other effects 
of proposed or final rules that include a Federal mandate likely to 
result in the expenditure by State, local, or tribal governments, in 
the aggregate, or by the private sector, of $100 million or more 
annually (adjusted for inflation).
    This regulatory evaluation applies to both this rule, which applies 
to U.S. citizens, and to the corresponding rule, which applies to 
aliens. While, to date, all individuals whom the Under Secretary has 
assessed as threats have been aliens, TSA is not able to predict which 
individuals, who may be subject to TSA threat assessments, may be 
citizens of the United States or aliens in the future. This regulatory 
evaluation examines the costs and benefits of TSA notifying the FAA of 
its assessment that an individual holding or applying for an FAA 
certificate, rating, or authorization poses a security threat. TSA is 
taking this action in an ongoing effort to improve national security. 
The procedure of notification and action taken by the FAA and TSA could 
prevent aircraft, persons, and property in the United States from 
imminent peril by the denial or revocation of FAA certificates, 
ratings, or authorizations of those individuals who pose a security 
threat.
    The Assistant Administrator for Intelligence makes a determination 
regarding an individual posing a security threat who also holds or is 
applying for an FAA certificate, rating, or authorization. The 
Assistant Administrator then issues an Initial Notification to the FAA 
Administrator and the subject individual. At that time, the individual 
has the opportunity to act in three ways: (1) Reply and request the 
materials that the determination is based on; (2) reply without 
requesting materials; or (3) do nothing. The Deputy Administrator 
reviews the Initial Notification, and the Under Secretary makes the 
final review. TSA issues the Final Notification or a Withdrawal of 
Initial Notification to the FAA Administrator and the subject 
individual. It is the FAA Administrator who will take action and deny 
or revoke the FAA certificate, rating, or authorization if the Under 
Secretary determines that the individual poses a security threat. There 
are over 3.75 million holders of airmen certificates, ratings, or 
authorizations, who are subject to this final rule.
    TSA has determined that this rule is not, in economic impact, a 
``significant regulatory action'' as defined in E.O. 12866, Regulatory 
Planning and Review, but due to the potential public interest in this 
rule it is considered to be a ``significant regulatory action'' under

[[Page 3760]]

that Executive Order and under the DOT Regulatory Policies and 
Procedures. TSA determines this final rule does not have a significant 
economic impact on a substantial number of small entities. Regarding 
paperwork reduction, there are no new requirements for the collection 
of information associated with this rule. In terms of international 
trade, the rule will neither impose a competitive trade disadvantage to 
U.S. aircraft operators operating overseas nor foreign aircraft 
operators deplaning or enplaning passengers within the United States. 
In terms of the Unfunded Mandates Act, the rule will not contain any 
Federal intergovernmental mandates or private sector mandates.

Introduction and Background

    ATSA (49 U.S.C. 114) makes TSA responsible for security in all 
modes of transportation regulated by DOT, including civil aviation. 
Additionally, ATSA transferred the duty of ensuring civil aviation 
security from the FAA to TSA. To carry out its security mission, TSA 
must assess intelligence and other information in order to identify 
individuals who pose a threat to security. In doing so, TSA must 
coordinate with other federal agencies, including the FAA, to address 
these threats. 49 U.S.C. 114(f)(13) specifically requires TSA to work 
with the FAA Administrator to take actions that may affect aviation 
safety or air carrier operations.
    While performing the duty of ensuring civil aviation security, TSA 
receives information from other agencies and other sources identifying 
particular individuals who pose security threats. In some cases, these 
individuals hold airman certificates, ratings, or authorizations, such 
as pilot or mechanic certificates, ratings, or authorizations that were 
issued by the FAA in accordance with 49 U.S.C. Chapter 447. These 
individuals who pose security threats and hold FAA certificates, 
ratings, or authorizations are in positions to disrupt the civil 
aviation transportation system and harm the public.
    In ATSA, Congress specifically required the Under Secretary to 
establish procedures to notify the FAA Administrator, among others, of 
the identities of individuals who are known to pose or suspected of 
posing, a threat of air piracy or terrorism or a threat to airline or 
passenger safety. 49 U.S.C. 114(h)(2). Additionally, in 49 U.S.C. 
44703(g), as amended by ATSA section 129, Congress required the FAA 
Administrator to make modifications to the system used for issuing 
aviation certificates, ratings, or authorizations in order to make the 
system more effective in combating acts of terrorism.
    The Under Secretary has determined that TSA must notify the FAA 
when TSA's threat assessment reveals an individual who holds an FAA 
certificate, rating, or authorization or is an applicant for such 
certification poses a security threat. This determination is based on 
the Congressional authorization for the Under Secretary to identify and 
counter threats to transportation security and Congress's express 
direction that TSA work with the FAA Administrator in taking actions 
that may affect aviation security or air carrier operations and to 
communicate information to the FAA regarding individuals who pose a 
security threat.

Cost of Compliance

    TSA has performed an expected cost-benefit analysis for the final 
rule. To date, from a pool of approximately 1.35 million holders of 
airmen certificates issued by the FAA in the last ten years, TSA has 
identified 11 persons who are security threats. Estimating the number 
of FAA certificates that will be issued in the next ten years, from 
2003 to 2012, TSA has found that an estimated nine persons out of an 
estimated 1.11 million airmen certificates over the ten years will be 
flagged or at least one person per year. If, however, the estimates are 
off by as much as a factor of ten, TSA estimates that approximately 100 
persons may be impacted over the ten-year period. This estimates 
equates to ten persons per year over the ten-year period.
    This rule allows an impacted party to respond to the TSA-issued 
Initial Notification in order to refute the finding of the security 
threat assessment. To date, seven individuals or 63.64 percent from the 
11 identified are in the process of responding to a threat assessment 
notice from TSA. Assuming this percentage will remain relatively 
constant, TSA calculated a minimum and maximum number of impacted 
persons who will respond ranging from one person to six persons per 
year. Using the value of passenger time per hour for general aviation 
from ``Economic Values for Valuation of Federal Aviation Administration 
Investment and Regulatory Programs (Values)'' (FAA-APO-98-8) as a proxy 
for the wage rate of the impacted party, TSA estimated the approximate 
costs to respond to an Initial Notification without legal counsel to be 
$31.10 per hour in 2001 dollars. TSA assumed it would take an impacted 
person five hours to respond to the Initial Notification via a written 
letter requesting releasable materials upon which the decision was 
made, review any TSA materials, and write a response based upon these 
materials. An additional $20 was added to cover any costs of postage, 
copying, and stationery costs. Therefore, the total estimated cost for 
an individual to respond to TSA's Initial Notification equals 
approximately $176 per person in 2001 dollars. If an individual chooses 
to hire legal counsel, the cost rises to approximately $1000 to $1500 
based on five hours legal time at between $200-300 per hour.
    TSA projected the costs of this rule for impacted parties over the 
ten-year period of 2003-2012. The range of one person refuting per year 
without legal counsel to six persons per year refuting with legal 
counsel was used for analysis. Costs were discounted over the ten-year 
period using the standard seven percent discount rate as dictated by 
the Office of Management and Budget (Circular A-94). The total costs 
for this rule projected over the next ten years ranges from $1,755 (if 
one person per year responds on his/her own without legal counsel) to 
$71,735 (if six persons per year hire legal counsel to respond to 
findings) in 2001 discounted dollars.

Analysis of Benefits

    This rule is intended to enhance aviation security. Congress has 
mandated that the Under Secretary identify and counter threats to the 
transportation system and national security, as well as, work with the 
FAA Administrator to take actions that may affect aviation safety or 
air carrier operations and to communicate information to the FAA 
regarding individuals who pose a security threat. The primary benefit 
of the rule will be increased protection to Americans and others from 
acts of terrorism. The changes envisioned in this rule are an integral 
part of the total program needed to prevent a criminal or terrorist 
incident in the future.
    Since the mid-1980s, the major goals of aviation security have been 
to prevent bombing and sabotage incidents. The individuals covered by 
this rule hold airman certificates, ratings, or authorizations, such as 
pilot and mechanic certificates, ratings, or authorizations, issued by 
the FAA under 49 U.S.C. Chapter 447. These certificates, ratings, or 
authorizations allow these individuals access to aircraft while in 
maintenance and repair, to fly aircraft, or to operate aircraft 
navigational equipment. These individuals are in unique positions to 
disrupt the civil air transportation system and harm the public through 
acts of air piracy, sabotage, or misuse of

[[Page 3761]]

the aircraft. As such, these individuals could represent a definitive 
threat to security.

Comparison of Costs and Benefits

    It is estimated this rule will have insignificant incurred costs 
when compared to the potential benefits. The potential benefits are 
huge in the number of lives and amount of property within the United 
States saved from a catastrophic terrorist act by this rule. As such, 
the small amount of costs and the large positive value of the cost-
benefit analysis support the rule as cost-beneficial.

Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (RFA) established ``as a 
principle of regulatory issuance that agencies shall endeavor, 
consistent with the objective of the rule and of applicable statutes, 
to fit regulatory and informational requirements to the scale of the 
businesses, organizations, and governmental jurisdictions subject to 
regulation.'' To achieve that principle, the RFA requires agencies to 
solicit and consider flexible regulatory proposals and to explain the 
rationale for their actions. The RFA covers a wide-range of small 
entities, including small businesses, not-for-profit organizations and 
small governmental jurisdictions.
    Agencies must perform a review to determine whether a proposed or 
final rule will have a significant economic impact on a substantial 
number of small entities. If the determination is that it will, the 
agency must prepare a regulatory flexibility analysis as described in 
the RFA. However, if an agency determines that a proposed or final rule 
is not expected to have a significant economic impact on a substantial 
number of small entities, section 605(b) of the RFA provides that the 
head of the agency may so certify and a regulatory flexibility analysis 
is not required. The certification must include a statement providing 
the factual basis for this determination, and the reasoning should be 
clear.
    TSA has determined that this rule will not have a significant 
economic impact on a substantial number of small entities, pursuant to 
the RFA, 5 U.S.C. 605(b). This determination is based on the fact that 
the rule affects only individuals, not entities. Additionally, based on 
the comparison of costs and benefits set forth above, the costs 
incurred by individuals will be insignificant compared to potential 
benefits of the rule. Therefore, pursuant to the RFA, 5 U.S.C. 605(b), 
TSA certifies that this rule will not have a significant impact on a 
substantial number of small entities. The FAA has also issued a final 
rule regarding denial and revocation of FAA-issued certificates, 
ratings, or authorizations and has determined that such denial or 
revocation will not have a significant economic impact on a substantial 
number of small entities.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires 
that the TSA consider the impact of paperwork and other information 
collection burdens imposed on the public. We have determined that there 
are no new requirements for information collection associated with this 
final rule. An agency may not conduct or sponsor and a person is not 
required to respond to a collection of information unless it displays a 
current valid Office of Management and Budget (OMB) control number.

International Trade Impact Statement

    The Trade Agreement Act of 1979 prohibits Federal agencies from 
engaging in any standards or related activities that create unnecessary 
obstacles to the foreign commerce of the United States. Legitimate 
domestic objectives, such as safety and security, are not considered 
unnecessary obstacles. The statute also requires consideration of 
international standards, and where appropriate, that they be the basis 
for U.S. standards. The TSA has assessed the potential effect of this 
rulemaking and has determined that it will have only a domestic impact 
and, therefore, no effect on any trade-sensitive activity.

Unfunded Mandates Determination

    The Unfunded Mandates Reform Act of 1995 (the Act), enacted as Pub. 
L. 104-4 on March 22, 1995, is intended, among other things, to curb 
the practice of imposing unfunded Federal mandates on State, local, and 
tribal governments.
    Title II of the Act requires each Federal agency to prepare a 
written statement assessing the effects of any Federal mandate in a 
proposed or final agency rule that may result in a $100 million or more 
expenditure (adjusted annually for inflation) in any one year by State, 
local, and tribal governments, in the aggregate, or by the private 
sector; such a mandate is deemed to be a ``significant regulatory 
action.''
    This final rule does not contain such a mandate. Therefore, the 
requirements of Title II of the Unfunded Mandates Reform Act of 1995 do 
not apply.

Executive Order 13132, Federalism

    TSA has analyzed this final rule under the principles and criteria 
of Executive Order 13132, Federalism. We determined that this action 
will not have a substantial direct effect on the States, or the 
relationship between the national Government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government, and therefore does not have federalism implications.

Environmental Analysis

    TSA has reviewed this action for purposes of the National 
Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4347) and has 
determined that this action will not have a significant effect on the 
human environment.

Energy Impact

    The energy impact of this final rule has been assessed in 
accordance with the Energy Policy and Conservation Act (EPCA) Pub. L. 
94-163, as amended (42 U.S.C. 6362). We have determined that this 
rulemaking is not a major regulatory action under the provisions of the 
EPCA.

List of Subjects in 49 CFR Part 1540

    Air carriers, Aircraft, Airports, Law enforcement officers, 
Reporting and recordkeeping requirements, Security measures.

The Amendment

    In consideration of the foregoing, the Transportation Security 
Administration amends Chapter XII of Title 49, Code of Federal 
Regulations, as follows:

PART 1540--CIVIL AVIATION SECURITY: GENERAL RULES

    1. The authority citation for part 1540 continues to read as 
follows:

    Authority: 49 U.S.C. 114, 5103, 40119, 44901-44907, 44913-44914, 
44916-44918, 44935-44936, 44942, 46105.


    2. Amend part 1540 by adding Sec.  1540.115 to read as follows:


Sec.  1540.115  Threat assessments regarding citizens of the United 
States holding or applying for FAA certificates, ratings, or 
authorizations.

    (a) Applicability. This section applies when TSA has determined 
that an individual who is a United States citizen and who holds, or is 
applying for, an airman certificate, rating, or authorization issued by 
the Administrator, poses a security threat.
    (b) Definitions. The following terms apply in this section:

[[Page 3762]]

    Assistant Administrator means the Assistant Administrator for 
Intelligence for TSA.
    Date of service means--
    (1) The date of personal delivery in the case of personal service;
    (2) The mailing date shown on the certificate of service;
    (3) The date shown on the postmark if there is no certificate of 
service; or
    (4) Another mailing date shown by other evidence if there is no 
certificate of service or postmark.
    Deputy Administrator means the officer next in rank below the Under 
Secretary of Transportation for Security.
    FAA Administrator means the Administrator of the Federal Aviation 
Administration.
    Individual means an individual whom TSA determines poses a security 
threat.
    Under Secretary means the Under Secretary of Transportation for 
Security.
    (c) Security threat. An individual poses a security threat when the 
individual is suspected of posing, or is known to pose--
    (1) A threat to transportation or national security;
    (2) A threat of air piracy or terrorism;
    (3) A threat to airline or passenger security; or
    (4) A threat to civil aviation security.
    (d) Representation by counsel. The individual may, if he or she so 
chooses, be represented by counsel at his or her own expense.
    (e) Initial Notification of Threat Assessment. (1) Issuance. If the 
Assistant Administrator determines that an individual poses a security 
threat, the Assistant Administrator serves upon the individual an 
Initial Notification of Threat Assessment and serves the determination 
upon the FAA Administrator. The Initial Notification includes--
    (i) A statement that the Assistant Administrator personally has 
reviewed the materials upon which the Initial Notification was based; 
and
    (ii) A statement that the Assistant Administrator has determined 
that the individual poses a security threat.
    (2) Request for Materials. Not later than 15 calendar days after 
the date of service of the Initial Notification, the individual may 
serve a written request for copies of the releasable materials upon 
which the Initial Notification was based.
    (3) TSA response. Not later than 30 calendar days, or such longer 
period as TSA may determine for good cause, after receiving the 
individual's request for copies of the releasable materials upon which 
the Initial Notification was based, TSA serves a response. TSA will not 
include in its response any classified information or other information 
described in paragraph (g) of this section.
    (4) Reply. The individual may serve upon TSA a written reply to the 
Initial Notification of Threat Assessment not later than 15 calendar 
days after the date of service of the Initial Notification, or the date 
of service of TSA's response to the individual's request under 
paragraph (e)(2) if such a request was served. The reply may include 
any information that the individual believes TSA should consider in 
reviewing the basis for the Initial Notification.
    (5) TSA final determination. Not later than 30 calendar days, or 
such longer period as TSA may determine for good cause, after TSA 
receives the individual's reply, TSA serves a final determination in 
accordance with paragraph (f) of this section.
    (f) Final Notification of Threat Assessment. (1) In general. The 
Deputy Administrator reviews the Initial Notification, the materials 
upon which the Initial Notification was based, the individual's reply, 
if any, and any other materials or information available to him.
    (2) Review and Issuance of Final Notification. If the Deputy 
Administrator determines that the individual poses a security threat, 
the Under Secretary reviews the Initial Notification, the materials 
upon which the Initial Notification was based, the individual's reply, 
if any, and any other materials or information available to him. If the 
Under Secretary determines that the individual poses a security threat, 
the Under Secretary serves upon the individual a Final Notification of 
Threat Assessment and serves the determination upon the FAA 
Administrator. The Final Notification includes a statement that the 
Under Secretary personally has reviewed the Initial Notification, the 
individual's reply, if any, and any other materials or information 
available to him, and has determined that the individual poses a 
security threat.
    (3) Withdrawal of Initial Notification. If the Deputy Administrator 
does not determine that the individual poses a security threat, or upon 
review, the Under Secretary does not determine that the individual 
poses a security threat, TSA serves upon the individual a Withdrawal of 
the Initial Notification and provides a copy of the Withdrawal to the 
FAA Administrator.
    (g) Nondisclosure of certain information. In connection with the 
procedures under this section, TSA does not disclose to the individual 
classified information, as defined in Executive Order 12968 section 
1.1(d), and reserves the right not to disclose any other information or 
material not warranting disclosure or protected from disclosure under 
law.

    Issued in Washington, DC on January 21, 2003.
J.M. Loy,
Under Secretary of Transportation for Security.
[FR Doc. 03-1682 Filed 1-22-03; 10:09 am]
BILLING CODE 4910-62-P